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Andreas Rothe: Ladies and gentlemen, good morning from Mannheim. We welcome all of you to our conference call. The underlying presentation for this call has already been published this morning on our website. Today, we released the statement for the first half of the financial year '25/'26. We are going to present you the highlights of the period, revisit our full year group earnings guidance for the business year, which we adjusted on August 21. Following the presentation, we are going to answer your questions. As already mentioned, a recording of this call will be available on our homepage shortly after the call. Now let me hand over to our CFO, Dr. Stephan Meeder. Stephan Meeder: Thank you, Matthias and Andreas, for the introductions. Ladies and gentlemen, also a warm welcome from my side, and thank you very much to all of you for your interest showing in Südzucker. As mentioned, I would like to give you a brief overview about the business performance in the first 6 months of fiscal '25/'26. And I would like to give you some more details about the confirmed earnings guidance for fiscal '25/'26. So let me start with the highlights of the past 6 months of the fiscal. You will find this on Page 5. But before going into the details upfront, let me say, more general remark on where we stand as of today. So you can see in the figures that there is a weak performance in Q2. Yes, it came in as expected, but it's clear, it's a weak performance. But on the other side, we confirm our full year financial guidance for the operating profit as of today, which stands at EUR 100 million to EUR 200 million. So when looking into the remainder of the year, we believe that from Q3 onwards, this should be the turning point to the positive, but the figures that I will continue to explain to you in the following for Q2 and H1 show a weak performance. So going into the details, you can see that Q2 was -- performance was not able to match prior year's numbers for Q2, and the same is true for H1 -- compared to H1, and after 6 months, we have reached the following numbers. You can see group revenues came in at roughly EUR 4.2 billion, which is significantly below prior year's level. Same is true for group EBITDA, which was significantly down by 55% to EUR 189 million and group operating profit also only reached EUR 42 million versus EUR 269 million in previous year's period. Same is true for cash flow, which decreased to EUR 67 million. And when it comes to net financial debt, so net financial debt as of 31st of August this year came in EUR 285 million below prior year's level and did remain stable compared to the end of fiscal '24/'25, which is end of Feb '25. So let me continue with the next pages. We have a look here on H1. So bringing H1 into historic context, you can see that especially for operating group results, this is a strong decline compared to previous year's periods. You can see that the decline is in revenues, EBITDA and operating result. Particularly affected in H1 are the segments of sugar, special products, CropEnergies, starch, but we do see an increase in the fruit segment. And that is something important to note. We do this in each and every quarter. We know we are active in volatile markets, but what is good about Südzucker Group that it is a strong and resilient portfolio, and we always have divisions who do also benefiting for the group with a strong performance. And overall, this year, this is the fruit segment, but we also see a good development in the divisions of BENEO and Freiberger. So on August 21, we changed our group guidance for the fiscal '25/'26. We now expect revenues to range between EUR 8.3 billion and EUR 8.7 billion for the full year, EBITDA between EUR 470 million and EUR 570 million and operating profit between EUR 100 million and EUR 200 million. So further details for the outlook, I will give on later. What we can see, if we move on to what we will see on Page 10 is there are persistently low sugar prices in the global market and challenging EU market environment with continuous impact into autumn 2025. And we also do see continuous volatility or volatility going forward, which you cannot exclude due to geopolitical and global economic conditions. You are all fully aware of that. So let's move on to Page 9. You can find -- it's a little bit difficult to read, but it's a little bit also a backup information for you. Here you can find the detailed results of the segments. And as already mentioned, after 6 months, group revenues came in -- [ operated ] levels. We do see revenues decline in the segments of sugar, special products, CropEnergies and starch, but revenues rose slightly in the fruit segment. And when it comes to the EBITDA, as already stated, there's a decrease as well as an operating result. This is largely driven by the sugar segment, but was also significantly below prior year's level in special products, CropEnergies and starch segment and positively to note the fruit segment showed an increase. So most important, which is for H1, really important to discuss in more details is the development in the sugar segment and to see the developments in the sugar segment, we have also always have to have a close look what happens on the global sugar market. So I start with the global sugar market on Page 10 because this has an impact on the European sugar market and the development of the European sugar market has an effect or [indiscernible] for the sugar segment development in Südzucker Group. So let's have a look on the sugar market as a total on the worldwide scale. You will find that, as I said, on Page 10. Let's have first a look what is positively on the world market. You can see that the consumption is still growing. So on a worldwide scale, sugar market is still growing. You see this is the normal blue bars. You can see that consumption is going up. Dark blue is the production. And you can see that we have in '24/'25, a market with a deficit and deficit market and commodity markets are beneficiary to the prices. That is the situation we started. But in '25/'26 sugar marketing year and just as a reminder, sugar marketing year always starts 1st of October and it goes until end of September. So for sugar marketing year '25/'26 and '26/'27, it is expected to be that the market is in a surplus. That means production going over consumption. And in a commodity market, this is leading to a bearish sentiment on the prices. This is also if you have a look on the sugar market prices, we do not have this in this presentation, but you can find this in our investor slide deck on our homepage, they have all the detailed price developments. And you can see that recently, there is still a downward trend in market prices. And another factor also contributing to that compared then into euro is the weakness of the U.S. dollar, which is also a bearish factor. So going from the global sugar market or coming to the European sugar market. So as a mid-summary, we can state that from the world market, we do not have a support. The contrary is true. So there's a bearish sentiment for sugar on the world market, and this translates also to the situation in Europe. So here also the graph, you can see the dark blue is the production and the normal blue is the consumption. When it comes to consumption in Europe, you can see that there is a -- it depends whether you start looking into the figure '22/'23. If you take this, you can see that it is rather stable consumption in Europe. If we take also into consideration '21/'22 as a starting point, we can also come to the conclusion that European market is rather in a slightly downward trend. So going into the details for the recently started sugar marketing year '25/'26, so which started 1st of October '25, the EU Commission and also the analysts from market survey expect a significant decline in cultivation area for Europe, so less acres with sugar beets. So based on this production, including isoglucose is forecasted to decrease to 15.9 million tonnes. That's the graph or the bars on the right-hand side in the graph. And as a result, the EU is expected to have a balance in export/import volumes. The sugar price, let's have a look on the sugar prices, but it's not on the graph, but let me explain to you the development for the sugar prices. So the sugar prices, which have been published by the EU Commission, fell significantly down from EUR 619 per tonne at the start of the '24/'25 sugar marketing year in October '24 sharply. And since it has continued to fall, reaching EUR 550 per tonne at the start of the '25/'26 fiscal in March '25 and in July '25. So this is the latest available publication, EU sugar prices stood at EUR 534 per tonne. So one aspect that we always have to put into consideration when we discuss sugar prices in Europe is what is happening with Ukraine. As we stated in the last conference calls, one factor which heavily weighed on European sugar prices was the Ukraine imports over the last years and months. So at current stage, the EU Ukraine Association agreement foresees that the import -- allowed import or the duty-free allowed imports into the EU amount to 20,000 tonnes for this year, pro rata temporary. But the ongoing discussion is to increase those volumes to 100,000 tonnes as of 1st of January next year. So for sure, we stand with Ukraine, but we're heavily opposed to those additional duty-free imports given the fact that the European market is well supplied. So after having had this macro look on the world sugar market development, the European market development, how does this translate to the Südzucker Group sugar segment? You can see in the graph on the right-hand side that revenues significantly decreased. So in H1 '24/'25, we stood at EUR 2.1 billion in turnover. So this has decreased to EUR 1.4 billion. And when it comes to operating profit, it even turned to a loss situation. So in H1 '24/'25, we stood at an operating profit for the group for the Südzucker segment at EUR 72 million, and this has turned to a loss situation of EUR 89 million operating loss. Let's continue with the special products segment on Page 13. Here, you can see that after 6 months, revenue in the Specialty Products segment decreased moderately, which is mainly due to the disposal of the dressing and sauces business in the U.S. from division Freiberger, which was executed in Q2 '24/'25. So all in all, revenues declined moderately from EUR 1.14 billion to EUR 1.1 billion in H1 '25/'26. Coming to operating profit, we also do see a decrease, you can see from EUR 108 million to EUR 71 million. So the operating profit decreased significantly to EUR 71 million in the first half of this fiscal. And this development is mainly due to the rising production cost that we see in these divisions, which could not fully be passed on to customers. Going forward on Page 14, here you can see the development of CropEnergies segment, so the ethanol business. You can see also -- let me start with the key figures on the right-hand side, you can see that revenues were down from EUR 484 million in H1 '24/'25 to EUR 402 million in this H1 of the current fiscal. And operating profit also turned to the negative from EUR 17 million in H1 '24/'25 to a minus EUR 13 million operating loss in the CropEnergies segment in '25/'26. And the main reason for development in revenues is a decrease in production. So it's not linked to the market development. Ethanol market or the need or the development for biofuels is still pretty stable in the U.S. -- sorry, in the EU. The development of CropEnergies here and on the revenue side was linked to internal reasons. So the decrease is primarily due to significantly lower sales volumes, mainly resulted from both scheduled and also unscheduled maintenance work carried out due to technical issues. When it comes to the operating profit, so as I said, it turned to a negative and this was significant -- that was due to significantly lower prices in the first half. But we will see when we discuss the outlook further on. We always state that ethanol prices are volatile. There are good reasons given supply/demand in Europe, there are good reasons to -- that prices should increase. That's what we also stated in the quarterly calls we had in prior periods. And we did see this increase finally in the last 10 days, yes, or I would say, last week. So in the last days, ethanol prices have increased significantly in Europe. So this is a positive sign, and this also is reflected in our forecast, which I will discuss at the end of this presentation. So let's move on to the starch segment. This is on Page 15. You can see also on the right-hand side that after 6 months, revenues in the starch segment declined moderately from EUR 505 million to EUR 474 million in first 6 months of this fiscal. And this was due to the overall decline in prices and volumes. Operating result is significantly below previous year's levels. You can see that it turned downward from EUR 20 million in H1 last year to EUR 5 million this year. On the positive side, in this reporting period, we benefited from an insurance compensation related to the flood damage at the Austrian plant, Pischelsdorf, which we discussed also in recent quarterly calls with you. Let's move on to the fruit segment. And as I said, this is really positive to note with the Südzucker Group having a robust and resilient portfolio. You can see that the development in the fruit segment is positive compared to prior year's H1. We do see an increase in revenues from EUR 824 million last year to EUR 858 million this year. And the operating result also came in above prior years, reaching EUR 86 -- EUR 68 million. I always mix figure sometimes. So EUR 68 million, you can see in the middle of the right-hand side, EUR 68 million positive. So let's move on to the remainder of the income statement after having had this look on the segment development, operating profit. So in income statement, you can see that after 6 months below operating profit, the result from restructuring and special items amounted to a minus EUR 33 million versus a plus of EUR 13 million. This was largely attributable to the sugar segment in addition to the special products segment. When it comes to the result from companies consolidated at equity, this also amounted to minus EUR 8 million and is alongside the starch segment and the sugar segment. Looking into the financial result, you see a minus EUR 70 million, which is also higher than last year, where we had stood in the financial result at a minus EUR 51 million. So what are the reasons for that? There we have to look a different look on both the pure financial interest side and the other financial interest side, when it comes to the pure financial side, when it comes to the interest side, here, we can see that here is a minus EUR 53 million, and this is linked to higher interest expense, which is due to an average increase in interest rates. So for this reporting period, we have an average interest rate of 3.7% compared to a 3.4% in the prior year's period. Net financial debt on average in this period was roughly stable at EUR 1.9 billion, EUR 2 billion. And when it comes to the other financial results, this is mainly attributable to exchange rate losses, which are linked to the weak U.S. dollar and the weaker British pound. Moving on to the taxes. You can find that on Page 19. So taxes on income in H1 came in with a plus of EUR 9 million compared to a minus of EUR 74 million in the same period of last year. And this is based on earnings before taxes of minus EUR 69 million in the current year versus a EUR 235 million in the first 6 months of '24/'25 fiscal. So finally, we look into earnings per share, not a positive figure and clearly disappointing for us. Earnings per share at the end came in at a minus EUR 0.38 against a plus of EUR 0.61 in the prior year's period. Let's have a short look on cash flow, working capital investments. You can find that on the following pages. So I start with cash flow on Page 21. You can see in the graph or in the table that due to the decline in operating result, cash flow also decreased in the reporting period now to EUR 67 million compared to EUR 343 million in prior year's period. We do see a decrease in working capital, which is positive. On the investment side, CapEx side, investments into fixed assets reached EUR 219 million. So we are on track with reducing CapEx. And investment in financial assets and acquisitions are not meaningful in size. When it comes to the financing activities, so Südzucker had been very successful in refinancing our debt position. So here, you can see I have a particular look on the new EUR 700 million hybrid bond, which we issued successfully in May '25. So this is reflected also. You can see that in the cash flow statement. So we issued a new EUR 700 million hybrid bond via our Dutch subsidiary, Südzucker International Finance, to refinance the existing hybrid bond, which was also worth EUR 700 million, which was issued in summer 2025. And the increase and decrease in stakes held in subsidiaries and capital buyback are linked to this transaction. So we move on to the balance sheet, which you can find in the -- on Page 23. So when it comes to net financial debt, by end of August '25, net financial debt stands at EUR 1.674 billion. The cash inflow from operating activities of EUR 255 million includes, in particular, the cash flow of EUR 67 million and a strong decrease in working capital. And as I said, investments into CapEx amounted to EUR 219 million. So in total, the net financial debt is rather stable compared to the EUR 1.654 billion, where net financial debt stood at the end of last fiscal 29th of February -- 28th of February '25. Equity ratio is still solid. So we stand with an equity ratio of 45%. So this is a solid level. Let me now turn to the outlook, which you can find on Page 25, 26. So unfortunately, we had to revise downwards our operating profit guidance for the group on August '21. That was the MRR guidance that you have seen. So on August 21, we updated the group guidance for the full fiscal '25/'26, and we expect group revenues to come in between EUR 8.3 billion and EUR 8.7 billion. That's in the middle of the graph down and operating result to reach between EUR 100 million and EUR 200 million. This compares to our previous guidance of EUR 150 million to EUR 300 million. So it's a downward review of our forecast, which we had to do on August 21, but we do confirm this number as of today. So what has changed compared to our previous guidance before going into the details. So overall, it is unchanged now for the group, but we do see a decrease in the sugar segment. So sugar segment is updated. We have not changed the outlook for special products and starch. We do see right now a slightly better improvement in CropEnergies, and we do see a better development in fruit. So this is also linked to what I've already stated. So it's a robust portfolio, and we have different developments in the different segments. So coming to sugar. For the sugar segment, operating result is now seen in a range from minus EUR 850 million to minus EUR 250 million. Our previous forecast was between minus EUR 100 million to minus EUR 200 million. So there's an additional burden to be seen given the bearish sentiment on prices, which I just explained of EUR 50 million in sugar segment. special products segment unchanged. We currently expect the operating result to decline significantly due to the anticipated rise in costs, which I have already explained. For CropEnergies, the development is the following. So in the segment of CropEnergies, we expect significantly weaker revenues. This is due to lower average ethanol prices compared to the previous year as well as technical issues, as just explained, following the scheduled and unscheduled maintenance. At the same time, net raw material costs have gone down compared to previous year. And what is positively to note, ethanol prices in the European market, they have just recently started to rise again, which is positive. All in all, we expect the operating result for Crop Energy segment to be on the same level as last year. Already stated for starch segment, no change. And for the fruit segment, following an already very successful '24/'25 fiscal, where we now expect a slightly improved operating result compared to the previous year as moderately increased prices are helping to offset the impact of rising costs. So all in all, our group guidance is unchanged compared to the downward revision on August 21, and we do see group revenues in the range of operating profit between EUR 100 million and EUR 200 million. Looking at the other KPIs for our forecast, you'll find that on Page 26. So for group EBITDA, the range is expected to come in between EUR 470 million and EUR 570 million with the explanations completely true for, as I just stated, in operating profit. Depreciation is expected to be on previous year's level. CapEx is expected to remain below prior year's level. And when it comes to net financial debt, we do project net financial debt to remain rather stable compared to the end of last fiscal. So ladies and gentlemen, after this review of our H1 figures and the forecast. So as a summary before closing to and coming to the Q&A, I would like to comment that as expected, the challenging market environment in our core sugar segment has continued in the second quarter of this fiscal. Market prices started to improve, but not as much as anticipated. Our nonsugar business continued to be a stabilizing factor. But as a consequence, we had to revise downwards our operating profit forecast for this year in August '25, but we do confirm this outlook as just explained as of today. When it comes to financing, we are very proud that we have successfully issued this EUR 700 million bond in May, and now we successfully completed our refinancing activities. There is a EUR 500 million senior bond also successfully issued in January '25, and this covers the refinancing of the senior bond maturing end of November 2025. Together with the extended and increased to EUR 800 million syndicated loan, we have established a solid and reliable financing structure for the years ahead. And as I said, I'm very proud of Südzucker and the entire Südzucker finance team who achieved this refinancing over the last months. Also, what is new, but also already communicated for Südzucker Board since October 1, we have Theresa von Fugler on board. We are very happy to have her here with her expertise. And also here from my side and from the entire team, a very warm welcome to her, and we are very much looking forward with her to further work on the success of our Südzucker Group and a very warm welcome to Theresa. So thank you very much to all of you. So far, we are now happy to take your questions. And together with Andreas, I'm happy to give the answers that you might have to the figures. Thank you very much so far. Operator: [Operator Instructions] The first question comes from the line of Karine Elias from Barclays. Karine Elias: I just wanted to go back to your point on the guidance. So just trying to look at the implied guidance for the second half. Does it imply that the price for sugar or the contracted price for sugar would be probably the decline would be about EUR 100 -- more than about EUR 100 per tonne in the recent contracting. Any color there would be very useful, especially as we think about the start of 2027. And then just going back to your point, I think, on the net debt. Your leverage obviously has picked up. That's partially because of the lower EBITDA. What type of leverage are you comfortable staying in for how long, especially as you think about potential actions from rating actions? Stephan Meeder: Thank you, Karine, for your questions. When it comes to sugar prices, it is -- I cannot disclose our individual prices. So sugar prices in our market is a competition-sensitive information. So I have -- what I can comment is available market data and just very broadly expectations. What we did say at the beginning of this fiscal when we put up our budget, we stated that when it comes to the sugar availability in Europe, we did foresee a decline. And this decline that we had foreseen was linked to the fact that we, on our side, decreased the acreage significantly by roughly 15%. And then if you look into EU market data, the overall trend for hectares for beets in this sugar marketing year was also decreased by roughly 11%. So given normal harvest, we would have seen a strong decline in beet availability and the sugar availability in Europe. And this was the base assumption for our assumption that sugar prices should rise. At the end of the day, they really -- they increased, but they did not increase to the extent that we have foreseen originally. And that was the reason why we had to revise downward also the development in the sugar segment. In a nutshell, yes, there is a price increase compared to last year, but not to the extent that we have foreseen because sugar availability and the harvesting conditions, they are much better than we have anticipated. When it comes to net financial debt, we are -- rating agencies have revised downwards our rating and what are the levels we feel comfortable. This is clearly if net financial debt over cash flow or EBITDA is below 3.5x. We are not yet there, but we work hard on that. And what we feel comfortable is 3.5x, and there's a clear commitment from the Board to investment-grade rating. And so we have put into place the measures to reduce costs. We go into all -- in each every cost position. We do all our best to decrease CapEx, but decreasing CapEx is not so easy because you have ongoing projects with contracts in place. But what we can do to cancel or postpone, we do. And all in all, we strive to come below 3.5x net debt over EBITDA. But it is not the case as of today, but this is our ambition level, yes, clearly. Operator: The next question comes from the line of Hartmut Moers from MATELAN Research. Hartmut Moers: I have a couple of questions and probably we could go through them one by one. So the first one would be on the sugar segment here. What we find basically in the second quarter is roughly the same level, a bit below the sales level of the first quarter. And I mean, you should have basically a similar price level, at least with regard to the predominant part of your business as your October contracts still lasted into the second quarter. But usually, you tend to have better volumes in the second quarter compared to the first. So one would have -- or one could have thought that your sales increase in the sugar segment in the second quarter compared to the first. So what was the reason here for, yes, being just south of that level? And you still had quite a number of special items in the sugar segment. How shall we look about that going forward? Meaning would that now something related to the shutdowns you had on the AGRANA side of the business? And is there coming more with regard to the cost optimization measures you're just taking? So how should we look about that going forward? So that's on the sugar segment. Stephan Meeder: For the volumes and price development in sugar, I tend to rely more on H1 figures than on individual quarters because you can also have some shifts. So for me, the more reliable way to look at it is really H1 as a total. And we do see for the 6 months that there is both a decrease in volumes and a decrease in prices. So we do see that the environment for sugar, there is some volume decreases and also for prices. Hartmut Moers: H1 versus H1 last year? Or... Stephan Meeder: Yes, yes, yes. H1 -- to compare H1 to H1. So there, we have lower volumes and lower prices. And the lower volumes, they are across all markets. It's not one particular market or a specific region. So for us, it's an overall trend that we have reduced volumes. Hartmut Moers: Okay. And going forward, for the coming year, you're staying roughly level in terms of volumes. Is that a fair assumption? Stephan Meeder: Yes, that's a fair assumption. But we have to see -- we did see some reductions in sugar consumption, for example, in beverages, there's less sugar in beverages. And we also do see, for example, less chocolate sold. This is linked to the fact that cocoa is very expensive. So there is less chocolate sold and thus less sugar into chocolate. These are trends which can change. But for the time being, there's a slight decrease, and we have to monitor that closely. Hartmut Moers: Okay. Second one would be on... Stephan Meeder: On restructuring. So within the restructuring side, so this is, as I said, particularly linked to the sugar segment, and this is a follow-up cost of the restructuring we had, for example, with the closure of the 2 plants, Leopolsdorf and Hrušovany, for example. Hartmut Moers: Okay. But is that finished now? Or shall we plan with further one-off items in the coming quarters? Stephan Meeder: When it comes to those 2 plants, it's finished. But when it comes to special items coming forward, the issue of special items is that they are not really predictable. So we cannot exclude neither that it's the -- that you will stay that, but it's also possible that additional special items could come up in Q3, Q4. So we have to -- when you do the -- when we'll start to do the planning for the years to come, we have to do our goodwill impairment test and all of that, but this will be then in Q3, Q4. It's too early to say whether there can be additional one-off items, but I cannot exclude them. Hartmut Moers: Yes. I mean -- but there's nothing scheduled so far. So in terms of cost optimization or something, there's nothing you have in your budgeting right now? Stephan Meeder: There are some special items also from the first 6 months when it comes to restructuring, when it comes to personnel or severance payments that is possible. So what is executed on the table at the end of August, that means for the first 6 months, this is included. But for sure, there can come additional points can come up in the development of Q3, Q4, I. Cannot exclude, but it's too early to say. Hartmut Moers: Okay. With regard to CropEnergies, all your technical issues and so on, this is finalized now. So my question would be with regard to capacity utilization. So obviously, you had a rather low capacity utilization in the first half of the year due to these issues. But are we now looking to a more normal level again? Or are there any reasons why your one or the other site might not work at full capacity in the second half of the year? Stephan Meeder: There's nothing scheduled. And as I said, the market environment for biofuels as a total is positive. This is also the reason why prices have gone up significantly. There was a strong driving season, and there is -- on the months to come, there's nothing particular to see. So I would assume a high capacity utilization unless other technical issues would arise. But from the market perspective, there's good reasons to use fully the equipment we have. Hartmut Moers: Perfect. And then I would like to come to your outlook, and I'm a bit lost here. So what you're saying compared to what you said on August 21, you have somewhat reduced or specified the range for your sugar segment, which is a bit weaker than what you expected still in August. And you have compensated this with a more positive outlook on the CropEnergies and the fruit side. But looking at the extent of the changes, I would -- I mean, you've upped fruit by one notch, which is maximum of 4%. On Crop, Europe, yes, also EUR 5 million, EUR 6 million, EUR 7 million, so to come to EUR 22 million. But if I took the midpoint of your new sugar guidance, which would be minus EUR 200 million, it would basically impossible for you under the indications that you have given to reach the midpoint of your group guidance, you would be somewhat below that. And that already would assume that, in particular, starch and special products would also materially improve in the second half of the year, and we would not look at run rates of the current Q2 level. So is what you're saying that we should rather look on your group guidance, not at the midpoint, but rather at the lower end of your guidance? Or how should we interpret this? Stephan Meeder: Hartmut, as you said, nothing to be confused. It is exactly what you said. So we are -- we confirm the group guidance EUR 100 million to EUR 200 million, and we are slightly -- for the group guidance, we are slightly below midpoint, but close to midpoint, but rather we are not at the lower end, but we are close to midpoint, but slightly below midpoint. Hartmut Moers: Okay. That's fair. Okay. Stephan Meeder: And -- but not to an extent which would force us to update the guidance. You know the rules of MRR. So we are close to midpoint, slightly below. Hartmut Moers: Okay. No, that's, let's say, feasible under the assumption that special products and starch would make a major jump from the Q2 level to the norm, then you arrive exactly what you're saying. But you can confirm that this is the assumption then? Stephan Meeder: Yes. Hartmut Moers: In starch and special products, Q3 and Q4 will be significantly better than Q2? Stephan Meeder: As I stated at the beginning, so we do not give particular ranges or points for the segment. So our main focus is on group level. As I said, it's a robust portfolio. We have different developments in the different segments. And the other thing that is also true, I said, that we believe that Q3 should be the turning point to the better. And all of that, but your analysis is fully correct. We confirm group guidance EUR 100 million to EUR 200 million. Hartmut Moers: Perfect. Last point would be on the cost optimization measures you mentioned earlier. Could you just give us an update on that? I mean you've already mentioned size, but could you be -- become a bit more precise on the time line? And also, I mean, you have said in the last call that the cost optimization is roughly split 50-50 between sugar and -- between Südzucker and AGRANA. Would you be prepared also to give a split between sugar and nonsugar divisions? Stephan Meeder: This is unchanged. So this is still true what I said in recent conference calls. We have initiated a lot of cost-saving initiatives. We are here on track. And the different amounts that have already been communicated, we still stick to them. So in total, we strive for savings of EUR 200 million for the Südzucker Group, which are to materialize in the coming years. For this fiscal, it is still our target, and we are on track for EUR 80 million cost savings, which is half of half AGRANA and Südzucker. AGRANA has the program called NEXT LEVEL. And here, they strive up for savings up to EUR 80 million to EUR 100 million per year starting in '27, '28, so we started. At Südzucker, this program is called OPTIMUM, which drives for EUR 100 million savings in the sugar segment also coming into effect fully in the next 3 years. So we are on track, but it's not that all of the amounts are already visible this year. So this will build up. But in general, we are on track and there's nothing change to previous communications on our cost saving measures. Hartmut Moers: Okay. But just to make that clear, the EUR 100 million coming from Südzucker are 100% sugar. There's nothing in the other divisions, in your other divisions? Stephan Meeder: No. In total, we strive for EUR 200 million after 3, let's say, 3 years, and this is EUR 100 million for sugar and EUR 100 million for the others. Operator: [Operator Instructions] We now have a question from the line of Oliver Schwarz from Warburg Research. Oliver Schwarz: May I come back to CropEnergies first. I appreciate that you are flexible enough to notch up your outlook following the increase in ethanol prices. And you already have given some remarks regarding the reasons behind that. However, I guess, driving season should now be over. We still have the problem of U.S. imports into the European market and so on and so forth. So I'm wondering what you think how sustainable this increase is given the overall structural situation the European market is in. And that would lead me to my second question of your U.K. asset, Ensus. You stated that you are looking for full capacity utilization in the second half of this year. And I guess that very much includes Ensus then. So what's the status of this last remaining asset that the U.K. has? It seems like especially the U.K. market is under heavy pressure given that they have made trade deals with the U.S. that might be less favorable for the U.K. bioethanol industry and one of your competitors has already pulled the plug on his plant. So yours is the only remaining one. And I'm wondering what's the situation there? And lastly, could you give us an update on your future, let's say, value chain that you are currently trying to expand into chemicals, given that the chemical industry in Europe has a lot of structural problems at the moment and is shrinking. So your upcoming production once those assets currently under construction have started up. I guess your customer base must -- or your potential customer base must have shrunk and those who are still in the game, they currently have problems regarding their there -- when it comes to pushing their volumes in the market. So how welcome will your product be coming in addition to what's already available in the market? That would be my 3 questions on CropEnergies. Stephan Meeder: For ethanol prices, so when you look into the fiscal, so we had ethanol prices between, let's say, roughly EUR 600 quite stable over the last -- since the start of this fiscal. So starting with EUR 700, our first forecast was to see EUR 700 and plus, but prices, in fact, decreased to roughly EUR 600 over -- since the beginning of this fiscal. And what we did see over the last -- it started in September, but materialized in October. Now the prices have jumped over EUR 800. If you now ask me whether I believe this is to continue, I just have to say you, I cannot give you a promise because we see, as we always state, ethanol prices are volatile. For sure, there is always the risk of major changes, be it on the tax side, be it on the import side, be it on bilateral agreements between countries. So it's really difficult to predict. But for the time being, we see EUR 800. If you look into the forward curve, there's still a backwardation. So the anticipation is that this EUR 800 is not to last. But there are good reasons also when I look into supply and demand, there is not too much volume in ARA, Antwerp, Rotterdam region. So I believe that prices should be supportive, but I cannot give you a guarantee. It is still volatile market. It's commodity market. It will depend on factors. But from the supply and demand side or especially from the demand side, there's robust demand for ethanol. But I guess for sure, there's no guarantee. We are very happy with the price increase to be seen how long and to which extent this will last, but we have taken this into our forecast to a certain extent with a better price assumptions that we have seen so far. When it comes to Ensus, when I said we strive for a full capacity utilization, there's a question mark still on Ensus. So the negotiations with the U.K. government on a support package are still ongoing. I cannot disclose any details. We are confident because we believe Ensus is really significant to U.K. industry, be it on the ethanol side, but also on the CO2 side and the co-product side. So it's an important player in the industrial landscape of Britain. So we hope that the discussions or the negotiations with the government would find a positive end, but I cannot disclose and it's not finally done, but you have seen that the competitor has stated to stop production. We are still in negotiations with the government. So there's a question mark on Ensus. Your third question was on bio-based chemicals. Here also -- it is true, your concern comes from the point that climate mitigation measures are under discussion. This started with the Trump administration putting into question climate change and focusing much more on fossil fuels. For sure, this is at present a trend or a downward trend for climate protection measures, but this does not lead us to change our strategy. We still believe we need green carbon hydrates. We have to get rid of fossil fuels, be it in the transport sector, be it in chemistry, and we continue with our project as foreseen. So start of operations is to come as foreseen, and we do have still positive discussions with potential customers. The product that we want to produce is [Foreign Language] which is a solvent, which is needed for many also very interesting products, be it solvents, be it paintings, be it coatings, be it [ nakeva ], fluid adhesives. It goes into nail polish, nail polisher and thane. So this is really interesting products and our customers, they also have very much interest in having this green product. So there's no change in our strategy. But we -- I confirm the overall framework for climate mitigation measures has changed, but I believe this to be not a continuous trend because I think we will all have to do our best to reduce our carbon footprint, and we will continue to do so. Operator: The next question comes from the line of Setu Sharda from Barclays. Setu Sharda: So my question is, what was the achieved average price in sugar marketing this year? And was it in line or lower versus last year? And what is your exposure to spot prices move over the course of the next 12 months? Stephan Meeder: Setu, as I stated, I cannot disclose Südzucker sugar prices because we are in a commodity market. And for competition or reasons, I cannot disclose any precise numbers on sugar prices of Südzucker. As an overall trend, and you will find that in our investor slide deck you have to rely on available market data. And what you can see is both from the world market sugar prices, there is a downward trend since the beginning of the fiscal, and the same is true for European sugar prices. They have declined significantly. And based on the European sugar prices, you can make your calculations for Südzucker Group because typically, our prices very much rely on European sugar prices, but I cannot disclose individual Südzucker sugar prices. Setu Sharda: Okay. And what is your exposure to spot prices, like how much you have contracted this year? Stephan Meeder: Our exposure to spot prices is not meaningful insight because typically, we do 1-year contracts with customers. Those customers do foresee a certain flexibility in volumes. So we have a certain development. It also depends on some regions have more spot contracts than others. But all in all, spot contracts or spot volumes are not meaningful in size. We do have yearly contracts. Setu Sharda: Okay. And one more thing, like can you give some color on what has changed in sugar production, your expectation versus Q1 stage? Like there was a mention that you expect better harvest. Stephan Meeder: Yes. So when it comes to Europe, that's what you have seen on -- if we go back to -- on Page 11 for Europe, it is foreseen that production should come out in '25/'26 at 15.9 million tonnes compared to 17.0 million tonnes in last year. So there is a reduction in European -- there's a reduction in European sugar production. And what has changed is the extent of this decrease. I would have assumed or we have assumed when setting up our budget, we have assumed a stronger decrease and this stronger decrease was based on the fact that we knew from our side that we decreased significantly the acreage in our regions. And for overall Europe, the decrease in acreage was 11%. That was the number that was known, let's say, in March, April when we set up our budget. And that means given a normal harvesting conditions, so let's say, for example, based on the average of the last 5 years, this would have led to a significant decrease in beet and thus sugar production. What has changed and then what we also anticipated leading to reasons for lower sugar production was the diseases that we have seen last year. So one is called Stolbur, the other in SBR, Syndrome Basses Richesses. And what we also have included in our initial forecast was a very dry summer. That of course we called it at the time when we last discussed, we called it our 75-percentage scenario when setting up the budget in March, April, the projections for the weather conditions in summer indicated a very dry and hot summer. And this would have led to the fact that also the protection measures would not have been very effective or it was unclear to which extent those measures would have been effective. And this led us to our initial forecast with a much lower sugar production. At the end of the day, when this is now what has changed, July came out very wet and cold. That was beneficial to the beets. The same was true for August. Here, the weather conditions have shown sunny days and rainy days and cold nights, and this is the perfect mix for the beets. So what we do see today, and this is not what we have expected, we do see a very good harvesting conditions in Europe. So there's much more beet and solid beet and without diseases available for this sugar campaign, and this was not what we had anticipated in our initial budget. So it's positive for the farmers. But given it leads to a much better sugar availability in Europe, this has brought us a bearish sentiment on the prices. And this was the reason why at the end of the day, we had to decrease our forecast for the sugar segment. Operator: We have a follow-up question from the line of Oliver Schwarz from Warburg Research. Oliver Schwarz: Actually, it's more than one. I'm sorry about that, but hopefully, I can... Stephan Meeder: We still have time, Oliver, no problem. Oliver Schwarz: Quickly talk you through all of my questions. Sorry for that. Firstly, starch. You're talking about higher raw material costs, given grain prices have declined due to -- we didn't only have a strong harvest in sugar, but also all other crops seem to be affected. Positive volume development all over the place, and that obviously also puts pressure on grain prices. Still in starch, you're talking about higher raw material costs, which makes me wonder, is that still, let's say, a remnant of hedging in regard to raw material costs that will tail off over time? Or why is that? Stephan Meeder: Yes. As I stated, so in H1, compared to H1 previous year, we do see higher raw material and energy costs in starch segment. So this is true for the corn prices. This is true for the wheat prices, and this is also true for the energy. It is true what you said that when you look at market quotations, grain prices have come down, but there's also always a question of hedging, what hedging positions do you have? This can have an impact. So I cannot disclose all the details, but hedging can have an impact. And also, it has an impact in the regions where you buy your grain or corn or whatever. So market is always the price in Rouen, France. And typically, you have plus and minuses in different regions. And so this can lead to the fact that even if raw market prices go down, you can have different prices depending on availability in certain regions or quality in certain regions. So this -- all in all, this led to the fact that for the starch segment, unfortunately, we do see compared to H1 last year, higher raw material costs in all the 3 segments. It's true for corn, it's true for wheat and it's true for energy. Oliver Schwarz: Will that be true also for H2? Or is this trend to reverse in H2? Stephan Meeder: I don't have that figure in mind. Sorry. We will have to see. I mean, we have the full year guidance, but I do not have on hand the different assumptions for those cost components for starch. I don't -- we can have a look, but I think here, I don't have that with me. Oliver Schwarz: Yes, I get that. But if it's solely, let's say, a function of your hedging position, I guess you should have an insight on that. But we can do that at a later stage, no problem at all. Second question is on fruit. Obviously, the bright spot in your portfolio at the moment. When looking at the sales development and looking at the comments on volumes, it seems like more or less stable volumes. The sales are not greatly up, which indicates that prices are mostly unchanged as well. So this increase in profitability must have had something to do with lower costs. Is that a result of cost-cutting measures? So is that something that is company specific? Or is that lower raw material costs that might have to be passed on over time to customers? Stephan Meeder: There's not one answer putting everything into -- or one silver bullet answering everything. So because we have to -- when we talk about fruit, there are 2 divisions. So one division is fruit preparation, the other one is fruit concentrates. And the developments in those divisions is not parallel. It's -- both of them are positive, show an increase in operating profit and in turnover, but the development within the cost positions is different. Your question, for sure, we do all to -- as entire Südzucker, we do all to reduce administration costs and so. So there's one aspect of that into that. But particularly for the fruit, we do have also increase in material costs. So this is still true. This is true for fruit preparation. So there is an upward trend for those fruit components that we buy. And the same is true for -- in the concentrates business, also the fruit concentrates, they show an increase in material prices. And -- but we have a good development on the pricing situation and on the other costs. So it's a mix of all, but it's not one explanation that fits for all of the divisions. But in general, material prices go up. Oliver Schwarz: Okay. And perhaps can you -- I know it's perhaps a bit delayed now, but can you share about your key thoughts about, let's say, the exchange of your hybrid bond? Obviously, the new hybrid bond is a bit more expensive than the old one was when it comes to the coupon. You had costs regarding issuing the bond and also costs in regarding to buy the old hybrid bond back. So there needs to be an upside somewhere. And given that we are looking for interest rates to rather go down than go up, at least that's my takeaway from the market at the moment. It seems like the only caveat that is out there is that the new bond doesn't have this operating cash flow covenant that the old one had, which basically implies that you might not be that confident with future operating cash flow development so that some breach of that covenant might be or might have been in the cards in the foreseeable future. That would be my takeaway. But I guess you can easily talk me out of that assumption and give me a better reason for that exchange. Stephan Meeder: Oliver, I wouldn't subscribe to that fully. For us, the main reason really was that the old hybrid was stated from 2005 and was at the time, one of the first ones, but now was also the last one. So it was my objective to really to modernize the entire financial situation of the balance sheet. That means I wanted to review and modernize together with my team, the entire financing. This is -- you have to put this into context of the entire refinancing. We did more than EUR 2 billion refinancing in the last months. So this was very successfully. We issued, as I said, the new EUR 500 million senior bond. We did modernize the revolving credit facility with our core banks, increasing that from EUR 600 million to EUR 800 million. We did -- we still have in place the -- with the -- sorry, -- the commercial paper, EUR 60 million is still in place. We have the senior bond. We have the hybrid bond. We put into place a factoring program. So we modernized everything. And part of this modernization was the hybrid, and I'm very happy to have this new EUR 700 million hybrid bond now on the balance sheet, which is fully in line with all the other hybrid bond structures, which we see. So it's part of a modernization of the entire balance sheet. And this really puts us in a good position going forward. The entire refinancing is done, and so this is positive. Oliver Schwarz: I get that modernization sounds very positive. And -- but what is actually the advantage for Südzucker from the new hybrid bond versus the old one? What is in those terms, more modern than the old one was? Stephan Meeder: The modernization of the hybrid bond now it's fully in line with all the other hybrid basis. So it has no more a cash flow trigger. It has -- so it's fully in line with the others. And for sure, this is an advantage not having the cash flow trigger. Oliver Schwarz: Okay. So it is the cash flow trigger that is the advantage, not to have it? Stephan Meeder: That's what you said. That's not what I said. Oliver Schwarz: What did you... Stephan Meeder: Okay. Let's leave it like that. Oliver Schwarz: Okay. And lastly, and I promise that's my last question. Could you talk me through the bridge from the EBITDA to expected net debt level? Given the fact that after the first 6 months of the current fiscal year, we saw an increase in net debt by, give or take, EUR 20 million. You are aiming for a net debt level of EUR 1.630 billion, which is basically currently around EUR 40 million lower than the current level. Your guidance is out of EUR 100 million to EUR 200 million for the full year. So that gives you a EUR 50 million to EUR 150 million additional EBIT for the full year. Could you talk me through that, that stable -- the bridge from that increasing EBIT, especially in the second half of this year to the changes in net debt. Are we expected to see an increase, so some reversal of working capital in the second half of this year, especially as Südzucker tends to pay its sugar beet farmers for the harvest in the second half of this year? Andreas Rothe: So this is Andreas speaking. Maybe I can comment on -- when it comes to the operating cash flow to start there, as you indicated, results are down, but we are also expecting a significant reduction, which already started in the first half, a significant reduction in our net working capital. You have also seen that within the first half year, the CapEx levels are lower than in previous years. That trend should continue also in the second half of the current fiscal year. And the combination of those things should come out in a way that our net financial debt position by the end of the year, we expect to be rather in the ballpark of what we had by the end of 2024, 2025. So the lower operating result should be compensated basically by the net working capital. And obviously, the dividends when it comes to what we paid on dividends this year, it's also a lower -- much lower number than in previous years. Oliver Schwarz: Okay. Maybe I didn't make myself clear that much. Sorry for that. I was specifically asking for the developments in H2. You've got EUR 50 million, let's say, EBIT under your belt, give or take, for the first half year. Your guidance is out there for EUR 100 million to EUR 200 million. That gives you a residual number for the second half year of EUR 50 million to EUR 150 million in EBIT. Your -- currently, your net debt is up compared to the beginning of the fiscal year by EUR 40 million. But by the end of the fiscal year, we are looking for basically the same level as last year. And I was just wondering how does that compute given that you just said CapEx will be lower compared to last year and working capital releases might continue in the second half of this year. How does that compute with coming up with a net financial debt on the same level as last year? Andreas Rothe: The continue -- so we expect a continuation of our working capital, let's say, improvement process that we indicated that we already started, and that should contribute or this is our expectation that this contributes to the offsetting the low operating results. And again, when it comes to CapEx, also in the second half of this year, it's -- the number is not as significant. Dividends are already paid. So when it comes to the balance of our net debt position, that is in line with what we see in the numbers. Stephan Meeder: Yes. Maybe -- Oliver, we are running out of time. So maybe we can postpone it to a later moment. But what you can take is for the minutes, we do foresee that net financial debt at the end of this fiscal should be roughly in line with last year. Oliver Schwarz: Yes. But isn't that very conservative? Shouldn't it be below [indiscernible] Stephan Meeder: Yes, but I think we have to stop it. I mean we -- our assumption is at the end of the day, we strive for having net financial debt on the same level like last year. Operator: Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Andreas Rothe for any closing remarks. Andreas Rothe: Thank you very much, and thank you very much to all of you for your participation and your interest in Südzucker. Also, thank you very much for your questions. As Stephan already indicated, when it comes to additional questions that should come up in the aftermath of this call, we, as the Investor Relations department are always available via phone or e-mail at any time. And obviously, we are trying our best to come back to you as quick and fast as possible. Presentation of the Q3 figures will be held in the beginning of January 2026. And until then, I wish you all the best. Stay safe and take care, and talk to you soon. Stephan Meeder: Thank you very much.
Operator: Good day, and thank you for standing by. Welcome to Apogee Enterprises Second Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question and answer session. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. As a reminder, this conference is being recorded for replay purposes. I will now turn the conference over to Jeremy Stephan, Vice President, Investor Relations and Communications to begin. Jeremy, please go ahead. Jeremy Stephan: Thank you. Good morning, and welcome to Apogee Enterprises. Fiscal 2026 Second Quarter Earnings Call. On the call today are Ty Silberhorn, Apogee's Chief Executive Officer and Matt Osberg, our Chief Financial Officer. During this call, the team will reference certain non-GAAP financial measures. Definitions of these measures and a reconciliation to the nearest GAAP measures are provided in the earnings release and slide deck, which are available in the Investor Relations section of our website. As a reminder, today's call will contain forward-looking statements. These reflect management's expectations based on currently available information. Actual results may differ materially from those expressed today. More information about factors that could affect Apogee's business and financial results can be found in our press release, and in the company's SEC files. With that, I'll turn the call over to Ty. Ty Silberhorn: Good morning, everyone. Our team delivered solid second quarter results with sequential improvements in sales and adjusted EPS in what continued to be a dynamic operating environment. Our teams remain focused on what is in our control while leveraging strategic actions to reduce the impacts from tariffs during the quarter. Net sales improved by almost 5% primarily driven by both inorganic and organic growth in Performance Surfaces. Architectural services recorded another quarter of net sales growth and sequentially grew their backlog by over $100 million. Glass performed as expected on both the top and bottom line with margins normalizing within our long-term range. Metals showed significant sequential top and bottom line improvement as our tariff-driven price increases went into full effect. However, we did see volume falter as those prices took full effect, resulting in their sales and EBITDA being below our expectations for Q2. Finally, cash flow in the quarter was an area of strength and a testament to our ability to generate cash in a dynamic macroeconomic environment. Looking ahead to the remainder of the fiscal year, we are updating our outlook for both net sales and adjusted EPS to reflect developments since last quarter. First, we are lowering expectations for glass volume and price as the competitive environment has not improved. While bid activity for our glass business remains up versus last year, price pressures are impacting their ability to secure volumes without giving up significant margin. Second, we are seeing higher aluminum costs that will put more pressure on pricing and volume in metals. As they work to maximize EBITDA dollars, volume, and market share, we expect their margins to drop particularly in Q3 from their Q2 results. While we are disappointed that these changes have impacted our guide for the year, we remain positioned to drive year-over-year net sales and adjusted EPS growth in the second half of the fiscal year. This will primarily be driven by growth in performance services which has been consistently strong and we continue to see upside for that business long-term. As we navigate the complexity of our current macroeconomic environment, we are also building a stronger Apogee for the future. And I'd like to highlight some examples that we believe are enhancing our ability to deliver sustained, long-term value for shareholders. Our leadership bench is strong, as demonstrated by the recent changes for metals and services. UW Solutions continues to be on track to deliver the expected financial and synergy targets in addition to expanding our reach and broadening our product offerings. Our tariff mitigation efforts and Project Fortify two actions illustrate the strength and agility of our organization as we address a challenging macro environment. AMS continues to drive productivity improvements across our manufacturing footprint. And finally, our strong cash flow and balance sheet provide us with significant flexibility to continue to be active on M&A opportunities while managing through the current market dynamics. We remain focused on acquisitions that fit our strategic and financial objectives. Ones that will add differentiated products, leverage our core capabilities, provide accretive margin and growth rates, while expanding our geographic reach. With that, I'll turn it over to Matt. Matt Osberg: Thanks, Ty, and good morning, everyone. First, I'll begin with a review of the results for the second quarter and then follow with commentary on our outlook for the rest of fiscal 2026. Beginning with our consolidated results, net sales increased 4.6% to $358.2 million primarily driven by $24.9 million of inorganic sales from the acquisition of UW Solutions. This was partially offset by lower price and volume in glass and a less favorable mix in metals. Adjusted EBITDA margin decreased to 12.4%. The decrease was primarily driven by lower price and volume, unfavorable mix, and higher material, tariff, and health insurance costs partially offset by lower incentive compensation expense. Adjusted diluted EPS declined to 98¢, primarily driven by lower adjusted EBITDA and higher interest expense. Turning to our segment results, metals net sales declined slightly primarily reflecting a less favorable mix partially offset by higher volume and price. Adjusted EBITDA margin decreased to 14.8% primarily driven by a less favorable mix and higher aluminum and tariff costs, partially offset by lower incentive compensation expense. Our services segment delivered its sixth consecutive quarter of year-over-year net sales growth, with sales increasing 2.5% primarily due to higher volume. Adjusted EBITDA margin decreased to 5%, mostly driven by project mix, partially offset by lower short-term incentive compensation costs. Additionally, backlog for services sequentially grew 16% to $792 million. For the glass segment, as expected, net sales declined and adjusted EBITDA margin moderated from the elevated levels in Q2 last year, primarily due to reduced volume and price from lower end market demand, partially offset by lower short-term incentive compensation expense. Performance services net sales increased driven by the inorganic sales contribution from the acquisition of UW Solutions and strong organic growth of 18.6% primarily from improved retail channel distribution. Adjusted EBITDA margin increased primarily driven by favorable price and volume. Turning to cash flow and the balance sheet. As Ty mentioned, we generated strong cash flow in the second quarter, with net cash provided by operating activities of $57.1 million compared to $58.7 million in the prior year. On a year-to-date basis, cash from operating activities was $37.3 million compared to $6.164 billion a year ago, due to lower operating cash flow in the first quarter. Our balance sheet remains strong, with a consolidated leverage ratio of 1.5, no near-term debt maturities, and significant capital available for future deployment. Turning now to our outlook for fiscal 2026. As Ty noted, we are updating our outlook for both net sales and adjusted diluted EPS. We now expect net sales in the range of $1.39 billion to $1.42 billion and adjusted diluted EPS in the range of $3.60 to $3.90. This outlook includes an estimated EPS impact from tariffs of $0.35 to $0.45. Our updated outlook assumes an adjusted effective tax rate of approximately 27% and capital expenditures in the range of $35 million to $40 million. During the second quarter, the One Big Beautiful Bill Act was passed. We expect that this bill will not have a material impact on our effective tax rate but will provide a cash tax benefit that will primarily impact fiscal 2026 with a smaller impact on fiscal 2027. Looking at the cadence of the year, as expected, we delivered sequential improvement on our financial results from Q1 to Q2. For the second half of the year, we expect year-over-year net sales and adjusted diluted EPS growth primarily driven by Performance Surfaces. Additionally, we expect net sales to be generally evenly distributed between Q3 and Q4 and we expect Q3 adjusted diluted EPS to be similar to Q2 and then sequentially improve in Q4. Despite our solid performance in the second quarter, we are lowering our outlook for the second half of the year. This is primarily driven by increased pressure on volume and price in glass and an expectation of higher aluminum costs that will further challenge pricing and volume in metals. For glass, in our previous outlook, we expected a sequential improvement in both sales and EBITDA in the second half of the year as compared to the first half of the year. We are now expecting second half glass results to be more in line with first half results. We see a highly competitive market putting pressure on price and our glass team is working to maximize EBITDA dollar contribution while protecting their premium margins. For metals, during the first quarter, we saw aluminum prices subside, only to increase on average by approximately 20% during the second quarter. And we are incorporating the expectation of higher aluminum costs in our outlook for the remainder of the year. This impact is more pronounced in our longer lead time products where we have less ability to raise prices to match current cost trends. For our shorter lead time items, we are also expecting increased pricing pressure in the second half of the year with competitors seemingly less likely to raise prices. This is putting more pressure on volume and margins as we work to maximize margin dollars in a more competitive pricing environment. We also experienced higher than expected health insurance costs in the second quarter and are forecasting that trend to continue for the second half of the year, which is a new headwind in our outlook as compared to last quarter. Despite the macroeconomic challenges, I'm pleased with the momentum generated through the first half of the year and our outlook for year-over-year growth in the second half of the year. Additionally, our strong cash flow generation and healthy balance sheet position the company well for sustained future success. With that, I'll turn it back over to Ty for some concluding remarks. Ty Silberhorn: The first half of our fiscal 2026 has been challenging. And I'm very proud of the work the team has done. Navigating challenges and further positioning the company to drive long-term shareholder value. As we look ahead to the second half of the fiscal year, despite macroeconomic headwinds, we are positioned to drive year-over-year net sales and adjusted EPS growth in the second half. While metals and glass faced challenges on volume and price, both businesses are in stronger positions than they were the last downturn. As an example, even with sales for glass being down significantly year-over-year, we expect that they will finish the year in the mid-teens for EBITDA versus mid-single-digit margins the last downturn. And we continue efforts to build our M&A pipeline to add strategic capabilities to enable long-term growth. In closing, while the macro creates challenges near term, we remain focused on executing our strategy, investing to strengthen the company, and building a more resilient portfolio that delivers higher growth and higher margins. With that, we will now open the call to questions. Operator: As a reminder to ask a question, please press 11 on your telephone, and wait for your name to be announced. To withdraw your question, please press 11 again. Our first question comes from the line of Brent Thielman from D.A. Davidson. Brent Thielman: Hey, thanks. Good morning. Good morning, Brent. Brent? Yeah. Guys, I guess, maybe just the first question, focused on performance services. Could you sort of expand on the organic growth that you saw through the quarter? How much might be related to internal initiatives around distribution? Relative to just sort of market growth behind that. I'd be curious around the organic growth profile in that segment. Ty Silberhorn: Yeah, Brent. It's a great question. So if you look at kind of ex UW Solutions, the old LSO, that core part of the business, that's where we saw probably the strongest growth within the portfolio. And it was really if you remember last year, they did lose some distribution. Think of it as shelf space at some of the retail outlets. They've regained that, and they've also picked up momentum at adding some additional products. They're also leveraging some cross-selling opportunities for overlapping customers between the UW Solutions business and the original core old LSO business. So that's giving them some momentum in that space. And then within UW, while it's tracking as expected, we're seeing the flooring side of that portfolio actually outperform, and we do expect that to continue. Based on awards and order rates. Brent Thielman: And, Ty, maybe just following on that, what's moving the needle on the flooring side of that business? Ty Silberhorn: I'd say a couple things. So there remains demand for that product as manufacturing and distribution centers, warehouses look to bring more automation in. So that product's best value proposition is when a distribution center is gonna put in AGVs, automated guided vehicles, robotics to move inventories around. So we're seeing a push there. We are actually seeing a pull of that product into Europe. Based on a large global e-commerce retailer that has had tremendous success with that product and is actually asking us to pull that business into Europe as they build out some additional distribution centers and retrofit existing ones with mezzanine. So those are things that are not only feeding that business right now, but give us confidence that that's gonna continue over the next few quarters. Brent Thielman: Yep. And then on the services backlog up to here, in the second quarter, maybe sort of a similar question, Ty. Is this indicative of maybe some different outreach by the business in the new markets? Is it reflective of market conditions? Maybe you could just expand on that increase in backlog quarter over quarter. Ty Silberhorn: Yeah. It's a combination of both. I would tell you what drove the largest portion of that backlog growth. Were projects in the Northeast. So that part of the country has been relatively soft for a couple of years. So we alluded in the last call, we were seeing a pickup in bid activity. The Northeast was an area where we saw that picking up materially in terms of activity. And the good news is that team's been able to bring some of those projects across the finish line. The work that the team has done to expand out west, that continues as well. The work that they have done to put sales offices and teams on the ground in the West United States is also helping them continue to build out that backlog and take share. That business, when we look at that result in the quarter, while it is a signal, maybe some positive things are coming. I think it's a testament to what the team has done in this environment to take share in what still is, you know, relatively soft market. Brent Thielman: Okay. That's great. I'll leave it there and pass it on. Thank you. Ty Silberhorn: Thanks, Brent. Operator: Thank you. One moment for our next question. Our next question comes from the line of Julio Romero from Sidoti and Company LLC. Julio Romero: Thanks. Hey. Good morning, Ty, Matt, and Jeremy. On the Glass segment, the lowered expectations for Glass in the second half, I guess, tempering the sales guide there. It sounds like the competitive environment has gotten a bit tougher. Do you still kind of expect to post margins in the targeted EBITDA margin range for the next two quarters? And then secondly, what's your sense of how long the softness should or could persist? Matt Osberg: Yeah. Julio, good question. So, you know, as Ty and I have talked about, you know, the glass segment and just more broadly about how we think about our long-term margin ranges. You know, I think we said, you know, in years that we've got more top line challenges, you know, you look to the bottom end of that range and years where you got some tailwinds you look to the top end of that range. I think this is a great example of even though they've got some headwinds on the top line, you know, as Ty said, we're expecting mid-teens. And, yeah, I would say that's expecting mid-teens for the year and for the next couple of quarters. And I think that's a testament to the shift to premium strategy and what we've been able to build in that business and just the quality of the business that we have. And then we're also very careful as we're looking at some of the headwinds that we have to not destroy what we've built and to be really selective about how we pursue other volume opportunities to still preserve that margin. So yeah, I think that it's definitely looking at that mid to high teens for the next couple of quarters in the year. Ty Silberhorn: Yeah. Julio, I'll just maybe I'll add in here that as we worked with the team we talked about last quarter, staying on top of the teams in terms of what's driving their sales pipelines, etcetera. The bid activity in glass continues to be up over year over year. So that's a positive sign. The negative that really started to show in the quarter and we think now is gonna continue in the back half is price pressures from competition. So even though bid activities were seeing some pickup, the aggressiveness of competition to win some of those jobs is putting downward pressure. We worked with the Glass team, and they've been very thoughtful. They've done a lot of work to really reposition the premium side of their portfolio. And while they are giving some price, to win business with premium products, they are really working to preserve a pricing floor on those product offerings, to maintain those margin levels. So I guess you could look at it and say, would they have had the opportunity to maybe step into some more sales? Probably. We also looked at that and said, you know, you're gonna take a pretty hefty margin hit and they are concerned about kinda resetting at a much lower price rate for those premium products. So they're navigating this, I think, the right way. They wanna maximize the EBITDA dollars. They wanna win the business that they can. But they don't want to destroy the two plus years of work they've done to really reposition and build out the premium side of the portfolio. Julio Romero: Got it. Very helpful answer there. And then kind of similar it sounds like you're seeing some similar dynamics within the metal segment, although it sounds like it's a little bit more cost pressure than maybe competitive pressure there. Can you maybe just speak to how much of the lowered guide for metals in the second half is kind of based on cost pressure versus kind of a decision on your end to maximize EBITDA dollars and share in that segment? Matt Osberg: Yeah. Julio, it's you know, it's I would say they're connected. Right? So as we saw in the first quarter, we started to see price aluminum costs start to abate a little bit from the rise that they've been on. And then during the second quarter, we saw those step up, you know, on average now about 20% compared to the first quarter. So you've got that element of higher cost and as you look at the right moments to take price, you're also measuring okay, how am I going to fare in the market against my competition with those prices and am I going to be able to maintain volume, right? So there's kind of that triangle of the cost, the price, and the volume that you're trying to balance out. As we've said, to try and maximize our EBITDA dollars. So I would say the pressure is mainly coming from the higher aluminum costs. And then we're trying to work through the price and volume impacts of what we wanna do in the market, what our competition's doing in the market. But I think it's being generated. That pressure is being generated by the higher aluminum costs that we're experiencing now and we expect for the second half of the year. Ty Silberhorn: Yeah. And I'll add let me add into that, Julio, as we looked it it's a little bit there's similarity there with glass, but a little different in that with the price pressure. So if you look, you can go out and look at aluminum spot pricing. We saw about a 20% increase from the beginning of our Q2 through the end of the Q2, and you know, that's stabilized for now. But we're looking at our outlook and factoring in what we need to do there in terms of price and how it might impact us from margin. Metals at the same time, as I said in the opening, we did expect them to do better on top and bottom line, and they didn't. And part of that is our second round of price increase. Remember, there's a 25% tariff in February. Second, 25% tariff in June. That really started to flow through pricing for aluminum on the spot price basis in June, July, and August. As we push through that second round of price increases, we saw order volumes starting to take a hit. And here, we're trying to balance holding on to some share, regaining some share from some of the operational challenges, again, trying to maximize EBITDA dollars, but with that rise in aluminum and some of the longer lead products that are in that portfolio, they're gonna have to swallow some higher costs in Q3, which is why we expect them to step backwards on margin and have some margin erosion in Q3. Julio Romero: Got it. Very helpful there. Last one, if I could, is just on Performance Surfaces. It sounds like you're seeing some good momentum within the UW, but in both legacy and UW. But within UW, can you maybe speak to where the mix of flooring stands? As a percentage of UW or maybe give us a sense of where that mix has how the mix has evolved. Since UW has been under the Apogee umbrella. Ty Silberhorn: Yeah. If you recall, when we announced the acquisition, we said it was a little less than half of the portfolio. Given the healthy double-digit growth rates, it's trending to be comfortably over half of the portfolio, and we think that trend will continue over the next several quarters. Julio Romero: Excellent. I'll pass it on. Thanks very much. Ty Silberhorn: Thanks, Julio. Operator: Thank you. One moment for our next question. Our next question comes from the line of Gowshihan Sriharan from Singular Research. Gowshihan Sriharan: Good morning, guys. Can you hear me? Ty Silberhorn: Yeah. Good morning, Ashley. Matt Osberg: Morning. Gowshihan Sriharan: Good morning. My first question is on the customer shift. Across your businesses, have you seen any shift towards smaller or nontraditional engineering-only projects? And if there are any kind of marginal delta differences between those, and the historical businesses? Matt Osberg: Yeah. Yeah. I think, you know, you've seen that with the increased competition in the market and some of the slower levels of activity, you start to expand the reach and what you wanna look at. And particularly, I would say in our glass business, you know, we're expanding the scope of where we can participate and how we can pick up some margin volume dollars. So, you know, definitely looking at it, you know, I think it's a more competitive environment. You know, across the board. And so, you know, as you look at those, typically, they're lower margin projects. But like we said, we're trying to create margin dollars. And specifically in our glass business, you know, we're trying to protect the premium products that we've built over the past two and a half years, protect some of the margins there. So it's a job-by-job evaluation where we wanna but we're trying to expand our reach to see where we can strategically pick up some volume dollars. Ty Silberhorn: Yeah. I think as Matt said, Gowshihan, it's really within glass and services. If you looked at their average project size, that has come down in the last eighteen months. As they work to maximize volume as best they can. So they're going down a bit. A lot of those projects whether it's glass or curtain wall through architectural services, tend to be less complex, which means it opens up to some more of the smaller regional players and that does put some price pressure to win those jobs. Gowshihan Sriharan: Gotcha. And on the downside of the EPS, if there is continued end market softness, maybe slower than expected 45 realization and no additional tariff relief. What is the realistic downside for FY 2026? And what could be the levers you could pull to defend that flow? Matt Osberg: Yeah. So, you know, we put out a range of $3.60 to $3.90. So that's what, you know, we're looking at in terms of our analysis. Some of the big things that can impact that you know, is would be continued upward cost pressure on aluminum. We've factored into the second half of the year an expectation that aluminum costs basically stay where they are today. So if things worsen from there, that can put pressure on it. And, you know, we're doing things, like, within our project fortify phase two, we're looking at cost actions that we can be proactive and responsive to what we're seeing and make sure we're doing the right things to control costs at a corporate level. To offset any of the further pressure we might see. Gowshihan Sriharan: Gotcha. And just for modeling purposes, on the tax rate to reset and I know you're modeling for 27% or for the full-year assumptions. Was this driven so for Q2 to Q4, for the rest of the year, how are we supposed to model or think about the tax rate steps set up? Matt Osberg: Yeah. So I mean, obviously, you know, we had a higher tax rate in Q1. We had, you know, much lower operating income. So, you know, we guided for 27% for the year. I think that tax rate, you know, in Q3 is pretty close to that and then dips down a little bit in Q4 and you end up at close to twenty-seven. Gowshihan Sriharan: And on my final question, on the surfaces that we are modeling 25%, 23% adjusted EBITDA margins for multiple quarters now. How sensitive is that segment to a potential slowdown? Or is there any inventory correction in the channel partners in the next year? Ty Silberhorn: I think if you look at historically, Q2 and Q3 on the retail side is really when the business flows, and we've got decent visibility in that business. You know, one or two months out, and we're a month through our Q3. So I think any slowdown dramatic slowdown that they might see on the retail side of that business is probably a Q4, Q1, and it's more likely Q1 as folks reset inventories after the holiday season. So I think what might drive any shifts in our outlook for that business probably just more of a mix. As opposed to a dramatic falloff on the retail side. Reminder on a large portion of that business, it's really targeting kind of upper middle class, upper-income households, which are a little less susceptible. And I just listened to the spending report on the drive in and that part of the consumer market actually spending was holding up. I think the number was about 4%. So that's kind of a positive reflection for how that business might look as we work through the end of our fiscal year. Gowshihan Sriharan: Awesome. All I had. I'll take the rest offline. Thank you, guys. Ty Silberhorn: Thank you. Operator: Thank you. At this time, I'm showing no further questions. I would like to turn the conference back over to Ty Silberhorn for closing remarks. Ty Silberhorn: Thanks, Gigi. Thanks for joining our call today. Look forward to updating you on our progress in a few months. Hope everyone has a great weekend. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Gianandrea Roberti: Good morning, everybody. My name is Gianandrea Roberti. I'm Head of Financial Reporting at Tryg. We published our Q3 figures earlier this morning, and I have here with me, Johan Brammer, our Group CEO; Allan Thaysen, our Group CFO; and Mikael Karrsten, our Group CTO, to present the figures. And with this words, over to you, Johan. Johan Brammer: Thanks a lot, Gian, and good morning from me also this morning. I will, on the first slide, as always, start by commenting on the financial highlights for the quarter. And as you can see from the slide, we are reporting a premiums growth of 3.4%, which is, in fact, 4% when adjusting for a one-off booked in the corresponding quarter last year. The insurance service result landed at DKK 2.181 billion, which corresponds to a growth of 7% when normalizing large and weather events. The combined ratio was 78.6%, a very strong performance in a seasonally favorable quarter, and I am very pleased to see that all business segments and geographies reported a strong profitability development. The group underlying claims ratio improved by 30 bps, which is in line with recent experience, but it is worth highlighting that the Private segment accelerated the positive development, improving also 30 bps against 20 basis points in the previous quarter. The investment result was solid, helped by both the free and the match portfolio. We'll get back to that. And even more importantly, we are showing a good traction on the sell-down of properties. To be more specific, we had DKK 3.3 billion of properties at Q2. We have DKK 2.9 billion now here at Q3. And in addition, we are flagging today that 2 new sales right after the reporting date are bringing us to DKK 2.4 billion in Q4. We continue to work, of course, hard on reducing our asset risk further into next year, in line with our promise at the Capital Market Day. And to wrap up this slide, we are paying a quarterly dividend of DKK 2.05 and report a robust solvency ratio of 204%, which is supportive, of course, of future capital repatriation. With that, I'll move to the next slide on the customer highlights. And I'm pleased to report that after 3 quarters of our new strategy period towards 2027, we are reaching a customer satisfaction level of 82, which is midway between our baseline in 2024 and our targeted level of 83 at the completion of the strategy period in 2027. Customer satisfaction, as you know, remains absolutely paramount in our industry. And during 2025, we've actually launched several exciting STP, straight through processing, initiatives as an efficient and speedy claims handling process is a key driver of customer satisfaction. As an example, Claims Sweden has now enabled that certain claims are swiftly reimbursed with SWISH, a mobile banking app, so that customers receive their money in a fast and secure manner. And I'd also like to highlight that TryghedsGruppen has paid its member bonus in September amounting to 6% of premiums paid in 2024. In the next slide, we show you the development of the insurance service result by our 2 segments, Private and Commercial. And as always, there are many moving parts impacting the reported number. And in addition, it's also important to remember the changed accounting practice due to the inflation hedge, which explains the difference between reported and restated in this chart. I would love to highlight that in the Private segment, especially in Norway, we see a continuous progress driven by profitability initiatives, which I'll comment on later on during this call. And as for the Commercial segment, it reported an excellent combined ratio of 73.7%, also driven by our strategic focus on SMEs and of course, also the reduction of the corporate book carried out during the previous strategy period. With that, let's turn to the next slide on the group insurance service result, where we show the ISR development by geographies here. On a group level, the ISR of DKK 2.181 billion benefited primarily from premiums growth, improved underlying performance and a higher runoff results. These were partly offset by higher large and weather claims compared to last year. Normalizing the large and weather claims development, the ISR grew 7%, a strong uplift as illustrated at the bottom right. From a geographical perspective, we once again see a very strong Swedish performance, also helped by a higher runoff result. We see a Danish performance, which is slightly lower, weighed down by the July cloud burst across Denmark. And finally, we see a Norwegian performance that continues to show progress following the profitability actions that were initiated a couple of years ago. All in all, and this is important, very solid and robust ISR developments across the board. We're now moving into the revenue development section, and our premiums growth was 3.4% in Q3 or more importantly, 4% when adjusting for a one-off included in Q3 last year. As always, most of the growth comes from the Private segment, which grew 4.7% adjusting for the previously mentioned one-off. During the last 2.5 years, we have worked in a disciplined manner to protect our margins in the most complicated period for our industry, following the return, as you all know, of sudden and high inflation. We believe this effort has proven successful as we are posting industry-leading margins. That being said, we have, of course, in parallel gradually reignited and accelerated commercial initiatives, aiming at improving our top line development starting next year and onwards. On that, we are starting to see positive signs in Private Sweden already. It's always important to remember that growth can easily be achieved in our industry, but profitable growth is a different story, and we only seek the latter. Long term, our goal remains -- we've discussed this before, our goal remains to achieve a growth, which is carefully balanced between price increases, new customers and upselling to current customers. And with that, let's turn to the next slide, where we are zooming in on our Norwegian performance. The combined ratio in Norway has improved more than 500 basis points accumulated for the first 9 months of 2025. Looking at Q3 in isolation, it's worthwhile to note that large and weather claims experience impacts the combined ratio comparisons, while on an underlying basis, the performance continues to improve significantly. Profitability initiatives are evidently working, improving, in particular, our motor and property performance. And it is perhaps worthwhile to remember that we are significantly overweighed on motor in Norway with more than 40% of our book coming from motor. While we are satisfied with the performance improvements, we are also mindful that Q4 is a more challenging quarter from a seasonal perspective. And in general, I want to stress, and this is also important that we acknowledge that we still have work to do to achieve a sustainable earnings level towards 2027. I'll move to the next slide and comment on the retention levels, which remain broadly stable. As it is evident from this slide, retention is slightly down in Denmark, slightly up in Sweden, whereas Norway appears fairly stable. We've mentioned many times before that the current development, especially in Denmark is not surprising following a period characterized by significant price adjustments to fight off inflationary pressures. I can also add that the development in Private Denmark in this specific quarter is primarily driven by the technical adjustment impacting Q3 last year. Without this, the development is actually stabilizing and closer to flat. We have experienced similar developments before in situations similar to this. And as we move into 2026 and onwards, we are confident that the situation will stabilize. And I guess with that, I will hand it over to you, Miki. Mikael Karrsten: Thanks, Johan. And I will now comment on the development of the underlying claims ratio. On a group basis, the underlying claims ratio improved by 30 basis points, in line with previous quarters and primarily driven by the improvement in Norway. The private underlying claims ratio improved as well by 30 basis points, while it was 20 basis points in Q2. And as a reminder, the private segments represent almost 70% of group revenues. Initiatives in Norway and in particular, in Private Norway has been the primary driver of the improvement. At the Capital Markets Day in December 2024, we mentioned that we expect an underlying claims ratio to be stable to slightly improving towards 2027, and we'll reiterate that today. And with that, we turn to the next slide. As always, in this slide, we comment on the development of the volatile items, large and weather claims, level of interest rates impacting the discounting as well and, of course, the runoff result. The quarter was favorable looking at the large and weather claims experience taken together. Large claims were well below the quarterly expectations of DKK 200 million, while weather claims were somewhat above the Q3 expectation of DKK 160 million. In general, the large and weather claims experience in 2025 has been fairly positive compared with the normalized expectations. The discount rate was unchanged compared to Q2, while the runoff result at 2.4% was broadly in line with the guidance of a runoff around 2% towards 2027. And with that, I hand it over to you, Gian. Gianandrea Roberti: Thanks, Miki. I'm now in the first of the 2 slides of the investment activities. Total invested assets were DKK 59 billion, of which 3/4 is our match portfolio and 1/4 is the free portfolio. The asset mix is broadly unchanged with one noticeable difference. Our real estate exposure, as Johan mentioned at the start, was DKK 3.3 billion in Q2, was DKK 2.9 billion at Q3. And actually, we're flagging a level around DKK 2.4 billion at year-end following an additional sale right at the beginning of Q4. The lower properties exposure is completely in line with our promise from the CMD, where we announced we were exiting all risky assets to minimize earnings volatility, lower capital consumption and ultimately increasing the return on own funds. Moving to the second slide. You can see that the overall investment return was DKK 177 million, helped by good free and match portfolio returns. Other financials was broadly in line with expectation. The match portfolio result was helped by the income on premiums provision and a general narrowing of covered bond spreads in all geographies. The free portfolio benefit from a good return from covered bonds, while the positive properties return included the sale of the properties in the quarter. In general, it was a satisfactory quarter for our investment activities, and we are particularly pleased about the property reduction shown in Q3 and flagged for the year-end as well. And with this, over to you, Allan. Allan Thaysen: Thanks, Gian, and good morning from me as well. Please turn to the first page in the solvency and expenses section, where we are showing details on our solvency position as per end of the quarter. In this slide, we are highlighting a robust solvency ratio of 204%, which is up from 199% at the end of last quarter. Furthermore, we are highlighting a strong operating capital generation before dividend payment of 22% in Q3. As always, the difference between operating earnings and the dividend payment is the primary driver of the change in own funds. The recent and very successful Tier 2 issue in the beginning of October will be included in Q4, although this will not impact the overall solvency level as we have called back the old equivalent subordinated loan. The overall solvency capital requirement is up DKK 26 million in Q3, primarily driven by business growth and some small movements in currencies. These movements are partially offset by the lower real estate exposure, ensuring a fall in the solvency capital requirement of DKK 45 million. Note that the further sale of real estate exposure in Q4 will provide additional relief in the solvency capital requirement of approximately DKK 50 million. Now please turn to the next slide. In this slide, we are showing the historical development of the solvency ratio. We have mentioned multiple times that post the RSA Scandinavia acquisition, we have been operating at a higher level of solvency ratio compared to 4 years ago, where we were running our business at a level of around 175% to 180%. The return of sudden and high inflation and the following macroeconomic turbulence has been problematic for the industry, and therefore, we believe a higher level of solvency has served us well. As we mentioned at the Capital Market Day, our solvency ratio will gravitate towards a less conservative level long term. As promised, we will review our solvency position at year-end and at that time, consider extraordinary capital repatriation if found appropriate. Currently, many things are pointing in the right direction, and it's hard to stay pessimistic. As always, remember that we prefer a gradual approach, benefiting our shareholders with balanced actions. And now please turn to the next slide, Slide 21. Solvency sensitivities are virtually unchanged since last quarter, and we generally have very low sensitivities following the asset derisking carried through during last autumn. In this quarter, we have further reduced the property sensitivity by selling approximately DKK 400 million of real estate and more will come in Q4 with the October sale of another approximately DKK 500 million. As always, the biggest sensitivity remains to covered bonds as this is by far our biggest single asset class. The sensitivity to interest rates movement is very low, taking our matching strategy into consideration and general low sensitivities across the board due to a strong and hedged balance sheet. And now please turn to the next and last slide in this section for details on the expense ratio development. The expense ratio was 13.3% in the quarter, supported by a continued tight cost control in general. We continue to believe that the low expense ratio is a key competitive advantage for truck Tryg, and we remain very focused on this. The slight increase in the number of employees this quarter is driven by an increase in the customers' fronting activities, especially in private lines Denmark. And finally, please note that redundancies related to TCS agreement will only be included from the end of Q4. And with this, I will hand it over to you, Johan. Johan Brammer: Thanks a lot, Allan. And I will now take you to the next section on the strategic and financial targets. In the first slide, we are recapping our 2027 strategy and the 3 strategic pillars that underpin our financial targets and the ambition to grow the normalized ISR by DKK 1 billion from 2024 to 2027. When it comes to the first building block, scale and simplicity totaling DKK 500 million, I would highlight the recent expansion of our TCS agreement to greatly simplify our IT setup. As for the second and middle strategic pillar on technical excellence, we continue to work on improving our portfolio management and improve the profitability in selected lines of businesses in selected geographies. And finally, as for the last strategic pillar, customer and commercial excellence, I would like to highlight that Trygg-Hansa has entered into 2 new partnership agreements and expanded a third, strengthening its position in the very important Motor segment in Sweden. In the next few slides, I'd like to unfold some of the activities behind Pillar 1 and Pillar 3. So on the next slide, let's start by unfolding the first strategic pillar. As mentioned at our Capital Market Day, the Tryg that you know today is, in all essence, the product of several mergers and acquisitions through the years, more recently, Alka, Codan Norway and Trygg-Hansa. This has naturally had an impact on our IT setup with a vast number of applications, suppliers and consultants as illustrated on the left-hand side, which is essentially a recap from CMD. As we communicated in Q3, we have, amongst other activities, expanded our agreement with TCS with a firm objective to simplify our IT setup across the group. As illustrated on the right-hand side of this slide, one of the levers in the agreement with TCS is the sharp reduction in the number of ways we develop IT in Tryg, which will drop from 10 to 1. In combination with other levers, this strategic move means that the IT organization at Tryg will see an approximate reduction of 33% in the number of employees in our IT organization as we come into 2026. On the next slide, I'll open up some of the recent activities behind the 3 strategic pillars. As mentioned previously, Trygg-Hansa has recently entered into 2 new partnerships within motor and expanded a third. As a reminder from the CMD presentation on the left-hand side, there is a significant potential in our Swedish private lines business to bring the exposure in motor up to par with the total market share similar to what we see in our other markets. And one of the levers to achieve that is through partnerships. And so far this year, Trygg-Hansa has signed agreements with Subaru and Carla, an Internet portal and expanded the partnership with Hedin Automotive, which is a retailer, highlighting an increased commercial focus in an area where our market share in Sweden is below our aggregated market share. The plan is to continue down this path completely in line with our strategy as presented and laid out at the recent CMD. These initiatives are, together with other initiatives, expected to increase premiums by approximately DKK 300 million towards 2027. So we are well on track. And that brings me to the next slide on the financial targets and the strategic targets, essentially a recap of our well-known targets towards 2027. We target a combined of around 81%, which drives an ISR of DKK 8.2 billion or between DKK 8 billion to DKK 8.4 billion, leaving us some room at both ends of the guidance. We target a return on own funds between 35% and 40%, while we have promised to return DKK 17 billion to DKK 18 billion to our shareholders, including DKK 15 billion to DKK 16 billion of ordinary dividends and the already completed DKK 2 billion share buyback. We're also showing in this slide all our strategic KPIs, which support the financial KPIs. And last but not least, we always end our presentations with the words of John D. Rockefeller that remind us of the importance of being a healthy dividend payer. And with that, I will pass it on to the operator for Q&A. Operator: [Operator Instructions] Our first question comes from the line of Martin Gregers Birk from SEB. Martin Birk: Johan, just coming back to your ambitions of growing your business. And of course, now you have a good example in Sweden. But given your industry low combined ratio, how much space is there actually for growth? And when you talk about those sort of strategic initiatives, what kind of growth rates are you thinking about? Johan Brammer: Thanks a lot for that question, Martin. I think it's an excellent place to start, basically. So I think coming back to our industry-leading margins, that's something we are quite proud of after elevated inflation for the last 2 years. So I would argue we are in exactly the position we want to be in to reignite some of the growth initiatives. And you're right that there are parts of our business, you're alluding also to the combined ratio in Sweden, where, of course, as we start growing that business, it will be with a combined ratio pressure upwards. Whatever we sell in Sweden will have an upwards pressure on combined ratio. That being said, on a group level, there's ample room to maneuver through that. We have set a target of a combined of 81% in 2027. That leaves us plenty of room to also grow the business along the way. And I want to come back to after the last 2 years, being in a position with strong margins and a growth in the private lines business, which is actually 4.7% is actually a very strong starting point. Martin Birk: Okay. But how much -- I mean sort of -- I guess this is coming back to the everlasting question about the relationship between growth and profitability, right? I mean how much profitability can you sacrifice short term for growth? And given that -- I mean, we have just been through a -- I mean, you pushed through very large price increases over recent years. And I guess from a starting point, you are by no means the cheapest out there in the market. I'm just struggling a little bit to see how you sort of can get the best of both words going forward. Johan Brammer: I think there's ample room for us to move on the growth ambitions that we have. Just to be very clear, we don't have a growth target as such. We are a disciplined player. Growing is very easy in our industry. Anybody can grow. The trick here is to grow in a profitable and disciplined manner. You were alluding to, in your first question, what kind of growth expectations do we have? I will never have a growth target on me. If you look back before inflation, we were growing somewhere between 4% to 7% on our top line. That's probably a pretty adequate number to aim for. But if the market is not there, we are not there. So we will not take the growth for the sake of growth. But there's plenty of room to move. And I think to your point about whether our pricing is attractive or not, I tend to disagree. I think we have a very attractive value proposition in the market, and we are priced accordingly. And when we look at our customer satisfaction numbers, customers seem to echo that. Operator: The next question will be from the line of Qian Lu from UBS. Qian Lu: So you talk about inflation easing and commercial activities picking up. How do you think this would shape the competitive landscape in Nordics given the peers would see similar growth opportunities as you have? Mikael Karrsten: I think I'll start on that question. So I mean, I think, first of all, as you say, inflation is easing off. That's not to say that there is no inflation anywhere. In particular, motor, we've spoken about that before. There are still some areas of inflation, especially for new cars. Having said that, I mean, now inflation is coming down. By that, it's also the necessary price increases that we drive are coming down. So obviously, that gives a much better starting point from a technical perspective to grow from. And obviously, as Johan alluded to, we are also putting through more focus on commercial initiatives from that. That's not to say that the market is not competitive. Obviously, it is, but that's as it should be. Operator: And our next question will be from the line of Nadia Claressa from JPMorgan. Nadia Claressa: I have two questions, please. My first one is just on Sweden. So obviously, a very strong combined ratio there. Could you just provide some more context on the drivers behind that, please? And secondly, on Norway, I mean, the development there has been pleasing to see. And I think earlier in your commentary, you mentioned that there's still work to do there. So I was just wondering with the rate increases start to slow down, could you just remind us what specific initiatives you're referring to here? Mikael Karrsten: I'll start addressing those questions. If we start with Sweden, I would say, first of all, it's a very strong result overall. I mean, basically from the Private segment to the Commercial segment. So very strong sort of across the board and all product areas. And obviously, as we've said many times before, a big part of the Swedish book is personal accident, which is capital heavy and therefore, also should have a good combined ratio. So I think it's basically sort of all different parts sort of drawing in the same direction and therefore, giving a really, really strong -- super strong -- I mean, we need to say super, super strong combined ratio in Sweden. If I move over to Norway, yes, we are improving this quarter as well. We've said a number of times that we are putting through initiatives. Those are mainly rate initiatives, but it's also other profitability initiatives, including, for instance, deductibles. And this is mainly targeting private Norway. We are continuing to putting through the same measures as we have done before. This will ease off going into 2026. But we're also very confident that the actions we have taken and the actions that we are still taking and the earnings effect of that will have the impact that we want to and that we will come into that mid-80s core that we talked about before. Johan Brammer: I think if I could just add one thought on that, Miki is, I think what we are seeing now is a benefit of having a group hedge in the sense that we are very well exposed now with strong businesses in Denmark, Sweden and Norway. So whereas we've seen Norway being slightly challenged for all operators in the Norwegian market, we have benefited from having a very strong and stable business in Sweden and the same in Denmark. So I think this is the group hedge that we bring to the table. Operator: The next question will be from the line of Derald Goh from Jefferies. Derald Goh: Just going back on the Danish retention rate. So I've noticed this dropped by about 80 basis points in both Private and Commercial. Could you elaborate about the technical factor that you spoke about? Because you mentioned pricing, but then if I look at the revenue growth, it was something like 1% or 2%. So maybe could you explain what's happening behind that retention ratio, please? Allan Thaysen: Maybe I should start on this one. Yes, we are mentioning a one-off that is printed in the growth rates in the private growth rates. And it's just around DKK 50 million that is related to a partner agreement last year, and we have decided to adjust the numbers to align the market expectations on the top line growth. Johan Brammer: And just on the top of that, Allan, you're correct that we are seeing some drops on the retention rates in the Danish market. Before I get to that, we are seeing an uplift in Sweden. We are pleased to see that. We are seeing a stabilization in Norway. And yes, we are seeing slight drops in Denmark. As for the private lines, as Allan alluded to, this technical adjustment actually means we are flat in Denmark Q-on-Q when you do the technical adjustment, whereas we still see some sort of a drop in the commercial lines. Just to bring that into the context of where we are, we are coming out of a period of high price increases, offsetting inflationary pressures. We've seen this before. You don't have to go more than 8 or 10 years back where we see drops in retention of similar nature. And when these situations taper off, we've seen a bounce back, and we expect a similar bounce back in our Danish market going forward. So to be very honest, we couldn't have wished for a better position to be in right now than where we are, strong margins, strong customer satisfaction and the ability to invest into the market. Operator: The next question will be from the line of Asbjørn Mørk from Danske Bank. Asbjørn Mørk: As well on the underwriting, just trying to understand, first, the combined ratio trend in Denmark, the deterioration we're seeing here, you say that retention has been softer. I guess you've been repricing mainly at low profitability clients. So I guess your core or combined ratio should improve, all else equal. But also more on the underlying claims ratio trend for the coming years, the 30 basis points improvement you print again here for Q3 and the composition that private continues to improve also in the second order derivative with the repricing measures, it seems like at least on official data, you're repricing more than most of your peers in Norway. But [indiscernible], trends on the claims side is moving in the right direction. So is it fair to assume that the private underlying will improve also in the second order derivatives for the coming quarters and that the group will continue to deliver 30 basis points also in '26 and '27? Or because when I look at consensus, it seems as if consensus at least expects some sort of deterioration to the underlying improvement trends. So sort of getting a little bit more flavor on that would be good. Mikael Karrsten: So if we start with the combined ratio in Denmark, the specifics for this quarter is obviously that we had some weather events. Those were, like we said before, on a Scandinavian basis, slightly above our expectations, but the main part of those came from Denmark. So weather is impacting Denmark a bit more in the quarter. If we then move to our underlying expectations before, and I know I'm a bit boring when I'm going back to and stating that we will be stable to slightly improving going forward as well. So that statement still holds also from these levels. But in order to sort of double-click on that and give a little bit more flavor on that, of course, as we have said before, the composition of that slight improvement will come more from the Private segment. We've said that before. We are seeing that in the numbers today, and that is something that we also expect going forward. And that's not least coming from the repricing initiatives in Norway and the profitability initiatives in Norway. And then just a final point, I mean, one of the good things about being a big, well-diversified Scandinavian player is obviously that we can utilize that in order to drive the right measures in the right markets. And in Sweden, as Johan has alluded to, we see that we have commercial initiatives to be done and are doing. In Norway, we are protecting our margins and improving our margins. So it's also depending on market on what type of initiatives we drive. Asbjørn Mørk: So if I just may follow up, Miki. So if we look at Denmark and we adjust for weather, or then last case, look at the underlying, is there then an improvement in Denmark year-over-year? And secondly, just trying to understand, do you expect a deterioration to the underlying claims ratio on a group basis for commercial going forward? Or I mean, are you seeing any changes in competition, anything like that, that would impact that? Or should we expect sort of flattish development there? Mikael Karrsten: Yes. So if we start with sort of Denmark specifically, and now we don't guide for the underlying in specific markets. But I think I'll just like to reiterate once again that the improvement is very much coming from the Norwegian book, which is natural and that we want and we need that improvement. Denmark and Sweden Personal Lines, we are more targeting to grow from very healthy levels that we start with. And then if we look at the composition in underlying, again, saying sort of stable to slightly improving. We don't guide on the specifics between Commercial and Private. But as I've said before, we expect the composition to be more driven from the Private segment. That's also natural given the extremely good combined ratios that we're seeing for the Commercial segment. Johan Brammer: And Asbjørn, just to add one comment on this. So I do understand where you're coming from when you see the combined for Denmark moving up slightly. But one thing is weather. But in general, don't get too hung up on one quarterly combined. I mean we are running a quite sizable book. Don't get hung up on that. We are printing for the 3 markets combined of 81.9%, 83.1% and 70.7%. So I think you need to have the broader perspective and allow the quarters to come in the order they are coming. On a group level, this is very satisfactory. Operator: Our next question comes from the line of Mathias Nielsen from Nordea. Mathias Nielsen: So I'd like to ask two questions. The first one is some sort of just a small technical one, just to be clear, the one-off you had last year of DKK 50 million on revenues. As far as I have understood it, there's not been any claims related to that. So that means you've got some headwind on the combined ratio on the group level this year on the underlying. I know you prefer to have stable earnings. So would it be fair to expect an uptick in the improvement in the underlying claims ratio in Q4 given that it also seems to be in the Private segment where you're already ticking up by another 10 basis points in Q3 despite this headwind? That's the first question. And then the second one, coming a bit back to the Danish retention rates, if I hear you right, it seems like we are now at the peak negative on the retention rates in Denmark, as you say, when adjusting for the technical stuff you have done, has actually been flat. Would you expect the retention rates to increase from Q4 already? Or should we go further into the future before we see that improvement? How should we think about that? Allan Thaysen: Yes. I think I'll start with the first question here, and that is just to reiterate that we are a very large book and immaterial runoffs will occur from time to time. And we have chosen to adjust the DKK 50 million related to the specific one-off related to a partner agreement last year. And in terms of underlying, what we are discussing here is 10 basis points, it's around DKK 10 million that you're alluding to here. So not much to add on this part, Mathias. Mathias Nielsen: Sorry, but it's like -- it's DKK 50 million profits. It's like you have no cost associated to that. It's actually going to be like DKK 50 million going directly to profits where you normally would have around 80% of that going to claims and costs. So that's what I'm asking about is that was there any claims related to those DKK 50 million last year? Mikael Karrsten: Yes. So if I just -- let's just be clear on that. So the -- I mean, those DKK 50 million are normal DKK 50 million earnings from those, also obviously some claims. So that doesn't have any impact whatsoever on the underlying loss ratio. So no impact whatsoever, sort of up or down from the 30 basis points. You should ignore those totally from the underlying claims ratio improvement. Mathias Nielsen: Okay. That was very clear. And then on the retention rates, please... Johan Brammer: Yes. And on the retention rates, I don't want to guide on retention rates for a certain segment in a certain market. But you're right in sort of summarizing my statement earlier saying that if we adjust for this technical adjustments, we are seeing it plateau our retention rates. And I think we are playing a marginal sport here. So whether it goes down slightly or up slightly is difficult to judge. But I think we are coming to an end of some of the impacts of repricing in our retention rates. So in that sense, I agree with you. Mathias Nielsen: Okay. And then if you look historically, how fast did it come back last time? Was there any -- do you have any empirical evidence on how quickly retention rates get back to historical levels after such things? Johan Brammer: It takes a few years, I would argue. But let's see -- it depends on how things develop from here in terms of inflation and et cetera. So it's hard to guide. But in the previous situation, it's been a few years for the bounce back. Operator: The next question will be from the line of Vinit from Mediobanca. Vinit Malhotra: So my one question and one clarification, if possible, please. One question would be the very interesting news to me about your car dealership agreements in Sweden, where one of your other peers is quite prominent already in that space. And I'm just curious if -- did you face much competition or resistance in the market when you were trying to do this? Because obviously, it's a different signal. I think you've been bigger in the used car space versus new. So it obviously has some implications medium term for your motor book? And are you planning to do more of these in other markets? I'm just curious about this new agreement in motor insurance. Any comments helpful. And on the clarification, the DKK 1 billion or so less roughly of real estate sold, have you indicated any gains on that in the P&L either in Q3 or in Q4 in whichever way? Johan Brammer: Thanks a lot for those questions. I will start by looking into the Trygg-Hansa, and then I think Allan will comment on the sale of real estate afterwards. So as for the motor agreements in Sweden, this is actually not a completely new strategy. Already in the last strategy period, we attracted quite a lot of car agreements also with BMW in the recent strategy period. And what we're doing now is going down the same path now of actually using and leveraging our very strong Trygg-Hansa brand in Sweden to attract partners and customers. As for the competition, of course, it is a competitive space. Winning motor customers is an attractive business. We're very pleased with the agreements we have signed now with Subaru and Carla. We are also very pleased with expanding with Hedin Automotive. And you're asking me, do I think there will be more to come? I sincerely hope so. I think this is a very good way of attracting new customers. And this is down the path of not just the strategy we launched at the Capital Markets Day in December, but it fits very well with the rationale behind the RSA transaction, where we said that we believe the Trygg-Hansa brand was punching underweight in Sweden. We're investing into the Swedish market. The brand is vibrant as ever, and we see this also allowing us to attract new partnerships like the ones just closed this year. So we expect more from this and it's benefiting the growth profile in the Swedish market. And I think, Allan, could you just share a few words on the sale of real estate? Allan Thaysen: Yes. Well, happy to do that. And just to go back in time, as mentioned at our Capital Market Day back in December, long term, we do not expect properties to be part of our asset mix. And now we have started the derisking of the book. Very pleased to announce today the sale of that made in Q3 and also commenting that we have done a further derisking in Q4. We are very, obviously, hard at work to bring down our real estate exposure further down the line. And as also said earlier, for real estate, timely liquidity is very important considerations, and we will still take an opportunistic approach to this asset class. And just as planned, we plan to exit, and we will revert when we have news on the further derisking. Operator: Our next question comes from the line of Youdish Chicooree from Autonomous Research. Youdish Chicooree: I've got -- I would like to come back on the topic of the trade-off between margins and top line growth. If I take your combined ratio you reported for the first 9 months and normalize for large claims and weather and take the latest discounting and assume runoff of just 2%, I get a normalized combined ratio of 81.5%. And you still have over a year of your strategic plan and efficiency measures to realize, which in my view leaves you in a very strong position to actually beat your combined ratio target. Would it be fair to say that you are deliberately choosing to operate at that 81% level while prioritizing maybe more top line growth that we've seen in the recent quarters? Johan Brammer: First of all, thanks for the question. I think fundamentally, if you take a step back, I think the key question here is whether there is any boundaries for us to take organic profitable growth in the market with the financial targets that we have set out, and we don't see any. I think it's true, of course, that as you start growing your business, it's an investment that will put some upward pressure. But if you do this in a disciplined manner, we have ample opportunities to navigate through this financially. We have in the strategy, many cost levers also that we are pulling that will allow us to navigate our combined ratio to hit around the 81% that is in our financial targets. Expect us to continue to deliver an improving underlying -- stable to improving underlying. Expect us to navigate to the 81%, and expect us to start rebalancing the growth profile also. We are in a very strong position to do so. And we don't see any boundaries. That being said, you'll never see us coming out in an uncontrolled manner chasing for growth. We'll leave that to other people. We want to have a very disciplined approach to our growth profile, and we have ample room to do that in the financial targets. Operator: [Operator Instructions] the next question will be from the line of Daniel Wilson-Omordia from Morgan Stanley. Daniel Wilson-Omordia: I just had a quick question on the investment portfolio. I've noticed over the past few quarters or so, it's come down -- the size of the portfolio has come down quite a bit. I mean we were at DKK 17.5 billion just in Q2 '24, DKK 16.5 billion in the end of '24, DKK 15 billion last quarter, and now we're at DKK 14 billion. So I'm just wondering, I know some of this will be to do with the buyback, but I'm wondering if there's anything else going on there that's causing the portfolio to shrink. I also noticed that you sold down the real estate portfolio this quarter, but it doesn't seem like you've reinvested the proceeds from that back into the bonds. So I'm just wondering what's happening there. If there's any sort of timing issues or things happening there that you could elaborate on? Gianandrea Roberti: Maybe I can help you out with this. The absolutely primary explanation is the buybacks. That's what explains the reduction in total of the free portfolio. You should also expect any proceeds from the sale of real estate to be reinvested in Danish covered bonds. There can be delays in time the DKK 500 million were flagged at the beginning of Q4. It's obviously to be booked in Q4. So there can be slight delays, but there shouldn't be any doubt of what we'll be doing with this. I hope that's clear. Operator: Our next question comes from the line of [indiscernible] from ABG. Unknown Analyst: Just on a follow-up on the comments on Denmark. It looks to be relatively muted revenue growth in Denmark, even adjusting for the one-off, well below indexation levels. So I guess the volume part of the equation is just the dampening effect here. Is this simply sort of like the effect from retention levels dropping? Or is there still some pruning of the portfolio left? And if so, when should this paid off? Just any color on that would be very helpful. Johan Brammer: Yes. So thanks for that question. And just to share a few numbers before I try to answer the question. You're right, when you do the adjustments for the -- technical adjustments, your growth rate for Denmark will be somewhere between 2% and 3%. If you look into the private lines business, I can share so much -- the private lines is actually quite above that. So you are right, there is a lack of growth in our Commercial segment. And that comes down to a combination of the metrics you are alluding to here. One is pruning of the portfolio and another part is what we discussed earlier in this call, the retention part. So there is sort of the topic to discuss for the Danish growth levels, and that's something that we will be tackling in the quarters to come. Operator: And as our final question, we have a follow-up from the line of Derald from Jefferies. . Derald Goh: Just a quick one, please. Could you share what sort of price increases you're putting in Norway and Denmark, please? And how did that compare to your assumed level of claims inflation? Mikael Karrsten: Yes. So if we start with Norway, and I'm assuming that the question is mainly for the Private segment in Norway. Currently, we are still putting through the same price increases as we have talked about previously, which is in sort of the mid- to high teens. We obviously expect that, and I said that before as well, to be much lower in 2026, obviously, still well covered for inflation. And in Denmark, the situation is very different. Again, we've said that before. So we are much more sort of indexed linked and much more in line with compensating for inflation when it comes to the private segment in Denmark. Gianandrea Roberti: Well, back to me now. I just would like to thank you all for the good dialogue and always a good question. As a reminder, Robin and the Investor Relations team will be able to help you today in the next few days. Otherwise, thanks again, and we'll speak to you soon.
Operator: Good afternoon, and welcome to the Invinity Energy Systems Plc Interim Results Investor Presentation. [Operator Instructions] Before we begin, I would like to submit the following poll. And I would now like to hand you over to our CEO, Jonathan Marren. Good afternoon to you. Jonathan Marren: Great. Many thanks, and welcome, everybody. Welcome to our 2025 interim results presentation. Delighted to have you all here today. The results were released a week, on Monday, so they've been with you for a while. We're going to start this session with a brief come-through of the results from Adam, our CFO, because obviously, that is the direct topic of this, but we've been having a number of institutional meetings yesterday, today and Monday -- sorry, on Tuesday. And understandably, most of the questions are around where we're heading as a strategic basis and an awful lot of news flow that's come out in recent weeks and months. And we're going to talk around that and happy to take your questions afterwards. So Adam, if I will, I'm going to hand over to you to talk through the interim results. Adam Howard: Good afternoon, everybody. I'm going to start by going through the key financial highlights, a little bit more detail on the P&L and balance sheet and then pass across to Jonathan on the strategy. So looking at the first half trading in line with expectations, we signed -- we launched ENDURIUM at the back end of last year and signed 12-megawatt hours of orders in the first half. That's up from 4-megawatt hours in the same period last year. So clearly, revenues second half weighted this year, we recognized GBP 2 million of revenue and grant income driven largely by the LoDES project funding. We were -- our operating loss was down 10%. That's a combination of recognition through LoDES and also a reduction in our administrative expenses. The group is debt-free, just shy of GBP 40 million cash at the end of September with a GBP 20 million order book for the full year. And so looking at what's happened on the P&L, that GBP 2 million revenue in project grant income, GBP 1.7 million of that was LoDES grant funding, probably recognizing through the P&L, what's not capitalized in terms of the units themselves. We -- you will see a slight uptick in the gross loss. That's reflecting our running costs spread across lower production volumes and also includes warranty costs, which also include the DC-DCs that are being replaced by the supplier. And slight reduction in overheads, as I said, has been supported by our R&D recoveries out in Canada. And so taken together, a reduced operating loss of GBP 10 million compared to GBP 11 million in the period last year. So looking more on the balance sheet and what's happening there. So you will see an uptick in our inventory and prepaid inventory to GBP 14 million compared to GBP 6 million this time last year. That's a reflection of LoDES, HITT, the U.S. project we announced back at the beginning of the year, and STS, the Hungarian project. Importantly, there is debt financing sitting behind the STS project as well, which is also important as we scale this into these larger projects for Cap and Floor. So what you'll see in the bottom left-hand corner is the buildup of that inventory there in Motherwell ready to be shipped out for LoDES. You will see some DESNZ claim accrual on the balance sheet. That's cash that has since been received. So I say, taken together with the GBP 25 million raise that we recently closed, just under GBP 40 million of cash, which is the company comfortably funded through to 2027. Looking at outlook for the full year. So the GBP 20 million order book, there is some risk within that around 10% of that subject to customer NTPs. And then we need to close out another GBP 5 million of near-term contracts to get to the maximum potential revenue and grant income for the year of GBP 25 million. We're broadly categorizing our pipeline into 3 main areas. One is order book. So that's signed contracts with customers that are either unconditional or subject to a customer NTP. The second is near-term contracts, so projects that we're expecting to close out in the next month and the next quarter, which are in final contracting stage, so without development risk. And then the last category is our development pipeline. So those are people who have bid into a procurement scheme like Cap and Floor in the U.K. or the schemes in North America and Canada with our technology or submitted planning permission on a project with our technology. So with that, I'm going to pass across to Jonathan. Jonathan Marren: Well, actually, Adam, if I may, just talk about before you cover that slide. If I can just push you back to this slide here. There's a little picture on the left-hand corner there, and I think pictures paint a thousand words. Adam talked about inventory rising at the period end. For those of you that have been to Motherwell, that is a picture taken from Motherwell, no matter than sort of 24, 48 hours ago. As you'll see, there are a very significant number of boxes that are there. Those are in relation to the LoDES project and also in relation to the Indiana project we signed and announced quite recently and HITT. So you can see visually there, we have a very full factory with inventory ready to go, which obviously will convert into cash. And I think the other point I'd like to mention is that, Adam rightly pointed out that revenues are second half weighted. Just to recap, we had a major new project -- product launch at the back end of last year, right at the end of December. We managed to ship 4 of those units from Vancouver to Gamesa Electric in Spain, at La Plana. And that has been tested and you've seen, hopefully, or will see, LinkedIn posts from Gamesa Electric on that site and then talking about that. Any manufacturer that launches a new product does not start shipping straight away, particularly if they are working up the new supply chain and moving it from Vancouver to China. So it's not surprising given our revenue recognition that revenue gets reckoned in that second half of the period. So the other point on that is that the trigger for recognizing grant income on LoDES was when we got planning permission on that site, and that came really right at the back end of June. So with that, Matt, I might just ask you to cover off some of those LDES procurement programs. Matthew Harper: Yes, absolutely. And Jonathan, thanks. And I know you'll speak in a moment about the importance of some of these programs in our broader strategy. Look, we've been tremendously encouraged over the last year really to start to see around the world a number of bespoke programs for long-duration storage, most of which have some form of carve-out for non-lithium technologies, whether we're talking about the Cap and Floor program in the U.K., the BC Hydro RFEOI that has just closed here in BC or some of the programs in California that are a continuation of our already successful deliveries there. Those jurisdictions are all starting to look not at sort of tens of megawatt hours, but hundreds to thousands of megawatt hours worth of deployment of our class of technology. We're tracking about a half dozen or so of these projects as active participants. We have submissions that have gone in within the various deadlines that started back in June and are running through sort of early next year. And we've been very encouraged so far by the feedback that we've had from the developers with whom we're partnering on these programs and expect that we will hear good news and share it with you all when -- as and when it comes through. Jonathan Marren: Great. Thank you, Matt. So let us move on to the bulk of the presentation. The first 3 slides here are really how we are presenting the business now to investors, to customers, to those who maybe haven't come across Invinity so far. So I'd like to run those through to you because I know there's -- there will be some new people on the call as well as those who are familiar with it. But there's some interesting data points here as well that point to our strategy. So that top left, the world is facing an energy crisis, and I don't think anyone can doubt that is the case. There is a significant amount of primary energy that is wasted at the moment, 63% of a 5% of global GDP is wasted as energy at the moment. And there's a reason for that. Global energy demand is growing at a very, very significant rate. And that third bullet point there is very interesting. If you look at where consumption is forecast to rise significantly globally, 60% of that is due to come from both China and India. Our business is one about gaining scale because scale enables us to reduce our product cost and therefore, open up our marketplace. If we are going to achieve scale globally, we need to be in those 2 markets. And as you'll see and we'll come on to, we announced 2 really interesting partnerships in China and India, both in September. If -- for those who are familiar, I spend a lot of my time, I'm afraid, looking at renewable penetration on the U.K. grid. On Saturday, we had a very blustery day and it was very sunny, and we had approaching 75% of penetration of renewables onto the grid. However, we still have the highest energy prices in the G7 and some of the highest worldwide. It is causing huge issues from a manufacturing perspective, from a growth perspective. And the reason that you can have that high penetration of renewables, but yet no impact on prices is because the current storage mechanism we have, which is predominantly lithium short duration storage is not bridging the gap between the two. We need to be able to time shift that renewables from daytime from the solar perspective overnight and particularly when the wind is generating. And that's what long-duration storage is designed to achieve. So if that's the problem that needs to be addressed, how do we address that? Now very simply, we produce a battery. We produce a 20-foot shipping container that is a battery in a box. And frankly, we don't need to make it too much more complicated than that to a large audience because fundamentally, our customers, be they sophisticated developers, be they C&I businesses, want to buy an energy storage device. They want to buy a battery. They are not too concerned necessarily whether it's a lead-acid battery, lithium battery, or vanadium battery, but what they want are certain characteristics that, that battery can deliver. So for us, we talked about our characteristics, we have different ones than other types of batteries. Critically, we have a 30-plus year life without degradation. And what that means is you can cycle the batteries as many times as you want without any drop-off. And that is unlike almost any other type of battery. There is no fire risk. Critically in a huge number of use cases, fire risk is a problem. And it's also a problem from a planning perspective. Increasingly, planners do not want a fire risk there. We are less noisy as well. That's quite a significant characteristics at the same time. One of the questions is, well, if -- and when I talk to customers, it's rare you would talk to a customer that says, look, I love this. I don't -- I would like to buy a battery. Why are you not selling more of them? And why can I not buy one now? And the answer is actually, it comes down to cost, and cost is going to be a recurring theme of our product across this presentation and what we are doing to get to a position where that gets taken off the table, and therefore, we can scale significantly. Now the other point that is really interesting is you'll see a number there that we have nearly 2,000 individual flow battery modules manufactured for customers across the world. That's up from 1,500 that actually we presented very, very recently. And actually, when you account for the LoDES projects and others which we are building out for STS, Ideona, et cetera, we're at about nearly 2,000 number. And that's really important as well because most of our customers are going to be those who effectively are building a critical infrastructure asset. This has to work. They are not willing to take infrastructure and technology risk. And what is clear now is because we have progressed the VS3 since 2020, over the last 5 years, we've got that credibility. So we have proven the technology works. But not only that, we've proven that the customer services and our ethos around that is something which customers really value. And time and time again, I speak to customers and they say, look, there are always problems on site, and there will always be problems on site across all technologies, across all products. And what you really want is an organization who we can trust to come in and resolve those issues. And not only resolve them, actually, come to us and say, look, we have an issue with the product or this site, we actually need to come in and fix it. And this is the time scale, and this is how we'll do it. And then you do that on time. And I am very, very certain that we are doing better than the industry on that because we are told that time and time -- time and time again. You only have that if you have that number of products out into the field. And that in itself is a competitive advantage and the blocker from others who are not in that position getting to where we are. Clearly, if we stand still, we will allow others to catch up, but we don't intend to do that. So that is a huge competitive advantage. If I can look at that bottom right-hand box, our revenue model for those who, say, are new to us, our principal revenue stream at the moment is sales of batteries, sales of those 20-foot shipping containers. And we recognize that once the product is taken ownership by the client. There is some servicing revenue that comes alongside that. Inherently, there's a bit of a conflict. You don't want to grow that too significantly because ultimately, people are looking at the overall cost of ownership of this product and for them, keeping the servicing level down is important. So -- but it will become an increasingly important revenue stream for us. The license and royalty arrangements, which are those that we look to progress outside of our core markets, so across Taiwan, across China, across India, it is likely that all those -- most of that revenue will come as a license and royalty. So our partners will look to do the heavy lifting in terms of the sales process, in terms of the commissioning, and we will get paid a royalty for that. And we alluded to that, I think, in one of our announcements when you look to China, that comes through effectively at very, very high gross margins. There were no costs associated with that. So that is one way of significantly enhancing the margins over and above product sales. And then that last bullet point at the bottom, batteries as a service. You are starting to see service providers talk about this. ABB is one of those service providers that launched this service at the end of last year. And actually, for a behind-the-meter customer, so a sort of C&I customer, who maybe has solar on their roof, what they really want to do is they will need to lower their energy bills. They're not sat there thinking, I need to buy a battery. And therefore, if you can package a product up and offer a service to them, almost power by the hour, you could say, that can start to become very appealing. And if you think about how a leasing model works, we all know when we -- if we lease a car, ultimately, the cost of that lease is driven by the residual value of the car at the end of that period of time. We have a battery that doesn't degrade. And therefore, you would have thought that the residual value of that battery should be much higher than another product. It should lend itself really well to a leasing model and therefore, this type of service. So we've said future here because it is the future. We're not about to do that just yet, but it is something we will actively work on to see how we can progress. We -- Invinity came together at the beginning of 2020. And since then, we have those 2,000 modules -- up to 2,000 modules out into the field. We have over 6 gigawatt hours of energy dispatched from those batteries, and we are about to break the 7 gigawatt hour of dispatched energy. Again, that brings huge credibility to the business. But ultimately, it is all about ENDURIUM. We launched ENDURIUM at the back end of last year. And very recently, we launched ENDURIUM Enterprise. Those cover effectively different use cases and different sizes. But absolutely critically, it is the same shipping container. It's the same battery within that box because what we do and are absolutely focused on is driving cost out of that product, and you do that by having a product that is manufactured on a repeatable basis. And there is a different architecture that sits around it. But ultimately, that's how we can take cost out and deliver scale from that. So going forward, you would expect to see certainly ENDURIUM and ENDURIUM Enterprise sales being predominantly the mix. So business strategy. And I think this is -- it's worth spending a few minutes on here to explain where we are. If I can really focus on that longer-term box. Longer term, we mean 2030 as a target. I am convinced and I have -- is an ethos throughout the company that we have to be in a position that as a product, we can compete alongside any other energy storage device without any form of support from the regulator or elsewhere. This needs to be able to compete in its own right. And the way we do that is an absolute focus on driving cost out of the product heading towards that target. We have a very good competitive advantage with other LDES technologies, and there's a great example of that from the Cap and Floor program, which I think Matt will talk about in a short while. But lithium really is a huge competitor to ours. It improves from a performance, fire, safety perspective, but we have very other many characteristics that enable us to compete on that, but we have to continue to compete on cost. And therefore, at the moment, we'll talk about how we are going to do that. So what does that mean? That medium-term box there, though, is how we can deliver significant scale from various programs, which are being promoted around the world. Now Matt's just talked about those LDES programs such as BC Hydro, such as Cap and Floor. There are some very significant programs there. And that -- we've shown we can be successful so far within Cap and Floor, and we're seeing the same level of interest elsewhere. That can deliver for us billions of pounds of revenue. Now that's interesting, but what really is driving the cost out is the scale that comes behind that of significant manufacturing of products across the piece. So that's where we are focusing to deliver those huge potential volumes. But what does that mean for the short term? It means in the short term, we need to be a little bit more focused on where we are looking to sell. We are not looking to compete directly head on with lithium. But there are many use cases we see where lithium is not appropriate. Think of a green hydrogen project, think of a data center. Both of those have a fire risk that you would not put a lithium battery directly next door to. We also speak to developers who actually see that there is a cost and benefit to putting our vanadium flow batteries in now. So therefore, we're speaking to some very large developers who are considering making purchases for delivery next year and the year after. So there is some really interesting deal flow there, but we have to be a little bit more fleet of foot to be able to find them. There are competitors of ours that are able to sell at negative gross margin at future costs to achieve that. It is one way of driving scale, but it is very high risk. And also, I think it's -- for us, we need to be focused on driving that cost out and just making more careful use of our balance sheet rather than effectively what could be wrapping pound notes around a product before it sells out there. So I hope that sort of explains our strategy and why we're heading where we are. The short term, we're looking to make sure that we've got some healthy growth in revenues next year and then really pushing forward from '27 onwards. So from a cost down perspective, I'm going to cover the first few bullet points here. Matt, I might hand over to you, if that's okay, to talk through some of the detail. But one -- in fact, one of the most interesting questions we got when we produced the final results was an institutional shareholder saying to us, look, you moved from VS3 to ENDURIUM. That was quite a long process to get there. Are you happy with the result? Did it achieve out of the box what you thought it would do? And the answer there is, yes, it has done. There is a reason why we spent so long talking about box, then Mistral and now ENDURIUM. Out of the box, 43% lower production cost than the VS3. So an absolutely critical step forward from a product development perspective. A year ago, when I took over as Chief Exec, we talked about the fact that at that point in time in Vancouver, the product was too expensive, and we needed to move to a low-cost region, and we set out that we knew how we would do that. We have taken, since then, 36% cost out of the product as we've moved it across from Vancouver to China, where the balance of system is currently being manufactured. So 2 important data points there. If I can just focus on that graph before I hand over to Matt and explain those 3 lines. The top line, again, 12 months ago was where the cost target road map was set out. Still some laudable forecast there, but we needed to deliver against that. Now the middle line was what we reported to you at the time of the final results in May, and that red line is the most latest cost projection. So as you can see, we are continuing to head down the curve, but as an improved rate than we forecast before. That is so important to us because we know we are absolutely certain that at the cost points that we think we can get to, this really does open up the market. So Matt, if I may, I might hand over to you just to cover off the other part. Matthew Harper: Yes, absolutely. Look, the -- as Jonathan said, and as many of you are well aware, this is a market that is tremendously cost sensitive and where we need to be directly competitive, both on a first cost basis and ultimately on a low-cost basis as well with lithium juggernaut What we've seen, we've been very happy with the progress the team has made over the last year, knocking further cost out of ENDURIUM as we've brought that out. We've started to optimize the supply chain as we started to deliver the product as we wanted it to be. The next 2 stages of the evolution of that are really looking at the first stage for product that is going to be delivered within about 2 to 3 years. We're looking at primarily improvements on the fundamental design of the product, some engineering changes to optimize how the product is configured and goes together and then really leaning into the relationships that we're developing in India and China to make sure that on a global basis, we are developing the absolute best possible, lowest cost possible and highest quality possible supply chain. When we look out to the end of the decade, what we have time for at that stage is more evolution of the fundamental technology underlying the product. So everything that we're going to deliver between now and say, 2028 is going to be based on exactly the same technology we have today. But as we look out towards the end of the decade and as we look towards that point of becoming directly cost competitive with lithium, what we are contemplating is enhancements to the existing technology platform through better stack technology, higher energy density electrolytes and related performance improvements that are going to see us hit that direct cost competitiveness. So looking at those global LDES procurements that we talked about a few minutes ago, we've got with ENDURIUM, the tool that we will be able to use to deliver those projects profitably in the next sort of 3 or 4 years. And then by the end of the decade, moving beyond those bespoke stand-alone programs to be directly competitive with best-in-breed product in the marketplace. Jonathan Marren: Great. Thanks, Matt. So I'd like to spend a little bit of time talking about a couple of the announcements which we made in September on China and India. Let's cover India first. We announced a strategic partnership with Atri. Atri is an entity that I've known the promoter from that for some 15 years or so. He was behind KSK Energy, which was a power generating business listed in London, but with assets in India, upwards of about 5 gigawatt hours of coal and wind assets. Very deep understanding of Indian power markets, very well known in the sector and understands how the sector is moving towards greater penetration of renewables and the need for LDES technology. The Indian market is one, and you've seen this from solar, you're starting to see it from lithium, and it's going to be exactly the same for long duration. That market really needs locally supplied product for that market. And therefore, for us to be able to deliver into that, we have to have a local supply chain and local manufacturing. But I'm a firm believer that in areas outside of our areas of expertise, we have to have partners who, a, we can trust; and b, who are competent to be able to sell into those markets. And again, I think we picked a great partner with actually to enable us to do that. So they are very much going to assist us on those commercial efforts. They are well connected in with the various LDES programs that are going through there and are going to assist us and going to work with them to be able to make submissions into that and also build up the supply chain and the manufacturing. So very excited about that. They also looked to the business and wanted to help us from a strategic basis and hence, the GBP 25 million, which they and Next Gen Mobility put in during the period. So really pleased to have them on board, and the teams are working collaboratively with each other already. China is obviously an enormous market. And I was -- I've made 2 trips to China and Hong Kong quite recently, both to Xiamen in China, which is on the East Coast. And what you realize when you go to China is actually China is obviously a collection of provinces and those provinces compete really fiercely with each other. And the province where Xiamen is in has a lithium battery manufacturer. It has Hithium, which it assisted growing from a standing start in 2019 to what is now, in some measures, the second largest lithium battery manufacturer in the world. They don't do anything when it comes to vanadium flow batteries at the moment, and they are very keen to have a presence there. So that's great. We've met them, and they are really keen to work with us. The picture there, we have the #2 in the Head of the Commerce Department of the Xiamen government. We have a new potential partner, which is International Resources Limited. They own one of the world's largest vanadium mines in South Africa and various other sort of members of the sort of British diplomatic service, et cetera. What we are trying to do there is to use what China is very good at, is building scale. And the other thing they are very good at is also on quality as well. So it's maybe a misconception that you might have sometimes that what comes with scale and quality doesn't follow. We were blown away when we walk around the Hithium factory, the level of automation and the level of quality control that comes with that. When China wants to do something, it really does put its mind to it. There is always a risk conceptually that there is IP leakage from doing this, and we are alive to that. I would say 2 things, one of which is that I think there is a greater risk in us not trying to embrace how China can deliver scale. But also one of the ways you mitigate that is by working with partners who you trust. And so the fact that we are working with UESNT, who we announced slightly earlier and International Resources Limited, those are 2 partners that we've been working with for some time, we've got to know well. IRL is based in Hong Kong. So we'll channel a lot of our efforts through that. There's a more familiar legal setup in doing so. And so together, that will enable us to really be comfortable and try and drive cost out. The other side of that is that both of those 2 organizations have some really interesting projects and contacts within China at levels that I think we wouldn't -- in some sense, sort of dream of being able to exploit ourselves. And so on both China and India, you can see a license and royalty model coming through there. And if we get this right and we start delivering product into China, then this could start to deliver quite significant license royalty revenue from that. We are not there yet. But at the very least, what this should be doing is delivering low-cost product to enable us to compete at the lower cost we need outside of China in our core markets. So both of those 2 are really, really exciting. The partnership in Xiamen is through C&D Group. C&D has a $100 billion of revenue. It's a Fortune 100 companies. It's a collection of companies that sit within that. I've met on numerous occasions, the senior management team there, i.e., the Chairman of the various organizations and developed a really good relationship with them. So this is hopefully going places and more to come in due course. Now Matt, if I may, I wouldn't mind you just covering sort of the LoDES program, and I will jump in on one point. I think you know when I'm going to do that. Matthew Harper: Yes, absolutely. Always welcome to jump in, of course, Jonathan. Look, we were thrilled about 3 weeks ago to see the short list for projects that have been qualified under the first stage of the Cap and Floor program. Of the 171 projects that had been proposed, 77 of them were selected to go forward. That's a pretty healthy ratio of which were our projects, a total of 16.7 gigawatt hours of projects on our side. Of the handful of developers that we had partnered with to deliver proposals under this program, 4 of them were selected to go forward with delivering projects with our technology, including Frontier Power. We were also very encouraged that 100% of the eligible VFB projects in the scheme were ones that are planning to use our technology. So a real validation that not only we're the right technology for the program, but that we're -- that Ofgem and others believe that we're the ones who are going to be able to deliver the right kind of LDES capabilities to the future grid, in general. I think it's worth noting that there are a combination of projects that had both lithium and zinc batteries installed. Those projects are going to -- they're intended to include both technologies. And we're very happy to be part of delivering that product capability. As we look towards next steps on this program, we're now moving into the final project assessment stage. That includes a cost-benefit analysis that includes some more detailed planning considerations. We're moving into that phase now. The initial decision for projects to go forward, often I'd say, they expect to be released within spring 2026 with final projects due in summer and hopefully, some very good news and moving forward on contracts towards the end of next year. Jonathan Marren: Yes. So a couple of points. Just to clarify, we have had a number of people ask us whether we are worried by the new competitor is the vanadium flow straight zinc battery manufacturer. Just to be absolutely clear, Frontier Power have effectively split all their projects down the middle 50-50. So if you had a site with 100-megawatt connection, which was -- pick a number, 10 acres, 5 acres, 50 megawatts would have a vanadium flow battery on it and the other mirror side would have a 50-megawatt, 5-acre Eos battery. And that's just the way they wanted to configure that. So as Matt said, we were not the only vanadium flow battery where -- which had their technology bid into this, but we were the only successful one. 21 projects, potentially 22 because one of the other projects is choosing -- needs to choose between lithium and vanadium flow. And again, that's one of our batteries. But the point I wanted to focus on is that 1,000 permanent high-quality U.K. jobs potentially created here if we were to go ahead with all of those 21 projects. We don't think we will go ahead with all of those 21, but it is worth highlighting the point that we have a wonderful opportunity here to create the sorts of durable clean transition jobs, which the government is very keen to promote. The Energy Secretary, Ed Miliband, stood up at the Labour party conference last week and talked about the need to create 400,000 jobs in the U.K. Straight off the bat, there are 1,000 here, which you can start to point to. But this isn't just us. Eos, we've got huge respect for Eos alongside us. They've also said that they would look to create U.K. manufacturing. And we've seen other lithium battery manufacturers say the same. There is a great opportunity here that those who are able to provide U.K. technology can create the jobs that the whole of the sort of the net zero transition, the route to clean power and lower prices can bring those jobs at the same time. But I think we need to talk to anyone who will listen to say you need to join the dots here because otherwise, there is a real risk that there will be no specific promotion for U.K. technology, and they'll be ambivalent as to whether this technology is manufactured in the U.K. or arrives as a completed product on a boat. Now frankly, from our perspective, we can do that. So the worst-case scenario for me, and I'd be horrified by this, is if it doesn't create any U.K. jobs and our clients say to us, "Look, it is a bit cheaper to deliver a fully formed product from India or China, please do so." And we will have no option but to do so. However, if the analysis that Ofgem is doing enables a sort of support for what will be slightly higher prices from a U.K. manufacturing perspective, but all the ancillary benefits that go around it, it's not just 1,000 jobs, there's a multiplier effect from that coming in place. There's something really exciting that we could be part of here. But I'm telling everybody who will listen that there needs to be just a little bit of joined-up thinking to achieve that. And then we will -- you'll hopefully see us doing that. That's why we mentioned this at least 3 times in the RNS, in the interims, and you'll see us continuing to do so. Adam, do you want to cover this slide? Adam Howard: Yes. Thanks, Jonathan. So it's worth taking a step back at what's the problem we're trying to solve here and why it's important for the U.K. As Matt mentioned, 21 of those 77 projects that Ofgem have approved have been submitted with ENDURIUM technology. So the traction there is really important. The average developer that submitted with ENDURIUM had a 60% chance to 45% across the scheme. And the U.K. has really been quite forward-leaning in putting a scheme on that together. But there's a reason for that. We have essentially the highest electricity prices in the developed world, about 30% higher than the EU, over twice as high as the U.S. And the reason for that is quite simple and quite interesting. We've taken the thermal coal baseload off the system before we had storage to balance it. So the last electron that bounce to the grid sets the price in the U.K. In the U.K., that is gas, which is the most expensive electron, 97% of the time. In the EU, it's gas 40% of the time. On top of that, we're also taking liquefied gas now from the U.S., which is more expensive. So that's really pushed up our bills in the U.K., which is crippling from a manufacturing perspective and has become quite an important political priority. But not just in the U.K., also in other markets. So in Canada, I mentioned the schemes early on there, in the U.S., in Hungary and also in parts of Europe. And essentially, all of these schemes are asking for the same sort of characteristics, 25-year availability without degradation and improved depth of discharge. And that graph at the bottom there is quite interesting in terms of what's changed here. So go back only 3 years ago, 4-hour plus duration was less than 0.2% of the market, relatively negligible. What was needed was a short duration 2-, 3-hour power, which could be delivered more cheaply through a lithium battery. Fast forward to today, 4-hour plus is around about 10%, 15% of the market. It's really changed quite quickly, and that's much more about time shifting and being able to do that over long periods. So it's interesting to see where this plays into what's happening in the U.K. and the problem we're trying to solve. So with that, I'll pass across to Jonathan to wrap up. Jonathan Marren: Great. Thank you, Adam. So just a look back 12 months ago when I took over as Chief Exec, we set a 12-month plan, which we want to achieve 5 goals there. We've reported on some of these already. 4 of those, I think we can demonstrably say we have achieved, particularly talking this time about Goal 4, that cost reduction plan. In terms of Goal 3, we have a route to achieving these this year's numbers, and we're working diligent to make sure we take that place. And we have a deep and wide and very interesting pipeline going forward. Clearly, we need to support that. Now Goal 4 enables us to achieve that. But the continued focus is on making sure that we do achieve those additional sales so we can ramp up and achieve the scale needed. So last slide, and then we'll go on to Q&A. That stable proven technology is what provides the base for us to exploit the market opportunity ahead of us. Those 2,000 battery modules, as I've said, really is a calling card that is very difficult for many others to get anywhere near competing with as long as we continue to progress. And that close to 7 million -- 6.7 gigawatt hours, close to 7 gigawatt hours of dispatched battery, again, is setting ourselves apart from the rest. We do think we've got that market-leading position. There are others and where there are new technologies, which you see being talked about in various guises across the piece. Again, there is an awfully long way to go from that to having a position where people think technology is proven. The way that we are going to address this requires key strategic relationships. We remain really grateful for the investment from National Wealth Fund. We retain a very good relationship with them and delighted they remain on the shareholder register. Gamesa Electric in the process of being bought by ABB. ABB, I think, will be a great parent for them. We have met ABB, and they are very supportive of this. So we look forward to accelerating that further once that acquisition completes. We've talked about actually and what we're doing in China and also the existing relationships of Baojia and Everdura remain in place. So Joe, with that, I think we've completed the formalities. We can now move on to the Q&A. Joe Worthington: Great stuff. And thank you, everyone, for putting so many questions in. We've got in excess of 28 and counting at the moment. So we'll try and get through as many as we can. And just before we go on to it, apologies if you can hear notifications coming off the exec's microphones. This is in the -- we're in the golden hour at the moment between our North American and European teams with so much going on. There's a lot of traffic. But -- okay. So there's a question here related to ongoing LDES schemes. What is the maximum value of orders from the Cap and Floor projects you've announced that you've passed eligibility? For Jonathan. Jonathan Marren: Yes. So you won't be surprised to hear, I'm not going to give you an absolute number on that for obvious reasons. It is in the billions of pounds worth of revenue type, and that is certainly more than 1. Joe Worthington: Okay. And related, there was a couple of questions actually about how -- assuming we take a view on how many of the maximum projects we win, how we manage the supply constraints within that? What's our strategy for that? Jonathan Marren: So if you recall how -- assuming we do deliver a Made in Britain product, which is what we want to do, at the moment, the strategy is that we would -- and how we're delivering them at the moment, you have the steel container, so the 20-foot shipping container, you have the tanks and you have the electrolyte and the wiring effectively fitted in the best cost region, so China. But equally, you can see that being done in India. That is lower cost than you will achieve outside, particularly in the U.K. and elsewhere. That then gets shipped as that product to the U.K. to the factory in Motherwell, where we would have stacks manufactured. So those stacks will get fitted. Control system gets fitted. We do the factory acceptance test. That's where the core IP and the core know-how really gets added to the product. That is regarded as a substantial transformation. It's a British factory and it gets shipped to site. So there's a number of different parts of our supply chain. We look at the component parts that fit within that. All of the component part suppliers we are working with are capable of scale. What they need is time and notice to do so and some security of order. Our partner is Baojia, and Baojia would be involved in any move to Xiamen as well. So we're certainly not disintermediating them from this discussion. They are certainly capable of scaling. And the whole point of China and India as well is that you can get to significant scale. So I think that continuing sort of fabrication of boxes, tanks, electrolyte, we are comfortable with the lead time that we can achieve. And then you're looking at what happens in the U.K. So stack manufacturing, we have already installed a semi-automated stack line within the U.K. At that sort of volume, we'll be looking at move to further automation. That is taken into account when we've looked at those 1,000 jobs. So therefore, we would need probably additional facilities to manufacture stacks, but we've shown that's not a significant investment to do so. And then it's still fitting those stacks into ENDURIUM is still not a high CapEx cost process. There needs some space. You need a crane to move the boxes around. But ultimately, it actually became a matter of logistics, how can you get that number of boxes through a site. So I think it needs planning. We would look to deliver these over 2 to 3 years and revenue will be recognized over that 2- to 3-year period. So this isn't just going to hit in 2030. You would certainly expect revenues to be coming through from '28, '29 and 2030. So it's not just a one-off hit, but very important to realize that. So that 16.7 gigawatt hours would be spread out over 2 to 3 years in any case. Joe Worthington: Great. And related, there's -- someone's asked a question here talking about super projects in the Cap and Floor, particularly one project called the Hagshaw LDES, which is being bid in to use vanadium flow. Is our commercial strategy to do a few of these super projects and call it a day or do a large number of smaller projects? Can you comment on that, in general? Jonathan Marren: Yes. Matt, do you want to take that? Matthew Harper: Yes. Look, one of the things that's nice about the projects that have gone in under Cap and Floor is that there is a sequencing to them. There are a number of smaller projects that we would be delivering in the earlier portion of that program and then some of the larger projects that we will be delivering towards the back end of it. That is very nice from our perspective because it allows us to continually ramp up the level of production that we've got both for our global supply chain and locally through the final assembly of product in order to get those products delivered. Is it -- do we -- are we concerned about the size of those things? Absolutely, but it's also dead on where we expect to be delivering these very, very large projects in 2030 and beyond. So it's -- they're definitely large projects as compared to what we've done in the past. But because we have sort of stable immediate steps along the way to get there, especially through some of the earlier projects in Cap and Floor, we're confident in our ability to deliver on those. Joe Worthington: Thanks, Matt. A question here, interesting question about financing and financing models around LDES projects. What are the different models and what are the different strategies that are being taken? I think this is more general than just the Cap and Floor, but I think maybe we could talk about sort of what we've seen on our side. Adam? Adam Howard: Yes. Thanks, Joe. So 2 ways of reading that question as to LDES financing or LoDES financing, and that's what I'll do is try and address both and split into short, medium and long term. So in the short term, we have seen the first debt financing on our batteries as part of our portfolio financing together with lithium. That's quite an important milestone in terms of lenders getting comfortable with the asset class. We are now looking at current contracts, which are sole project finance for our technology, and that's really important as a milestone build up into the larger Cap and Floor orders. In the medium term, so on LoDES, we are fully financed there with the grant financing and the equity financing. We have been approached with by 2 lenders with good interest to finance the batteries, and that's important as we sort of lead up into the larger projects for Cap and Floor. And I mean, clearly best cost of financing is delivered after energization expected second half of next year. So we'll look to keep the lowest cost of capital for that, but there is interest out there in the bank market and the U.K. bank market, particularly for financing these assets. In terms of the longer-term Cap and Floor, that Jonathan mentioned, those are 28 to 30 deliveries. The Cap and Floor has been designed -- the floor has been designed to support project finance. It's built on the Cap and Floor mechanism for the interconnectors that we have with Germany. So that supported high levels of gearing, and it's been structured to facilitate project finance into the space. So we have already -- we're fortunate in that NatWest House Bank has shown significant interest in our technology and understanding the sector. They were the largest financing into short-duration lithium battery storage in the last few years. And we're seeing plenty of interest from the U.K. bank market to support these assets. Joe Worthington: Great. Thanks, Adam. I'm going to move on. There's quite a lot of questions sort of around on the more sort of commercial sort of product side, which you might just move on to and get through a couple of them. There's a couple of questions here around sort of the general sort of geopolitical climate. There's a specific one here about, given the current political environment in the U.S. and the effect on some renewable companies out there, what's your -- has your view on the U.S. market changed at all? And what's -- and Invinity's pipelines of opportunities? Jonathan Marren: Yes. Joe, look, it's a really good question and probably it definitely warrants a few moments thinking about this. There is new news flow that comes out of the U.S. every single day. And it is absolutely fair to say that, that news flow can be challenging at times. We are aware of it. And we've got to make sure that we don't make any rush decisions on the basis of that because fundamentally, we still have a very good position when it comes to the U.S. There are issues at a sort of federal level and issues at the state level. If you sort of drive down into that state level, the California Energy Commission, we are one of the very few LDES technologies, which the CEC is looking to back and will continue to back no matter what changes from a sort of a federal political basis. So there is still a very interesting market to target there. And there are some projects there, which I wish I could talk about because they are so exciting and so transformational to us if we can get those over the line, it will take us to a different level than we are now. But these things do take time. And what's not helpful is uncertainty that comes from that. So we're alive to it. Definitely, there will be issues with some projects that sit in our pipeline. But you would expect that. And to be honest, that's why we never assume for one moment that all of those projects will come through. But also, this, again, gets to why it's really important that we have a widely geographically spread business. And again, comes to why India and China is important. I would be nervous now if most of my sales funnel is coming from the U.S. It's not. And therefore, it would be nice if there's more certainty there, but I can look across U.K. and Europe. I can look to India. I can look to China. I can look to Australia. And the U.S. will come through in its own time frame. And when you look across '28, '29, Cap and Floor and other projects there are very obvious. That -- just that short to medium term, '26 and '27, there are still some significant projects there that are not U.S. focused, that sit outside of any regulatory program with developers that want to deliver that. They are -- these sales cycles though can take anything from -- quickest we've had is 3 months through to 3 to 4 years. And the -- just look at what happened last week when the connections reform in the U.K., which is being pushed through by NESO was delayed by 3 months. So any projects in the U.K. outside of our control is automatically on a decision-making process pushed back 3 months. That's really frustrating because we've got some really interesting projects there, which are bubbling away, close to being ready to go. But unless you can have your connection confirmed, you can't get that to financial close. Those projects are still there, but we just got to make sure that we've got a broad enough spread across them, but we have got that spread across jurisdiction, use case and developer type that those will start to drop. It's frustrating, and I would love to see them dropping quicker. But I'm confident they're there and enough of them will get through there that we will deliver the upwards tick that we need to. Matt, anything else you want to sort of add to that because you're often more in the firing line than I am from customers. Matthew Harper: No, look, the one thing that I would say just to address the regional risk more broadly and just to talk about the U.S. Look, the thing that we've seen over and over again is that despite vacillations, shall we say, at the federal level, the states themselves remain very supportive of what we're doing and remain very interested in funding the list of programs that we talked about earlier on in the presentation. So while I think everything in the U.S. is going to be progressing more slowly than we had expected, we still remain very confident in the longer-term view of how those programs are going to go forward, and we remain very encouraged by the relationships that through delivering against existing projects, we are continuing to build in -- especially in California. Joe Worthington: Thanks, Matt. Moving on to some of the product questions. So can you update us on how the launch of ENDURIUM Enterprise has gone, specifically who the target market is? And there's a couple of follow-ups on this as well. But some want to cover that first? Matthew Harper: Yes, sure. I'm happy to jump in on that. Look, the reason we launched ENDURIUM was -- ENDURIUM Enterprise was not because we wanted a new product, it's because we were actively quoting it for a handful of customers. This was really a customer-led initiative where we had a small number of projects come through where we require -- the projects themselves were very compelling. At least one of them is with a previous partner with whom we've already delivered equipment. And they said, look, we want the benefits of ENDURIUM, but we want to be able to deliver it behind the meter and at a smaller scale. And so given that impetus, we thought it was reasonable not to sort of do a quick and dirty job of going and offering them something that would make sense for their needs, but rather really turning this into a fully built-out product that we could deliver not only to those prospective customers, but also to the C&I market more generally. In terms of the general focus and target for that product, really, ENDURIUM is -- the smallest projects that we're contemplating are in the double-digit megawatt hour size range. ENDURIUM Enterprise allows us to go down into the single-digit megawatt hours. That opens up a lot of the sort of medium to larger scale industrial facilities and commercial facilities where they have big electricity bills that need teaming and where our batteries can do a really good job. It also opens the door to slightly larger projects, but where they have a very, very high degree of redundancy required within their operations, sort of critical loads where having a smaller number of battery strains is very beneficial. So that stretches well into that sort of double-digit megawatt hour range. So whether you're looking at critical infrastructure, hospitals, data centers, whether you're looking at just smaller commercial or industrial facilities, ENDURIUM Enterprise is the right architecture for us to deliver. Joe Worthington: And the follow-up question, which someone has literally just asked again in a slightly different way. How are we addressing sort of the data center and sort of AI opportunity? This last question sort of says that our efforts seem to be currently quite heavily weighted towards grid scale projects. Does Invinity have a compelling sort of product for this market? Can you talk a bit about that? Matthew Harper: For sure. Yes. Look, I'll start off and Jonathan and Adam if you have comments, please jump in. As we are learning more about the duty cycle that these data centers have to go through and as we're learning more, especially about a lot of the AI data centers, what we're learning is that their load factors are incredibly stochastic. They are all over the place. These data centers will be pulling 20% of their net load 1 minute and 100% of their net load the next. Regulating that power flow into a data center like that is a duty cycle that our battery does spectacularly well, and it's a duty cycle that would be incredibly damaging for most lithium-ion technologies and other solutions. So we've always talked about data centers as being a great fit for us explicitly because of the lack of fire risk. Data centers are not going to want to have a battery installed alongside them regulating their power flow that has any fire risk associated with it whatsoever. But now that we're learning more and engaging more deeply with some of those hyperscalers and those other data center service providers, what we're learning is that the basic duty cycle for a battery at these sites is really fit for purpose for us as well. So some interesting opportunities in our pipeline, nothing to announce as yet, but I would say watch this space because it's one that we are very, very excited about. Joe Worthington: Thanks. There's a question here around someone that's sort of news coverage on membraneless-less flow battery -- sorry, membrane-less flow battery technology bidding to be part of the big data center project in Switzerland. Does management have a view on this type of technology? And what gives us the confidence that ENDURIUM is superior to that? Jonathan Marren: Yes. Look, Matt, if you may, I'll cover that. That's referring to the FlexBase project in Laufenburg. FlexBase were at the International Flow Battery Forum in Austria this year talking to the entire industry. And that is a really interesting project. That is they're looking to put 2 gigawatt hours of vanadium flow batteries beneath a data center. It's fair to say every single flow battery manufacturer is talking to them, and we are not alone in that, and we know them well. What I would say that is if you were looking to build a data center that needs a 2 gigawatt hour battery, you would be -- one of the key things you would be looking at is making sure that you have a robust technology that is proven in the field. So I can't comment on the credibility or technological prowess of that specific technology. I have no basis for doing so. Obviously, wish them well. But we are confident that when you look at how successful we were under Cap and Floor against all other vanadium flow batteries that we have a pretty strong competitive position there. They haven't announced where they're going with that, haven't announced how they're doing it, how they're going to structure that, but we know them well. But no, I'm not concerned about that. If we stand still for the next 5 to 10 years and let them get to the position we are now, then that could be an issue. But in 5 to 10 years' time, I would envisage we're a very different business than we are now. Matthew Harper: Yes. And Jonathan, just to pile on just quickly on the technology side. I would say that membrane-less flow batteries have been contemplated for a very long time. There are a handful of companies who have tried to bring that class of technology to the field, and they have struggled with the durability and longevity of that technology in service. There are always chances that those challenges have been resolved, but I would say that it's a class technology that has been tried and has not succeeded to date. Joe Worthington: Just keeping one eye on the time. I think we've still got some really good questions coming through. So I'm going to run over another 5 minutes or so just to let those on the call know. There's a number of questions here sort of asking about cash and things like that. So perhaps management could just give a bit more commentary in addition to what's been on the on the slides around cash burn and cash balance and sort of route to cash generation. Adam Howard: Yes. So as we talked early on, post the GBP 25 million raise, cash position at the end of September is just under GBP 40 million. And you'll see from the interims, our admin expenses now running under GBP 2 million a month, which sees us comfortably funded through into 2027, including also the equity outlay on LoDES. So that leaves the company in a strong position without the additional gross margin from some of these projects that we're looking at in the pipeline and that we talked through early on in the presentation. So that gives really headway to now look at good solid strategic decision-making for the group. Part of the user process that raise are R&D to accelerate our cost down. The most important thing in our pipeline conversion is cost, and that cost is driven by R&D investment, and the group is now in a solid place to deliver on those plans. Joe Worthington: Great. Thanks, Adam. There's a question here asking about the deal we have with UESNT, our Chinese partner, and we made, I think, one of the recent announcements about a license fee that's potentially due by the end of the year. Could you just give a little bit more color on this? And does this signal a sort of fundamental shift in our business model? And how should that color people's thinking on sort of that breakeven point? Jonathan Marren: Yes. When we say a fundamental change in our business model, hopefully, I can point you back to those -- that box right at the beginning of the presentation where we talked about our revenue streams, one of them was license and royalty. We have been talking about that for, I think, at least 2 to 3 years. So absolutely not -- this does not signal a change. We've been talking about this for quite some period of time. It's the way we think we should exploit markets outside of our core and let our partners do the heavy lifting when it comes to the commercial -- building the commercial pipeline, closing the sale and doing the delivery and installation and O&M from there on inwards. And hopefully, the manufacturing as well, we will get a license fee from that, that comes through as revenue without any costs associated from it. So it is clearly a lower revenue number, but it comes without cost. Therefore, it effectively comes through as near 100% gross margin. If we supply stacks, then that would come -- that 100% would come down because you'd also take account of those stacks, but much, much higher gross margin revenue than you have to date. If you're trying to build a valuable business, margins are -- percentage margins are really important. So anything we can do to raise those margins both at the gross level and at the net level are really important. And obviously, that does bring cash through without the costs associated with it. So that is why if we do book the revenue from that this year, that comes through with a very high margin, and therefore, it's really helpful to us. Joe Worthington: Thanks. I think we'll just do one more question, and it's been asked a couple of times in a few different ways, and it's a good one to end on it. It's people looking across into the Eos, specifically Eos, who have a market cap of close to GBP 4 billion according to this question. Can you provide an explanation as to why this market cap is so much larger than Invinity's? You seem to be operating in the same space with similar technology and a similar level of development. Jonathan? Jonathan Marren: Yes. Let me do that. Matt, feel free to jump in, if need be. So you're quite right. We are, to some extent, very similar businesses. We both dispatch broadly the similar amount of energy. They'll put their latest sort of total energy dispatch from their batteries out, I think, in their results, which their Q3 results, which are due out in November. But broadly, I expect that to be sort of reasonably similar. From an Eos perspective, we often sit alongside them in -- actually, either in projects on the ground, the [ VS3 ] project, other projects, we're clearly Pari-passu with Frontier Power in the U.K. I think that was the only one they were involved in. And obviously, that was successful alongside us. And therefore, you say, well, why do they have a different valuation from us? Some of that can be explained potentially by small cap in the U.K. is having a tough time at the moment, but it certainly doesn't explain that huge difference. And I think I get asked this a lot, and it's worth us focusing on that. And this really, to some extent, explains the opportunity we have because they have a financing structure that allows them at the moment to sell product at negative gross margin. And I say that because if you look at their forecast for this year, I think it's -- this might be -- this is broadly right, forgive me, this is around about $125 million of revenue and a gross loss of about $60-odd million. So they are selling significantly below the cost of production. And also, they have an OpEx base, I think, that is about 3x the size of ours. So quite a healthy growth -- healthy loss. Next year, they are able to -- they're forecasting, I think, $460 million of revenue and again, on effectively a flat gross margin business. Now for us, our shareholders, and I think us as a management team as a Board do not think that's a strategy we want to pursue to sell as a negative margin. We also do not have the balance sheet to do that. However, what's really important to notice is that the prices where they are quoting in a number of years' time are exactly where we are going to be from our cost down procedure. And therefore, we know the reason they've got those deals now is because they're at those price points where they're able to effectively sell at that loss, we're not able to. So they have a better forecast than us at the top line and the U.S. does value top line growth. We don't have that luxury in the U.K., and that's fine. But I think it points to the fact that there are customers in the LDES space that are buying at the price points that we are getting to. And when we get there, and I'm sure it is when we get there, then that sort of value will start to attribute to us. From us, we are also broadly spread from a geographical perspective. So back to the question on the U.S. I don't know the makeup of their projects and products where they go. But I think in competition, we mostly see them in the U.S. We don't see them as much outside of the U.S. at the moment other than the U.K. Matt, is that -- do you think that's fair? Yes. But yes, just for the avoidance of doubt, huge respect for them. And what we really want is we want Eos to be fabulously successful because we want this to be a fabulously successful sector, where institutions and investors make money and customers see that those who have got to the stage where the technology is mature are successful and develop because I think we will be one of them, and we will all grow on that rising tide. So I say very good luck to them, very good luck with that valuation, and we will aspire to that as quickly as we can. Joe Worthington: Thanks, Jonathan. I think we'll call it the on the questions. And thanks, everyone, for putting them all in. We'll make sure there's -- I don't think -- there's a few we've managed to miss, but I'll make sure someone, myself, one of the team gets back to you shortly after this call. And Jonathan, can I just sort of go to you for some final sort of closing remarks, please? Jonathan Marren: Yes, very happy to. Thanks, everybody, for joining. Apologies if there were some irritating pinging noises earlier on. It wasn't messages coming through. I think it was the port and my computer playing up, which I haven't spotted. So entirely my fault, I hold my hands up for that. We'll sort that out for next time. Hopefully, you found this useful. This is a business where there is some extraordinary opportunity there. The key for us is cost. I'm going to keep coming back to that, and that's the key there. Matt, you know your key task is to make sure we continue the process to bring the business together to drive that down. That is the #1 focus and everything follows from that. But I think that question on Eos is interesting. You've seen where the value of this business can go if we get that right. And I think that is absolutely within our graph. So exciting times. We'll keep pushing those partnerships forward as well and look forward to speaking to you next time. Operator: Fantastic. That's great. Thank you all for updating investors today. Could I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the Board 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 Invinity Systems plc, we would like to thank you for attending today's presentation, and good afternoon to you all.
Operator: Good morning, and welcome to the MTY Food Group 2025 Third Quarter Results Earnings Call. [Operator Instructions] Listeners are reminded that portions of today's discussion may contain forward-looking statements that reflect current views with respect to future events. Any such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements. For more information on MTY Food Group's risks and uncertainties related to these forward-looking statements, please refer to the company's annual information form dated February 13, 2025, which is posted on SEDAR+. The company's press release, MD&A and financial statements were issued earlier this morning and are available on its website and on SEDAR+. All figures presented on today's call are in Canadian dollars, unless otherwise stated. This morning's call is being recorded on Friday, October 10, 2025, at 8:30 a.m. Eastern Time. I would now like to turn the call over to Mr. Eric Lefebvre, Chief Executive Officer of MTY Food Group. Please go ahead, sir. Eric Lefebvre: Thank you, and good morning, everyone. I'd like to begin by expressing how proud I am of MTY and our franchise partners for their discipline and resilience in executing our strategy even amid the volatile environment. As I often mentioned in the past, MTY's team remains laser-focused on driving organic growth through positive same-store sales and net unit growth across our portfolio. Combined with greater efficiency and scale, these efforts should translate into meaningful EBITDA growth over time. With our asset-light diversified business model, we believe MTY is well positioned to navigate this challenging macro environment and to continue delivering long-term value. During the third quarter, we achieved an important part of that objective by delivering a net gain of 15 locations, supported by a robust pipeline of new locations and continued interest from our franchise partners to further invest in our brands. Cold Stone Creamery, Wetzel's Pretzels, Planet Smoothie and Thai Express continue to be key contributors, while many of our smaller brands add locations regularly and also contribute an important portion of the overall number. With momentum building, we are well positioned to continue expanding our network steadily over the medium and long term. MTY system sales remained stable at $1.5 billion. Same-store sales, on the other hand, have not reached the level we aimed for last quarter. But I'm encouraged by the sequential improvement in the U.S. driven by Cold Stone and SweetFrog, 2 brands at their seasonal highs during the third quarter and continued strong performance by Village Inn. Canada same-store sales were largely flat during the quarter. Many street-based brands performed well, including our breakfast concepts and sushi brands, but that was offset by a 2.5% decline experienced by our mall-based locations. Looking ahead to the start of Q4, we've seen continued volatility in the U.S., similar to the trends experienced so far in 2025, while our Canadian operations are showing signs of improvement across most of our banners. Although this reflects just 1 month of the quarter, it reinforces the importance of our diverse portfolio as we navigate these market dynamics. Turning to our digital channels. Digital sales grew 1% in Q3 and now represent 19% of total sales. The slight moderation in growth is primarily due to Papa Murphy's system sales decline. Papa Murphy's drives approximately 40% of its sales from online transactions, so a decline on Papa Murphy's carries significant weight on the consolidated number. Excluding Papa Murphy's and the impact of foreign exchange, consolidated digital sales increased 3% during the quarter over prior year. We see significant opportunity to increase our digital penetration over time, and we believe our investment in people, infrastructure and technologies, along with brand level initiatives are enhancing the off-premise guest experience while building a long-term growth engine. Digital also enables us to leverage data-driven insights for more targeted marketing, stronger customer loyalty, delivering scalable impact across both our large and emerging banners. While most of our U.S. brands are already well into their digital journey, we're only scratching the surface in Canada with significant improvements coming in the next few months as our data infrastructure reaches the required level to activate the value of the data we own. At MTY, innovation is at the heart of what we do. It's not just about new menu items, it's about finding smarter ways to engage guests, streamline operations and drive incremental traffic across our brands. From digital tools that simplify ordering and enhance the off-premise experience to data-driven marketing and bold menu concepts, our teams are continuously experimenting and scaling what works. This approach helps us stay ahead in a competitive, value-conscious market while driving the top line growth and operational efficiencies. We remain confident in the underlying strength of our brands and the resilience of our business model. At the same time, we are mindful of external factors that could affect near-term growth. A prolonged U.S. government shutdown could delay SBA loan approvals, which are an important source of financing for some of our franchise partners and as a result, could temporarily slow the pace of new restaurant development. The shutdown could also impact the availability of SNAP benefits, which may put pressure on consumer spending, particularly for low-income guests. I'd like to take a moment to walk you through some of the key objectives and initiatives underway at Papa Murphy's. As part of our ongoing efforts to strengthen the brand and position it for long-term success, we've made the difficult but strategic decisions in partnership with our franchisees to close a certain number of underperforming locations over the last year. This allows us to focus our time, resources and support on markets and stores where we are seeing strongest growth and guest engagement. These actions ensure the brand is on strong footing and remains healthy, sustainable and well positioned for future expansion. A recent example of this success is our opening in Deer Park, Washington. The newly opened location currently generates sales of more than twice our brand's average unit volume. We're also making targeted investments in marketing, including exciting collaborations like our recent partnership with Mike's Hot Honey. Additionally, one of our most impactful initiatives on the horizon is the relaunch of the Papa Murphy's loyalty program. This updated program transitions from a surprise and delight structure to a rewards-based system designed to both attract new guests and increase visit frequency among our loyal customers. Aggressive incentives will be offered to customers to generate interest around the relaunch, which should offer an opportunity to reconnect with some guests and reengage them with the brand. Other initiatives include menu optimization, SKU rationalization and an entirely new lineup of exciting pizzas launching next year, all aimed at driving innovation, simplifying operations and enhancing the guest experience. We're confident these strategic moves will drive continued momentum and growth for the brand. Papa Murphy's team is focused on building a stronger, more agile business, one that honors our heritage while evolving to meet the needs of today's guests and tomorrow's opportunities. While we are on the topic of Papa Murphy's, I would like to announce the departure of Adam Lehr, who was the Co-COO for the Barbecue Holdings in Papa Murphy's divisions. Al Hank, who was Adam's Co-COO, will take the solo lead for the division. We wish Adam the best of luck as he becomes a franchise owner for Famous Dave's Barbecue and Champps Restaurants. On a different topic, I'd like to highlight the significant progress we've made on our ERP implementation, a cornerstone initiative that will drive efficiency and scalability across MTY. Our Canadian go-live was completed on time and on budget, and we are now in the first phase of the U.S. rollout with the final phase scheduled for December. We remain confident in our time line and are applying the lessons learned in Canada to ensure a successful transition. Already, the system is enabling us to develop tools that improve visibility, streamline processes and enhance efficiency in every part of our operations. I want to take a moment to recognize the exceptional work and efforts of our head office teams whose dedication has been instrumental in achieving this milestone. With that, I'll now turn it over to Renee, who will discuss MTY's financial results in greater details. Renée St-Onge: Thank you, Eric, and good morning, everyone. Normalized adjusted EBITDA came in at $74 million for the third quarter, up 3% year-over-year compared to the same period last year. This was aided by the recognition of a $5.8 million employee retention credit from the U.S. government, which pertained to the 2020 and 2021 period. Excluding this credit, normalized adjusted EBITDA would have shown a modest year-over-year decline. Our franchise segment delivered results that were in line with the overall business performance with a 2% decline that mirrors the trend seen in same-store sales, while margins for the segment remained stable at 56%. Canadian revenues for the segment decreased by 2% to $36.4 million, mainly due to lower sales of materials to franchisees, partly offset by higher recurring revenue streams. Meanwhile, in the U.S. and International segment, franchise operations revenue also saw a modest 2% decline to $64.4 million, driven mainly by an unfavorable foreign exchange variation. On the expense side, operating costs in Canada went up by $1.4 million year-over-year to $20 million, mostly due to normal inflation on wages and increases in consulting and SAP implementation costs. Meanwhile, I'm happy to report that in the U.S. and International segments, operating expenses decreased by 4% to $25.6 million. Looking ahead in the franchising segment, we expect the higher quality of new stores opened and those about to open, along with the efficiencies from our ongoing initiatives to drive franchise EBITDA growth at a pace above same-store sales growth levels. Normalized adjusted EBITDA of the Corporate Store segment came in at $13.1 million, up $3.8 million from last year. After normalizing for the $5.8 million employee retention credit, EBITDA was softer this quarter, reflecting a decline in sales and a higher cost of goods. That said, we view these pressures as temporary and in most cases, addressable. We remain confident in our ability to manage these effectively and drive improvements over time, and we expect this segment's margins to be closer to the high single-digit level experienced last year. Canadian corporate store revenues decreased by 4% to $10.8 million due to a reduction in the number of corporate stores, while U.S. and international revenues declined by 1% to $107.7 million due to a 2% reduction in system sales. Operating expenses for the Canadian segment increased by $0.5 million to $10.9 million, while the U.S. and International segment decreased by 5% to $94.5 million. The U.S. decrease was due to the recognition of the $5.8 million employee retention credit received, partly offset by a higher cost, reflecting a higher number of corporate store locations. Food Processing, Distribution and Retail segment delivered revenue growth of 19%, driven by a shift in our retail model from a licensing agreement to vendor on record for some of our products as well as successful promotional activities and higher volumes across our core retail products. Looking ahead, we see meaningful opportunities for both revenue growth and margin expansion as we continue to build scale and strengthen our presence in underpenetrated markets. Normalized adjusted EBITDA for the segment reached $4.9 million, down 6% from last year with margins coming in at 10%. The decline in the margin was primarily due to the results of the move from a licensing model to being the vendor on record for certain products. Turning our attention to net income attributable to owners, it amounted to $27.9 million or $1.22 per diluted share compared to $34.9 million or $1.46 per diluted share in Q3 2024. The decline was mainly due to a $6.2 million net impairment charge on intangible costs related to one brand in the U.S. and International segments and 3 brands in Canada. Moving over to cash flows. MTY's asset-light model continues to generate strong free cash flows, providing meaningful flexibility to reduce debt, pursue strategic acquisitions and enhance shareholder returns, all while continuing to invest in the long-term growth of our brands. In the third quarter, cash flows from operations were $39 million compared to $66.4 million in Q3 2024, representing a decrease of $27.4 million. The lower-than-expected amount mainly reflects a temporary working capital decrease tied to delayed invoicing for the retail segment during the SAP rollout. To ensure accuracy and establish a sustainable process, invoicing was pushed to the later part of Q3 and is now fully up to date. We expect full collection on the amounts outstanding at quarter end within the next month with no material risk as all the receivables are related to major retailers and grocers in Canada. Cash flows before noncash working capital items, interest and taxes were $73.6 million compared to $71.4 million in Q3 2024. On a trailing 12-month basis, free cash flow net of lease payments stands just over $120 million, representing roughly 14% of our market capitalization. This underscores both the strength of our cash generation profile and the attractive value of our shares. We ended the quarter with net debt of approximately $602 million. Considering our strong cash flow generating ability, our debt-to-EBITDA of approximately 2.3x is a level of debt that gives us flexibility to make acquisitions should the opportunity arise. And with that, I'd like to thank you for your time and turn it back to Eric for closing remarks. Eric Lefebvre: Thanks, Renee. Before we move to questions, I want to emphasize that MTY is built for resilience and growth. With our asset-light model, strong cash flows and diverse portfolio of brands, we are well positioned to navigate near-term challenges and capture long-term opportunities. Our focus remains on driving efficiency, accelerating store development and investing where we see the strongest returns. With the strength of our people and the proven power of our model, we are confident in MTY's ability to deliver sustainable growth and last shareholder value. Thank you for your time, and we will now open the lines for questions. Operator? Operator: [Operator Instructions] With that, our first question comes from the line of Vishal Shreedhar with National Bank. Vishal Shreedhar: I wanted to get your perspective on the net location growth. Last quarter, you noted more than 100 locations under construction. And this quarter, there were 96 openings. So how should we think the pipeline going forward? Eric Lefebvre: Yes. The pipeline remains really strong. I mean, of note, and I'm sure our construction teams are listening now. We took possession of a large number of locations in the last few weeks. So the pipeline remains super strong for the next year or so, even the next 18 months. So really happy with where we stand in terms of our pipeline and franchisee engagement is really good. So what you're seeing, I mean, there's going to be seasonal highs and lows on new store openings, but the pipeline remains as strong as it was at the end of last quarter. Vishal Shreedhar: With respect to the employee retention credit, should we expect more of that? Or is it more of a onetime benefit in this quarter? Eric Lefebvre: Yes. That was -- the largest amount has come in. That was the largest one we were expecting. There might be some more coming in Q3 and Q4, but it's not going to be of the magnitude of what we received in Q3. Vishal Shreedhar: With respect to the menu prices that were talked about last quarter in the U.S. corporate stores, were those enacted? And did that help profitability to the extent envisioned? And was there an impact on traffic? And how should we think about pricing going forward? Eric Lefebvre: Yes. We did take price on certain brands, predominantly Village Inn and Famous Dave's. For Village Inn, there was no impact on traffic. We're really happy. The brand is doing well. We seem to have really, really good momentum with that brand. With Famous Dave's, I mean, the impact was good. I don't think there was an impact on traffic. The problem we have is those commodities that we sell at Famous Dave's keep soaring in prices. So if you just look at the price of beef, for example, the cost of brisket for us is going up rapidly. So we do face some issues. Ribs are getting more expensive as well. So we can increase prices only by so much, and then we need to figure out ways to control our prime costs. And unfortunately, the market is not going in the right direction for our proteins at the moment. Operator: And your next question comes from the line of Derek Lessard with TD Cowen. Derek Lessard: So a couple for me. You did have a pretty good pop in same-store sales in Canada in Q2, but it looks like they softened again in Q3. Just maybe if you could talk about what you're seeing in terms of maybe the consumer dynamic in your restaurant network. Eric Lefebvre: Yes. If we dissect Q3 a little bit more, we see that it's really the mall locations in Canada that hurt us a little bit more. So the fact that same-store sales turned negative for the quarter, I don't think means anything in terms of the consumer. It probably speaks to the incredible weather we've had and that people are not necessarily going to malls as much, which -- I don't want to blame weather for everything, but I mean, it's factual that our mall locations declined in Q3 more than anything else. So we're doing pretty good with the other types of locations. So I don't think we should draw conclusions on where the consumer is just based on that Q3. Derek Lessard: Okay. That's fair. And maybe just switching gears to the U.S. Obviously, there was a sequential improvement there. I think in the press release, you did talk about Cold Stone and Wetzel's improvement there. So just maybe talk about those concepts in particular and whether the improvements that you've seen are -- how you think about in terms of sustainability. Eric Lefebvre: Yes. I mean, the U.S. market is a little bit more volatile. It reacts to different situations a little bit faster than what we're seeing in Canada. Cold Stone is still a great brand and Wetzel's is still a great brand. So I have no doubt that in the long term, those 2 brands are going to be successful. Now will they respond positively or negatively to certain inputs, probably, like the rest of the market. But I remain super confident. What we're seeing so far in Q4 is a little bit of the same, where we see some really good periods and then some troubles here and there in sequence, where we can't really explain it by anything we're doing. So it really responds to different inputs that the market is receiving. But overall, I mean, if you look at our Q3, it was an improvement for most of our brands with the exception of Papa Murphy's that struggled a little bit more. So I mean, overall, the portfolio looks good. I mentioned during the more formal part of the call that we have a number of initiatives going on for Papa Murphy's. The relaunch of the loyalty program is really important. It's coming -- it's going live with a soft launch now, and there's going to be more aggressive marketing around it at the end of the month, and we're pretty positive for that brand. So overall, things are looking good. I mean, we do have some work to do with a number of our brands, but overall, it's looking positive. Derek Lessard: And at Papa Murphy's, is it issues tied to competitiveness within the pizza vertical? And I guess, how close are you to getting that store base stabilized? Eric Lefebvre: Yes. For sure, it's a very competitive space with the pizza. You look at our competitors and they're -- I mean, they all admitted to over-investing in marketing in the last few quarters, some of them $30 million, $40 million. So that's something we can afford to do. So we need to compete differently. In our case, I mean, the space is competitive. We remain positive on the brand. We have a lot of new things that are coming also for next year that we can't necessarily announce now. But pretty pumped about what we're doing with the brand, and it's looking really good. What we're seeing also at the moment is we have some franchisees that are pulling out a little bit of their local marketing efforts. And as you know, pizza is very marketing driven. So as soon as you close the tap, you see the sales going down right away. And unfortunately, some franchisees are just not putting their money into their businesses at the moment. So we're trying to work with them to have the right material to have the right campaigns for them to be, I guess, motivated to deploy some capital and invest in marketing. So we're working on that. But other than that, the brand is generally doing well. Will there be more store closures in the future? Probably a few. But I think you're not going to see closures of the magnitude we've seen in the last 2 years. Hopefully, we're getting close to stabilization there. And we're also going to be opening more stores as the pipeline is developing. Our sales team is doing a really good job, and we should see the pace of opening pick up next year. So obviously, that happens gradually, but now we're starting from very little openings to almost none, and now we're seeing some momentum picking up, and we're going to have more openings in '26. Operator: And your next question comes from the line of Ryland Conrad with RBC Capital Markets. Ryland Conrad: I guess just starting off on retail. Could you maybe unpack the strong performance there? Are you rolling out more products or seeing distribution gains? Or is that mainly driven by just the shift in consumer spending from out-of-home to at-home dining? Eric Lefebvre: Yes. I mean you need to look at the increase in revenues 2 ways for retail. One of them is just driven by the shift from a licensing model to a vendor-on-record model. So it's not really -- the fact that our revenues are increasing by that much doesn't necessarily mean we have great performance there, but we do have great performance when it's all said and done. We have some really good opportunities in that market. We have some really good products and the team is doing a fantastic job now expanding the network of stores where we deploy our products. I think we've made some changes in the organization last year in Q4, and we continue to evolve that organization. And as our pipeline is growing and as we get traction with more initiatives, we should see significant growth in that space. So really happy with where we are now. Numbers might be a little bit misleading this quarter just because of the change in model. But overall, it's a great business, and it's one of the areas of our business where we see the most growth for the next few years. So we're really happy with where we are. Ryland Conrad: Okay. And then just shifting gears a bit to M&A. I guess with the macro pressure that we're seeing across the U.S., could you just provide us an update at a high level kind of what you're seeing with the current M&A environment and just whether seller expectations have begun to normalize at all and how that pipeline is progressing? Eric Lefebvre: Yes, it's interesting. The market is very dynamic. There is a good amount of deal flow at the moment. So it's just a matter of finding the right deal for MTY. There's been a lot of corporate store networks that were not necessarily interesting for us. There's been a lot of fixer-uppers, a lot of Chapter 11 situations where this is not necessarily what we're focused on. But I feel like the market is starting to be in a better place now. And it's just a matter of us to be at the table for those right deals when they come and to be able to make them cross the finish line. So the market seems to be a little bit more favorable at the moment for MTY, and we'll see what it -- I mean there's no guarantee it's going to lead to anything significant in the future, but there's also a better opportunity now than there was maybe a year ago. Operator: And your next question comes from the line of Michael Glen with Raymond James. Michael Glen: So just on CapEx, Eric, your CapEx spending has come down. It was notably quite low in the fiscal third quarter. I'm just trying to get a better sense with the corporate stores that you do own, is this level of CapEx sustainable? Are there some pent-up projects that you're going to have to start to look at next year? Eric Lefebvre: No. I mean we've been saying that CapEx would normalize this year for a long, long time, and we're delivering on that promise. I mean we don't normally give guidance, but that was one area where we said that CapEx was going to be the way it is. So this is normal CapEx now. We're doing what we have to do at our manufacturing plants, and we're doing what we have to do in our corporate stores. So it's not like we're underinvesting in anything. So no, we're actually refreshing a few stores at the moment. We try to do it very cost effectively, and we try to be disciplined with that. But there's no pent-up CapEx coming. So the level you're seeing now is the normal level going forward. Michael Glen: Okay. And just on -- you referenced the lower expense levels. Is there -- can you better describe is there a broader expense initiative that you're going after here within the organization? Eric Lefebvre: Yes. I mean you've known MTY for a long time. This is a review we do continuously, try to be more effective and try to stretch every dollar to go a little bit further. So this is part of what we do. I mean also over the last 18 months, we've restructured a number of our departments. We've consolidated a number of different things. We see also SAP enabling maybe some lower expenses in some areas. So it's a continuous process at MTY. We never take it for granted that we're at the right level, and we're always trying to be more and more disciplined with our expenses. So there's no specific initiative that I can announce or that I can point to, but it's a continuous effort that we're trying to reduce the amount of external help. We need to reduce the number of consultants, try to maximize every employee we have. And now with our investments in technology, I think we're going to be able to make everyone a little bit more efficient in the company, and that should result in some savings as well. So -- but there's no specific initiative. Michael Glen: I guess I've never known the company to be overly egregious on the expense line. So I'm just curious where you're finding incremental buckets, it must be hard to find. Eric Lefebvre: There's always something. Michael Glen: And then just circling back to M&A. I know that you do keep your sort of criteria list rather broad. But like what -- if you're looking at opportunities, I guess, probably more in the U.S., like what -- can you describe what represents something that would be ideal for you to go after? Eric Lefebvre: Yes. Well, the one thing is we'd like to go into franchise systems as much as possible. Corporate stores, we don't hate corporate stores, but we also like franchise better. So this would probably be the one criteria. And then obviously, you want to look at type of food, type of market you're going into and try to find an area where there's probably more room to grow and probably an easier environment. But there's no specific criteria. I mean there could be some really good targets in the wrong areas that would be very cost effective. So that might be one or there could be some really good growth companies that would be a little bit more expensive where we can see a longer runway. So that could be another one. So I mean, it's all about the return we can generate for shareholders in the end. And this is how we look at it. So we're pretty agnostic in the type of food, the geography. I mean the one thing where we're probably less agnostic is where we want to go into franchise systems. Operator: [Operator Instructions] Your next question comes from the line of John Zamparo with Scotiabank. John Zamparo: I wonder if you could talk a bit more about franchisee profitability. There's some new disclosure on that from your prepared remarks. Maybe first, can you just remind us of the visibility that you have on this metric and has the ERP system helped with that? Eric Lefebvre: We have visibility for some of our brands. We don't have visibility for all our brands. So in many cases, we have some tools like Crunchtime or ProfitKeeper, for example, where we're going to be able to track profitability a little bit better. And that applies for some of our larger brands like Cold Stone and Papa Murphy's, for example. So we do have access to franchisee profitability. And I mean, there's always some franchisees that are doing extremely, extremely well, franchisees that are struggling a little bit more and a large number of franchisees that are operating at expected profits. So that's the normal. And this is -- what we're seeing now is no different than what we were seeing before. For the other brands, we'll work with the annual financial statements that we're getting and also with our theoretical models. We know how much rent franchisees pay, and we know how much they should have in food costs and labor costs. So typically, we have a pretty good idea of where our franchisees stand. And I mean, it's a daily battle for all our brands and all our operations people. We need to make our best effort to help our franchisees be profitable with their business. And what we're seeing now, I mean, is a good validation that what we're doing is right. We have a lot of current franchisees who want to reinvest in the business and a lot of these new stores we're opening are coming from existing franchisees. So it tells me that although we might not be perfect, we're doing a large number of good things and that we're helping franchisees be profitable. John Zamparo: Okay. That's good color. And does SAP help with that? Or is that separate, what that's contributing? Eric Lefebvre: Yes. That's not SAP. That's one of the aspects SAP doesn't cover. It's not scoped in. We have other tools, other technologies that enable that. It doesn't mean one day, it won't be in there. But because franchisees numbers are not our numbers, typically, we try not to mix the 2. So I suspect that we'll keep that out of SAP. John Zamparo: Okay. And it sounds like you're relatively optimistic on being able to grow overall franchisee profitability even if the outlook on the sales environment is maybe more moderate. Are there plans to take out costs within the 4-wall operations? Eric Lefebvre: Yes. I mean this is what we do on a daily basis. We need to do a great job at purchasing, a great job at trying to help our franchisees maximize every product that they have in the store. We have some better practices, best practices, let's say, for example, that you shouldn't bring in a SKU in a restaurant if it doesn't have at least 3 uses. So those are the types of initiatives we try to come up with where we're trying to obviously bring some new innovation, but try to innovate with the existing SKUs. So innovate within the box we already have and where we need to bring in new SKUs, and we'll need to maximize them and use them a little bit more. So those are the types of initiatives we're trying to come up with. We're also working with a number of our suppliers to try to help us reduce the labor needed in our restaurants. So a certain number of prep, for example, some items can be prepped with our suppliers. So we don't have to do it in store. We have better volume to automate maybe some of these functions. So there's a number of different initiatives we look at to try to do that. AI is coming into the staffing also. It's been a thing for maybe 5 or 6 years, but it's obviously getting more refined now. So we're trying to have the proper level of staffing at every hour to try to, again, take out costs in the restaurant and maximize the staff when they're in the restaurant. So this -- but it's ongoing initiatives. So I can't say it's one thing, not one initiative we're doing now. It's something we do every day. John Zamparo: Right. Okay. Switching gears to the small business administration loans. I wonder if you could say historically, what percent of U.S. store openings have relied on this program? Eric Lefebvre: The vast majority of them. John Zamparo: Okay. And typically, what percent approximately of total funding would come from that program? Is it significant? Is it a small contributor? Eric Lefebvre: Yes, the funding does not come directly from the SBA. The SBA is more a federal program that will guarantee a certain portion of the loan for banks to loan. We have the same program in Canada. It's SBL in Canada. So it's the same type of program where the government guarantees a portion of the loan to incentivize the banks to support small businesses. So it's the same thing in the U.S. And if the SBA loan doesn't get approved, it's a little bit harder for the banks to lend the money without having that government support. John Zamparo: Okay. Understood. A couple more. On the openings this quarter, these skewed fairly heavily towards the nontraditional format. I wonder if you could add some more color there. Was that 1 or 2 banners? Was there a reopening of previously closed stores? Anything you can say there? Eric Lefebvre: No. Well, it's -- Wetzel's is a brand that will have more non-trads where we might open, for example, in a Walmart or we might open in -- we used to open more in Macy's. You can open food trucks, for example, or airports or campuses. Those will all be categorized as non-traditional. So it's a pretty large bucket you have in there that will skew non-trads. So it's mostly from -- the volume of non-trad mostly from the Wetzel's. We also have some coffee shops that are opening in other locations that might be considered non-trads as well. So you'll see that. But I'll say it's mostly Wetzel's. John Zamparo: Right. That makes sense. Okay. And then lastly, I wonder how you're thinking about the buyback. You were not active in Q3. You referenced in your prepared remarks that you're pretty pleased about where leverage stands. I wonder what investors should expect on the buyback over the next year, particularly given valuation levels and where does this lie in your list of capital priorities? Eric Lefebvre: Yes. I mean, it's something we discuss all the time. We made the choice last quarter to focus a little bit more on our debt and put a little bit more money on debt repayments. Paying down debt helps us build flexibility, whether it is for buying back shares through the NCIB or even an SIB. It gives us flexibility if we find attractive opportunities out there. So -- I mean, we like buybacks. We also like reducing our debt. So it's a balance right now. I'd say we probably expect that -- at least for the next quarter, we should probably expect that we're going to keep focusing on debt, and then we'll reassess regularly as we always do. Operator: Thank you. And showing no further questions at this time. Ladies and gentlemen, this now concludes today's conference call. Thank you all for joining. You may now disconnect.
Operator: Good afternoon, and welcome to the Invinity Energy Systems Plc Interim Results Investor Presentation. [Operator Instructions] Before we begin, I would like to submit the following poll. And I would now like to hand you over to our CEO, Jonathan Marren. Good afternoon to you. Jonathan Marren: Great. Many thanks, and welcome, everybody. Welcome to our 2025 interim results presentation. Delighted to have you all here today. The results were released a week, on Monday, so they've been with you for a while. We're going to start this session with a brief come-through of the results from Adam, our CFO, because obviously, that is the direct topic of this, but we've been having a number of institutional meetings yesterday, today and Monday -- sorry, on Tuesday. And understandably, most of the questions are around where we're heading as a strategic basis and an awful lot of news flow that's come out in recent weeks and months. And we're going to talk around that and happy to take your questions afterwards. So Adam, if I will, I'm going to hand over to you to talk through the interim results. Adam Howard: Good afternoon, everybody. I'm going to start by going through the key financial highlights, a little bit more detail on the P&L and balance sheet and then pass across to Jonathan on the strategy. So looking at the first half trading in line with expectations, we signed -- we launched ENDURIUM at the back end of last year and signed 12-megawatt hours of orders in the first half. That's up from 4-megawatt hours in the same period last year. So clearly, revenues second half weighted this year, we recognized GBP 2 million of revenue and grant income driven largely by the LoDES project funding. We were -- our operating loss was down 10%. That's a combination of recognition through LoDES and also a reduction in our administrative expenses. The group is debt-free, just shy of GBP 40 million cash at the end of September with a GBP 20 million order book for the full year. And so looking at what's happened on the P&L, that GBP 2 million revenue in project grant income, GBP 1.7 million of that was LoDES grant funding, probably recognizing through the P&L, what's not capitalized in terms of the units themselves. We -- you will see a slight uptick in the gross loss. That's reflecting our running costs spread across lower production volumes and also includes warranty costs, which also include the DC-DCs that are being replaced by the supplier. And slight reduction in overheads, as I said, has been supported by our R&D recoveries out in Canada. And so taken together, a reduced operating loss of GBP 10 million compared to GBP 11 million in the period last year. So looking more on the balance sheet and what's happening there. So you will see an uptick in our inventory and prepaid inventory to GBP 14 million compared to GBP 6 million this time last year. That's a reflection of LoDES, HITT, the U.S. project we announced back at the beginning of the year, and STS, the Hungarian project. Importantly, there is debt financing sitting behind the STS project as well, which is also important as we scale this into these larger projects for Cap and Floor. So what you'll see in the bottom left-hand corner is the buildup of that inventory there in Motherwell ready to be shipped out for LoDES. You will see some DESNZ claim accrual on the balance sheet. That's cash that has since been received. So I say, taken together with the GBP 25 million raise that we recently closed, just under GBP 40 million of cash, which is the company comfortably funded through to 2027. Looking at outlook for the full year. So the GBP 20 million order book, there is some risk within that around 10% of that subject to customer NTPs. And then we need to close out another GBP 5 million of near-term contracts to get to the maximum potential revenue and grant income for the year of GBP 25 million. We're broadly categorizing our pipeline into 3 main areas. One is order book. So that's signed contracts with customers that are either unconditional or subject to a customer NTP. The second is near-term contracts, so projects that we're expecting to close out in the next month and the next quarter, which are in final contracting stage, so without development risk. And then the last category is our development pipeline. So those are people who have bid into a procurement scheme like Cap and Floor in the U.K. or the schemes in North America and Canada with our technology or submitted planning permission on a project with our technology. So with that, I'm going to pass across to Jonathan. Jonathan Marren: Well, actually, Adam, if I may, just talk about before you cover that slide. If I can just push you back to this slide here. There's a little picture on the left-hand corner there, and I think pictures paint a thousand words. Adam talked about inventory rising at the period end. For those of you that have been to Motherwell, that is a picture taken from Motherwell, no matter than sort of 24, 48 hours ago. As you'll see, there are a very significant number of boxes that are there. Those are in relation to the LoDES project and also in relation to the Indiana project we signed and announced quite recently and HITT. So you can see visually there, we have a very full factory with inventory ready to go, which obviously will convert into cash. And I think the other point I'd like to mention is that, Adam rightly pointed out that revenues are second half weighted. Just to recap, we had a major new project -- product launch at the back end of last year, right at the end of December. We managed to ship 4 of those units from Vancouver to Gamesa Electric in Spain, at La Plana. And that has been tested and you've seen, hopefully, or will see, LinkedIn posts from Gamesa Electric on that site and then talking about that. Any manufacturer that launches a new product does not start shipping straight away, particularly if they are working up the new supply chain and moving it from Vancouver to China. So it's not surprising given our revenue recognition that revenue gets reckoned in that second half of the period. So the other point on that is that the trigger for recognizing grant income on LoDES was when we got planning permission on that site, and that came really right at the back end of June. So with that, Matt, I might just ask you to cover off some of those LDES procurement programs. Matthew Harper: Yes, absolutely. And Jonathan, thanks. And I know you'll speak in a moment about the importance of some of these programs in our broader strategy. Look, we've been tremendously encouraged over the last year really to start to see around the world a number of bespoke programs for long-duration storage, most of which have some form of carve-out for non-lithium technologies, whether we're talking about the Cap and Floor program in the U.K., the BC Hydro RFEOI that has just closed here in BC or some of the programs in California that are a continuation of our already successful deliveries there. Those jurisdictions are all starting to look not at sort of tens of megawatt hours, but hundreds to thousands of megawatt hours worth of deployment of our class of technology. We're tracking about a half dozen or so of these projects as active participants. We have submissions that have gone in within the various deadlines that started back in June and are running through sort of early next year. And we've been very encouraged so far by the feedback that we've had from the developers with whom we're partnering on these programs and expect that we will hear good news and share it with you all when -- as and when it comes through. Jonathan Marren: Great. Thank you, Matt. So let us move on to the bulk of the presentation. The first 3 slides here are really how we are presenting the business now to investors, to customers, to those who maybe haven't come across Invinity so far. So I'd like to run those through to you because I know there's -- there will be some new people on the call as well as those who are familiar with it. But there's some interesting data points here as well that point to our strategy. So that top left, the world is facing an energy crisis, and I don't think anyone can doubt that is the case. There is a significant amount of primary energy that is wasted at the moment, 63% of a 5% of global GDP is wasted as energy at the moment. And there's a reason for that. Global energy demand is growing at a very, very significant rate. And that third bullet point there is very interesting. If you look at where consumption is forecast to rise significantly globally, 60% of that is due to come from both China and India. Our business is one about gaining scale because scale enables us to reduce our product cost and therefore, open up our marketplace. If we are going to achieve scale globally, we need to be in those 2 markets. And as you'll see and we'll come on to, we announced 2 really interesting partnerships in China and India, both in September. If -- for those who are familiar, I spend a lot of my time, I'm afraid, looking at renewable penetration on the U.K. grid. On Saturday, we had a very blustery day and it was very sunny, and we had approaching 75% of penetration of renewables onto the grid. However, we still have the highest energy prices in the G7 and some of the highest worldwide. It is causing huge issues from a manufacturing perspective, from a growth perspective. And the reason that you can have that high penetration of renewables, but yet no impact on prices is because the current storage mechanism we have, which is predominantly lithium short duration storage is not bridging the gap between the two. We need to be able to time shift that renewables from daytime from the solar perspective overnight and particularly when the wind is generating. And that's what long-duration storage is designed to achieve. So if that's the problem that needs to be addressed, how do we address that? Now very simply, we produce a battery. We produce a 20-foot shipping container that is a battery in a box. And frankly, we don't need to make it too much more complicated than that to a large audience because fundamentally, our customers, be they sophisticated developers, be they C&I businesses, want to buy an energy storage device. They want to buy a battery. They are not too concerned necessarily whether it's a lead-acid battery, lithium battery, or vanadium battery, but what they want are certain characteristics that, that battery can deliver. So for us, we talked about our characteristics, we have different ones than other types of batteries. Critically, we have a 30-plus year life without degradation. And what that means is you can cycle the batteries as many times as you want without any drop-off. And that is unlike almost any other type of battery. There is no fire risk. Critically in a huge number of use cases, fire risk is a problem. And it's also a problem from a planning perspective. Increasingly, planners do not want a fire risk there. We are less noisy as well. That's quite a significant characteristics at the same time. One of the questions is, well, if -- and when I talk to customers, it's rare you would talk to a customer that says, look, I love this. I don't -- I would like to buy a battery. Why are you not selling more of them? And why can I not buy one now? And the answer is actually, it comes down to cost, and cost is going to be a recurring theme of our product across this presentation and what we are doing to get to a position where that gets taken off the table, and therefore, we can scale significantly. Now the other point that is really interesting is you'll see a number there that we have nearly 2,000 individual flow battery modules manufactured for customers across the world. That's up from 1,500 that actually we presented very, very recently. And actually, when you account for the LoDES projects and others which we are building out for STS, Ideona, et cetera, we're at about nearly 2,000 number. And that's really important as well because most of our customers are going to be those who effectively are building a critical infrastructure asset. This has to work. They are not willing to take infrastructure and technology risk. And what is clear now is because we have progressed the VS3 since 2020, over the last 5 years, we've got that credibility. So we have proven the technology works. But not only that, we've proven that the customer services and our ethos around that is something which customers really value. And time and time again, I speak to customers and they say, look, there are always problems on site, and there will always be problems on site across all technologies, across all products. And what you really want is an organization who we can trust to come in and resolve those issues. And not only resolve them, actually, come to us and say, look, we have an issue with the product or this site, we actually need to come in and fix it. And this is the time scale, and this is how we'll do it. And then you do that on time. And I am very, very certain that we are doing better than the industry on that because we are told that time and time -- time and time again. You only have that if you have that number of products out into the field. And that in itself is a competitive advantage and the blocker from others who are not in that position getting to where we are. Clearly, if we stand still, we will allow others to catch up, but we don't intend to do that. So that is a huge competitive advantage. If I can look at that bottom right-hand box, our revenue model for those who, say, are new to us, our principal revenue stream at the moment is sales of batteries, sales of those 20-foot shipping containers. And we recognize that once the product is taken ownership by the client. There is some servicing revenue that comes alongside that. Inherently, there's a bit of a conflict. You don't want to grow that too significantly because ultimately, people are looking at the overall cost of ownership of this product and for them, keeping the servicing level down is important. So -- but it will become an increasingly important revenue stream for us. The license and royalty arrangements, which are those that we look to progress outside of our core markets, so across Taiwan, across China, across India, it is likely that all those -- most of that revenue will come as a license and royalty. So our partners will look to do the heavy lifting in terms of the sales process, in terms of the commissioning, and we will get paid a royalty for that. And we alluded to that, I think, in one of our announcements when you look to China, that comes through effectively at very, very high gross margins. There were no costs associated with that. So that is one way of significantly enhancing the margins over and above product sales. And then that last bullet point at the bottom, batteries as a service. You are starting to see service providers talk about this. ABB is one of those service providers that launched this service at the end of last year. And actually, for a behind-the-meter customer, so a sort of C&I customer, who maybe has solar on their roof, what they really want to do is they will need to lower their energy bills. They're not sat there thinking, I need to buy a battery. And therefore, if you can package a product up and offer a service to them, almost power by the hour, you could say, that can start to become very appealing. And if you think about how a leasing model works, we all know when we -- if we lease a car, ultimately, the cost of that lease is driven by the residual value of the car at the end of that period of time. We have a battery that doesn't degrade. And therefore, you would have thought that the residual value of that battery should be much higher than another product. It should lend itself really well to a leasing model and therefore, this type of service. So we've said future here because it is the future. We're not about to do that just yet, but it is something we will actively work on to see how we can progress. We -- Invinity came together at the beginning of 2020. And since then, we have those 2,000 modules -- up to 2,000 modules out into the field. We have over 6 gigawatt hours of energy dispatched from those batteries, and we are about to break the 7 gigawatt hour of dispatched energy. Again, that brings huge credibility to the business. But ultimately, it is all about ENDURIUM. We launched ENDURIUM at the back end of last year. And very recently, we launched ENDURIUM Enterprise. Those cover effectively different use cases and different sizes. But absolutely critically, it is the same shipping container. It's the same battery within that box because what we do and are absolutely focused on is driving cost out of that product, and you do that by having a product that is manufactured on a repeatable basis. And there is a different architecture that sits around it. But ultimately, that's how we can take cost out and deliver scale from that. So going forward, you would expect to see certainly ENDURIUM and ENDURIUM Enterprise sales being predominantly the mix. So business strategy. And I think this is -- it's worth spending a few minutes on here to explain where we are. If I can really focus on that longer-term box. Longer term, we mean 2030 as a target. I am convinced and I have -- is an ethos throughout the company that we have to be in a position that as a product, we can compete alongside any other energy storage device without any form of support from the regulator or elsewhere. This needs to be able to compete in its own right. And the way we do that is an absolute focus on driving cost out of the product heading towards that target. We have a very good competitive advantage with other LDES technologies, and there's a great example of that from the Cap and Floor program, which I think Matt will talk about in a short while. But lithium really is a huge competitor to ours. It improves from a performance, fire, safety perspective, but we have very other many characteristics that enable us to compete on that, but we have to continue to compete on cost. And therefore, at the moment, we'll talk about how we are going to do that. So what does that mean? That medium-term box there, though, is how we can deliver significant scale from various programs, which are being promoted around the world. Now Matt's just talked about those LDES programs such as BC Hydro, such as Cap and Floor. There are some very significant programs there. And that -- we've shown we can be successful so far within Cap and Floor, and we're seeing the same level of interest elsewhere. That can deliver for us billions of pounds of revenue. Now that's interesting, but what really is driving the cost out is the scale that comes behind that of significant manufacturing of products across the piece. So that's where we are focusing to deliver those huge potential volumes. But what does that mean for the short term? It means in the short term, we need to be a little bit more focused on where we are looking to sell. We are not looking to compete directly head on with lithium. But there are many use cases we see where lithium is not appropriate. Think of a green hydrogen project, think of a data center. Both of those have a fire risk that you would not put a lithium battery directly next door to. We also speak to developers who actually see that there is a cost and benefit to putting our vanadium flow batteries in now. So therefore, we're speaking to some very large developers who are considering making purchases for delivery next year and the year after. So there is some really interesting deal flow there, but we have to be a little bit more fleet of foot to be able to find them. There are competitors of ours that are able to sell at negative gross margin at future costs to achieve that. It is one way of driving scale, but it is very high risk. And also, I think it's -- for us, we need to be focused on driving that cost out and just making more careful use of our balance sheet rather than effectively what could be wrapping pound notes around a product before it sells out there. So I hope that sort of explains our strategy and why we're heading where we are. The short term, we're looking to make sure that we've got some healthy growth in revenues next year and then really pushing forward from '27 onwards. So from a cost down perspective, I'm going to cover the first few bullet points here. Matt, I might hand over to you, if that's okay, to talk through some of the detail. But one -- in fact, one of the most interesting questions we got when we produced the final results was an institutional shareholder saying to us, look, you moved from VS3 to ENDURIUM. That was quite a long process to get there. Are you happy with the result? Did it achieve out of the box what you thought it would do? And the answer there is, yes, it has done. There is a reason why we spent so long talking about box, then Mistral and now ENDURIUM. Out of the box, 43% lower production cost than the VS3. So an absolutely critical step forward from a product development perspective. A year ago, when I took over as Chief Exec, we talked about the fact that at that point in time in Vancouver, the product was too expensive, and we needed to move to a low-cost region, and we set out that we knew how we would do that. We have taken, since then, 36% cost out of the product as we've moved it across from Vancouver to China, where the balance of system is currently being manufactured. So 2 important data points there. If I can just focus on that graph before I hand over to Matt and explain those 3 lines. The top line, again, 12 months ago was where the cost target road map was set out. Still some laudable forecast there, but we needed to deliver against that. Now the middle line was what we reported to you at the time of the final results in May, and that red line is the most latest cost projection. So as you can see, we are continuing to head down the curve, but as an improved rate than we forecast before. That is so important to us because we know we are absolutely certain that at the cost points that we think we can get to, this really does open up the market. So Matt, if I may, I might hand over to you just to cover off the other part. Matthew Harper: Yes, absolutely. Look, the -- as Jonathan said, and as many of you are well aware, this is a market that is tremendously cost sensitive and where we need to be directly competitive, both on a first cost basis and ultimately on a low-cost basis as well with lithium juggernaut What we've seen, we've been very happy with the progress the team has made over the last year, knocking further cost out of ENDURIUM as we've brought that out. We've started to optimize the supply chain as we started to deliver the product as we wanted it to be. The next 2 stages of the evolution of that are really looking at the first stage for product that is going to be delivered within about 2 to 3 years. We're looking at primarily improvements on the fundamental design of the product, some engineering changes to optimize how the product is configured and goes together and then really leaning into the relationships that we're developing in India and China to make sure that on a global basis, we are developing the absolute best possible, lowest cost possible and highest quality possible supply chain. When we look out to the end of the decade, what we have time for at that stage is more evolution of the fundamental technology underlying the product. So everything that we're going to deliver between now and say, 2028 is going to be based on exactly the same technology we have today. But as we look out towards the end of the decade and as we look towards that point of becoming directly cost competitive with lithium, what we are contemplating is enhancements to the existing technology platform through better stack technology, higher energy density electrolytes and related performance improvements that are going to see us hit that direct cost competitiveness. So looking at those global LDES procurements that we talked about a few minutes ago, we've got with ENDURIUM, the tool that we will be able to use to deliver those projects profitably in the next sort of 3 or 4 years. And then by the end of the decade, moving beyond those bespoke stand-alone programs to be directly competitive with best-in-breed product in the marketplace. Jonathan Marren: Great. Thanks, Matt. So I'd like to spend a little bit of time talking about a couple of the announcements which we made in September on China and India. Let's cover India first. We announced a strategic partnership with Atri. Atri is an entity that I've known the promoter from that for some 15 years or so. He was behind KSK Energy, which was a power generating business listed in London, but with assets in India, upwards of about 5 gigawatt hours of coal and wind assets. Very deep understanding of Indian power markets, very well known in the sector and understands how the sector is moving towards greater penetration of renewables and the need for LDES technology. The Indian market is one, and you've seen this from solar, you're starting to see it from lithium, and it's going to be exactly the same for long duration. That market really needs locally supplied product for that market. And therefore, for us to be able to deliver into that, we have to have a local supply chain and local manufacturing. But I'm a firm believer that in areas outside of our areas of expertise, we have to have partners who, a, we can trust; and b, who are competent to be able to sell into those markets. And again, I think we picked a great partner with actually to enable us to do that. So they are very much going to assist us on those commercial efforts. They are well connected in with the various LDES programs that are going through there and are going to assist us and going to work with them to be able to make submissions into that and also build up the supply chain and the manufacturing. So very excited about that. They also looked to the business and wanted to help us from a strategic basis and hence, the GBP 25 million, which they and Next Gen Mobility put in during the period. So really pleased to have them on board, and the teams are working collaboratively with each other already. China is obviously an enormous market. And I was -- I've made 2 trips to China and Hong Kong quite recently, both to Xiamen in China, which is on the East Coast. And what you realize when you go to China is actually China is obviously a collection of provinces and those provinces compete really fiercely with each other. And the province where Xiamen is in has a lithium battery manufacturer. It has Hithium, which it assisted growing from a standing start in 2019 to what is now, in some measures, the second largest lithium battery manufacturer in the world. They don't do anything when it comes to vanadium flow batteries at the moment, and they are very keen to have a presence there. So that's great. We've met them, and they are really keen to work with us. The picture there, we have the #2 in the Head of the Commerce Department of the Xiamen government. We have a new potential partner, which is International Resources Limited. They own one of the world's largest vanadium mines in South Africa and various other sort of members of the sort of British diplomatic service, et cetera. What we are trying to do there is to use what China is very good at, is building scale. And the other thing they are very good at is also on quality as well. So it's maybe a misconception that you might have sometimes that what comes with scale and quality doesn't follow. We were blown away when we walk around the Hithium factory, the level of automation and the level of quality control that comes with that. When China wants to do something, it really does put its mind to it. There is always a risk conceptually that there is IP leakage from doing this, and we are alive to that. I would say 2 things, one of which is that I think there is a greater risk in us not trying to embrace how China can deliver scale. But also one of the ways you mitigate that is by working with partners who you trust. And so the fact that we are working with UESNT, who we announced slightly earlier and International Resources Limited, those are 2 partners that we've been working with for some time, we've got to know well. IRL is based in Hong Kong. So we'll channel a lot of our efforts through that. There's a more familiar legal setup in doing so. And so together, that will enable us to really be comfortable and try and drive cost out. The other side of that is that both of those 2 organizations have some really interesting projects and contacts within China at levels that I think we wouldn't -- in some sense, sort of dream of being able to exploit ourselves. And so on both China and India, you can see a license and royalty model coming through there. And if we get this right and we start delivering product into China, then this could start to deliver quite significant license royalty revenue from that. We are not there yet. But at the very least, what this should be doing is delivering low-cost product to enable us to compete at the lower cost we need outside of China in our core markets. So both of those 2 are really, really exciting. The partnership in Xiamen is through C&D Group. C&D has a $100 billion of revenue. It's a Fortune 100 companies. It's a collection of companies that sit within that. I've met on numerous occasions, the senior management team there, i.e., the Chairman of the various organizations and developed a really good relationship with them. So this is hopefully going places and more to come in due course. Now Matt, if I may, I wouldn't mind you just covering sort of the LoDES program, and I will jump in on one point. I think you know when I'm going to do that. Matthew Harper: Yes, absolutely. Always welcome to jump in, of course, Jonathan. Look, we were thrilled about 3 weeks ago to see the short list for projects that have been qualified under the first stage of the Cap and Floor program. Of the 171 projects that had been proposed, 77 of them were selected to go forward. That's a pretty healthy ratio of which were our projects, a total of 16.7 gigawatt hours of projects on our side. Of the handful of developers that we had partnered with to deliver proposals under this program, 4 of them were selected to go forward with delivering projects with our technology, including Frontier Power. We were also very encouraged that 100% of the eligible VFB projects in the scheme were ones that are planning to use our technology. So a real validation that not only we're the right technology for the program, but that we're -- that Ofgem and others believe that we're the ones who are going to be able to deliver the right kind of LDES capabilities to the future grid, in general. I think it's worth noting that there are a combination of projects that had both lithium and zinc batteries installed. Those projects are going to -- they're intended to include both technologies. And we're very happy to be part of delivering that product capability. As we look towards next steps on this program, we're now moving into the final project assessment stage. That includes a cost-benefit analysis that includes some more detailed planning considerations. We're moving into that phase now. The initial decision for projects to go forward, often I'd say, they expect to be released within spring 2026 with final projects due in summer and hopefully, some very good news and moving forward on contracts towards the end of next year. Jonathan Marren: Yes. So a couple of points. Just to clarify, we have had a number of people ask us whether we are worried by the new competitor is the vanadium flow straight zinc battery manufacturer. Just to be absolutely clear, Frontier Power have effectively split all their projects down the middle 50-50. So if you had a site with 100-megawatt connection, which was -- pick a number, 10 acres, 5 acres, 50 megawatts would have a vanadium flow battery on it and the other mirror side would have a 50-megawatt, 5-acre Eos battery. And that's just the way they wanted to configure that. So as Matt said, we were not the only vanadium flow battery where -- which had their technology bid into this, but we were the only successful one. 21 projects, potentially 22 because one of the other projects is choosing -- needs to choose between lithium and vanadium flow. And again, that's one of our batteries. But the point I wanted to focus on is that 1,000 permanent high-quality U.K. jobs potentially created here if we were to go ahead with all of those 21 projects. We don't think we will go ahead with all of those 21, but it is worth highlighting the point that we have a wonderful opportunity here to create the sorts of durable clean transition jobs, which the government is very keen to promote. The Energy Secretary, Ed Miliband, stood up at the Labour party conference last week and talked about the need to create 400,000 jobs in the U.K. Straight off the bat, there are 1,000 here, which you can start to point to. But this isn't just us. Eos, we've got huge respect for Eos alongside us. They've also said that they would look to create U.K. manufacturing. And we've seen other lithium battery manufacturers say the same. There is a great opportunity here that those who are able to provide U.K. technology can create the jobs that the whole of the sort of the net zero transition, the route to clean power and lower prices can bring those jobs at the same time. But I think we need to talk to anyone who will listen to say you need to join the dots here because otherwise, there is a real risk that there will be no specific promotion for U.K. technology, and they'll be ambivalent as to whether this technology is manufactured in the U.K. or arrives as a completed product on a boat. Now frankly, from our perspective, we can do that. So the worst-case scenario for me, and I'd be horrified by this, is if it doesn't create any U.K. jobs and our clients say to us, "Look, it is a bit cheaper to deliver a fully formed product from India or China, please do so." And we will have no option but to do so. However, if the analysis that Ofgem is doing enables a sort of support for what will be slightly higher prices from a U.K. manufacturing perspective, but all the ancillary benefits that go around it, it's not just 1,000 jobs, there's a multiplier effect from that coming in place. There's something really exciting that we could be part of here. But I'm telling everybody who will listen that there needs to be just a little bit of joined-up thinking to achieve that. And then we will -- you'll hopefully see us doing that. That's why we mentioned this at least 3 times in the RNS, in the interims, and you'll see us continuing to do so. Adam, do you want to cover this slide? Adam Howard: Yes. Thanks, Jonathan. So it's worth taking a step back at what's the problem we're trying to solve here and why it's important for the U.K. As Matt mentioned, 21 of those 77 projects that Ofgem have approved have been submitted with ENDURIUM technology. So the traction there is really important. The average developer that submitted with ENDURIUM had a 60% chance to 45% across the scheme. And the U.K. has really been quite forward-leaning in putting a scheme on that together. But there's a reason for that. We have essentially the highest electricity prices in the developed world, about 30% higher than the EU, over twice as high as the U.S. And the reason for that is quite simple and quite interesting. We've taken the thermal coal baseload off the system before we had storage to balance it. So the last electron that bounce to the grid sets the price in the U.K. In the U.K., that is gas, which is the most expensive electron, 97% of the time. In the EU, it's gas 40% of the time. On top of that, we're also taking liquefied gas now from the U.S., which is more expensive. So that's really pushed up our bills in the U.K., which is crippling from a manufacturing perspective and has become quite an important political priority. But not just in the U.K., also in other markets. So in Canada, I mentioned the schemes early on there, in the U.S., in Hungary and also in parts of Europe. And essentially, all of these schemes are asking for the same sort of characteristics, 25-year availability without degradation and improved depth of discharge. And that graph at the bottom there is quite interesting in terms of what's changed here. So go back only 3 years ago, 4-hour plus duration was less than 0.2% of the market, relatively negligible. What was needed was a short duration 2-, 3-hour power, which could be delivered more cheaply through a lithium battery. Fast forward to today, 4-hour plus is around about 10%, 15% of the market. It's really changed quite quickly, and that's much more about time shifting and being able to do that over long periods. So it's interesting to see where this plays into what's happening in the U.K. and the problem we're trying to solve. So with that, I'll pass across to Jonathan to wrap up. Jonathan Marren: Great. Thank you, Adam. So just a look back 12 months ago when I took over as Chief Exec, we set a 12-month plan, which we want to achieve 5 goals there. We've reported on some of these already. 4 of those, I think we can demonstrably say we have achieved, particularly talking this time about Goal 4, that cost reduction plan. In terms of Goal 3, we have a route to achieving these this year's numbers, and we're working diligent to make sure we take that place. And we have a deep and wide and very interesting pipeline going forward. Clearly, we need to support that. Now Goal 4 enables us to achieve that. But the continued focus is on making sure that we do achieve those additional sales so we can ramp up and achieve the scale needed. So last slide, and then we'll go on to Q&A. That stable proven technology is what provides the base for us to exploit the market opportunity ahead of us. Those 2,000 battery modules, as I've said, really is a calling card that is very difficult for many others to get anywhere near competing with as long as we continue to progress. And that close to 7 million -- 6.7 gigawatt hours, close to 7 gigawatt hours of dispatched battery, again, is setting ourselves apart from the rest. We do think we've got that market-leading position. There are others and where there are new technologies, which you see being talked about in various guises across the piece. Again, there is an awfully long way to go from that to having a position where people think technology is proven. The way that we are going to address this requires key strategic relationships. We remain really grateful for the investment from National Wealth Fund. We retain a very good relationship with them and delighted they remain on the shareholder register. Gamesa Electric in the process of being bought by ABB. ABB, I think, will be a great parent for them. We have met ABB, and they are very supportive of this. So we look forward to accelerating that further once that acquisition completes. We've talked about actually and what we're doing in China and also the existing relationships of Baojia and Everdura remain in place. So Joe, with that, I think we've completed the formalities. We can now move on to the Q&A. Joe Worthington: Great stuff. And thank you, everyone, for putting so many questions in. We've got in excess of 28 and counting at the moment. So we'll try and get through as many as we can. And just before we go on to it, apologies if you can hear notifications coming off the exec's microphones. This is in the -- we're in the golden hour at the moment between our North American and European teams with so much going on. There's a lot of traffic. But -- okay. So there's a question here related to ongoing LDES schemes. What is the maximum value of orders from the Cap and Floor projects you've announced that you've passed eligibility? For Jonathan. Jonathan Marren: Yes. So you won't be surprised to hear, I'm not going to give you an absolute number on that for obvious reasons. It is in the billions of pounds worth of revenue type, and that is certainly more than 1. Joe Worthington: Okay. And related, there was a couple of questions actually about how -- assuming we take a view on how many of the maximum projects we win, how we manage the supply constraints within that? What's our strategy for that? Jonathan Marren: So if you recall how -- assuming we do deliver a Made in Britain product, which is what we want to do, at the moment, the strategy is that we would -- and how we're delivering them at the moment, you have the steel container, so the 20-foot shipping container, you have the tanks and you have the electrolyte and the wiring effectively fitted in the best cost region, so China. But equally, you can see that being done in India. That is lower cost than you will achieve outside, particularly in the U.K. and elsewhere. That then gets shipped as that product to the U.K. to the factory in Motherwell, where we would have stacks manufactured. So those stacks will get fitted. Control system gets fitted. We do the factory acceptance test. That's where the core IP and the core know-how really gets added to the product. That is regarded as a substantial transformation. It's a British factory and it gets shipped to site. So there's a number of different parts of our supply chain. We look at the component parts that fit within that. All of the component part suppliers we are working with are capable of scale. What they need is time and notice to do so and some security of order. Our partner is Baojia, and Baojia would be involved in any move to Xiamen as well. So we're certainly not disintermediating them from this discussion. They are certainly capable of scaling. And the whole point of China and India as well is that you can get to significant scale. So I think that continuing sort of fabrication of boxes, tanks, electrolyte, we are comfortable with the lead time that we can achieve. And then you're looking at what happens in the U.K. So stack manufacturing, we have already installed a semi-automated stack line within the U.K. At that sort of volume, we'll be looking at move to further automation. That is taken into account when we've looked at those 1,000 jobs. So therefore, we would need probably additional facilities to manufacture stacks, but we've shown that's not a significant investment to do so. And then it's still fitting those stacks into ENDURIUM is still not a high CapEx cost process. There needs some space. You need a crane to move the boxes around. But ultimately, it actually became a matter of logistics, how can you get that number of boxes through a site. So I think it needs planning. We would look to deliver these over 2 to 3 years and revenue will be recognized over that 2- to 3-year period. So this isn't just going to hit in 2030. You would certainly expect revenues to be coming through from '28, '29 and 2030. So it's not just a one-off hit, but very important to realize that. So that 16.7 gigawatt hours would be spread out over 2 to 3 years in any case. Joe Worthington: Great. And related, there's -- someone's asked a question here talking about super projects in the Cap and Floor, particularly one project called the Hagshaw LDES, which is being bid in to use vanadium flow. Is our commercial strategy to do a few of these super projects and call it a day or do a large number of smaller projects? Can you comment on that, in general? Jonathan Marren: Yes. Matt, do you want to take that? Matthew Harper: Yes. Look, one of the things that's nice about the projects that have gone in under Cap and Floor is that there is a sequencing to them. There are a number of smaller projects that we would be delivering in the earlier portion of that program and then some of the larger projects that we will be delivering towards the back end of it. That is very nice from our perspective because it allows us to continually ramp up the level of production that we've got both for our global supply chain and locally through the final assembly of product in order to get those products delivered. Is it -- do we -- are we concerned about the size of those things? Absolutely, but it's also dead on where we expect to be delivering these very, very large projects in 2030 and beyond. So it's -- they're definitely large projects as compared to what we've done in the past. But because we have sort of stable immediate steps along the way to get there, especially through some of the earlier projects in Cap and Floor, we're confident in our ability to deliver on those. Joe Worthington: Thanks, Matt. A question here, interesting question about financing and financing models around LDES projects. What are the different models and what are the different strategies that are being taken? I think this is more general than just the Cap and Floor, but I think maybe we could talk about sort of what we've seen on our side. Adam? Adam Howard: Yes. Thanks, Joe. So 2 ways of reading that question as to LDES financing or LoDES financing, and that's what I'll do is try and address both and split into short, medium and long term. So in the short term, we have seen the first debt financing on our batteries as part of our portfolio financing together with lithium. That's quite an important milestone in terms of lenders getting comfortable with the asset class. We are now looking at current contracts, which are sole project finance for our technology, and that's really important as a milestone build up into the larger Cap and Floor orders. In the medium term, so on LoDES, we are fully financed there with the grant financing and the equity financing. We have been approached with by 2 lenders with good interest to finance the batteries, and that's important as we sort of lead up into the larger projects for Cap and Floor. And I mean, clearly best cost of financing is delivered after energization expected second half of next year. So we'll look to keep the lowest cost of capital for that, but there is interest out there in the bank market and the U.K. bank market, particularly for financing these assets. In terms of the longer-term Cap and Floor, that Jonathan mentioned, those are 28 to 30 deliveries. The Cap and Floor has been designed -- the floor has been designed to support project finance. It's built on the Cap and Floor mechanism for the interconnectors that we have with Germany. So that supported high levels of gearing, and it's been structured to facilitate project finance into the space. So we have already -- we're fortunate in that NatWest House Bank has shown significant interest in our technology and understanding the sector. They were the largest financing into short-duration lithium battery storage in the last few years. And we're seeing plenty of interest from the U.K. bank market to support these assets. Joe Worthington: Great. Thanks, Adam. I'm going to move on. There's quite a lot of questions sort of around on the more sort of commercial sort of product side, which you might just move on to and get through a couple of them. There's a couple of questions here around sort of the general sort of geopolitical climate. There's a specific one here about, given the current political environment in the U.S. and the effect on some renewable companies out there, what's your -- has your view on the U.S. market changed at all? And what's -- and Invinity's pipelines of opportunities? Jonathan Marren: Yes. Joe, look, it's a really good question and probably it definitely warrants a few moments thinking about this. There is new news flow that comes out of the U.S. every single day. And it is absolutely fair to say that, that news flow can be challenging at times. We are aware of it. And we've got to make sure that we don't make any rush decisions on the basis of that because fundamentally, we still have a very good position when it comes to the U.S. There are issues at a sort of federal level and issues at the state level. If you sort of drive down into that state level, the California Energy Commission, we are one of the very few LDES technologies, which the CEC is looking to back and will continue to back no matter what changes from a sort of a federal political basis. So there is still a very interesting market to target there. And there are some projects there, which I wish I could talk about because they are so exciting and so transformational to us if we can get those over the line, it will take us to a different level than we are now. But these things do take time. And what's not helpful is uncertainty that comes from that. So we're alive to it. Definitely, there will be issues with some projects that sit in our pipeline. But you would expect that. And to be honest, that's why we never assume for one moment that all of those projects will come through. But also, this, again, gets to why it's really important that we have a widely geographically spread business. And again, comes to why India and China is important. I would be nervous now if most of my sales funnel is coming from the U.S. It's not. And therefore, it would be nice if there's more certainty there, but I can look across U.K. and Europe. I can look to India. I can look to China. I can look to Australia. And the U.S. will come through in its own time frame. And when you look across '28, '29, Cap and Floor and other projects there are very obvious. That -- just that short to medium term, '26 and '27, there are still some significant projects there that are not U.S. focused, that sit outside of any regulatory program with developers that want to deliver that. They are -- these sales cycles though can take anything from -- quickest we've had is 3 months through to 3 to 4 years. And the -- just look at what happened last week when the connections reform in the U.K., which is being pushed through by NESO was delayed by 3 months. So any projects in the U.K. outside of our control is automatically on a decision-making process pushed back 3 months. That's really frustrating because we've got some really interesting projects there, which are bubbling away, close to being ready to go. But unless you can have your connection confirmed, you can't get that to financial close. Those projects are still there, but we just got to make sure that we've got a broad enough spread across them, but we have got that spread across jurisdiction, use case and developer type that those will start to drop. It's frustrating, and I would love to see them dropping quicker. But I'm confident they're there and enough of them will get through there that we will deliver the upwards tick that we need to. Matt, anything else you want to sort of add to that because you're often more in the firing line than I am from customers. Matthew Harper: No, look, the one thing that I would say just to address the regional risk more broadly and just to talk about the U.S. Look, the thing that we've seen over and over again is that despite vacillations, shall we say, at the federal level, the states themselves remain very supportive of what we're doing and remain very interested in funding the list of programs that we talked about earlier on in the presentation. So while I think everything in the U.S. is going to be progressing more slowly than we had expected, we still remain very confident in the longer-term view of how those programs are going to go forward, and we remain very encouraged by the relationships that through delivering against existing projects, we are continuing to build in -- especially in California. Joe Worthington: Thanks, Matt. Moving on to some of the product questions. So can you update us on how the launch of ENDURIUM Enterprise has gone, specifically who the target market is? And there's a couple of follow-ups on this as well. But some want to cover that first? Matthew Harper: Yes, sure. I'm happy to jump in on that. Look, the reason we launched ENDURIUM was -- ENDURIUM Enterprise was not because we wanted a new product, it's because we were actively quoting it for a handful of customers. This was really a customer-led initiative where we had a small number of projects come through where we require -- the projects themselves were very compelling. At least one of them is with a previous partner with whom we've already delivered equipment. And they said, look, we want the benefits of ENDURIUM, but we want to be able to deliver it behind the meter and at a smaller scale. And so given that impetus, we thought it was reasonable not to sort of do a quick and dirty job of going and offering them something that would make sense for their needs, but rather really turning this into a fully built-out product that we could deliver not only to those prospective customers, but also to the C&I market more generally. In terms of the general focus and target for that product, really, ENDURIUM is -- the smallest projects that we're contemplating are in the double-digit megawatt hour size range. ENDURIUM Enterprise allows us to go down into the single-digit megawatt hours. That opens up a lot of the sort of medium to larger scale industrial facilities and commercial facilities where they have big electricity bills that need teaming and where our batteries can do a really good job. It also opens the door to slightly larger projects, but where they have a very, very high degree of redundancy required within their operations, sort of critical loads where having a smaller number of battery strains is very beneficial. So that stretches well into that sort of double-digit megawatt hour range. So whether you're looking at critical infrastructure, hospitals, data centers, whether you're looking at just smaller commercial or industrial facilities, ENDURIUM Enterprise is the right architecture for us to deliver. Joe Worthington: And the follow-up question, which someone has literally just asked again in a slightly different way. How are we addressing sort of the data center and sort of AI opportunity? This last question sort of says that our efforts seem to be currently quite heavily weighted towards grid scale projects. Does Invinity have a compelling sort of product for this market? Can you talk a bit about that? Matthew Harper: For sure. Yes. Look, I'll start off and Jonathan and Adam if you have comments, please jump in. As we are learning more about the duty cycle that these data centers have to go through and as we're learning more, especially about a lot of the AI data centers, what we're learning is that their load factors are incredibly stochastic. They are all over the place. These data centers will be pulling 20% of their net load 1 minute and 100% of their net load the next. Regulating that power flow into a data center like that is a duty cycle that our battery does spectacularly well, and it's a duty cycle that would be incredibly damaging for most lithium-ion technologies and other solutions. So we've always talked about data centers as being a great fit for us explicitly because of the lack of fire risk. Data centers are not going to want to have a battery installed alongside them regulating their power flow that has any fire risk associated with it whatsoever. But now that we're learning more and engaging more deeply with some of those hyperscalers and those other data center service providers, what we're learning is that the basic duty cycle for a battery at these sites is really fit for purpose for us as well. So some interesting opportunities in our pipeline, nothing to announce as yet, but I would say watch this space because it's one that we are very, very excited about. Joe Worthington: Thanks. There's a question here around someone that's sort of news coverage on membraneless-less flow battery -- sorry, membrane-less flow battery technology bidding to be part of the big data center project in Switzerland. Does management have a view on this type of technology? And what gives us the confidence that ENDURIUM is superior to that? Jonathan Marren: Yes. Look, Matt, if you may, I'll cover that. That's referring to the FlexBase project in Laufenburg. FlexBase were at the International Flow Battery Forum in Austria this year talking to the entire industry. And that is a really interesting project. That is they're looking to put 2 gigawatt hours of vanadium flow batteries beneath a data center. It's fair to say every single flow battery manufacturer is talking to them, and we are not alone in that, and we know them well. What I would say that is if you were looking to build a data center that needs a 2 gigawatt hour battery, you would be -- one of the key things you would be looking at is making sure that you have a robust technology that is proven in the field. So I can't comment on the credibility or technological prowess of that specific technology. I have no basis for doing so. Obviously, wish them well. But we are confident that when you look at how successful we were under Cap and Floor against all other vanadium flow batteries that we have a pretty strong competitive position there. They haven't announced where they're going with that, haven't announced how they're doing it, how they're going to structure that, but we know them well. But no, I'm not concerned about that. If we stand still for the next 5 to 10 years and let them get to the position we are now, then that could be an issue. But in 5 to 10 years' time, I would envisage we're a very different business than we are now. Matthew Harper: Yes. And Jonathan, just to pile on just quickly on the technology side. I would say that membrane-less flow batteries have been contemplated for a very long time. There are a handful of companies who have tried to bring that class of technology to the field, and they have struggled with the durability and longevity of that technology in service. There are always chances that those challenges have been resolved, but I would say that it's a class technology that has been tried and has not succeeded to date. Joe Worthington: Just keeping one eye on the time. I think we've still got some really good questions coming through. So I'm going to run over another 5 minutes or so just to let those on the call know. There's a number of questions here sort of asking about cash and things like that. So perhaps management could just give a bit more commentary in addition to what's been on the on the slides around cash burn and cash balance and sort of route to cash generation. Adam Howard: Yes. So as we talked early on, post the GBP 25 million raise, cash position at the end of September is just under GBP 40 million. And you'll see from the interims, our admin expenses now running under GBP 2 million a month, which sees us comfortably funded through into 2027, including also the equity outlay on LoDES. So that leaves the company in a strong position without the additional gross margin from some of these projects that we're looking at in the pipeline and that we talked through early on in the presentation. So that gives really headway to now look at good solid strategic decision-making for the group. Part of the user process that raise are R&D to accelerate our cost down. The most important thing in our pipeline conversion is cost, and that cost is driven by R&D investment, and the group is now in a solid place to deliver on those plans. Joe Worthington: Great. Thanks, Adam. There's a question here asking about the deal we have with UESNT, our Chinese partner, and we made, I think, one of the recent announcements about a license fee that's potentially due by the end of the year. Could you just give a little bit more color on this? And does this signal a sort of fundamental shift in our business model? And how should that color people's thinking on sort of that breakeven point? Jonathan Marren: Yes. When we say a fundamental change in our business model, hopefully, I can point you back to those -- that box right at the beginning of the presentation where we talked about our revenue streams, one of them was license and royalty. We have been talking about that for, I think, at least 2 to 3 years. So absolutely not -- this does not signal a change. We've been talking about this for quite some period of time. It's the way we think we should exploit markets outside of our core and let our partners do the heavy lifting when it comes to the commercial -- building the commercial pipeline, closing the sale and doing the delivery and installation and O&M from there on inwards. And hopefully, the manufacturing as well, we will get a license fee from that, that comes through as revenue without any costs associated from it. So it is clearly a lower revenue number, but it comes without cost. Therefore, it effectively comes through as near 100% gross margin. If we supply stacks, then that would come -- that 100% would come down because you'd also take account of those stacks, but much, much higher gross margin revenue than you have to date. If you're trying to build a valuable business, margins are -- percentage margins are really important. So anything we can do to raise those margins both at the gross level and at the net level are really important. And obviously, that does bring cash through without the costs associated with it. So that is why if we do book the revenue from that this year, that comes through with a very high margin, and therefore, it's really helpful to us. Joe Worthington: Thanks. I think we'll just do one more question, and it's been asked a couple of times in a few different ways, and it's a good one to end on it. It's people looking across into the Eos, specifically Eos, who have a market cap of close to GBP 4 billion according to this question. Can you provide an explanation as to why this market cap is so much larger than Invinity's? You seem to be operating in the same space with similar technology and a similar level of development. Jonathan? Jonathan Marren: Yes. Let me do that. Matt, feel free to jump in, if need be. So you're quite right. We are, to some extent, very similar businesses. We both dispatch broadly the similar amount of energy. They'll put their latest sort of total energy dispatch from their batteries out, I think, in their results, which their Q3 results, which are due out in November. But broadly, I expect that to be sort of reasonably similar. From an Eos perspective, we often sit alongside them in -- actually, either in projects on the ground, the [ VS3 ] project, other projects, we're clearly Pari-passu with Frontier Power in the U.K. I think that was the only one they were involved in. And obviously, that was successful alongside us. And therefore, you say, well, why do they have a different valuation from us? Some of that can be explained potentially by small cap in the U.K. is having a tough time at the moment, but it certainly doesn't explain that huge difference. And I think I get asked this a lot, and it's worth us focusing on that. And this really, to some extent, explains the opportunity we have because they have a financing structure that allows them at the moment to sell product at negative gross margin. And I say that because if you look at their forecast for this year, I think it's -- this might be -- this is broadly right, forgive me, this is around about $125 million of revenue and a gross loss of about $60-odd million. So they are selling significantly below the cost of production. And also, they have an OpEx base, I think, that is about 3x the size of ours. So quite a healthy growth -- healthy loss. Next year, they are able to -- they're forecasting, I think, $460 million of revenue and again, on effectively a flat gross margin business. Now for us, our shareholders, and I think us as a management team as a Board do not think that's a strategy we want to pursue to sell as a negative margin. We also do not have the balance sheet to do that. However, what's really important to notice is that the prices where they are quoting in a number of years' time are exactly where we are going to be from our cost down procedure. And therefore, we know the reason they've got those deals now is because they're at those price points where they're able to effectively sell at that loss, we're not able to. So they have a better forecast than us at the top line and the U.S. does value top line growth. We don't have that luxury in the U.K., and that's fine. But I think it points to the fact that there are customers in the LDES space that are buying at the price points that we are getting to. And when we get there, and I'm sure it is when we get there, then that sort of value will start to attribute to us. From us, we are also broadly spread from a geographical perspective. So back to the question on the U.S. I don't know the makeup of their projects and products where they go. But I think in competition, we mostly see them in the U.S. We don't see them as much outside of the U.S. at the moment other than the U.K. Matt, is that -- do you think that's fair? Yes. But yes, just for the avoidance of doubt, huge respect for them. And what we really want is we want Eos to be fabulously successful because we want this to be a fabulously successful sector, where institutions and investors make money and customers see that those who have got to the stage where the technology is mature are successful and develop because I think we will be one of them, and we will all grow on that rising tide. So I say very good luck to them, very good luck with that valuation, and we will aspire to that as quickly as we can. Joe Worthington: Thanks, Jonathan. I think we'll call it the on the questions. And thanks, everyone, for putting them all in. We'll make sure there's -- I don't think -- there's a few we've managed to miss, but I'll make sure someone, myself, one of the team gets back to you shortly after this call. And Jonathan, can I just sort of go to you for some final sort of closing remarks, please? Jonathan Marren: Yes, very happy to. Thanks, everybody, for joining. Apologies if there were some irritating pinging noises earlier on. It wasn't messages coming through. I think it was the port and my computer playing up, which I haven't spotted. So entirely my fault, I hold my hands up for that. We'll sort that out for next time. Hopefully, you found this useful. This is a business where there is some extraordinary opportunity there. The key for us is cost. I'm going to keep coming back to that, and that's the key there. Matt, you know your key task is to make sure we continue the process to bring the business together to drive that down. That is the #1 focus and everything follows from that. But I think that question on Eos is interesting. You've seen where the value of this business can go if we get that right. And I think that is absolutely within our graph. So exciting times. We'll keep pushing those partnerships forward as well and look forward to speaking to you next time. Operator: Fantastic. That's great. Thank you all for updating investors today. Could I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the Board 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 Invinity Systems plc, we would like to thank you for attending today's presentation, and good afternoon to you all.
Andreas Rothe: Ladies and gentlemen, good morning from Mannheim. We welcome all of you to our conference call. The underlying presentation for this call has already been published this morning on our website. Today, we released the statement for the first half of the financial year '25/'26. We are going to present you the highlights of the period, revisit our full year group earnings guidance for the business year, which we adjusted on August 21. Following the presentation, we are going to answer your questions. As already mentioned, a recording of this call will be available on our homepage shortly after the call. Now let me hand over to our CFO, Dr. Stephan Meeder. Stephan Meeder: Thank you, Matthias and Andreas, for the introductions. Ladies and gentlemen, also a warm welcome from my side, and thank you very much to all of you for your interest showing in Südzucker. As mentioned, I would like to give you a brief overview about the business performance in the first 6 months of fiscal '25/'26. And I would like to give you some more details about the confirmed earnings guidance for fiscal '25/'26. So let me start with the highlights of the past 6 months of the fiscal. You will find this on Page 5. But before going into the details upfront, let me say, more general remark on where we stand as of today. So you can see in the figures that there is a weak performance in Q2. Yes, it came in as expected, but it's clear, it's a weak performance. But on the other side, we confirm our full year financial guidance for the operating profit as of today, which stands at EUR 100 million to EUR 200 million. So when looking into the remainder of the year, we believe that from Q3 onwards, this should be the turning point to the positive, but the figures that I will continue to explain to you in the following for Q2 and H1 show a weak performance. So going into the details, you can see that Q2 was -- performance was not able to match prior year's numbers for Q2, and the same is true for H1 -- compared to H1, and after 6 months, we have reached the following numbers. You can see group revenues came in at roughly EUR 4.2 billion, which is significantly below prior year's level. Same is true for group EBITDA, which was significantly down by 55% to EUR 189 million and group operating profit also only reached EUR 42 million versus EUR 269 million in previous year's period. Same is true for cash flow, which decreased to EUR 67 million. And when it comes to net financial debt, so net financial debt as of 31st of August this year came in EUR 285 million below prior year's level and did remain stable compared to the end of fiscal '24/'25, which is end of Feb '25. So let me continue with the next pages. We have a look here on H1. So bringing H1 into historic context, you can see that especially for operating group results, this is a strong decline compared to previous year's periods. You can see that the decline is in revenues, EBITDA and operating result. Particularly affected in H1 are the segments of sugar, special products, CropEnergies, starch, but we do see an increase in the fruit segment. And that is something important to note. We do this in each and every quarter. We know we are active in volatile markets, but what is good about Südzucker Group that it is a strong and resilient portfolio, and we always have divisions who do also benefiting for the group with a strong performance. And overall, this year, this is the fruit segment, but we also see a good development in the divisions of BENEO and Freiberger. So on August 21, we changed our group guidance for the fiscal '25/'26. We now expect revenues to range between EUR 8.3 billion and EUR 8.7 billion for the full year, EBITDA between EUR 470 million and EUR 570 million and operating profit between EUR 100 million and EUR 200 million. So further details for the outlook, I will give on later. What we can see, if we move on to what we will see on Page 10 is there are persistently low sugar prices in the global market and challenging EU market environment with continuous impact into autumn 2025. And we also do see continuous volatility or volatility going forward, which you cannot exclude due to geopolitical and global economic conditions. You are all fully aware of that. So let's move on to Page 9. You can find -- it's a little bit difficult to read, but it's a little bit also a backup information for you. Here you can find the detailed results of the segments. And as already mentioned, after 6 months, group revenues came in -- [ operated ] levels. We do see revenues decline in the segments of sugar, special products, CropEnergies and starch, but revenues rose slightly in the fruit segment. And when it comes to the EBITDA, as already stated, there's a decrease as well as an operating result. This is largely driven by the sugar segment, but was also significantly below prior year's level in special products, CropEnergies and starch segment and positively to note the fruit segment showed an increase. So most important, which is for H1, really important to discuss in more details is the development in the sugar segment and to see the developments in the sugar segment, we have also always have to have a close look what happens on the global sugar market. So I start with the global sugar market on Page 10 because this has an impact on the European sugar market and the development of the European sugar market has an effect or [indiscernible] for the sugar segment development in Südzucker Group. So let's have a look on the sugar market as a total on the worldwide scale. You will find that, as I said, on Page 10. Let's have first a look what is positively on the world market. You can see that the consumption is still growing. So on a worldwide scale, sugar market is still growing. You see this is the normal blue bars. You can see that consumption is going up. Dark blue is the production. And you can see that we have in '24/'25, a market with a deficit and deficit market and commodity markets are beneficiary to the prices. That is the situation we started. But in '25/'26 sugar marketing year and just as a reminder, sugar marketing year always starts 1st of October and it goes until end of September. So for sugar marketing year '25/'26 and '26/'27, it is expected to be that the market is in a surplus. That means production going over consumption. And in a commodity market, this is leading to a bearish sentiment on the prices. This is also if you have a look on the sugar market prices, we do not have this in this presentation, but you can find this in our investor slide deck on our homepage, they have all the detailed price developments. And you can see that recently, there is still a downward trend in market prices. And another factor also contributing to that compared then into euro is the weakness of the U.S. dollar, which is also a bearish factor. So going from the global sugar market or coming to the European sugar market. So as a mid-summary, we can state that from the world market, we do not have a support. The contrary is true. So there's a bearish sentiment for sugar on the world market, and this translates also to the situation in Europe. So here also the graph, you can see the dark blue is the production and the normal blue is the consumption. When it comes to consumption in Europe, you can see that there is a -- it depends whether you start looking into the figure '22/'23. If you take this, you can see that it is rather stable consumption in Europe. If we take also into consideration '21/'22 as a starting point, we can also come to the conclusion that European market is rather in a slightly downward trend. So going into the details for the recently started sugar marketing year '25/'26, so which started 1st of October '25, the EU Commission and also the analysts from market survey expect a significant decline in cultivation area for Europe, so less acres with sugar beets. So based on this production, including isoglucose is forecasted to decrease to 15.9 million tonnes. That's the graph or the bars on the right-hand side in the graph. And as a result, the EU is expected to have a balance in export/import volumes. The sugar price, let's have a look on the sugar prices, but it's not on the graph, but let me explain to you the development for the sugar prices. So the sugar prices, which have been published by the EU Commission, fell significantly down from EUR 619 per tonne at the start of the '24/'25 sugar marketing year in October '24 sharply. And since it has continued to fall, reaching EUR 550 per tonne at the start of the '25/'26 fiscal in March '25 and in July '25. So this is the latest available publication, EU sugar prices stood at EUR 534 per tonne. So one aspect that we always have to put into consideration when we discuss sugar prices in Europe is what is happening with Ukraine. As we stated in the last conference calls, one factor which heavily weighed on European sugar prices was the Ukraine imports over the last years and months. So at current stage, the EU Ukraine Association agreement foresees that the import -- allowed import or the duty-free allowed imports into the EU amount to 20,000 tonnes for this year, pro rata temporary. But the ongoing discussion is to increase those volumes to 100,000 tonnes as of 1st of January next year. So for sure, we stand with Ukraine, but we're heavily opposed to those additional duty-free imports given the fact that the European market is well supplied. So after having had this macro look on the world sugar market development, the European market development, how does this translate to the Südzucker Group sugar segment? You can see in the graph on the right-hand side that revenues significantly decreased. So in H1 '24/'25, we stood at EUR 2.1 billion in turnover. So this has decreased to EUR 1.4 billion. And when it comes to operating profit, it even turned to a loss situation. So in H1 '24/'25, we stood at an operating profit for the group for the Südzucker segment at EUR 72 million, and this has turned to a loss situation of EUR 89 million operating loss. Let's continue with the special products segment on Page 13. Here, you can see that after 6 months, revenue in the Specialty Products segment decreased moderately, which is mainly due to the disposal of the dressing and sauces business in the U.S. from division Freiberger, which was executed in Q2 '24/'25. So all in all, revenues declined moderately from EUR 1.14 billion to EUR 1.1 billion in H1 '25/'26. Coming to operating profit, we also do see a decrease, you can see from EUR 108 million to EUR 71 million. So the operating profit decreased significantly to EUR 71 million in the first half of this fiscal. And this development is mainly due to the rising production cost that we see in these divisions, which could not fully be passed on to customers. Going forward on Page 14, here you can see the development of CropEnergies segment, so the ethanol business. You can see also -- let me start with the key figures on the right-hand side, you can see that revenues were down from EUR 484 million in H1 '24/'25 to EUR 402 million in this H1 of the current fiscal. And operating profit also turned to the negative from EUR 17 million in H1 '24/'25 to a minus EUR 13 million operating loss in the CropEnergies segment in '25/'26. And the main reason for development in revenues is a decrease in production. So it's not linked to the market development. Ethanol market or the need or the development for biofuels is still pretty stable in the U.S. -- sorry, in the EU. The development of CropEnergies here and on the revenue side was linked to internal reasons. So the decrease is primarily due to significantly lower sales volumes, mainly resulted from both scheduled and also unscheduled maintenance work carried out due to technical issues. When it comes to the operating profit, so as I said, it turned to a negative and this was significant -- that was due to significantly lower prices in the first half. But we will see when we discuss the outlook further on. We always state that ethanol prices are volatile. There are good reasons given supply/demand in Europe, there are good reasons to -- that prices should increase. That's what we also stated in the quarterly calls we had in prior periods. And we did see this increase finally in the last 10 days, yes, or I would say, last week. So in the last days, ethanol prices have increased significantly in Europe. So this is a positive sign, and this also is reflected in our forecast, which I will discuss at the end of this presentation. So let's move on to the starch segment. This is on Page 15. You can see also on the right-hand side that after 6 months, revenues in the starch segment declined moderately from EUR 505 million to EUR 474 million in first 6 months of this fiscal. And this was due to the overall decline in prices and volumes. Operating result is significantly below previous year's levels. You can see that it turned downward from EUR 20 million in H1 last year to EUR 5 million this year. On the positive side, in this reporting period, we benefited from an insurance compensation related to the flood damage at the Austrian plant, Pischelsdorf, which we discussed also in recent quarterly calls with you. Let's move on to the fruit segment. And as I said, this is really positive to note with the Südzucker Group having a robust and resilient portfolio. You can see that the development in the fruit segment is positive compared to prior year's H1. We do see an increase in revenues from EUR 824 million last year to EUR 858 million this year. And the operating result also came in above prior years, reaching EUR 86 -- EUR 68 million. I always mix figure sometimes. So EUR 68 million, you can see in the middle of the right-hand side, EUR 68 million positive. So let's move on to the remainder of the income statement after having had this look on the segment development, operating profit. So in income statement, you can see that after 6 months below operating profit, the result from restructuring and special items amounted to a minus EUR 33 million versus a plus of EUR 13 million. This was largely attributable to the sugar segment in addition to the special products segment. When it comes to the result from companies consolidated at equity, this also amounted to minus EUR 8 million and is alongside the starch segment and the sugar segment. Looking into the financial result, you see a minus EUR 70 million, which is also higher than last year, where we had stood in the financial result at a minus EUR 51 million. So what are the reasons for that? There we have to look a different look on both the pure financial interest side and the other financial interest side, when it comes to the pure financial side, when it comes to the interest side, here, we can see that here is a minus EUR 53 million, and this is linked to higher interest expense, which is due to an average increase in interest rates. So for this reporting period, we have an average interest rate of 3.7% compared to a 3.4% in the prior year's period. Net financial debt on average in this period was roughly stable at EUR 1.9 billion, EUR 2 billion. And when it comes to the other financial results, this is mainly attributable to exchange rate losses, which are linked to the weak U.S. dollar and the weaker British pound. Moving on to the taxes. You can find that on Page 19. So taxes on income in H1 came in with a plus of EUR 9 million compared to a minus of EUR 74 million in the same period of last year. And this is based on earnings before taxes of minus EUR 69 million in the current year versus a EUR 235 million in the first 6 months of '24/'25 fiscal. So finally, we look into earnings per share, not a positive figure and clearly disappointing for us. Earnings per share at the end came in at a minus EUR 0.38 against a plus of EUR 0.61 in the prior year's period. Let's have a short look on cash flow, working capital investments. You can find that on the following pages. So I start with cash flow on Page 21. You can see in the graph or in the table that due to the decline in operating result, cash flow also decreased in the reporting period now to EUR 67 million compared to EUR 343 million in prior year's period. We do see a decrease in working capital, which is positive. On the investment side, CapEx side, investments into fixed assets reached EUR 219 million. So we are on track with reducing CapEx. And investment in financial assets and acquisitions are not meaningful in size. When it comes to the financing activities, so Südzucker had been very successful in refinancing our debt position. So here, you can see I have a particular look on the new EUR 700 million hybrid bond, which we issued successfully in May '25. So this is reflected also. You can see that in the cash flow statement. So we issued a new EUR 700 million hybrid bond via our Dutch subsidiary, Südzucker International Finance, to refinance the existing hybrid bond, which was also worth EUR 700 million, which was issued in summer 2025. And the increase and decrease in stakes held in subsidiaries and capital buyback are linked to this transaction. So we move on to the balance sheet, which you can find in the -- on Page 23. So when it comes to net financial debt, by end of August '25, net financial debt stands at EUR 1.674 billion. The cash inflow from operating activities of EUR 255 million includes, in particular, the cash flow of EUR 67 million and a strong decrease in working capital. And as I said, investments into CapEx amounted to EUR 219 million. So in total, the net financial debt is rather stable compared to the EUR 1.654 billion, where net financial debt stood at the end of last fiscal 29th of February -- 28th of February '25. Equity ratio is still solid. So we stand with an equity ratio of 45%. So this is a solid level. Let me now turn to the outlook, which you can find on Page 25, 26. So unfortunately, we had to revise downwards our operating profit guidance for the group on August '21. That was the MRR guidance that you have seen. So on August 21, we updated the group guidance for the full fiscal '25/'26, and we expect group revenues to come in between EUR 8.3 billion and EUR 8.7 billion. That's in the middle of the graph down and operating result to reach between EUR 100 million and EUR 200 million. This compares to our previous guidance of EUR 150 million to EUR 300 million. So it's a downward review of our forecast, which we had to do on August 21, but we do confirm this number as of today. So what has changed compared to our previous guidance before going into the details. So overall, it is unchanged now for the group, but we do see a decrease in the sugar segment. So sugar segment is updated. We have not changed the outlook for special products and starch. We do see right now a slightly better improvement in CropEnergies, and we do see a better development in fruit. So this is also linked to what I've already stated. So it's a robust portfolio, and we have different developments in the different segments. So coming to sugar. For the sugar segment, operating result is now seen in a range from minus EUR 850 million to minus EUR 250 million. Our previous forecast was between minus EUR 100 million to minus EUR 200 million. So there's an additional burden to be seen given the bearish sentiment on prices, which I just explained of EUR 50 million in sugar segment. special products segment unchanged. We currently expect the operating result to decline significantly due to the anticipated rise in costs, which I have already explained. For CropEnergies, the development is the following. So in the segment of CropEnergies, we expect significantly weaker revenues. This is due to lower average ethanol prices compared to the previous year as well as technical issues, as just explained, following the scheduled and unscheduled maintenance. At the same time, net raw material costs have gone down compared to previous year. And what is positively to note, ethanol prices in the European market, they have just recently started to rise again, which is positive. All in all, we expect the operating result for Crop Energy segment to be on the same level as last year. Already stated for starch segment, no change. And for the fruit segment, following an already very successful '24/'25 fiscal, where we now expect a slightly improved operating result compared to the previous year as moderately increased prices are helping to offset the impact of rising costs. So all in all, our group guidance is unchanged compared to the downward revision on August 21, and we do see group revenues in the range of operating profit between EUR 100 million and EUR 200 million. Looking at the other KPIs for our forecast, you'll find that on Page 26. So for group EBITDA, the range is expected to come in between EUR 470 million and EUR 570 million with the explanations completely true for, as I just stated, in operating profit. Depreciation is expected to be on previous year's level. CapEx is expected to remain below prior year's level. And when it comes to net financial debt, we do project net financial debt to remain rather stable compared to the end of last fiscal. So ladies and gentlemen, after this review of our H1 figures and the forecast. So as a summary before closing to and coming to the Q&A, I would like to comment that as expected, the challenging market environment in our core sugar segment has continued in the second quarter of this fiscal. Market prices started to improve, but not as much as anticipated. Our nonsugar business continued to be a stabilizing factor. But as a consequence, we had to revise downwards our operating profit forecast for this year in August '25, but we do confirm this outlook as just explained as of today. When it comes to financing, we are very proud that we have successfully issued this EUR 700 million bond in May, and now we successfully completed our refinancing activities. There is a EUR 500 million senior bond also successfully issued in January '25, and this covers the refinancing of the senior bond maturing end of November 2025. Together with the extended and increased to EUR 800 million syndicated loan, we have established a solid and reliable financing structure for the years ahead. And as I said, I'm very proud of Südzucker and the entire Südzucker finance team who achieved this refinancing over the last months. Also, what is new, but also already communicated for Südzucker Board since October 1, we have Theresa von Fugler on board. We are very happy to have her here with her expertise. And also here from my side and from the entire team, a very warm welcome to her, and we are very much looking forward with her to further work on the success of our Südzucker Group and a very warm welcome to Theresa. So thank you very much to all of you. So far, we are now happy to take your questions. And together with Andreas, I'm happy to give the answers that you might have to the figures. Thank you very much so far. Operator: [Operator Instructions] The first question comes from the line of Karine Elias from Barclays. Karine Elias: I just wanted to go back to your point on the guidance. So just trying to look at the implied guidance for the second half. Does it imply that the price for sugar or the contracted price for sugar would be probably the decline would be about EUR 100 -- more than about EUR 100 per tonne in the recent contracting. Any color there would be very useful, especially as we think about the start of 2027. And then just going back to your point, I think, on the net debt. Your leverage obviously has picked up. That's partially because of the lower EBITDA. What type of leverage are you comfortable staying in for how long, especially as you think about potential actions from rating actions? Stephan Meeder: Thank you, Karine, for your questions. When it comes to sugar prices, it is -- I cannot disclose our individual prices. So sugar prices in our market is a competition-sensitive information. So I have -- what I can comment is available market data and just very broadly expectations. What we did say at the beginning of this fiscal when we put up our budget, we stated that when it comes to the sugar availability in Europe, we did foresee a decline. And this decline that we had foreseen was linked to the fact that we, on our side, decreased the acreage significantly by roughly 15%. And then if you look into EU market data, the overall trend for hectares for beets in this sugar marketing year was also decreased by roughly 11%. So given normal harvest, we would have seen a strong decline in beet availability and the sugar availability in Europe. And this was the base assumption for our assumption that sugar prices should rise. At the end of the day, they really -- they increased, but they did not increase to the extent that we have foreseen originally. And that was the reason why we had to revise downward also the development in the sugar segment. In a nutshell, yes, there is a price increase compared to last year, but not to the extent that we have foreseen because sugar availability and the harvesting conditions, they are much better than we have anticipated. When it comes to net financial debt, we are -- rating agencies have revised downwards our rating and what are the levels we feel comfortable. This is clearly if net financial debt over cash flow or EBITDA is below 3.5x. We are not yet there, but we work hard on that. And what we feel comfortable is 3.5x, and there's a clear commitment from the Board to investment-grade rating. And so we have put into place the measures to reduce costs. We go into all -- in each every cost position. We do all our best to decrease CapEx, but decreasing CapEx is not so easy because you have ongoing projects with contracts in place. But what we can do to cancel or postpone, we do. And all in all, we strive to come below 3.5x net debt over EBITDA. But it is not the case as of today, but this is our ambition level, yes, clearly. Operator: The next question comes from the line of Hartmut Moers from MATELAN Research. Hartmut Moers: I have a couple of questions and probably we could go through them one by one. So the first one would be on the sugar segment here. What we find basically in the second quarter is roughly the same level, a bit below the sales level of the first quarter. And I mean, you should have basically a similar price level, at least with regard to the predominant part of your business as your October contracts still lasted into the second quarter. But usually, you tend to have better volumes in the second quarter compared to the first. So one would have -- or one could have thought that your sales increase in the sugar segment in the second quarter compared to the first. So what was the reason here for, yes, being just south of that level? And you still had quite a number of special items in the sugar segment. How shall we look about that going forward? Meaning would that now something related to the shutdowns you had on the AGRANA side of the business? And is there coming more with regard to the cost optimization measures you're just taking? So how should we look about that going forward? So that's on the sugar segment. Stephan Meeder: For the volumes and price development in sugar, I tend to rely more on H1 figures than on individual quarters because you can also have some shifts. So for me, the more reliable way to look at it is really H1 as a total. And we do see for the 6 months that there is both a decrease in volumes and a decrease in prices. So we do see that the environment for sugar, there is some volume decreases and also for prices. Hartmut Moers: H1 versus H1 last year? Or... Stephan Meeder: Yes, yes, yes. H1 -- to compare H1 to H1. So there, we have lower volumes and lower prices. And the lower volumes, they are across all markets. It's not one particular market or a specific region. So for us, it's an overall trend that we have reduced volumes. Hartmut Moers: Okay. And going forward, for the coming year, you're staying roughly level in terms of volumes. Is that a fair assumption? Stephan Meeder: Yes, that's a fair assumption. But we have to see -- we did see some reductions in sugar consumption, for example, in beverages, there's less sugar in beverages. And we also do see, for example, less chocolate sold. This is linked to the fact that cocoa is very expensive. So there is less chocolate sold and thus less sugar into chocolate. These are trends which can change. But for the time being, there's a slight decrease, and we have to monitor that closely. Hartmut Moers: Okay. Second one would be on... Stephan Meeder: On restructuring. So within the restructuring side, so this is, as I said, particularly linked to the sugar segment, and this is a follow-up cost of the restructuring we had, for example, with the closure of the 2 plants, Leopolsdorf and Hrušovany, for example. Hartmut Moers: Okay. But is that finished now? Or shall we plan with further one-off items in the coming quarters? Stephan Meeder: When it comes to those 2 plants, it's finished. But when it comes to special items coming forward, the issue of special items is that they are not really predictable. So we cannot exclude neither that it's the -- that you will stay that, but it's also possible that additional special items could come up in Q3, Q4. So we have to -- when you do the -- when we'll start to do the planning for the years to come, we have to do our goodwill impairment test and all of that, but this will be then in Q3, Q4. It's too early to say whether there can be additional one-off items, but I cannot exclude them. Hartmut Moers: Yes. I mean -- but there's nothing scheduled so far. So in terms of cost optimization or something, there's nothing you have in your budgeting right now? Stephan Meeder: There are some special items also from the first 6 months when it comes to restructuring, when it comes to personnel or severance payments that is possible. So what is executed on the table at the end of August, that means for the first 6 months, this is included. But for sure, there can come additional points can come up in the development of Q3, Q4, I. Cannot exclude, but it's too early to say. Hartmut Moers: Okay. With regard to CropEnergies, all your technical issues and so on, this is finalized now. So my question would be with regard to capacity utilization. So obviously, you had a rather low capacity utilization in the first half of the year due to these issues. But are we now looking to a more normal level again? Or are there any reasons why your one or the other site might not work at full capacity in the second half of the year? Stephan Meeder: There's nothing scheduled. And as I said, the market environment for biofuels as a total is positive. This is also the reason why prices have gone up significantly. There was a strong driving season, and there is -- on the months to come, there's nothing particular to see. So I would assume a high capacity utilization unless other technical issues would arise. But from the market perspective, there's good reasons to use fully the equipment we have. Hartmut Moers: Perfect. And then I would like to come to your outlook, and I'm a bit lost here. So what you're saying compared to what you said on August 21, you have somewhat reduced or specified the range for your sugar segment, which is a bit weaker than what you expected still in August. And you have compensated this with a more positive outlook on the CropEnergies and the fruit side. But looking at the extent of the changes, I would -- I mean, you've upped fruit by one notch, which is maximum of 4%. On Crop, Europe, yes, also EUR 5 million, EUR 6 million, EUR 7 million, so to come to EUR 22 million. But if I took the midpoint of your new sugar guidance, which would be minus EUR 200 million, it would basically impossible for you under the indications that you have given to reach the midpoint of your group guidance, you would be somewhat below that. And that already would assume that, in particular, starch and special products would also materially improve in the second half of the year, and we would not look at run rates of the current Q2 level. So is what you're saying that we should rather look on your group guidance, not at the midpoint, but rather at the lower end of your guidance? Or how should we interpret this? Stephan Meeder: Hartmut, as you said, nothing to be confused. It is exactly what you said. So we are -- we confirm the group guidance EUR 100 million to EUR 200 million, and we are slightly -- for the group guidance, we are slightly below midpoint, but close to midpoint, but rather we are not at the lower end, but we are close to midpoint, but slightly below midpoint. Hartmut Moers: Okay. That's fair. Okay. Stephan Meeder: And -- but not to an extent which would force us to update the guidance. You know the rules of MRR. So we are close to midpoint, slightly below. Hartmut Moers: Okay. No, that's, let's say, feasible under the assumption that special products and starch would make a major jump from the Q2 level to the norm, then you arrive exactly what you're saying. But you can confirm that this is the assumption then? Stephan Meeder: Yes. Hartmut Moers: In starch and special products, Q3 and Q4 will be significantly better than Q2? Stephan Meeder: As I stated at the beginning, so we do not give particular ranges or points for the segment. So our main focus is on group level. As I said, it's a robust portfolio. We have different developments in the different segments. And the other thing that is also true, I said, that we believe that Q3 should be the turning point to the better. And all of that, but your analysis is fully correct. We confirm group guidance EUR 100 million to EUR 200 million. Hartmut Moers: Perfect. Last point would be on the cost optimization measures you mentioned earlier. Could you just give us an update on that? I mean you've already mentioned size, but could you be -- become a bit more precise on the time line? And also, I mean, you have said in the last call that the cost optimization is roughly split 50-50 between sugar and -- between Südzucker and AGRANA. Would you be prepared also to give a split between sugar and nonsugar divisions? Stephan Meeder: This is unchanged. So this is still true what I said in recent conference calls. We have initiated a lot of cost-saving initiatives. We are here on track. And the different amounts that have already been communicated, we still stick to them. So in total, we strive for savings of EUR 200 million for the Südzucker Group, which are to materialize in the coming years. For this fiscal, it is still our target, and we are on track for EUR 80 million cost savings, which is half of half AGRANA and Südzucker. AGRANA has the program called NEXT LEVEL. And here, they strive up for savings up to EUR 80 million to EUR 100 million per year starting in '27, '28, so we started. At Südzucker, this program is called OPTIMUM, which drives for EUR 100 million savings in the sugar segment also coming into effect fully in the next 3 years. So we are on track, but it's not that all of the amounts are already visible this year. So this will build up. But in general, we are on track and there's nothing change to previous communications on our cost saving measures. Hartmut Moers: Okay. But just to make that clear, the EUR 100 million coming from Südzucker are 100% sugar. There's nothing in the other divisions, in your other divisions? Stephan Meeder: No. In total, we strive for EUR 200 million after 3, let's say, 3 years, and this is EUR 100 million for sugar and EUR 100 million for the others. Operator: [Operator Instructions] We now have a question from the line of Oliver Schwarz from Warburg Research. Oliver Schwarz: May I come back to CropEnergies first. I appreciate that you are flexible enough to notch up your outlook following the increase in ethanol prices. And you already have given some remarks regarding the reasons behind that. However, I guess, driving season should now be over. We still have the problem of U.S. imports into the European market and so on and so forth. So I'm wondering what you think how sustainable this increase is given the overall structural situation the European market is in. And that would lead me to my second question of your U.K. asset, Ensus. You stated that you are looking for full capacity utilization in the second half of this year. And I guess that very much includes Ensus then. So what's the status of this last remaining asset that the U.K. has? It seems like especially the U.K. market is under heavy pressure given that they have made trade deals with the U.S. that might be less favorable for the U.K. bioethanol industry and one of your competitors has already pulled the plug on his plant. So yours is the only remaining one. And I'm wondering what's the situation there? And lastly, could you give us an update on your future, let's say, value chain that you are currently trying to expand into chemicals, given that the chemical industry in Europe has a lot of structural problems at the moment and is shrinking. So your upcoming production once those assets currently under construction have started up. I guess your customer base must -- or your potential customer base must have shrunk and those who are still in the game, they currently have problems regarding their there -- when it comes to pushing their volumes in the market. So how welcome will your product be coming in addition to what's already available in the market? That would be my 3 questions on CropEnergies. Stephan Meeder: For ethanol prices, so when you look into the fiscal, so we had ethanol prices between, let's say, roughly EUR 600 quite stable over the last -- since the start of this fiscal. So starting with EUR 700, our first forecast was to see EUR 700 and plus, but prices, in fact, decreased to roughly EUR 600 over -- since the beginning of this fiscal. And what we did see over the last -- it started in September, but materialized in October. Now the prices have jumped over EUR 800. If you now ask me whether I believe this is to continue, I just have to say you, I cannot give you a promise because we see, as we always state, ethanol prices are volatile. For sure, there is always the risk of major changes, be it on the tax side, be it on the import side, be it on bilateral agreements between countries. So it's really difficult to predict. But for the time being, we see EUR 800. If you look into the forward curve, there's still a backwardation. So the anticipation is that this EUR 800 is not to last. But there are good reasons also when I look into supply and demand, there is not too much volume in ARA, Antwerp, Rotterdam region. So I believe that prices should be supportive, but I cannot give you a guarantee. It is still volatile market. It's commodity market. It will depend on factors. But from the supply and demand side or especially from the demand side, there's robust demand for ethanol. But I guess for sure, there's no guarantee. We are very happy with the price increase to be seen how long and to which extent this will last, but we have taken this into our forecast to a certain extent with a better price assumptions that we have seen so far. When it comes to Ensus, when I said we strive for a full capacity utilization, there's a question mark still on Ensus. So the negotiations with the U.K. government on a support package are still ongoing. I cannot disclose any details. We are confident because we believe Ensus is really significant to U.K. industry, be it on the ethanol side, but also on the CO2 side and the co-product side. So it's an important player in the industrial landscape of Britain. So we hope that the discussions or the negotiations with the government would find a positive end, but I cannot disclose and it's not finally done, but you have seen that the competitor has stated to stop production. We are still in negotiations with the government. So there's a question mark on Ensus. Your third question was on bio-based chemicals. Here also -- it is true, your concern comes from the point that climate mitigation measures are under discussion. This started with the Trump administration putting into question climate change and focusing much more on fossil fuels. For sure, this is at present a trend or a downward trend for climate protection measures, but this does not lead us to change our strategy. We still believe we need green carbon hydrates. We have to get rid of fossil fuels, be it in the transport sector, be it in chemistry, and we continue with our project as foreseen. So start of operations is to come as foreseen, and we do have still positive discussions with potential customers. The product that we want to produce is [Foreign Language] which is a solvent, which is needed for many also very interesting products, be it solvents, be it paintings, be it coatings, be it [ nakeva ], fluid adhesives. It goes into nail polish, nail polisher and thane. So this is really interesting products and our customers, they also have very much interest in having this green product. So there's no change in our strategy. But we -- I confirm the overall framework for climate mitigation measures has changed, but I believe this to be not a continuous trend because I think we will all have to do our best to reduce our carbon footprint, and we will continue to do so. Operator: The next question comes from the line of Setu Sharda from Barclays. Setu Sharda: So my question is, what was the achieved average price in sugar marketing this year? And was it in line or lower versus last year? And what is your exposure to spot prices move over the course of the next 12 months? Stephan Meeder: Setu, as I stated, I cannot disclose Südzucker sugar prices because we are in a commodity market. And for competition or reasons, I cannot disclose any precise numbers on sugar prices of Südzucker. As an overall trend, and you will find that in our investor slide deck you have to rely on available market data. And what you can see is both from the world market sugar prices, there is a downward trend since the beginning of the fiscal, and the same is true for European sugar prices. They have declined significantly. And based on the European sugar prices, you can make your calculations for Südzucker Group because typically, our prices very much rely on European sugar prices, but I cannot disclose individual Südzucker sugar prices. Setu Sharda: Okay. And what is your exposure to spot prices, like how much you have contracted this year? Stephan Meeder: Our exposure to spot prices is not meaningful insight because typically, we do 1-year contracts with customers. Those customers do foresee a certain flexibility in volumes. So we have a certain development. It also depends on some regions have more spot contracts than others. But all in all, spot contracts or spot volumes are not meaningful in size. We do have yearly contracts. Setu Sharda: Okay. And one more thing, like can you give some color on what has changed in sugar production, your expectation versus Q1 stage? Like there was a mention that you expect better harvest. Stephan Meeder: Yes. So when it comes to Europe, that's what you have seen on -- if we go back to -- on Page 11 for Europe, it is foreseen that production should come out in '25/'26 at 15.9 million tonnes compared to 17.0 million tonnes in last year. So there is a reduction in European -- there's a reduction in European sugar production. And what has changed is the extent of this decrease. I would have assumed or we have assumed when setting up our budget, we have assumed a stronger decrease and this stronger decrease was based on the fact that we knew from our side that we decreased significantly the acreage in our regions. And for overall Europe, the decrease in acreage was 11%. That was the number that was known, let's say, in March, April when we set up our budget. And that means given a normal harvesting conditions, so let's say, for example, based on the average of the last 5 years, this would have led to a significant decrease in beet and thus sugar production. What has changed and then what we also anticipated leading to reasons for lower sugar production was the diseases that we have seen last year. So one is called Stolbur, the other in SBR, Syndrome Basses Richesses. And what we also have included in our initial forecast was a very dry summer. That of course we called it at the time when we last discussed, we called it our 75-percentage scenario when setting up the budget in March, April, the projections for the weather conditions in summer indicated a very dry and hot summer. And this would have led to the fact that also the protection measures would not have been very effective or it was unclear to which extent those measures would have been effective. And this led us to our initial forecast with a much lower sugar production. At the end of the day, when this is now what has changed, July came out very wet and cold. That was beneficial to the beets. The same was true for August. Here, the weather conditions have shown sunny days and rainy days and cold nights, and this is the perfect mix for the beets. So what we do see today, and this is not what we have expected, we do see a very good harvesting conditions in Europe. So there's much more beet and solid beet and without diseases available for this sugar campaign, and this was not what we had anticipated in our initial budget. So it's positive for the farmers. But given it leads to a much better sugar availability in Europe, this has brought us a bearish sentiment on the prices. And this was the reason why at the end of the day, we had to decrease our forecast for the sugar segment. Operator: We have a follow-up question from the line of Oliver Schwarz from Warburg Research. Oliver Schwarz: Actually, it's more than one. I'm sorry about that, but hopefully, I can... Stephan Meeder: We still have time, Oliver, no problem. Oliver Schwarz: Quickly talk you through all of my questions. Sorry for that. Firstly, starch. You're talking about higher raw material costs, given grain prices have declined due to -- we didn't only have a strong harvest in sugar, but also all other crops seem to be affected. Positive volume development all over the place, and that obviously also puts pressure on grain prices. Still in starch, you're talking about higher raw material costs, which makes me wonder, is that still, let's say, a remnant of hedging in regard to raw material costs that will tail off over time? Or why is that? Stephan Meeder: Yes. As I stated, so in H1, compared to H1 previous year, we do see higher raw material and energy costs in starch segment. So this is true for the corn prices. This is true for the wheat prices, and this is also true for the energy. It is true what you said that when you look at market quotations, grain prices have come down, but there's also always a question of hedging, what hedging positions do you have? This can have an impact. So I cannot disclose all the details, but hedging can have an impact. And also, it has an impact in the regions where you buy your grain or corn or whatever. So market is always the price in Rouen, France. And typically, you have plus and minuses in different regions. And so this can lead to the fact that even if raw market prices go down, you can have different prices depending on availability in certain regions or quality in certain regions. So this -- all in all, this led to the fact that for the starch segment, unfortunately, we do see compared to H1 last year, higher raw material costs in all the 3 segments. It's true for corn, it's true for wheat and it's true for energy. Oliver Schwarz: Will that be true also for H2? Or is this trend to reverse in H2? Stephan Meeder: I don't have that figure in mind. Sorry. We will have to see. I mean, we have the full year guidance, but I do not have on hand the different assumptions for those cost components for starch. I don't -- we can have a look, but I think here, I don't have that with me. Oliver Schwarz: Yes, I get that. But if it's solely, let's say, a function of your hedging position, I guess you should have an insight on that. But we can do that at a later stage, no problem at all. Second question is on fruit. Obviously, the bright spot in your portfolio at the moment. When looking at the sales development and looking at the comments on volumes, it seems like more or less stable volumes. The sales are not greatly up, which indicates that prices are mostly unchanged as well. So this increase in profitability must have had something to do with lower costs. Is that a result of cost-cutting measures? So is that something that is company specific? Or is that lower raw material costs that might have to be passed on over time to customers? Stephan Meeder: There's not one answer putting everything into -- or one silver bullet answering everything. So because we have to -- when we talk about fruit, there are 2 divisions. So one division is fruit preparation, the other one is fruit concentrates. And the developments in those divisions is not parallel. It's -- both of them are positive, show an increase in operating profit and in turnover, but the development within the cost positions is different. Your question, for sure, we do all to -- as entire Südzucker, we do all to reduce administration costs and so. So there's one aspect of that into that. But particularly for the fruit, we do have also increase in material costs. So this is still true. This is true for fruit preparation. So there is an upward trend for those fruit components that we buy. And the same is true for -- in the concentrates business, also the fruit concentrates, they show an increase in material prices. And -- but we have a good development on the pricing situation and on the other costs. So it's a mix of all, but it's not one explanation that fits for all of the divisions. But in general, material prices go up. Oliver Schwarz: Okay. And perhaps can you -- I know it's perhaps a bit delayed now, but can you share about your key thoughts about, let's say, the exchange of your hybrid bond? Obviously, the new hybrid bond is a bit more expensive than the old one was when it comes to the coupon. You had costs regarding issuing the bond and also costs in regarding to buy the old hybrid bond back. So there needs to be an upside somewhere. And given that we are looking for interest rates to rather go down than go up, at least that's my takeaway from the market at the moment. It seems like the only caveat that is out there is that the new bond doesn't have this operating cash flow covenant that the old one had, which basically implies that you might not be that confident with future operating cash flow development so that some breach of that covenant might be or might have been in the cards in the foreseeable future. That would be my takeaway. But I guess you can easily talk me out of that assumption and give me a better reason for that exchange. Stephan Meeder: Oliver, I wouldn't subscribe to that fully. For us, the main reason really was that the old hybrid was stated from 2005 and was at the time, one of the first ones, but now was also the last one. So it was my objective to really to modernize the entire financial situation of the balance sheet. That means I wanted to review and modernize together with my team, the entire financing. This is -- you have to put this into context of the entire refinancing. We did more than EUR 2 billion refinancing in the last months. So this was very successfully. We issued, as I said, the new EUR 500 million senior bond. We did modernize the revolving credit facility with our core banks, increasing that from EUR 600 million to EUR 800 million. We did -- we still have in place the -- with the -- sorry, -- the commercial paper, EUR 60 million is still in place. We have the senior bond. We have the hybrid bond. We put into place a factoring program. So we modernized everything. And part of this modernization was the hybrid, and I'm very happy to have this new EUR 700 million hybrid bond now on the balance sheet, which is fully in line with all the other hybrid bond structures, which we see. So it's part of a modernization of the entire balance sheet. And this really puts us in a good position going forward. The entire refinancing is done, and so this is positive. Oliver Schwarz: I get that modernization sounds very positive. And -- but what is actually the advantage for Südzucker from the new hybrid bond versus the old one? What is in those terms, more modern than the old one was? Stephan Meeder: The modernization of the hybrid bond now it's fully in line with all the other hybrid basis. So it has no more a cash flow trigger. It has -- so it's fully in line with the others. And for sure, this is an advantage not having the cash flow trigger. Oliver Schwarz: Okay. So it is the cash flow trigger that is the advantage, not to have it? Stephan Meeder: That's what you said. That's not what I said. Oliver Schwarz: What did you... Stephan Meeder: Okay. Let's leave it like that. Oliver Schwarz: Okay. And lastly, and I promise that's my last question. Could you talk me through the bridge from the EBITDA to expected net debt level? Given the fact that after the first 6 months of the current fiscal year, we saw an increase in net debt by, give or take, EUR 20 million. You are aiming for a net debt level of EUR 1.630 billion, which is basically currently around EUR 40 million lower than the current level. Your guidance is out of EUR 100 million to EUR 200 million for the full year. So that gives you a EUR 50 million to EUR 150 million additional EBIT for the full year. Could you talk me through that, that stable -- the bridge from that increasing EBIT, especially in the second half of this year to the changes in net debt. Are we expected to see an increase, so some reversal of working capital in the second half of this year, especially as Südzucker tends to pay its sugar beet farmers for the harvest in the second half of this year? Andreas Rothe: So this is Andreas speaking. Maybe I can comment on -- when it comes to the operating cash flow to start there, as you indicated, results are down, but we are also expecting a significant reduction, which already started in the first half, a significant reduction in our net working capital. You have also seen that within the first half year, the CapEx levels are lower than in previous years. That trend should continue also in the second half of the current fiscal year. And the combination of those things should come out in a way that our net financial debt position by the end of the year, we expect to be rather in the ballpark of what we had by the end of 2024, 2025. So the lower operating result should be compensated basically by the net working capital. And obviously, the dividends when it comes to what we paid on dividends this year, it's also a lower -- much lower number than in previous years. Oliver Schwarz: Okay. Maybe I didn't make myself clear that much. Sorry for that. I was specifically asking for the developments in H2. You've got EUR 50 million, let's say, EBIT under your belt, give or take, for the first half year. Your guidance is out there for EUR 100 million to EUR 200 million. That gives you a residual number for the second half year of EUR 50 million to EUR 150 million in EBIT. Your -- currently, your net debt is up compared to the beginning of the fiscal year by EUR 40 million. But by the end of the fiscal year, we are looking for basically the same level as last year. And I was just wondering how does that compute given that you just said CapEx will be lower compared to last year and working capital releases might continue in the second half of this year. How does that compute with coming up with a net financial debt on the same level as last year? Andreas Rothe: The continue -- so we expect a continuation of our working capital, let's say, improvement process that we indicated that we already started, and that should contribute or this is our expectation that this contributes to the offsetting the low operating results. And again, when it comes to CapEx, also in the second half of this year, it's -- the number is not as significant. Dividends are already paid. So when it comes to the balance of our net debt position, that is in line with what we see in the numbers. Stephan Meeder: Yes. Maybe -- Oliver, we are running out of time. So maybe we can postpone it to a later moment. But what you can take is for the minutes, we do foresee that net financial debt at the end of this fiscal should be roughly in line with last year. Oliver Schwarz: Yes. But isn't that very conservative? Shouldn't it be below [indiscernible] Stephan Meeder: Yes, but I think we have to stop it. I mean we -- our assumption is at the end of the day, we strive for having net financial debt on the same level like last year. Operator: Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Andreas Rothe for any closing remarks. Andreas Rothe: Thank you very much, and thank you very much to all of you for your participation and your interest in Südzucker. Also, thank you very much for your questions. As Stephan already indicated, when it comes to additional questions that should come up in the aftermath of this call, we, as the Investor Relations department are always available via phone or e-mail at any time. And obviously, we are trying our best to come back to you as quick and fast as possible. Presentation of the Q3 figures will be held in the beginning of January 2026. And until then, I wish you all the best. Stay safe and take care, and talk to you soon. Stephan Meeder: Thank you very much.
Operator: Good morning, ladies and gentlemen, and welcome to the Velan Inc. Q2 Financial Results Conference Call. [Operator Instructions] This call is being recorded on Friday, October 10, 2025. I would now like to turn the conference over to Rishi Sharma, Chief Financial Officer. Please go ahead. Rishi Sharma: Thank you, operator. Good morning. Thank you for joining us on our conference call. Let's start by discussing the disclaimer from our related Investor Relations presentation, which is available on our website in the Investor Relations section. As usual, the first paragraph mentions that the presentation provides an analysis of our consolidated results for the second quarter ended August 31, 2025. The Board of Directors approved these results yesterday, October 9, 2025. The second paragraph refers to non-IFRS and supplementary financial measures, which are defined and reconciled at the end of the presentation. The last paragraph addresses forward-looking information, which is subject to risks and uncertainties that are not guaranteed to occur. Forward-looking statements contained in this presentation are expressly qualified by this cautionary statement. Finally, unless indicated otherwise, all amounts are expressed in U.S. dollars, and all financial metrics discussed are from continuing operations. I will now turn the call over to Jim Mannebach, Chairman of the Board and CEO of Velan. James Mannebach: Thank you, Rishi, and good morning, good afternoon, good evening, everyone. Please turn to Slide 4 for a general overview of the second quarter of fiscal 2026. Velan reported adjusted EBITDA of $3.4 million and operating income of $400,000 on sales of $67.6 million during the period. Our performance in the quarter, which fell short of our internal expectations was negatively affected by the need to reschedule certain deliveries totaling more than $12 million, mostly to adapt to changes in customer requirements. Moreover, delays in purchasing decisions due to tariffs, largely for spare part orders, which are typically booked and shipped in the same quarter, further dampened sales in the period. It's important to note that prescheduled orders are part of firm contracts, which have simply been pushed out in time and will be delivered in the near future. For certain orders, small outstanding items prevented revenue recognition. And for others, greater complexity in part due to change in customer requirements led to these delays. In fact, we've already shipped orders related to the delays totaling approximately $5 million early in the third quarter, with the remainder now planned for delivery later in the third quarter or before the end of the fiscal year. We delivered the first order from our new manufacturing plant in Saudi Arabia, which is part of a joint venture in the Middle East dedicated to addressing the largest market for oilfield valves worldwide. This milestone follows the prior approval and certification from Saudi Aramco for some of our key valves. So, Velan is fully prepared to deliver in this region with a promising pipeline already in the works. Now let's turn to Slide 5. Our order backlog reached $285.8 million at the end of the second quarter, up 4% from the beginning of the year. At quarter end, 88.3% of the backlog, representing orders of $252.4 million was deliverable within 12 months as compared to 91.3% at the end of Q2 last year. As I stated last quarter, the shift in delivery schedule was driven by continued securing of an increasing number of large long-term contracts for the nuclear and defense industries. Bookings amounted to $65.2 million in the second quarter of fiscal 2026 compared to $88.4 million in the same period last year. Order intake early in the third quarter rebounded with significant contract and MRO wins throughout the world. Notably, we were recently advised of an award for certain reactor cooling valves related to the refurbishment of an Ontario reactor totaling more than $15 million, confirming the strength of our position, supplying the most critical valves into rapidly growing nuclear industry. To this point, among the key projects booked in the second quarter of last year was a main services agreement with GE Hitachi as part of the provision of a small modular reactor or SMR, at OPG's Darlington site, which I'll further expand in a moment. As we turn to Slide 6, I'm particularly pleased that this key infrastructure project was recently fast tracked by the Canadian government through the newly implemented Major Projects Office. The office's role is outlined by the federal government involves streamlining regulatory assessment approvals as well as helping structure finance and partnerships with all stakeholders. The main objective is to significantly reduce the approval time for projects identified as of national importance. Clearly, Velan stands to benefit from the pending acceleration of projects that typically require an extended planning periods such as nuclear. As a reminder, we have more than 55 years of experience in supplying valves to the nuclear power market with deep expertise, providing leading reactor technologies, more specific to the Darlington project, which happens to be the first SMR deployment in North America. Velan is a supplier of choice for GE Hitachi Nuclear Energy. Under the terms of our agreement, we are providing the development of advanced technology, engineering support and leading-edge proprietary valves for the safe and efficient operation of this first of 4 planned SMR units. This project has the potential to position Canada as a global leader in nuclear energy, and Velan as the leading valve provider in critical applications in the growing deployment of SMR technology. In summary, on Slide 7. nuclear and clean energy represents key growth sectors for Velan, both in Canada and increasingly on a global basis as customers move to reach their own carbon reduction objectives. So let's not forget that we're also fortified with a very solid footing in other markets, such as oil and gas, where our valves equip the vast majority of refineries in North America and a growing base worldwide, which will further expand through our Middle East joint venture. Defense activity also continues to rise as sovereign states are addressing their national security concerns. With our proven solutions for both surface and subsurface nuclear marine propulsion, we expect positive development in the years to come and continued growth. With the strength of our brand and our proven ability to address complex needs for the most demanding flow control applications throughout the world, we are very confident in our ability to sustain growth in our backlog. Before turning the call over to Rishi, let me assure you that after permanently resolving our asbestos-related liabilities and completing the sale of our French assets as announced earlier in the year, we remain quite active considering capital structure options to ensure the company remains well positioned to fully achieve its growth ambitions and its determination to maximize shareholder value. This wraps up my presentation, I'll now turn it over to you, Rishi. Rishi Sharma: Thank you, Jim. Turning to our second quarter results on Slide 9. Sales totaled $67.6 million, down 13% from $77.7 million a year ago. Since last year's second quarter included a nonrecurring revenue of $5.2 million related to a canceled agreement, the comparable year-over-year sales decrease is about 6.7%. As previously mentioned, the decrease was mainly caused by rescheduling of order deliveries, specifically from our North American and Italian operations added by tariff disruption. In fact, uncertainty resulting from the changing tariff regimes have dampened demand for valves, spare parts and MRO throughout the U.S. as customers continue to defer purchasing activities, awaiting the final outcome of ongoing tariff negotiations. Partially offsetting these factors were higher sales in Korea, India and China as well as greater MRO sales in North America. By customer geographic location, North America represented 55% of total sales in the second quarter of fiscal 2026 compared to 51% last year. Asia Pacific accounted for 26% of total revenues versus 12% a year ago. For its part, Europe represented 12% of sales in the second quarter compared to 20% last year. Finally, Africa and the Middle East as well as South and Central America rounded off our sales for the quarter. Moving to Slide 10. Gross profit reached $15.7 million compared to $20 million last year. The decrease was primarily due to lower sales volume, which negatively affected the absorption of fixed production overhead costs and a less favorable product mix. In addition, tariffs had a dual impact on gross profit. First, by impacting supply chain optimization and second, by causing a timing lag between the moments they are incurred and subsequently passed on to customers. These factors were partially offset by positive foreign exchange gain. As a percentage of sales, gross profit was 23.2% versus 25.7% last year. Administration costs decreased to $15.4 million or 22.7% of sales in the second quarter of fiscal 2026 from $16 million or 20.6% of sales a year ago. The year-over-year variation reflects lower sales commissions, reduced freight costs and additionally, cost prudence in our day-to-day spend. We also incurred restructuring expenses of $700,000 in the second quarter of fiscal 2026, which consisted of transaction-related costs. Excluding restructuring expenses, adjusted EBITDA amounted to $3.4 million versus $6.7 million last year. The year-over-year decrease can be attributed to lower gross profit, partially offset by reduced administration costs. Net loss meanwhile, totaled $1.7 million or $0.08 per share in the second quarter of fiscal 2026 compared to a net loss of $1.2 million or $0.05 per share last year. Excluding restructuring expenses, adjusted net loss amounted to $1.2 million versus adjusted net income of $2.8 million a year ago. Briefly on Slide 11, for the first 6 months of fiscal 2026, sales were up 1% or close to 5%, excluding last year's nonrecurring revenue, while gross profit was relatively stable, both in dollars and as a percentage of sales. Turning to cash flow from operating activities on Slide 12. Before changes in provisions, we used $16 million in cash in the second quarter of fiscal 2026 compared to generating $4.7 million a year ago. The unfavorable movement in cash was due to lower profitability and negative changes in noncash working capital items versus last year. For example, significantly more late-stage work-in-process inventory related to the changes in delivery schedules increased working capital requirements. Work-in-process inventory was up $10 million in the second quarter alone, and we expect a cash inflow as projects are shipped and paid for. In the period, we also paid $6.8 million in dividends representing the regular payments for dividends declared in May and July as well as the $0.30 per share special dividend declared earlier this year. As for the next payment, the Board of Directors declared yesterday a dividend of CAD 0.10 per share payable on November 27, 2025, to shareholders of record as of November 13, 2025. Our dividend policy reflects our growing firm order backlog, confidence in our future performance and our ability to sustain strong cash flow generation. Finally, our financial position as at August 31, 2025, remained strong with cash and cash equivalents of $36.1 million and short-term investments of $400,000. Bank indebtedness stood at $6.6 million, while long-term debt, including the current portion, amounted to $15.9 million. Considering our new $35 million credit facility, working capital financing, letters of credit and guarantees, we have access to nearly $60 million in additional cash flows. As a result, Velan has $96 million in readily available to execute its strategy and finance it expansion to sustain long-term profitable growth. I will now turn the call over to the operator to begin the Q&A session. Operator: [Operator Instructions] Your first question comes from Sebastian [ Sharlin ] with Agave Capital. Unknown Analyst: My first question today, it's maybe a little more philosophical. So in terms of the cycle in nuclear, I think it's pretty clear where we're at. It's increasing. I know sometimes there can be some tying or freezing with all that happened in the last year. But clearly, there's a growing demand worldwide. What would you say we're at or what are you seeing on the oil and gas side in terms of CapEx investment, perhaps and growing capacity? Or like where do you see us in that cycle for that industry? James Mannebach: Yes. Good question. I think what we're seeing in the marketplace in oil and gas, and it depends what you're looking at is upstream, midstream or downstream. But for our primary markets, we're seeing a lot of extension activity as refiners and producers continue to try and extend the useful life, so to speak, of their investments. It's good news for us. As you know, we're quite prevalent in all of those markets. And I think there's been a rebound generally in the sentiment with the change in the administration in the United States concerning the desirability for attractiveness of oil and gas in general. So I think the indicators are heading in the right direction are positive already. How long that will last? I suspect it will be a multiyear. It's not quite as long in terms of lead time, generally speaking, as in the nuclear industry. But certainly, once committed to, we're talking about several years of deployment. Unknown Analyst: Makes sense. The next one might be for Rishi, but feel free. It's more on the gross margin ballpark. I know in previous year, and I think last year, I had a question, the $5.2 million cancellation. I think it was related to a Russian tied entity for BP or in Vietnam, something like that? So I was questioning how should we go about forecasting gross margins in the future? I know now you throw in a mix or a mélange, as we say in French with the USMCA that's in jeopardy, the tariffs and all the impacts on the supply chain. Should we forecast or adjust slightly down on the gross margin side going in the future? Or is there a lag? Because I understand there's a difference between the time that you book at a certain price and you deliver and then there's a tariff that comes in between. So I guess if I have to summarize it, do you pass it on to customer at some point? Or should we just forecast it down? Rishi Sharma: Yes. So I'll take -- I'll take the question in 3 parts. The first one was, yes, it's a contract that we have for a Vietnam end user that was backed by essentially a Russian EPC. So that -- the $5.2 million that was the cancellation charge last year, you can essentially remove that from sales and it was at zero profit, if you remember what we discussed, so that normalizes Q2 of FY '25. On the gross margin and the mix, I think we're still very confident in terms of the normal levels we've been seeing in the last few quarters. When you look at tariffs, yes, exactly, there's a delay between when we pay the tariffs as the goods cross into the U.S. versus when we collect, let's say, surcharges or additional charges from our customers. I think that the year-to-date impact for us is just under $750,000 in net exposure. So I think we're controlling it well with the footprint that we have in terms of us negotiating with our customers. And then finally, Jim spoke about upstream, midstream. Our business in that sector has 2 components. There's the bare valves, as you call it, and then there's the actuation. We don't manufacture our actuators. So it's generally a buy-through and a pass-through of a markup. And so as the mix for upstream, midstream proportionately changes on the total revenues, you'll see some movement on the overall margin. But we're still very confident. And Jim mentioned the large order we're securing in nuclear. We have the defense contracts in the backlog that we're executing. So that the gross margin over the last few years -- quarters, I think, is still what we're targeting. Unknown Analyst: Okay. That's really helpful. And my last one is considering the capital structure option comments, are we more looking at perhaps preparing for larger, longer-term contracts? So whether it is growth CapEx, refinancing or even upsizing the facilities that you have for letters of guarantee, that kind of stuff that may be required? Or more on the buybacks, dividend or even small acquisition side? James Mannebach: Yes. I think principally, what we're looking at is we see a period of growth in some industries, such as nuclear, significant growth into the future for the industry. Our presence in those industries, as we've commented on several times, is quite critical. And consequently, it's incumbent on us to make sure that we have the capital structure in place that allows us to fully realize that growth potential. So in terms of the dividend, we had advised, I think it was in the last quarter that based on the strength of the business and our forward look, we had increased our recurring dividend to $0.10 per share and confirm that again this quarter. So some consideration of capital structure in that domain is also ongoing as you would expect by the Board quarter in, quarter out. Operator: [Operator Instructions] Your next question comes from Alex Ciarnelli with SM Investors. Alessandro Ciarnelli: Hope everything is fine. Just out of curiosity, can I ask what is the utilization rate of your manufacturing facilities today and then compared to, let's say, a year ago in general? And then if you can, for the Montreal stand-alone? James Mannebach: Well, we don't disclose the utilization rates by plant. I would say that the company has sufficient capacity over its planning horizon to support substantial growth without the need for extraordinary capital addition. So our equipment stock is in our [indiscernible] in Canada and the U.S. and around the world is quite good and quite robust in terms of supporting the growth. As you know, our CapEx traditionally is $9 million to $12 million, $13 million annually. Sometimes it goes up and down depending on our investment in additional capital machines. So I think that probably is sufficient. It's more replacement and upgrade. We have a wonderful preventative maintenance program throughout our network of plants, which allows us to extract maximum utilization of our machine stock. But of course, like anything, as time goes by, tolerance is increasing, so we make prudent investment from time to time in key machinery to ensure we continue to meet all tolerances. Alessandro Ciarnelli: Appreciate it. I don't know if you answered this already, sorry. When I look at the revenues down, right, and the commentary of the $5 million onetime last year, the push out of $12 million, which my understanding $5 million already came back and the $7 million for the rest of the year. Would it be wrong for me to see -- to say if I adjust for all that, the revenues were actually up? Is that a wrong way to look at it? or no? James Mannebach: Did you say would that be wrong? You're asking that in the negative or the positive? Clearly -- I think that's exactly the right conclusion to draw is that we had some late in the quarter changes and delays with customer receipts that if that -- if those shipments had occurred in the second quarter as had originally been planned, revenues would have been up. Rishi Sharma: I'll just add, Alex, to that. Today, we recognize revenue on a completed contract, as we see larger, more longer-term contracts, if you had a POC accounting base for rev rec, then it would be a bit more stable. So that's something of consideration for the future. Alessandro Ciarnelli: And then just an accounting item, I see the taxes. I think in the report it states that after taxes were up because of, I guess, tax individual -- the legal entity versus consolidated. That means that last year, it was -- you were looking at the taxation was on a consolidated basis and this year is different? Or did I miss that? And then rate of that, what are your cash taxes? Rishi Sharma: Are you talking about the quarter or year-to-date? Alessandro Ciarnelli: The quarter, sorry. Rishi Sharma: Yes. I think quarter -- I mean the variation in the quarters is just the taxable income that's generated in each of the legal entities. So in Q2 this year, we had certain legal entities that generated taxable income. There was catch-up in certain entities that have differences in year-end versus reporting periods for filings that result in assessments that go up and down. So Q2, you'll generally have a bit of catch-up or realignment for the year. So it's not more than that in terms of the cash tax expense. We do not, as you know, recognize and have not recognized deferred tax asset on the balance sheet. So that creates an effective tax rate that's significantly higher when you look at the taxable income that's generated. But as we move now forward to profitability that are in this quarter, if you look at net income, that's what we've done over the last 8 quarters, that's something that's also going to be for a discussion. James Mannebach: Yes. I think to underscore that point on our balance sheet to [indiscernible] I suppose is a better way of putting it, that we have combined net operating loss carryforwards [indiscernible] of over $100 million under IFRS because of the company's performance prior to the turnaround that started in '23, we have a threshold or we're closing in on the threshold of reestablishing those credits. This is an accounting fiction at the end of the day, we have [indiscernible] NOL and tax credits that will shield our earnings for many years to come. So I think that modeling needs to be certainly taken into account the cash advantage of utilization [indiscernible] to the future. Alessandro Ciarnelli: That's great [indiscernible] even after the French disclosure. And the last question, which you might have answered again, sorry, I was half of 5 minutes. Some color on the Saudi joint venture. How does that work [indiscernible] the first order and then what kind of pipeline you see there? James Mannebach: Yes, sure. It's a good question. So as you know, we commissioned and opened the Saudi joint venture in the first quarter of prior year, and that had been delayed also. So as I think I commented on it the last quarter for some time as we looked at the -- that the prior strategic option review within the Flowserve side, we'll call it. And so we're very, very pleased with the rapid growth of this joint venture. It's exceeding our expectations at the moment. Of course, first, you have to -- after you secure the approvals, the [indiscernible] which we call Aramco, you have to then produce on a limited basis product in accordance with that certification. And then basically, the doors are open for additional work. Thus, the pipeline is very, very robust. And I think the backlog is already exceeding USD 500,000. This is rather remarkable given that this joint venture has really been in place and operative for the 6 months, maximum 9 months, something like that. So we're quite pleased with that and very, very bullish on what we see developing in the Middle East, not only in Saudi Arabia, but also in the surrounding parts of the world there where we really, quite frankly, haven't focused as intently as perhaps as possible, and certainly, it will be the case going forward. Saudi Aramco, as you know, is by far, by far, the largest producer in the world. So yes, we look very confidently with that joint venture. Thanks for bringing it up. Operator: There are no further questions at this time. I will now turn the call over to Jim for closing remarks. James Mannebach: Well, thank you, operator. We appreciate your help as always. And thank all of you for joining us today. We look forward to sharing our third quarter results with you in January. And hope you have a good weekend. And for friends in Canada, happy Thanksgiving weekend. We look forward to talking with you again soon. Bye for now. Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.
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