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Ronnie George: Okay. Brilliant. Thank you. So warm welcome to Volution Full Year 2025 Results. Nice full room. So look, we're really delighted and excited to be here this morning to take you through our last 12 months. Pretty much similar format for us, a quick overview. I'll be quite brief with that, hand over to Andy to talk about the financial review for the year. I'll come back on business review and then summary and outlook and then Q&A. And I think our sort of view here is that probably 20, 25 minutes on the presentation. And just from past experience, we know there's always a good appetite to sort of go through the Q&A. So we'd like to allow some really good time to go through the Q&A. But look, for us, I've been doing this for some time now. So this was a strong year for us. Revenue up 20.6% or just under 22% on a constant currency basis and delighted with organic revenue at 5.7% on a constant currency basis. And obviously, the inorganic benefit in the year was exclusively from the Fantech acquisition. Our organic growth was largely sort of volume led rather than price led, and Andy can get into a little bit more detail on that later on. But highest revenue growth was in the U.K., 9.5% revenue growth in the U.K. So very strong revenue growth in the U.K. I'll come back on that in a moment and just take you through some of the detail but certainly supported by regulations. Volution is a regulatory underpinned story. I think this is a really good example of it and also made share gains in the market, and we can talk about that as well. Adjusted operating profit margin, small reduction, 22.3% versus 22.5% in the prior year, solely attributable to the Fantech dilution. And in actual fact, the organic margin expanded 50 basis points in the year. Again, very pleased about that performance. Quite a bit of headwinds in the market, particularly in the U.K. around sort of inflation on payroll and national insurance and such. So very, very pleased with the adjusted operating profit margin. And then the cash conversion, 109%. That's an absolute essential ingredient of the mix for us if we're going to continue to deploy capital to grow inorganically and leverage down to 1.2x in spite of the fact that during the year, we made our largest acquisition to date. Robust return on invested capital, 25.2%, and we did, as I say, make our largest acquisition to date. And really good progress on ESG, and we've got some detail on that. And just one other one. This isn't new. We talked about it at the half year, but we established -- I've established a sort of more regional structure to run the group, and it's inevitable over time. If we're going to continue to grow at the rate that we have been, we need to have the management bandwidth and capability to underpin that as we go forward. So this slide, we can't help but put this slide into the deck. But I think just to draw out a couple of important ingredients here. We listed in 2014; I became Chief Executive at the beginning of 2012. But it's really the sort of trajectory that we've been on. And I won't go into each of them individually, but roughly across revenue, profit, EPS and cash flow, plus/minus 12% compounding growth over that period. And it shows the change in the complexion of the group from 4 countries where we had a local presence. So that's a local presence, not where we make sales, but where we have a local operating company presence. But we've gone from 30% of our revenue from non-U.K. customers in 2014 to 63% today, 5 brands to 29 brands, and we have a presence in 17 countries. And that's sort of what's happened to us over the last 10 years. Strategic progress and priorities, 3 strategic pillars: organic growth, inorganic growth and operational excellence. And just a little bit under each of these, and we will spend a bit more time later on, but 5.7% organic revenue growth, and we're continuing to invest in products and facilities to underpin this organic growth revenue proposition. Value-add acquisition, 16.2% inorganic revenue growth coming from the Fantech acquisition. And also, as I've talked about, sort of fully embedding that more regional leadership structure that I've talked about already. And then operational excellence, as I said there, 22.3% operating profit margin, but an organic operating profit margin improvement in the year. Sustainability, again, I don't want to go through each of these individually, but what I was pleased about is pretty much every metric on the page has improved. Should just explain on low carbon sales there. Low carbon sales, 71.2% of Volution's total revenue is in low carbon. I said that it improved. It has improved organically to 77.3%. But Fantech as a proposition has less of its revenue today in what we would call the low carbon product bucket. So that created some dilution in the year. And of course, going forward, we'll report the inclusive of Fantech number, which is the 71.2%. And the same story with heat recovery. The dilution is because of Fantech actually, organically, we improved from 31.7% to 32.5%. And on the recycled plastics, I mean, some would say that we missed because we did set ourselves a 90% target, but we set that target when we were at 40%. And I remember shareholders saying to us, how are you going to get there? And we said we don't know, but we're setting a stretching target. We've got close. It's 83.9%. And in actual fact, the sort of drag on that improvement was more around the Nordics, where in actual fact, more recently, we've made some really strong progress. And just one other one I'd like to just pick out on the slide there is the accident frequency rate that improved in the year. And ultimately, Volution is a place where we want everybody to come in, in the morning and go home at night. So delighted to see that with the extra effort we're making around health and safety and so forth that our frequency rate improved in the year. So that was a very quick overview from me. I'll hand over to Andy to take you in a little bit more detail now. Andy O'Brien: Thanks, Ronnie. Good morning, everybody. So just to kick off, you saw the sort of 10-year progression on some of the key metrics earlier. This is adding a couple more and doing it over 5 years. Actually, it's quite nice because for the first time now, we can drop the COVID year off the 5-year comps. So the lines all make sense. And look, again, at risk of repeating the earlier slide, I think what stands out the most for this for us and hopefully for you as well is that sort of consistency of performance year-over-year, the continued improvement on all the key metrics. And actually, you see the sort of the steepness on those Top 2, the revenue and operating profit growing faster this year than any prior year as a result of both some really strong organic growth, which Ronnie is going to come on to when he starts to unpick the individual markets. So 5.7% organic growth. Our target range, you'll remember is sort of 3% to 5% that we stated that. And then supplementing that, obviously, with Fantech, our largest acquisition to date, which has gone really, really well. So I will then have in the subsequent slides and then I say, in the market, we'll go into a little bit more around some of these key pieces. But I guess the other one that I'd sort of draw out to having done the top left, if you go to the bottom right, really, really strong cash performance in the year. And that's always at the heart of the business model because that is how we fuel M&A and obviously, that is how we deliver our returns. But actually, to do that this year was even more important than normal years and then to end the year at 1.2x leverage, having spent AUD 220 million, GBP 110 million on the Fantech acquisition. Plus, of course, we did also complete the buyout of the balance 25% of ClimaRad in the year. So a meaningful amount of expenditure on M&A but still ending with the balance sheet in very good shape there at 1.2x leverage. So this next slide, just showing a little bit more detailed year-over-year comparative there. Revenue, operating profit, I'll unpick a bit more on the next couple of slides. I guess just to sort of help the analysts out, and again, they will probably have read this in going through the more detailed statement, but a couple of the pieces that then sort of go below operating profit. So we obviously had a higher financing cost charge in the year as a result of the borrowings that we took on to do the Fantech acquisition and the ClimaRad purchase. So our finance costs were up about 40% year-over-year to just over GBP 9 million. Tax rate was basically unchanged. In fact, it was exactly unchanged year-on-year. It was 21.8%. Now what should have happened is Australasia being higher tax rates than the rest of our group. So Australia is 30%, so we should have actually seen that bump up slightly. But offsetting that, our growth in the U.K., particularly U.K. residential is very much in patented products. We talk a lot about the fact that actually it's regulations that have moved forward, and we've developed some really compelling propositions to service those regulations, some of which then benefit from being patented. So we then have leveraged that U.K. patent box opportunity, and that's meant that effectively the tax rate has stayed exactly unchanged. Return on invested capital, again, I'll come back to later with a more detailed slide, but actually really, really pleased that, that still came out at just above 25%, and that's got 2/3 of the Fantech balance sheet in it because of our 3-point methodology on the balance sheet. And then dividends, up 20%. So slightly ahead of the rate of growth of the earnings per share. So dividends up 20% to 10.8p. Revenue, so I won't go through the individual regions too much because obviously, Ronnie will do that in more depth in the next section. But really pleasing that actually within that 5.7% constant currency organic growth, all 3 regions grew. Yes, the U.K. grew strongest. Europe grew nicely. Australasia, very, very small bit of growth, but it was growth. And that's despite the fact that, as we have talked about for the last couple of years, the New Zealand market has been a really, really tough market, won't steal the thunder, but hopefully starting to show some signs of recovery. But still, we were able to show organic growth in all 3. FX was against us. I think I've said that pretty much every year for the last few years. So one of these years, FX will sort of flip in our favor. That was, again, mainly in Australia and New Zealand, that GBP 4.5 million of adverse revenue impact and about GBP 1 million of profit impact sort of comes through from translation. Fantech obviously then coming in with the inorganic growth piece. And then just in the sort of the strap at the bottom there, just again, where we sort of try to unpick how much of the constant currency growth is volume stroke mix. So those 2 things effectively come together. So that's volume and it's also upselling of the proposition. How much is from that and how much is from pure like-for-like price. And the like-for-like price is now back to very much a normalized level of just over 1%. So 4.5% is what we estimate to be the volume stroke mix component of that revenue growth. Operating margin, as Ronnie mentioned in the intro slide, the fact that bottom left there, group margins nudged down ever so slightly by 20 basis points, but we'd already long trail that Fantech was coming into the group at a good margin relative to the wider market, but at a margin that nonetheless is lower than the margin that we trade at as a group. So to get to that 22.3%, you've got effectively a 50 basis points improvement in the organic margins of the business, offset then by a slight dilution from Fantech. And then you see, I guess, in that sort of bottom middle graph, you see how that organic margin improvement comes through region by region. So U.K. and Europe, there's no inorganic effect. So those comps are exactly as they would be. So a really nice 100 basis points improvement in the U.K., 20 in Europe. And interestingly, for those that have sort of followed us for many, many years, I remember my first couple of sets of results being asked, why is the U.K. margin the laggard relative to the rest of your group? And actually, look, I think this is testament to some really, really strong results from the U.K. over many, many years now. I guess we always said, look, we've got a really good infrastructure in the U.K. We've got a very broad proposition. There is no reason why it won't be at or above. And indeed, that's what you now see. And then on the Australasia graph, we've given you 3 data points there. So as reported, '24 and '25, but then also showing what the '25 organic was. So actually, if you compare that 22.7% to the 23.8% a nice organic margin improvement in Australasia as well. Jumping on to the balance sheet and the cash flow. So a very, very strong cash conversion, 109%. We talk about a target of above -- at or above 90%. And as you see on that sort of top right graph there, we've hit that pretty much every year bar, 2022 was when we made a sort of material increase in our inventory levels to bolster customer service. But aside from that, essentially, the 90% and above, 109% is particularly strong. I'm not going to promise that's going to keep repeating, but it does just show how robust the model actually is. And inside that, investing nicely in facilities and infrastructure. So you'll see when you get the annual report in a couple of weeks' time, we showed a little bit about where we've been investing, whether that's further capacity and automation in Reading in the U.K., for example, whether it be the early bits of our expansion in North Macedonia that we've talked about for a number of years and in the Nordics, where we've been adding additional metal production capability. So we spent about GBP 8.4 million on CapEx in the year, which was up GBP 1.3 million from the year before. So still continuing to invest nicely in the organic business where it's compelling as well. Then I've already mentioned this, the return on invested capital. So this is a really, really important metric for us. We've said that we are confident that we can carry on delivering returns of 20% and above whilst continuing to invest materially in acquisitions. And as I said, the fact that we're 25.2% with having brought Fantech into the group is fantastic. So there was a very nice organic ROIC improvement coming about through that working capital and balance sheet management, coming about through that organic margin improvement. And again, that means that we're able to bring these nice acquisitions in and still deliver very, very strong returns to investors. I don't think I need to -- this is at the risk of repetition a little bit. This is basically showing in the dark blue, our key financial metrics for FY '25. In the light blue, the average over the last 5 years. So actually, what you see with all of them, the organic one there does still include the '21 versus 2020 comp, which is COVID impacted. But really, relative to our green numbers there, which are the long-term financial targets, if you like, of the business, continuing to deliver on all of those metrics, which obviously is really, really pleasing and important for us. So with that, I'll pass back to Ronnie to go through the business. Ronnie George: Great. Thanks very much, Andy. So we talked about this already Volution in 2014 and today. And of course, the Australasia only includes 8 months of Fantech. So the way to sort of think about the group now in terms of its geographic disposition is 40%, 30%, 30%. So quite a nice split. And look, what we've said throughout is that over time, we expect the percentage of group revenue in the U.K. to get smaller as we continue to bulk up with more -- obviously more opportunities in Continental Europe and in Australasia. And this, again, is our increasing geographic diversity. So you see from, as I say, my tenure started in '12. We started to acquire in Europe and then the first acquisition in New Zealand in FY '18. And of course, this year, we'd expect again that light blue box to get much bigger as we see 12 months participation from Fantech. So a little bit of detail about the local geographic areas. So look, specifically in the U.K., very pleased with the 9.5% revenue growth. I mean that's -- and if you look at the residential, we've had a consistent period of growth now. We talk about strong comps, and they were strong comps in 2024 for the U.K., but the U.K. residential ventilation increased by 9.7%. And that was -- the growth was most significant in residential new build, which I know is counterintuitive and we think about house builders and the volume of activity, but we saw a big change in the impact from regulations, and we're moving towards what we call more continuous ventilation and continuous ventilation with heat recovery. And we made some account gains along the way there. So that was a particularly pleasing step-up in residential. I think it's fair to say that public housing RMI is still attractive for us and private residential RMI have been probably a little bit more challenging. Then as you work down commercial, look, we're still very small in commercial. We've only got GBP 30 million of revenue in a much bigger U.K. commercial ventilation market. So in the year, the 6.9% revenue growth was particularly buoyed by the second half of the year. We had good strength in the second half of the year. And I'll come on to some of the investments and focus that we're making in that area because we still see that as a runway of opportunity for us into the future. Export 29.4% revenue growth. So very strong, mainly in Ireland. We've got a good partnership in Ireland, again, around residential heat recovery systems. The Irish market is probably one of the best examples about where regulations have really quite seriously driven that sort of home of the future, that very energy-efficient home of the future. And our technology lends itself really well to the regulations, and we've benefited hugely, and we still think there's a runway of opportunity to continue there. And as Andy has already talked about, 100 basis points operating profit margin improvement, and we did suffer quite a substantial national insurance increase and wage-related increase from April and also some facilities cost increase around leasing and so forth. But delighted that we were able to, in spite of that, improve adjusted operating profit margins. And then it's about future proofing. We're not just about delivering in this year. We've made investments in most of our facilities in the U.K., but in particular, in Reading with new injection molding, some additional machine monitoring, some robot control, quite a big investment in Dudley in the West Midlands. In actual fact, we took on an additional 50,000 square feet facility that we're equipping right now as we speak. But it's about future-proofing our facilities to be able to have capacity headroom to grow into the future. In Continental Europe, the European story has been a little bit more challenging for us over time. But in actual fact, 3.1% constant currency growth, adjusted operating profit increase of 2.5%. But what I would draw out there is that we had -- in our Central European activities, we had strong performance from our ClimaRad brand in the Netherlands, which is mainly focused on structural refurbishment. And that's a heat recovery proposition, a business that we bought in 2020. In actual fact, during the year, we completed the balance 25% acquisition that took place in December, and we talked about that in March, if you remember. But very pleased about the proposition in the Netherlands. We're seeing good organic revenue growth from our heat recovery counter flow cell manufacturing in North Macedonia in Bitola, where, again, we've made some investments. As Andy said, a lot of content in the annual report coming up, but substantial investment. We've effectively doubled the size of our factory footprint in North Macedonia, where refurbishing a building at the moment and putting in additional investment, but with strong sort of organic growth plans in that facility in the years ahead. The disappointments for us are probably in Germany. The market continues to be quite weak. I think we mitigated some of that weakness so as to have a less profound impact on profitability. It's still a very profitable business, and we still believe in the long-term prospects of heat recovery ventilation, particularly in refurbishment in Germany. And the Nordics, again, have been quite challenging, but actually showing some signs of recovery. And I think this is largely to do with the fact that we've had interest rates roll over more quickly in Europe. And I think our outlook for Europe is certainly a little bit more positive as we go forward. Finally, Australasia. These numbers that you look at here, they struggle a little bit with a big inorganic growth addition. So when you look at, for example, the commercial revenue decline of 11.3%, I really do need to pick this out. This is an 11.3% decline on the only GBP 3.1 million of organic commercial revenue that we had in the region prior to acquiring Fantech. So just to remind you, prior to acquiring Fantech, Volution's proposition in Australia and New Zealand was almost exclusively residential. So if we look back at the prior year, GBP 52 million of revenue, GBP 3.1 million of it. So let's say, circa 5% or 6% of our total revenue in the region was in commercial. That materially changes as we've acquired Fantech. So Fantech is in actual fact the reverse. That's why the complementarity of these 2 propositions is really quite attractive. We've taken a strong residential presence, complemented it with an additional residential presence and then overlaid a market-leading commercial proposition. So overall, when you look at the -- sorry, the adjusted operating profit increase of 83.5%. Andy has already talked about the organic component. But Fantech is going really well. I'm very proud of the fact that we brought the company into the group. The Chairman had the opportunity to visit the team locally a couple of months ago. This is an amazing proposition for us, integrating very well and plenty of opportunities now for us to cross-sell more to cost reduce products and to improve the organic margin, if you like, as we go forward in Fantech to and beyond our 20% operating profit target. So very pleased about Fantech, delighted that we were able to get this over the line in December last year and going really well. In actual fact, I've told you all of that, I've jumped ahead. So there we are. So yes, I don't think there's anything new there. The new regional leadership established. Anthony Lamaro was in Fantech for 18 years before we promoted him to be the regional leader, very well-respected, experienced leader. And I think it's fair to say that not surprisingly, when we buy a company that's much larger than us, with our original presence. We've actually acquired a very strong management team. And so there's quite a lot of extra coverage now and strengthening that team to help us improve the business as we go forward. We could spend an age on Fantech and the proposition. Maybe there'll be some questions later on but going really well and in itself growing on its prior year. I know we don't talk about that as organic, but what we should consider is that Fantech has improved over its prior year, both from a revenue and profit perspective and expanding margins. So as I said, we wouldn't be too long on basically half the presentation time allocated to this. I'm not going to go over these again. It's just repeating what we said earlier on. But just on the outlook, look, for us, it's only a couple of months in. We've had August and September and 6 trading days of October. But look, the new year has started well. We do have the benefit of the inorganic drag from Fantech for the next 4 months, and we are growing organically. And maybe just a caveat that the end markets are not as helpful as we would like. They could be more helpful. But notwithstanding those challenges, we're still very optimistic about another year of good progress for the group. So that's sort of the formal presentation. And we'd love to have your questions. Tania Maciver: Tania from RBC. Just a couple of questions on the U.K. market and your market share there, particularly given the strong performance in the second half? And how should we look about growth going into next year with some of the new regulations coming into play? And then just about your CapEx spend for next year across the regions to expand capacity. Is that being driven by order book demand that you're seeing now? Or is that more in terms of what you're expecting to come? Ronnie George: Yes. So taking our U.K. in order there, residential share is pretty substantial across new build, social housing refurbishment and private housing refurbishment, not necessarily with one single brand, but collectively with a number of different brands that we have in the stable. I think we would argue that we've got a leadership position in all 3, residential new build, commercial -- sorry, social housing refurbishment and private housing refurbishment. And I think the drivers are different but converging. So on residential new build, it's -- a lot of this is going to come down to whether or not we start to see more houses starting and being completed. And my crystal ball is as good as anyone else is there. And I think it's probably fair to say that it's been disappointing so far. Although in spite of that, we've managed to grow strongly. Now regulations will continue to help. We haven't had a full lap of the year yet where those regulatory benefits catch up with themselves. So if nothing else, there's a regulatory gain. I'd like to think that there might be sort of more structural increase in houses, but let's see. And then from a share perspective, I think what we would argue is that as the proposition becomes more complex, it's become easier for us to gain share. In other words, I think my argument is that our innovation and product range capability lends itself strongest to the higher end, even though we're eminently quite strong at the lower end, but it's probably a little bit more commoditized. So it's easier for us to stand out. Andy will talk about some of the capacity investments that we've made. Social housing refurbishment, Awaab's Law in October will be interesting to see how social housing responds to that. So there is one school of thought at the moment that social housing has probably been a little bit slower in terms of planned refurbishment because they are concerned about the onslaught that might happen once Awaab's Law goes live. Awaab's Law is basically around where ventilation or mold-related problems in a dwelling have to be dealt with in a much shorter time period. And I know social housing landlords are sort of gearing up for that, and we've set ourselves up to support it. But we're not quite sure quite how much of a bounce, if any, that will deliver. And then I think private housing refurbishment is very much down to sort of the whole consumer confidence piece as well. But look, we're very well positioned in all 3. We're continuing to innovate and customer service is essential here. In U.K. commercial, our share is quite small. Quite frankly, we're not the market leader. We understand who the leaders are in the different propositions, but we believe that we can grow our heat recovery ventilation and our natural and hybrid ventilation range under breathing buildings. And in fact, as I say, some of the investments we've made to support that. So we think the runway of opportunity in commercial organically is strong, and the opportunity there for us is quite clearly to take share. I didn't mention OEM earlier. It is quite small, but OEM had been quite a drag on our performance over the last few years. But we've -- we brought our OEM proposition into one facility. We did that about 12 months ago. And we've steadily improved the contribution that OEM makes towards the group. And a significant proportion of our internal consumption of larger motors now is actually manufactured in our OEM activities, although you don't see it here. And there's been a big focus on improving that proposition and trying to make some share gains. So we're reasonably optimistic about the outlook for OEM having had a couple of challenging years. Andy O'Brien: Yes. And on the CapEx front, Tania, I guess just to start with, first of all, to put it in context. So spend in '25 was GBP 8.4 million, spend the year before was GBP 7.1 million. And normally, we've talked about GBP 7 million as a sort of par spend. So it's sort of GBP 1.5 million or so more than that's been. But of course, the group is growing quite materially. And that GBP 8.4 million spreads across the breadth of the business. But I guess if we think about the sort of capacity and growth side of things, this isn't about us sort of stretching at the seams and being unable to deliver revenue. This really is about sort of future proofing. And it's also about areas like commercial in the U.K., where we've got aspirations to be bigger than we are right now. So if I just pick out a couple of them, Dudley in the U.K., we've talked about, that is where we manufacture both our heat recovery products that go into U.K. new build, which, of course, has been growing very, very strongly. So actually, if you go around that facility, it is full. And therefore, taking on the additional space just allows us to carry on with that growth because the regulations aren't going backwards. Hopefully the volumes are improving. It also serves new build -- sorry, heat recovery propositions that go into European markets as well. So we serve Denmark, we serve Belgium. We serve other countries out of that Dudley facility. So that growth there is very much supporting that piece and supporting our sort of U.K. commercial broader aspirations. Some of the other ones we're doing in places like Reading, which is about being more automation, having bigger capacity molding machines, which means that we can get more output from the machines for the same amount of factory floor space that's taken up. This is about both efficiency and catering for future growth. We've got some interesting metal work investment in the Nordics where we're quite peripheral and minor on commercial again there. And this is about helping us get the cost base right so that we can really compete in new parts of that market beyond perhaps the traditional sort of residential refurbishment where we've always been very, very strong. And then Macedonia, ERI, we've talked about for a little while now. So that business has grown very, very well over the years pre our ownership and the 4 years since we acquired it in 2021. We've taken on additional buildings. We're in the process of refurbishing and then kitting those buildings out, and this is about the growth that comes next. So that and Dudley are probably the 2 where if you go around and go, gosh, they're quite full right now. But what we try to do always is clearly not invest too early but invest at the right time so that we can continue that growth going into the future. Ronnie George: Just to add to that, that investment isn't just capacity. It's also focusing on efficiency and improving unit cost. We spend a lot of time on this, but at Reading, we've moved to what we call multi-injection -- multi-cavity injection tools so that we can increase the output unit rate. That means bigger machines and so forth, that investment has gone in. So it's capacity headroom and unit efficiency. And great insight from the technical team. I remember we did this about 7 or 8 years ago, but we built this platform of plastics that could scale. And so what happens is that although we have a market-leading range of final SKUs, we pair it back to a more limited number of chassis and so forth. And that's where we get the scale benefits by putting a chassis tool in having 4 parts instead of one larger machine. The robot investment is about reducing the people cost included in the product. And in actual fact, we started that first in the Nordics, and that was the sort of trailblazer for us, the art of the possible. We've got 3 shifts in the Nordics and one of them has got no people on it. And that's an example of what we think we can do in the future. Okay. Should we go to Rob next. Robert Chantry: Rob Chantry from Berenberg. So 3 questions from me. So firstly, just on addressable markets. I mean, obviously, very impressive slides on the 12% CAGR over the last 10 years. So if you were to do that again, is there enough in the current addressable markets that you have to achieve that? Or do you have to look more widely? Secondly, in terms of transactions in the space, clearly, Fantech was the last big one you've done, but there's been a lot else -- a lot of other things going on. Do you have any desire to do more in data controls, et cetera, which seem to be prominent? Would you like more of that in the business? And then thirdly, on Germany and Central Europe, quite an improvement in the year with kind of good constant currency organic growth. I guess how much of that is market versus focus versus internal management decisions. And is there any benefit from the German fiscal spend plans? Ronnie George: Okay. First 2, so M&A, yes, absolutely. Not concerned about the runway of opportunity on M&A. Yes. So yes, you're quite right. If we compound at 12% per annum by sort of doubling the size of the business every 6 years, and that's why we're proud of the slides that we put up because that's the sort of track record. We're generating the cash to do it. So there's no doubt about continuing along those lines. I want to be a little bit circumspect and sort of private around what we're doing, but there's plenty of stuff that we're looking at and optimistic about continuing on that trajectory, Rob. And I would say that if you look at the 3 geographic areas that we're in, U.K., Continental Europe and Australasia, I think it's fair to say that it could be in any one of those. We've talked about having a low market share in commercial in the U.K., although I do think there's a super opportunity to go fast organically. But notwithstanding that, we could also add things on. In Europe, we're still very small. We're underweight in quite a few geographies in Europe. So we'd love to do more there. And of course, now we've got a strong presence in Australasia. I think there might be adjacencies that would make sense for us in the future. I just want to remind you that Fantech is something that if we have turned up 10 years ago, I think you'd have been surprised and said, why have you acquired a more commercially focused ventilation business, the other side of the world. But as an adjacency to having a strong residential position in the region already, it wasn't really a surprise. And I think what Fantech and acquisitions like it do for us is they create additional adjacencies that we may or may not be able to consummate over time. The -- sorry, that was the -- yes, that was 1 and 2, wasn't it? Andy O'Brien: Yes. I mean there was a specific question around sort of data control. Ronnie George: Sorry, yes, yes. There have been some really big deals in the data market. Samsung made a big acquisition of FläktGroup. It's an interesting one in terms of long-term growth prospects. I mean it's certainly a bit of a bubble at the moment, and there's some very attractive growth. But I'm also hearing that maybe some of those projects are being delayed, aren't happening and so forth. We've had some insights around some of those deals and some of those numbers. We do have some niche data center applications as being in certain markets and providing air movement. But I wouldn't say necessarily that we would see that making a beeline towards that. I mean, look, if you're doing it inorganically, the competition is going to be stiff, and people are going to pay very high multiples. And I think we'd struggle to make the return on invested capital returns that we expect to make. And that sort of M&A discipline is essential for us. We are only delivering this 12% return on invested capital because of that discipline, and we mustn't give up on what's got us here so far. Andy O'Brien: And then so -- I mean just quickly again to add one more thing on that sort of transactions and what might be there. I think we said in the past that if roughly half of what we do are things that we've developed internally, we've known for many, many years and the other half are really good ideas that come to us. We do get some bad ideas as well. But they're inbound ideas that we then have a really good look at. I think it's fair to say that the volume of inbound ideas has grown exponentially over the last few years. And why is that? It's because our profile is so much bigger, our range is so much wider. And so people are coming to us with -- well, first of all, they're aware of us in the way they weren't before. I think we've got a reputation as good acquirers. And I think ideas therefore, will -- more ideas will therefore come through that channel as well as the sort of organically generated ones, if that's the right phrase. And then your other question, Tania, on sort of Central Europe. So look, 6% organic growth constant currency in Central Europe, but a very mixed, we're not going to, but if I was to give you each individual country within that, it's quite a disparity of outcomes. And I think where we've done particularly well, ClimaRad, ERI, absolutely specialist in their area, hitting the sweet spots and also in both of those cases, very much underpinned by sort of heat recovery and heat recovery being the driver of the future in key markets. So those 2 have gone exceptionally well. Some of the other -- Germany has been difficult. Germany is still difficult. We think that's -- it is just a tough market at the moment. We think we're well positioned, and we think we can do more as the market picks back up. And then other places, yes, France, we had a nice result this year, growing well organically, but it's small. And our aspirations there are definitely bigger than the business that we acquired because we acquired a very small position in a relatively large market. So a mixed picture. But I think overall, the European market per se hasn't been super supportive and super helpful over the last few years. Let's hope it starts to pick up a little bit more moving forward. Clyde Lewis: Clyde Lewis at Peel Hunt. I think I've got 4, apologies. Cost pressures and pricing, can you just give us an update as to what you think you've got ahead of you for FY '26? I mean, obviously, varies a lot across different markets, so obviously fairly broad on that front. In terms of the volume mix, split, that 4.5% that you put up, would be really interesting to understand probably the U.K. dynamics, particularly the U.K. number is obviously higher because obviously, if you're swapping out a couple of fans within the U.K., new house for a heat recovery unit, there's obviously a huge mix issue there. It'd be really useful to get an update on what's happening in Australia and New Zealand in terms of regulation as to whether there are any sort of new drivers coming through on that side of things. And the last one was probably on the competitor environment. There has been consolidation in a number of markets. Have you seen any areas where there's been a noticeable change in the competitive pressures as well. Andy O'Brien: So look, I'll take the first 2, and I think they sort of flow into each other and hopefully relatively quick, Clyde. So 1.2% price and then the 4.5% volume stroke mix. In fact, I'll do the second one first. So the 1.2% price, it's a very similar number in all 3 regions. So effectively, therefore, the balance is to get you to your organic growth is the volume mix. So of course, the U.K. being 9.5% means that there's a higher volume mix there than there is elsewhere. And we've always said sort of 1% there. How do we get to our 3% to 5% long-term target, roughly 1% of like-for-like price is what we think of as a norm inside that number. So I think you think about all the markets being sort of relatively normalized in that context. Cost pressures, Ronnie sort of alluded to earlier, I think the 2 places where there probably are still things that we have to keep constantly watching on people costs and particularly in the U.K., it's been a national minimum wage, national insurance. Let's find out in a month's time, but hopefully, there's not new delights coming our way. But that's obviously not been helpful. Facilities and sort of infrastructure type costs, we lease essentially all of our buildings and premises across the globe. And when they come up for periodic rent reviews, they never seem to go down. So those are probably the 2 bits where you get the most. But then we're always looking at the product cost level. I think we're carrying on doing what we always do. And hence, our organic gross margins have carried on nudging up. So I think that we feel well positioned with that. And I think in terms of future price where we sit now, we'd probably expect to carry on -- we're now back into a rhythm, I think, of announcing pretty much annual increases of different levels in different places and maybe it comes out at somewhere between 1%, 1.5%, 2% overall depending on inflationary pressures year-to-year. But I think we're in a relatively normal state. Ronnie George: Just to add to that, the relentless focus on what I call value engineering and cost down initiatives in the business is a delight. We put 50 basis points organically on in spite of all those headwinds. And the runway of opportunity there is as strong as ever, and we've got opportunities in Fantech and elsewhere. So I think the inflationary environment is probably less inflationary next 12 months or the last 12 months. But I would say that the opportunity for us to self-help and improve is as strong as ever. So I think we're reasonably confident. I think the issue for us is around how do we grow top line. Not saying we're not concerned about protecting margins, but I think it's a well-oiled machine. Regulations in Australia and New Zealand. I think it's fair to say in New Zealand that the economy has been better recently. We alluded to that in the detail of the statement. So I think we're getting a bit of help in New Zealand. We're moving towards more continuous ventilation in New Zealand. And we're seeing some regulations around air purity in the workplace or air purity in commercial industrial applications that will help us. And it's some way off, and I know this isn't regulatory, but we've got the Brisbane Olympics coming up. And look, from an infrastructure perspective, Fantech is better placed than anyone else to capitalize on this. So a bit early yet for this financial year, but that runway of opportunity into the future will be really helpful. And look, I just think the way that we're coordinated on regulations now between Australia and New Zealand, the different brands and the competence that we have is really helpful in terms of leveraging that. So pleased about where we are. And just a couple a cost reduction margin point and New Zealand. We've owned DVS now for 2.5 years, and we've made huge strides in improving the cost price of the product whilst improving the proposition, and that's seen quite a substantial gross margin improvement, albeit the proposition itself in the region is quite small. And then the fourth question was around competitive environment. This is a real -- this is quite fragmented still, Clyde, I would say. Our competition tends to come more locally. We could sit here and reel off the Top 2 or 3 competitors in U.K. commercial, U.K. -- and then if you went to Germany, they're not necessarily the same. I would say as a sort of more consolidated international group; we're probably up there now in terms of Volution. So that just gives you a -- an indication of the sort of fragmentation of the market, which comes back to Rob's earlier point about can you continue to acquire, absolutely, because it is still very fragmented as a market. Right. So we'll go to Charlie there, and then we'll come to Christen next. Charlie Campbell: Charlie Campbell at Stifel. Just got 2, please. On the U.K., Future Homes Standard, we might hear something soon. Is that a further step change in ventilation in the U.K.? And then secondly, ClimaRad, you now own 100% of that. Does that make it easier to extend that proposition out into other markets than maybe it's been in the past? And is that an opportunity for you? Andy O'Brien: I mean I can do the second one because it's so easier then -- so I think when we acquire businesses and whether they're running under earnouts, whether they're running under, in that case, the sort of 75-25, we try to be transparent from day 1, Charlie, make available everything in the group on day 1 and encourage them with the opportunities on day 1. But we are decentralized. So we don't go into a new acquisition and say, they must sell this product over here or you must get that product into your market. We sort of share the ideas, we encourage the ideas, and they then move at the pace that they move at. Look, we've got a little bit of traction over the last couple of years on getting the ClimaRad proposition into Germany. Can that go faster? Hopefully, yes. And I think the structure change that Ronnie mentioned with the regional MDs. So effectively, our ClimaRad MD is also now responsible for the German business. So that rather than the change in 75% to 100% ownership, that should help it, of course, because if you've got the same person looking over both businesses, it's easier to knit all the bits and pieces of it together. So that's something we're focusing on. And it's not just Germany, hopefully, it's other markets. But I think ClimaRad is very, very strong in the Netherlands. It's always that balance between adding the new bits but not losing your focus on where you're particularly strong as well. But it doesn't change as a result of the acquisition, I guess, is the message. Ronnie George: Future Homes Standard, I mean, absolutely, but it will take time. We've talked about how regulations have a sort of offset time and gestation. But look, Future Homes Standard will be very helpful. We're seeing now some communication around HEM, Home Energy Model. I don't know if that's come across your radar more recently but moving from SAP. So SAP, the Standard Assessment Procedure is moving to HEM, which is the Home Energy Model. And we're firmly involved with the consultation on all of that. So Lee Nurse chairs the U.K. Trade Association for Ventilation and BEAMA, also represents BEAMA at the Future Homes Standard consultation, and we see the direction of travel is really quite exciting but will take time. And the reason I mentioned Ireland there is that I think U.K. bodies are looking at Ireland as a really good example on 2 fronts around heat recovery. One is that the proposition going in really well and the benefits to the home and the decarbonization, but also the install governance because heat recovery is more complex. And what we have to make sure of is that these products are installed properly, and they perform as intended. So we've got some really good insights there from Ireland, and we're able to help with that. But yes, absolutely, heat recovery and continuous ventilation in new homes are the predominant solution, but heat recovery is still secondary to continuous. And that one day, it should be pretty much exclusively heat recovery in a new home. Why wouldn't you? Christen? Yes. And then -- sorry, David, we'll come to you. Christen Hjorth: Christen Hjorth from Deutsche Bank. Two questions from me. First of all, just be interesting to understand the difference in average sale price between U.K. social, U.K. housebuilding, U.K. private RMI. I know that won't be a like-for-like product, but it's more around the different mix going into those end markets. And then the second one, just on that 26% EBIT margin in the U.K., how sustainable is that going forward? Is there a mix dynamic, which means it sort of falls back a bit? Or actually, is it that the mix is all moving in the right direction and that's not going to come back and all the structural stuff you're doing on costs, that's there, and we should think about 26% being the right number going forward? Ronnie George: Okay. I can sort of do them together. Private -- so price point, private refurbishment is lower. In the past, I think we've used a slide where we talk about ranges, but private housing refurbishment ventilation equipment ranges from a sort of entry at maybe GBP 20, GBP 25 to GBP 100 at the top end, but there's not so much at the top end. So you look at the sort of -- if you look at the distribution across that range, it's probably more GBP 30, GBP 40, GBP 50, but there is a distribution. And our approach to private refurbishment forever has always been you don't have to have a noisy extract fan at home. There are silent ones and quiet ones and aesthetically more attractive ones, and that's the upsell. And of course, with the largest sales force in the U.K. across multiple brands, that's the proposition that we push. And quite frankly, if you're not pushing that, what are you pushing because it's not so regulatory driven. Social housing, the range of price point is probably GBP 70 to GBP 250, GBP 250 a unit. But I would say the sweet spot is probably GBP 90 to GBP 110, GBP 120. But the new development that we put into the market more recently was to piggyback some infrastructure that's supplied into the home from another brand, Switchee, and we coupled with them to provide ventilation equipment that can provide the housing association with live statistics around humidity, temperature and so forth. And that's a premium. That's an upsell for us. And we integrated that technology, and we partnered with Switchee. And the sales are quite small at the moment, but it's an opportunity to upsell. And then on residential new build, the range has moved up because it used to be GBP 20 or GBP 30 a unit or maybe GBP 100 a home, it's probably moved to GBP 200. And when you move to heat recovery, you're up at GBP 1,000. And there's also all sorts of other products that we're putting into new homes now. Part O is looking at cooling and overheating risks, and we've got some quite innovative solutions that are not air conditioning based but provide purge ventilation in the summer when you want to cool your home and they're eminently more sensible because they cost less to run, easier to install and the price is lower, but nevertheless, attractive for us. And that comes back to the sort of gross margin. Our gross margins across the business are broadly similar. So if you look at the group, then you would say that plus/minus 5% is the sort of range. So margin sustainability, I certainly wouldn't predict that things come off over time. I think we're in a nice position at the moment. So yes, absolutely sustainable. Believe it or not, this is a market that I think tends to compete more on the proposition on the innovation, on the service rather than necessarily the price. Not that we would do this, but if we used price as a vehicle, and we could do, of course, we think we've got a cost leadership position. But if we use price as a vehicle to try and attract more volume, I don't think it would make any difference. So yes, so sustainable, and hopefully, that gives you a bit of an insight on the price point ranges. Okay, David? David Richard Farrell: David Farrell from Jefferies. Three hopefully quick questions. First one around the new regional MD. Can you talk to how they're incentivized? Is it the same as the executive management team? Second question on Fantech. Does that have an order book? And therefore, what kind of visibility do you have in the year ahead? And is that order book up year-on-year, if there is one? And then my final question around Nordics, obviously, sounding a bit more positive about that. Is that because of orders you've seen come into the group already? Or is that just an expectation around interest rates feeding through to higher levels of activity? Andy O'Brien: I don't mind taking the last one, if you like, and then I think Ronnie do that. So there is definitely some key product activity that we've seen that's now coming into the order book. But I think what gives us a bit of confidence, David, is the most challenging bit of the Nordics for the last couple of years has definitely been residential new build. So I think the residential refurbishment has not been growing phenomenally strongly, but it's been very resilient. And I think it is definitely in growth territory. And the bit that's been holding it back has been new build, which for us is particularly places like Denmark and Finland. I think a combination of the succession of interest rate reductions that have happened in the region will definitely help. We were out in Denmark a few weeks ago with our sort of country manager there. And the view was that whereas a couple of years ago, there was a huge glut of unoccupied already built speculative apartments, in particular, in the Copenhagen area, and therefore, effectively, the market just didn't need much by way of new build. That's largely worked its way through the system now. So we've not suddenly seen a take-off of activity, but it's back into a balance at which we would expect to see activity picking up. So I think for us, it's new build hopefully getting better. We've been -- we talked a little bit about the metal investments that we've done, and you've seen in the annual report. That's about us being more competitive with some of these slightly larger projects aside from then the residential refurbishment, which we think remains pretty resilient. So I guess that's our grounds for a bit more confidence, hopefully, in the outlook. Ronnie George: Regional Managing Director, so started to sort of socialize this internally over a year ago. All 3 regional leaders are promoted from within, which is really helpful. Incentivization, if you think about the variable element of pay, there's a big focus on the annual -- on their regional areas and what they influence. But then when it comes to long-term incentives, and that's not just for our regional leaders, of course, from a sort of PDMR and external communication perspective, you see Andy and I, but we've got a long tail of senior managers and mid-managers now that are linked to the LTIP on an identical basis to us, absolutely identical, no change. I strongly believe in that. We want alignment. We want our managers to feel as if they're shareholders in the business and be aligned with the initiatives that we're trying to drive. So like I think it's an exciting place. If we can continue to grow the group at the rate that we have been, they benefit from our success. And I'm delighted if they do so because they deserve it. So I think that works really well. And then you had the question on Fantech visibility, a bit more visibility in Fantech on the commercial side. Our residential visibility, particularly in distribution is days. It's quite scary. If I look at October, we don't have enough of an order book across the group to meet our October revenue. But don't worry, orders come in every day and that pipeline gets populated throughout the month. But on commercial, there's a little bit more visibility around projects. And of course, we've got this sort of more medium-term indicator around the quotes. We have something called the Fan Selector program in the Fantech business, which is quite an integrated selection tool that consultants use to select our products, and we can see what they're selecting and what's being quoted and so forth. So I think the outlook in that region is positive. And the question you asked specifically about is the order book bigger now than it was by the fact that the order book tends to follow roughly the revenue piece, and I've said that the revenue is growing, the order book is growing in line with that. So yes. Okay. I think that's perfect time. I don't know if there were any other questions. No questions online, 1 minute to go. Well, look, brilliant. Thank you very much. Full room, lots of interest. We're delighted and we're positive about what comes next. So thank you very much.
Ronnie George: Okay. Brilliant. Thank you. So warm welcome to Volution Full Year 2025 Results. Nice full room. So look, we're really delighted and excited to be here this morning to take you through our last 12 months. Pretty much similar format for us, a quick overview. I'll be quite brief with that, hand over to Andy to talk about the financial review for the year. I'll come back on business review and then summary and outlook and then Q&A. And I think our sort of view here is that probably 20, 25 minutes on the presentation. And just from past experience, we know there's always a good appetite to sort of go through the Q&A. So we'd like to allow some really good time to go through the Q&A. But look, for us, I've been doing this for some time now. So this was a strong year for us. Revenue up 20.6% or just under 22% on a constant currency basis and delighted with organic revenue at 5.7% on a constant currency basis. And obviously, the inorganic benefit in the year was exclusively from the Fantech acquisition. Our organic growth was largely sort of volume led rather than price led, and Andy can get into a little bit more detail on that later on. But highest revenue growth was in the U.K., 9.5% revenue growth in the U.K. So very strong revenue growth in the U.K. I'll come back on that in a moment and just take you through some of the detail but certainly supported by regulations. Volution is a regulatory underpinned story. I think this is a really good example of it and also made share gains in the market, and we can talk about that as well. Adjusted operating profit margin, small reduction, 22.3% versus 22.5% in the prior year, solely attributable to the Fantech dilution. And in actual fact, the organic margin expanded 50 basis points in the year. Again, very pleased about that performance. Quite a bit of headwinds in the market, particularly in the U.K. around sort of inflation on payroll and national insurance and such. So very, very pleased with the adjusted operating profit margin. And then the cash conversion, 109%. That's an absolute essential ingredient of the mix for us if we're going to continue to deploy capital to grow inorganically and leverage down to 1.2x in spite of the fact that during the year, we made our largest acquisition to date. Robust return on invested capital, 25.2%, and we did, as I say, make our largest acquisition to date. And really good progress on ESG, and we've got some detail on that. And just one other one. This isn't new. We talked about it at the half year, but we established -- I've established a sort of more regional structure to run the group, and it's inevitable over time. If we're going to continue to grow at the rate that we have been, we need to have the management bandwidth and capability to underpin that as we go forward. So this slide, we can't help but put this slide into the deck. But I think just to draw out a couple of important ingredients here. We listed in 2014; I became Chief Executive at the beginning of 2012. But it's really the sort of trajectory that we've been on. And I won't go into each of them individually, but roughly across revenue, profit, EPS and cash flow, plus/minus 12% compounding growth over that period. And it shows the change in the complexion of the group from 4 countries where we had a local presence. So that's a local presence, not where we make sales, but where we have a local operating company presence. But we've gone from 30% of our revenue from non-U.K. customers in 2014 to 63% today, 5 brands to 29 brands, and we have a presence in 17 countries. And that's sort of what's happened to us over the last 10 years. Strategic progress and priorities, 3 strategic pillars: organic growth, inorganic growth and operational excellence. And just a little bit under each of these, and we will spend a bit more time later on, but 5.7% organic revenue growth, and we're continuing to invest in products and facilities to underpin this organic growth revenue proposition. Value-add acquisition, 16.2% inorganic revenue growth coming from the Fantech acquisition. And also, as I've talked about, sort of fully embedding that more regional leadership structure that I've talked about already. And then operational excellence, as I said there, 22.3% operating profit margin, but an organic operating profit margin improvement in the year. Sustainability, again, I don't want to go through each of these individually, but what I was pleased about is pretty much every metric on the page has improved. Should just explain on low carbon sales there. Low carbon sales, 71.2% of Volution's total revenue is in low carbon. I said that it improved. It has improved organically to 77.3%. But Fantech as a proposition has less of its revenue today in what we would call the low carbon product bucket. So that created some dilution in the year. And of course, going forward, we'll report the inclusive of Fantech number, which is the 71.2%. And the same story with heat recovery. The dilution is because of Fantech actually, organically, we improved from 31.7% to 32.5%. And on the recycled plastics, I mean, some would say that we missed because we did set ourselves a 90% target, but we set that target when we were at 40%. And I remember shareholders saying to us, how are you going to get there? And we said we don't know, but we're setting a stretching target. We've got close. It's 83.9%. And in actual fact, the sort of drag on that improvement was more around the Nordics, where in actual fact, more recently, we've made some really strong progress. And just one other one I'd like to just pick out on the slide there is the accident frequency rate that improved in the year. And ultimately, Volution is a place where we want everybody to come in, in the morning and go home at night. So delighted to see that with the extra effort we're making around health and safety and so forth that our frequency rate improved in the year. So that was a very quick overview from me. I'll hand over to Andy to take you in a little bit more detail now. Andy O'Brien: Thanks, Ronnie. Good morning, everybody. So just to kick off, you saw the sort of 10-year progression on some of the key metrics earlier. This is adding a couple more and doing it over 5 years. Actually, it's quite nice because for the first time now, we can drop the COVID year off the 5-year comps. So the lines all make sense. And look, again, at risk of repeating the earlier slide, I think what stands out the most for this for us and hopefully for you as well is that sort of consistency of performance year-over-year, the continued improvement on all the key metrics. And actually, you see the sort of the steepness on those Top 2, the revenue and operating profit growing faster this year than any prior year as a result of both some really strong organic growth, which Ronnie is going to come on to when he starts to unpick the individual markets. So 5.7% organic growth. Our target range, you'll remember is sort of 3% to 5% that we stated that. And then supplementing that, obviously, with Fantech, our largest acquisition to date, which has gone really, really well. So I will then have in the subsequent slides and then I say, in the market, we'll go into a little bit more around some of these key pieces. But I guess the other one that I'd sort of draw out to having done the top left, if you go to the bottom right, really, really strong cash performance in the year. And that's always at the heart of the business model because that is how we fuel M&A and obviously, that is how we deliver our returns. But actually, to do that this year was even more important than normal years and then to end the year at 1.2x leverage, having spent AUD 220 million, GBP 110 million on the Fantech acquisition. Plus, of course, we did also complete the buyout of the balance 25% of ClimaRad in the year. So a meaningful amount of expenditure on M&A but still ending with the balance sheet in very good shape there at 1.2x leverage. So this next slide, just showing a little bit more detailed year-over-year comparative there. Revenue, operating profit, I'll unpick a bit more on the next couple of slides. I guess just to sort of help the analysts out, and again, they will probably have read this in going through the more detailed statement, but a couple of the pieces that then sort of go below operating profit. So we obviously had a higher financing cost charge in the year as a result of the borrowings that we took on to do the Fantech acquisition and the ClimaRad purchase. So our finance costs were up about 40% year-over-year to just over GBP 9 million. Tax rate was basically unchanged. In fact, it was exactly unchanged year-on-year. It was 21.8%. Now what should have happened is Australasia being higher tax rates than the rest of our group. So Australia is 30%, so we should have actually seen that bump up slightly. But offsetting that, our growth in the U.K., particularly U.K. residential is very much in patented products. We talk a lot about the fact that actually it's regulations that have moved forward, and we've developed some really compelling propositions to service those regulations, some of which then benefit from being patented. So we then have leveraged that U.K. patent box opportunity, and that's meant that effectively the tax rate has stayed exactly unchanged. Return on invested capital, again, I'll come back to later with a more detailed slide, but actually really, really pleased that, that still came out at just above 25%, and that's got 2/3 of the Fantech balance sheet in it because of our 3-point methodology on the balance sheet. And then dividends, up 20%. So slightly ahead of the rate of growth of the earnings per share. So dividends up 20% to 10.8p. Revenue, so I won't go through the individual regions too much because obviously, Ronnie will do that in more depth in the next section. But really pleasing that actually within that 5.7% constant currency organic growth, all 3 regions grew. Yes, the U.K. grew strongest. Europe grew nicely. Australasia, very, very small bit of growth, but it was growth. And that's despite the fact that, as we have talked about for the last couple of years, the New Zealand market has been a really, really tough market, won't steal the thunder, but hopefully starting to show some signs of recovery. But still, we were able to show organic growth in all 3. FX was against us. I think I've said that pretty much every year for the last few years. So one of these years, FX will sort of flip in our favor. That was, again, mainly in Australia and New Zealand, that GBP 4.5 million of adverse revenue impact and about GBP 1 million of profit impact sort of comes through from translation. Fantech obviously then coming in with the inorganic growth piece. And then just in the sort of the strap at the bottom there, just again, where we sort of try to unpick how much of the constant currency growth is volume stroke mix. So those 2 things effectively come together. So that's volume and it's also upselling of the proposition. How much is from that and how much is from pure like-for-like price. And the like-for-like price is now back to very much a normalized level of just over 1%. So 4.5% is what we estimate to be the volume stroke mix component of that revenue growth. Operating margin, as Ronnie mentioned in the intro slide, the fact that bottom left there, group margins nudged down ever so slightly by 20 basis points, but we'd already long trail that Fantech was coming into the group at a good margin relative to the wider market, but at a margin that nonetheless is lower than the margin that we trade at as a group. So to get to that 22.3%, you've got effectively a 50 basis points improvement in the organic margins of the business, offset then by a slight dilution from Fantech. And then you see, I guess, in that sort of bottom middle graph, you see how that organic margin improvement comes through region by region. So U.K. and Europe, there's no inorganic effect. So those comps are exactly as they would be. So a really nice 100 basis points improvement in the U.K., 20 in Europe. And interestingly, for those that have sort of followed us for many, many years, I remember my first couple of sets of results being asked, why is the U.K. margin the laggard relative to the rest of your group? And actually, look, I think this is testament to some really, really strong results from the U.K. over many, many years now. I guess we always said, look, we've got a really good infrastructure in the U.K. We've got a very broad proposition. There is no reason why it won't be at or above. And indeed, that's what you now see. And then on the Australasia graph, we've given you 3 data points there. So as reported, '24 and '25, but then also showing what the '25 organic was. So actually, if you compare that 22.7% to the 23.8% a nice organic margin improvement in Australasia as well. Jumping on to the balance sheet and the cash flow. So a very, very strong cash conversion, 109%. We talk about a target of above -- at or above 90%. And as you see on that sort of top right graph there, we've hit that pretty much every year bar, 2022 was when we made a sort of material increase in our inventory levels to bolster customer service. But aside from that, essentially, the 90% and above, 109% is particularly strong. I'm not going to promise that's going to keep repeating, but it does just show how robust the model actually is. And inside that, investing nicely in facilities and infrastructure. So you'll see when you get the annual report in a couple of weeks' time, we showed a little bit about where we've been investing, whether that's further capacity and automation in Reading in the U.K., for example, whether it be the early bits of our expansion in North Macedonia that we've talked about for a number of years and in the Nordics, where we've been adding additional metal production capability. So we spent about GBP 8.4 million on CapEx in the year, which was up GBP 1.3 million from the year before. So still continuing to invest nicely in the organic business where it's compelling as well. Then I've already mentioned this, the return on invested capital. So this is a really, really important metric for us. We've said that we are confident that we can carry on delivering returns of 20% and above whilst continuing to invest materially in acquisitions. And as I said, the fact that we're 25.2% with having brought Fantech into the group is fantastic. So there was a very nice organic ROIC improvement coming about through that working capital and balance sheet management, coming about through that organic margin improvement. And again, that means that we're able to bring these nice acquisitions in and still deliver very, very strong returns to investors. I don't think I need to -- this is at the risk of repetition a little bit. This is basically showing in the dark blue, our key financial metrics for FY '25. In the light blue, the average over the last 5 years. So actually, what you see with all of them, the organic one there does still include the '21 versus 2020 comp, which is COVID impacted. But really, relative to our green numbers there, which are the long-term financial targets, if you like, of the business, continuing to deliver on all of those metrics, which obviously is really, really pleasing and important for us. So with that, I'll pass back to Ronnie to go through the business. Ronnie George: Great. Thanks very much, Andy. So we talked about this already Volution in 2014 and today. And of course, the Australasia only includes 8 months of Fantech. So the way to sort of think about the group now in terms of its geographic disposition is 40%, 30%, 30%. So quite a nice split. And look, what we've said throughout is that over time, we expect the percentage of group revenue in the U.K. to get smaller as we continue to bulk up with more -- obviously more opportunities in Continental Europe and in Australasia. And this, again, is our increasing geographic diversity. So you see from, as I say, my tenure started in '12. We started to acquire in Europe and then the first acquisition in New Zealand in FY '18. And of course, this year, we'd expect again that light blue box to get much bigger as we see 12 months participation from Fantech. So a little bit of detail about the local geographic areas. So look, specifically in the U.K., very pleased with the 9.5% revenue growth. I mean that's -- and if you look at the residential, we've had a consistent period of growth now. We talk about strong comps, and they were strong comps in 2024 for the U.K., but the U.K. residential ventilation increased by 9.7%. And that was -- the growth was most significant in residential new build, which I know is counterintuitive and we think about house builders and the volume of activity, but we saw a big change in the impact from regulations, and we're moving towards what we call more continuous ventilation and continuous ventilation with heat recovery. And we made some account gains along the way there. So that was a particularly pleasing step-up in residential. I think it's fair to say that public housing RMI is still attractive for us and private residential RMI have been probably a little bit more challenging. Then as you work down commercial, look, we're still very small in commercial. We've only got GBP 30 million of revenue in a much bigger U.K. commercial ventilation market. So in the year, the 6.9% revenue growth was particularly buoyed by the second half of the year. We had good strength in the second half of the year. And I'll come on to some of the investments and focus that we're making in that area because we still see that as a runway of opportunity for us into the future. Export 29.4% revenue growth. So very strong, mainly in Ireland. We've got a good partnership in Ireland, again, around residential heat recovery systems. The Irish market is probably one of the best examples about where regulations have really quite seriously driven that sort of home of the future, that very energy-efficient home of the future. And our technology lends itself really well to the regulations, and we've benefited hugely, and we still think there's a runway of opportunity to continue there. And as Andy has already talked about, 100 basis points operating profit margin improvement, and we did suffer quite a substantial national insurance increase and wage-related increase from April and also some facilities cost increase around leasing and so forth. But delighted that we were able to, in spite of that, improve adjusted operating profit margins. And then it's about future proofing. We're not just about delivering in this year. We've made investments in most of our facilities in the U.K., but in particular, in Reading with new injection molding, some additional machine monitoring, some robot control, quite a big investment in Dudley in the West Midlands. In actual fact, we took on an additional 50,000 square feet facility that we're equipping right now as we speak. But it's about future-proofing our facilities to be able to have capacity headroom to grow into the future. In Continental Europe, the European story has been a little bit more challenging for us over time. But in actual fact, 3.1% constant currency growth, adjusted operating profit increase of 2.5%. But what I would draw out there is that we had -- in our Central European activities, we had strong performance from our ClimaRad brand in the Netherlands, which is mainly focused on structural refurbishment. And that's a heat recovery proposition, a business that we bought in 2020. In actual fact, during the year, we completed the balance 25% acquisition that took place in December, and we talked about that in March, if you remember. But very pleased about the proposition in the Netherlands. We're seeing good organic revenue growth from our heat recovery counter flow cell manufacturing in North Macedonia in Bitola, where, again, we've made some investments. As Andy said, a lot of content in the annual report coming up, but substantial investment. We've effectively doubled the size of our factory footprint in North Macedonia, where refurbishing a building at the moment and putting in additional investment, but with strong sort of organic growth plans in that facility in the years ahead. The disappointments for us are probably in Germany. The market continues to be quite weak. I think we mitigated some of that weakness so as to have a less profound impact on profitability. It's still a very profitable business, and we still believe in the long-term prospects of heat recovery ventilation, particularly in refurbishment in Germany. And the Nordics, again, have been quite challenging, but actually showing some signs of recovery. And I think this is largely to do with the fact that we've had interest rates roll over more quickly in Europe. And I think our outlook for Europe is certainly a little bit more positive as we go forward. Finally, Australasia. These numbers that you look at here, they struggle a little bit with a big inorganic growth addition. So when you look at, for example, the commercial revenue decline of 11.3%, I really do need to pick this out. This is an 11.3% decline on the only GBP 3.1 million of organic commercial revenue that we had in the region prior to acquiring Fantech. So just to remind you, prior to acquiring Fantech, Volution's proposition in Australia and New Zealand was almost exclusively residential. So if we look back at the prior year, GBP 52 million of revenue, GBP 3.1 million of it. So let's say, circa 5% or 6% of our total revenue in the region was in commercial. That materially changes as we've acquired Fantech. So Fantech is in actual fact the reverse. That's why the complementarity of these 2 propositions is really quite attractive. We've taken a strong residential presence, complemented it with an additional residential presence and then overlaid a market-leading commercial proposition. So overall, when you look at the -- sorry, the adjusted operating profit increase of 83.5%. Andy has already talked about the organic component. But Fantech is going really well. I'm very proud of the fact that we brought the company into the group. The Chairman had the opportunity to visit the team locally a couple of months ago. This is an amazing proposition for us, integrating very well and plenty of opportunities now for us to cross-sell more to cost reduce products and to improve the organic margin, if you like, as we go forward in Fantech to and beyond our 20% operating profit target. So very pleased about Fantech, delighted that we were able to get this over the line in December last year and going really well. In actual fact, I've told you all of that, I've jumped ahead. So there we are. So yes, I don't think there's anything new there. The new regional leadership established. Anthony Lamaro was in Fantech for 18 years before we promoted him to be the regional leader, very well-respected, experienced leader. And I think it's fair to say that not surprisingly, when we buy a company that's much larger than us, with our original presence. We've actually acquired a very strong management team. And so there's quite a lot of extra coverage now and strengthening that team to help us improve the business as we go forward. We could spend an age on Fantech and the proposition. Maybe there'll be some questions later on but going really well and in itself growing on its prior year. I know we don't talk about that as organic, but what we should consider is that Fantech has improved over its prior year, both from a revenue and profit perspective and expanding margins. So as I said, we wouldn't be too long on basically half the presentation time allocated to this. I'm not going to go over these again. It's just repeating what we said earlier on. But just on the outlook, look, for us, it's only a couple of months in. We've had August and September and 6 trading days of October. But look, the new year has started well. We do have the benefit of the inorganic drag from Fantech for the next 4 months, and we are growing organically. And maybe just a caveat that the end markets are not as helpful as we would like. They could be more helpful. But notwithstanding those challenges, we're still very optimistic about another year of good progress for the group. So that's sort of the formal presentation. And we'd love to have your questions. Tania Maciver: Tania from RBC. Just a couple of questions on the U.K. market and your market share there, particularly given the strong performance in the second half? And how should we look about growth going into next year with some of the new regulations coming into play? And then just about your CapEx spend for next year across the regions to expand capacity. Is that being driven by order book demand that you're seeing now? Or is that more in terms of what you're expecting to come? Ronnie George: Yes. So taking our U.K. in order there, residential share is pretty substantial across new build, social housing refurbishment and private housing refurbishment, not necessarily with one single brand, but collectively with a number of different brands that we have in the stable. I think we would argue that we've got a leadership position in all 3, residential new build, commercial -- sorry, social housing refurbishment and private housing refurbishment. And I think the drivers are different but converging. So on residential new build, it's -- a lot of this is going to come down to whether or not we start to see more houses starting and being completed. And my crystal ball is as good as anyone else is there. And I think it's probably fair to say that it's been disappointing so far. Although in spite of that, we've managed to grow strongly. Now regulations will continue to help. We haven't had a full lap of the year yet where those regulatory benefits catch up with themselves. So if nothing else, there's a regulatory gain. I'd like to think that there might be sort of more structural increase in houses, but let's see. And then from a share perspective, I think what we would argue is that as the proposition becomes more complex, it's become easier for us to gain share. In other words, I think my argument is that our innovation and product range capability lends itself strongest to the higher end, even though we're eminently quite strong at the lower end, but it's probably a little bit more commoditized. So it's easier for us to stand out. Andy will talk about some of the capacity investments that we've made. Social housing refurbishment, Awaab's Law in October will be interesting to see how social housing responds to that. So there is one school of thought at the moment that social housing has probably been a little bit slower in terms of planned refurbishment because they are concerned about the onslaught that might happen once Awaab's Law goes live. Awaab's Law is basically around where ventilation or mold-related problems in a dwelling have to be dealt with in a much shorter time period. And I know social housing landlords are sort of gearing up for that, and we've set ourselves up to support it. But we're not quite sure quite how much of a bounce, if any, that will deliver. And then I think private housing refurbishment is very much down to sort of the whole consumer confidence piece as well. But look, we're very well positioned in all 3. We're continuing to innovate and customer service is essential here. In U.K. commercial, our share is quite small. Quite frankly, we're not the market leader. We understand who the leaders are in the different propositions, but we believe that we can grow our heat recovery ventilation and our natural and hybrid ventilation range under breathing buildings. And in fact, as I say, some of the investments we've made to support that. So we think the runway of opportunity in commercial organically is strong, and the opportunity there for us is quite clearly to take share. I didn't mention OEM earlier. It is quite small, but OEM had been quite a drag on our performance over the last few years. But we've -- we brought our OEM proposition into one facility. We did that about 12 months ago. And we've steadily improved the contribution that OEM makes towards the group. And a significant proportion of our internal consumption of larger motors now is actually manufactured in our OEM activities, although you don't see it here. And there's been a big focus on improving that proposition and trying to make some share gains. So we're reasonably optimistic about the outlook for OEM having had a couple of challenging years. Andy O'Brien: Yes. And on the CapEx front, Tania, I guess just to start with, first of all, to put it in context. So spend in '25 was GBP 8.4 million, spend the year before was GBP 7.1 million. And normally, we've talked about GBP 7 million as a sort of par spend. So it's sort of GBP 1.5 million or so more than that's been. But of course, the group is growing quite materially. And that GBP 8.4 million spreads across the breadth of the business. But I guess if we think about the sort of capacity and growth side of things, this isn't about us sort of stretching at the seams and being unable to deliver revenue. This really is about sort of future proofing. And it's also about areas like commercial in the U.K., where we've got aspirations to be bigger than we are right now. So if I just pick out a couple of them, Dudley in the U.K., we've talked about, that is where we manufacture both our heat recovery products that go into U.K. new build, which, of course, has been growing very, very strongly. So actually, if you go around that facility, it is full. And therefore, taking on the additional space just allows us to carry on with that growth because the regulations aren't going backwards. Hopefully the volumes are improving. It also serves new build -- sorry, heat recovery propositions that go into European markets as well. So we serve Denmark, we serve Belgium. We serve other countries out of that Dudley facility. So that growth there is very much supporting that piece and supporting our sort of U.K. commercial broader aspirations. Some of the other ones we're doing in places like Reading, which is about being more automation, having bigger capacity molding machines, which means that we can get more output from the machines for the same amount of factory floor space that's taken up. This is about both efficiency and catering for future growth. We've got some interesting metal work investment in the Nordics where we're quite peripheral and minor on commercial again there. And this is about helping us get the cost base right so that we can really compete in new parts of that market beyond perhaps the traditional sort of residential refurbishment where we've always been very, very strong. And then Macedonia, ERI, we've talked about for a little while now. So that business has grown very, very well over the years pre our ownership and the 4 years since we acquired it in 2021. We've taken on additional buildings. We're in the process of refurbishing and then kitting those buildings out, and this is about the growth that comes next. So that and Dudley are probably the 2 where if you go around and go, gosh, they're quite full right now. But what we try to do always is clearly not invest too early but invest at the right time so that we can continue that growth going into the future. Ronnie George: Just to add to that, that investment isn't just capacity. It's also focusing on efficiency and improving unit cost. We spend a lot of time on this, but at Reading, we've moved to what we call multi-injection -- multi-cavity injection tools so that we can increase the output unit rate. That means bigger machines and so forth, that investment has gone in. So it's capacity headroom and unit efficiency. And great insight from the technical team. I remember we did this about 7 or 8 years ago, but we built this platform of plastics that could scale. And so what happens is that although we have a market-leading range of final SKUs, we pair it back to a more limited number of chassis and so forth. And that's where we get the scale benefits by putting a chassis tool in having 4 parts instead of one larger machine. The robot investment is about reducing the people cost included in the product. And in actual fact, we started that first in the Nordics, and that was the sort of trailblazer for us, the art of the possible. We've got 3 shifts in the Nordics and one of them has got no people on it. And that's an example of what we think we can do in the future. Okay. Should we go to Rob next. Robert Chantry: Rob Chantry from Berenberg. So 3 questions from me. So firstly, just on addressable markets. I mean, obviously, very impressive slides on the 12% CAGR over the last 10 years. So if you were to do that again, is there enough in the current addressable markets that you have to achieve that? Or do you have to look more widely? Secondly, in terms of transactions in the space, clearly, Fantech was the last big one you've done, but there's been a lot else -- a lot of other things going on. Do you have any desire to do more in data controls, et cetera, which seem to be prominent? Would you like more of that in the business? And then thirdly, on Germany and Central Europe, quite an improvement in the year with kind of good constant currency organic growth. I guess how much of that is market versus focus versus internal management decisions. And is there any benefit from the German fiscal spend plans? Ronnie George: Okay. First 2, so M&A, yes, absolutely. Not concerned about the runway of opportunity on M&A. Yes. So yes, you're quite right. If we compound at 12% per annum by sort of doubling the size of the business every 6 years, and that's why we're proud of the slides that we put up because that's the sort of track record. We're generating the cash to do it. So there's no doubt about continuing along those lines. I want to be a little bit circumspect and sort of private around what we're doing, but there's plenty of stuff that we're looking at and optimistic about continuing on that trajectory, Rob. And I would say that if you look at the 3 geographic areas that we're in, U.K., Continental Europe and Australasia, I think it's fair to say that it could be in any one of those. We've talked about having a low market share in commercial in the U.K., although I do think there's a super opportunity to go fast organically. But notwithstanding that, we could also add things on. In Europe, we're still very small. We're underweight in quite a few geographies in Europe. So we'd love to do more there. And of course, now we've got a strong presence in Australasia. I think there might be adjacencies that would make sense for us in the future. I just want to remind you that Fantech is something that if we have turned up 10 years ago, I think you'd have been surprised and said, why have you acquired a more commercially focused ventilation business, the other side of the world. But as an adjacency to having a strong residential position in the region already, it wasn't really a surprise. And I think what Fantech and acquisitions like it do for us is they create additional adjacencies that we may or may not be able to consummate over time. The -- sorry, that was the -- yes, that was 1 and 2, wasn't it? Andy O'Brien: Yes. I mean there was a specific question around sort of data control. Ronnie George: Sorry, yes, yes. There have been some really big deals in the data market. Samsung made a big acquisition of FläktGroup. It's an interesting one in terms of long-term growth prospects. I mean it's certainly a bit of a bubble at the moment, and there's some very attractive growth. But I'm also hearing that maybe some of those projects are being delayed, aren't happening and so forth. We've had some insights around some of those deals and some of those numbers. We do have some niche data center applications as being in certain markets and providing air movement. But I wouldn't say necessarily that we would see that making a beeline towards that. I mean, look, if you're doing it inorganically, the competition is going to be stiff, and people are going to pay very high multiples. And I think we'd struggle to make the return on invested capital returns that we expect to make. And that sort of M&A discipline is essential for us. We are only delivering this 12% return on invested capital because of that discipline, and we mustn't give up on what's got us here so far. Andy O'Brien: And then so -- I mean just quickly again to add one more thing on that sort of transactions and what might be there. I think we said in the past that if roughly half of what we do are things that we've developed internally, we've known for many, many years and the other half are really good ideas that come to us. We do get some bad ideas as well. But they're inbound ideas that we then have a really good look at. I think it's fair to say that the volume of inbound ideas has grown exponentially over the last few years. And why is that? It's because our profile is so much bigger, our range is so much wider. And so people are coming to us with -- well, first of all, they're aware of us in the way they weren't before. I think we've got a reputation as good acquirers. And I think ideas therefore, will -- more ideas will therefore come through that channel as well as the sort of organically generated ones, if that's the right phrase. And then your other question, Tania, on sort of Central Europe. So look, 6% organic growth constant currency in Central Europe, but a very mixed, we're not going to, but if I was to give you each individual country within that, it's quite a disparity of outcomes. And I think where we've done particularly well, ClimaRad, ERI, absolutely specialist in their area, hitting the sweet spots and also in both of those cases, very much underpinned by sort of heat recovery and heat recovery being the driver of the future in key markets. So those 2 have gone exceptionally well. Some of the other -- Germany has been difficult. Germany is still difficult. We think that's -- it is just a tough market at the moment. We think we're well positioned, and we think we can do more as the market picks back up. And then other places, yes, France, we had a nice result this year, growing well organically, but it's small. And our aspirations there are definitely bigger than the business that we acquired because we acquired a very small position in a relatively large market. So a mixed picture. But I think overall, the European market per se hasn't been super supportive and super helpful over the last few years. Let's hope it starts to pick up a little bit more moving forward. Clyde Lewis: Clyde Lewis at Peel Hunt. I think I've got 4, apologies. Cost pressures and pricing, can you just give us an update as to what you think you've got ahead of you for FY '26? I mean, obviously, varies a lot across different markets, so obviously fairly broad on that front. In terms of the volume mix, split, that 4.5% that you put up, would be really interesting to understand probably the U.K. dynamics, particularly the U.K. number is obviously higher because obviously, if you're swapping out a couple of fans within the U.K., new house for a heat recovery unit, there's obviously a huge mix issue there. It'd be really useful to get an update on what's happening in Australia and New Zealand in terms of regulation as to whether there are any sort of new drivers coming through on that side of things. And the last one was probably on the competitor environment. There has been consolidation in a number of markets. Have you seen any areas where there's been a noticeable change in the competitive pressures as well. Andy O'Brien: So look, I'll take the first 2, and I think they sort of flow into each other and hopefully relatively quick, Clyde. So 1.2% price and then the 4.5% volume stroke mix. In fact, I'll do the second one first. So the 1.2% price, it's a very similar number in all 3 regions. So effectively, therefore, the balance is to get you to your organic growth is the volume mix. So of course, the U.K. being 9.5% means that there's a higher volume mix there than there is elsewhere. And we've always said sort of 1% there. How do we get to our 3% to 5% long-term target, roughly 1% of like-for-like price is what we think of as a norm inside that number. So I think you think about all the markets being sort of relatively normalized in that context. Cost pressures, Ronnie sort of alluded to earlier, I think the 2 places where there probably are still things that we have to keep constantly watching on people costs and particularly in the U.K., it's been a national minimum wage, national insurance. Let's find out in a month's time, but hopefully, there's not new delights coming our way. But that's obviously not been helpful. Facilities and sort of infrastructure type costs, we lease essentially all of our buildings and premises across the globe. And when they come up for periodic rent reviews, they never seem to go down. So those are probably the 2 bits where you get the most. But then we're always looking at the product cost level. I think we're carrying on doing what we always do. And hence, our organic gross margins have carried on nudging up. So I think that we feel well positioned with that. And I think in terms of future price where we sit now, we'd probably expect to carry on -- we're now back into a rhythm, I think, of announcing pretty much annual increases of different levels in different places and maybe it comes out at somewhere between 1%, 1.5%, 2% overall depending on inflationary pressures year-to-year. But I think we're in a relatively normal state. Ronnie George: Just to add to that, the relentless focus on what I call value engineering and cost down initiatives in the business is a delight. We put 50 basis points organically on in spite of all those headwinds. And the runway of opportunity there is as strong as ever, and we've got opportunities in Fantech and elsewhere. So I think the inflationary environment is probably less inflationary next 12 months or the last 12 months. But I would say that the opportunity for us to self-help and improve is as strong as ever. So I think we're reasonably confident. I think the issue for us is around how do we grow top line. Not saying we're not concerned about protecting margins, but I think it's a well-oiled machine. Regulations in Australia and New Zealand. I think it's fair to say in New Zealand that the economy has been better recently. We alluded to that in the detail of the statement. So I think we're getting a bit of help in New Zealand. We're moving towards more continuous ventilation in New Zealand. And we're seeing some regulations around air purity in the workplace or air purity in commercial industrial applications that will help us. And it's some way off, and I know this isn't regulatory, but we've got the Brisbane Olympics coming up. And look, from an infrastructure perspective, Fantech is better placed than anyone else to capitalize on this. So a bit early yet for this financial year, but that runway of opportunity into the future will be really helpful. And look, I just think the way that we're coordinated on regulations now between Australia and New Zealand, the different brands and the competence that we have is really helpful in terms of leveraging that. So pleased about where we are. And just a couple a cost reduction margin point and New Zealand. We've owned DVS now for 2.5 years, and we've made huge strides in improving the cost price of the product whilst improving the proposition, and that's seen quite a substantial gross margin improvement, albeit the proposition itself in the region is quite small. And then the fourth question was around competitive environment. This is a real -- this is quite fragmented still, Clyde, I would say. Our competition tends to come more locally. We could sit here and reel off the Top 2 or 3 competitors in U.K. commercial, U.K. -- and then if you went to Germany, they're not necessarily the same. I would say as a sort of more consolidated international group; we're probably up there now in terms of Volution. So that just gives you a -- an indication of the sort of fragmentation of the market, which comes back to Rob's earlier point about can you continue to acquire, absolutely, because it is still very fragmented as a market. Right. So we'll go to Charlie there, and then we'll come to Christen next. Charlie Campbell: Charlie Campbell at Stifel. Just got 2, please. On the U.K., Future Homes Standard, we might hear something soon. Is that a further step change in ventilation in the U.K.? And then secondly, ClimaRad, you now own 100% of that. Does that make it easier to extend that proposition out into other markets than maybe it's been in the past? And is that an opportunity for you? Andy O'Brien: I mean I can do the second one because it's so easier then -- so I think when we acquire businesses and whether they're running under earnouts, whether they're running under, in that case, the sort of 75-25, we try to be transparent from day 1, Charlie, make available everything in the group on day 1 and encourage them with the opportunities on day 1. But we are decentralized. So we don't go into a new acquisition and say, they must sell this product over here or you must get that product into your market. We sort of share the ideas, we encourage the ideas, and they then move at the pace that they move at. Look, we've got a little bit of traction over the last couple of years on getting the ClimaRad proposition into Germany. Can that go faster? Hopefully, yes. And I think the structure change that Ronnie mentioned with the regional MDs. So effectively, our ClimaRad MD is also now responsible for the German business. So that rather than the change in 75% to 100% ownership, that should help it, of course, because if you've got the same person looking over both businesses, it's easier to knit all the bits and pieces of it together. So that's something we're focusing on. And it's not just Germany, hopefully, it's other markets. But I think ClimaRad is very, very strong in the Netherlands. It's always that balance between adding the new bits but not losing your focus on where you're particularly strong as well. But it doesn't change as a result of the acquisition, I guess, is the message. Ronnie George: Future Homes Standard, I mean, absolutely, but it will take time. We've talked about how regulations have a sort of offset time and gestation. But look, Future Homes Standard will be very helpful. We're seeing now some communication around HEM, Home Energy Model. I don't know if that's come across your radar more recently but moving from SAP. So SAP, the Standard Assessment Procedure is moving to HEM, which is the Home Energy Model. And we're firmly involved with the consultation on all of that. So Lee Nurse chairs the U.K. Trade Association for Ventilation and BEAMA, also represents BEAMA at the Future Homes Standard consultation, and we see the direction of travel is really quite exciting but will take time. And the reason I mentioned Ireland there is that I think U.K. bodies are looking at Ireland as a really good example on 2 fronts around heat recovery. One is that the proposition going in really well and the benefits to the home and the decarbonization, but also the install governance because heat recovery is more complex. And what we have to make sure of is that these products are installed properly, and they perform as intended. So we've got some really good insights there from Ireland, and we're able to help with that. But yes, absolutely, heat recovery and continuous ventilation in new homes are the predominant solution, but heat recovery is still secondary to continuous. And that one day, it should be pretty much exclusively heat recovery in a new home. Why wouldn't you? Christen? Yes. And then -- sorry, David, we'll come to you. Christen Hjorth: Christen Hjorth from Deutsche Bank. Two questions from me. First of all, just be interesting to understand the difference in average sale price between U.K. social, U.K. housebuilding, U.K. private RMI. I know that won't be a like-for-like product, but it's more around the different mix going into those end markets. And then the second one, just on that 26% EBIT margin in the U.K., how sustainable is that going forward? Is there a mix dynamic, which means it sort of falls back a bit? Or actually, is it that the mix is all moving in the right direction and that's not going to come back and all the structural stuff you're doing on costs, that's there, and we should think about 26% being the right number going forward? Ronnie George: Okay. I can sort of do them together. Private -- so price point, private refurbishment is lower. In the past, I think we've used a slide where we talk about ranges, but private housing refurbishment ventilation equipment ranges from a sort of entry at maybe GBP 20, GBP 25 to GBP 100 at the top end, but there's not so much at the top end. So you look at the sort of -- if you look at the distribution across that range, it's probably more GBP 30, GBP 40, GBP 50, but there is a distribution. And our approach to private refurbishment forever has always been you don't have to have a noisy extract fan at home. There are silent ones and quiet ones and aesthetically more attractive ones, and that's the upsell. And of course, with the largest sales force in the U.K. across multiple brands, that's the proposition that we push. And quite frankly, if you're not pushing that, what are you pushing because it's not so regulatory driven. Social housing, the range of price point is probably GBP 70 to GBP 250, GBP 250 a unit. But I would say the sweet spot is probably GBP 90 to GBP 110, GBP 120. But the new development that we put into the market more recently was to piggyback some infrastructure that's supplied into the home from another brand, Switchee, and we coupled with them to provide ventilation equipment that can provide the housing association with live statistics around humidity, temperature and so forth. And that's a premium. That's an upsell for us. And we integrated that technology, and we partnered with Switchee. And the sales are quite small at the moment, but it's an opportunity to upsell. And then on residential new build, the range has moved up because it used to be GBP 20 or GBP 30 a unit or maybe GBP 100 a home, it's probably moved to GBP 200. And when you move to heat recovery, you're up at GBP 1,000. And there's also all sorts of other products that we're putting into new homes now. Part O is looking at cooling and overheating risks, and we've got some quite innovative solutions that are not air conditioning based but provide purge ventilation in the summer when you want to cool your home and they're eminently more sensible because they cost less to run, easier to install and the price is lower, but nevertheless, attractive for us. And that comes back to the sort of gross margin. Our gross margins across the business are broadly similar. So if you look at the group, then you would say that plus/minus 5% is the sort of range. So margin sustainability, I certainly wouldn't predict that things come off over time. I think we're in a nice position at the moment. So yes, absolutely sustainable. Believe it or not, this is a market that I think tends to compete more on the proposition on the innovation, on the service rather than necessarily the price. Not that we would do this, but if we used price as a vehicle, and we could do, of course, we think we've got a cost leadership position. But if we use price as a vehicle to try and attract more volume, I don't think it would make any difference. So yes, so sustainable, and hopefully, that gives you a bit of an insight on the price point ranges. Okay, David? David Richard Farrell: David Farrell from Jefferies. Three hopefully quick questions. First one around the new regional MD. Can you talk to how they're incentivized? Is it the same as the executive management team? Second question on Fantech. Does that have an order book? And therefore, what kind of visibility do you have in the year ahead? And is that order book up year-on-year, if there is one? And then my final question around Nordics, obviously, sounding a bit more positive about that. Is that because of orders you've seen come into the group already? Or is that just an expectation around interest rates feeding through to higher levels of activity? Andy O'Brien: I don't mind taking the last one, if you like, and then I think Ronnie do that. So there is definitely some key product activity that we've seen that's now coming into the order book. But I think what gives us a bit of confidence, David, is the most challenging bit of the Nordics for the last couple of years has definitely been residential new build. So I think the residential refurbishment has not been growing phenomenally strongly, but it's been very resilient. And I think it is definitely in growth territory. And the bit that's been holding it back has been new build, which for us is particularly places like Denmark and Finland. I think a combination of the succession of interest rate reductions that have happened in the region will definitely help. We were out in Denmark a few weeks ago with our sort of country manager there. And the view was that whereas a couple of years ago, there was a huge glut of unoccupied already built speculative apartments, in particular, in the Copenhagen area, and therefore, effectively, the market just didn't need much by way of new build. That's largely worked its way through the system now. So we've not suddenly seen a take-off of activity, but it's back into a balance at which we would expect to see activity picking up. So I think for us, it's new build hopefully getting better. We've been -- we talked a little bit about the metal investments that we've done, and you've seen in the annual report. That's about us being more competitive with some of these slightly larger projects aside from then the residential refurbishment, which we think remains pretty resilient. So I guess that's our grounds for a bit more confidence, hopefully, in the outlook. Ronnie George: Regional Managing Director, so started to sort of socialize this internally over a year ago. All 3 regional leaders are promoted from within, which is really helpful. Incentivization, if you think about the variable element of pay, there's a big focus on the annual -- on their regional areas and what they influence. But then when it comes to long-term incentives, and that's not just for our regional leaders, of course, from a sort of PDMR and external communication perspective, you see Andy and I, but we've got a long tail of senior managers and mid-managers now that are linked to the LTIP on an identical basis to us, absolutely identical, no change. I strongly believe in that. We want alignment. We want our managers to feel as if they're shareholders in the business and be aligned with the initiatives that we're trying to drive. So like I think it's an exciting place. If we can continue to grow the group at the rate that we have been, they benefit from our success. And I'm delighted if they do so because they deserve it. So I think that works really well. And then you had the question on Fantech visibility, a bit more visibility in Fantech on the commercial side. Our residential visibility, particularly in distribution is days. It's quite scary. If I look at October, we don't have enough of an order book across the group to meet our October revenue. But don't worry, orders come in every day and that pipeline gets populated throughout the month. But on commercial, there's a little bit more visibility around projects. And of course, we've got this sort of more medium-term indicator around the quotes. We have something called the Fan Selector program in the Fantech business, which is quite an integrated selection tool that consultants use to select our products, and we can see what they're selecting and what's being quoted and so forth. So I think the outlook in that region is positive. And the question you asked specifically about is the order book bigger now than it was by the fact that the order book tends to follow roughly the revenue piece, and I've said that the revenue is growing, the order book is growing in line with that. So yes. Okay. I think that's perfect time. I don't know if there were any other questions. No questions online, 1 minute to go. Well, look, brilliant. Thank you very much. Full room, lots of interest. We're delighted and we're positive about what comes next. So thank you very much.
Operator: Thank you for standing by. This is the conference operator. Welcome to Aritzia's Second Quarter 2026 Earnings Conference Call. [Operator Instructions] The conference is being recorded. [Operator Instructions] I will now turn the conference over to Beth Reed, Vice President, Investor Relations. Please go ahead. Beth Reed: Thanks, operator, and thank you all for joining Aritzia's Second Quarter Fiscal 2026 Earnings Call. On the call today, I'm joined by Jennifer Wong, our Chief Executive Officer; and Todd Ingledew, our Chief Financial Officer. As a reminder, please note that remarks on this call may include our expectations, future plans and intentions that may constitute forward-looking information. Such forward-looking information is based on estimates and assumptions made by management regarding, among other things, general economic and geopolitical conditions as well as the competitive environment. Actual results may differ materially from the conclusions, forecasts or projections expressed by the forward-looking information. We would refer you to our most recently filed management's discussion and analysis and our annual information form, which include a summary of the material assumptions as well as risks and factors that could affect our future performance and our ability to deliver on the forward-looking information. Our earnings release, the related financial statements and the MD&A are available on SEDAR+ as well as the Investor Relations section of our website. I'll now turn the call over to Jennifer. Jennifer Wong: Thanks, Beth. Good afternoon, everyone, and thank you for joining us today. I'm delighted to share that our results for the second quarter of fiscal 2026 exceeded the outlook we provided in July across sales and margin. Trends in July and August surpassed even our highest expectations as we fueled exceptional broad-based strength across channels and geographies. This was driven by continued robust demand for our high-quality beautiful products as our summer assortment seamlessly transitioned to the launch of our fall campaign, which began at the end of July. This, combined with our strong inventory position, strategic marketing investments and new boutique openings drove a 32% top line increase over last year. We achieved net revenue of $812 million in the second quarter, well above the top end of our guidance range. We're extremely pleased with our performance in both channels with net revenue increasing 34% in retail and 26% in e-commerce. Comparable sales grew an outstanding 22% fueled by double-digit positive growth in all channels and all geographies, led by our U.S. e-commerce business. Our performance in the United States continued to drive our overall results. In the second quarter, we generated a 41% increase in U.S. net revenue, underscoring the strength and growing awareness of the Aritzia brand. Our results were fueled by the strong performance of our new and repositioned boutiques over the last 12 months. In addition, elevated demand for our products drove continued momentum in e-commerce, which we supported through strategic investments in marketing. We also generated outstanding comparable sales growth in our existing boutiques. During the quarter, we continued to focus on driving brand awareness and fueling the growing appreciation for our everyday luxury offering. We've seen outstanding new customer growth in the United States, where our base of loyal clients expands quarter after quarter. We're also super pleased with our second quarter results in Canada. We accelerated our sales growth for a third consecutive quarter, achieving a 21% increase in net revenue in Q2. We continue to maintain strong loyalty in Canada as clients responded well to our product assortment. In addition, our marketing investments helped drive double-digit growth in our active client base. In our retail channel, we delivered net revenue growth of 34% in the second quarter. This was driven by the success of our real estate expansion strategy as well as strong comparable sales growth in both the United States and Canada. Over the past 12 months, we increased our retail square footage by 25%, opening a total of 13 new and 4 repositioned boutiques. This included 3 new boutiques and 1 reposition boutique in the second quarter, all in the United States. We also generated high teens comparable sales growth in our existing boutiques. This is primarily driven by traffic growth due to the elevated demand for our product and supported by our strategic investments in marketing. Our real estate expansion strategy continues to yield exceptional results. This underscores the vast opportunity for growth in the United States, where we have just 68 boutiques today. The boutique we've opened in the U.S. in fiscal 2026 are tracking to pay back in less than 1 year on average that exceeds our target of 12 to 18 months. Boutique openings continue to be our most predictable driver of top line growth. They enhance brand visibility and support client acquisition in both new and existing markets. In Q3, we expect to open 6 new boutiques in the United States. This includes locations in Pittsburgh and Scottsdale, which are new markets for us as well as in Denver, Miami and Minneapolis. We also plan to open our newly repositioned Flatiron flagship in Manhattan. In e-commerce, we delivered an increase in net revenue of 26% in the second quarter. This was driven by the robust demand for our product from our summer assortment to the launch of our fall campaign. Notably, our focus on full funnel marketing fuels an increase in website traffic of nearly 50% in the United States. In addition, we benefited from site enhancements, operational improvements and higher omnichannel engagement. In late August, we launched our new and improved international e-commerce platform. The site offers an enhanced shopping experience, which is fueling higher revenue growth through increased conversion. Its performance in the first 6 weeks have meaningfully exceeded our expectations, and we're confident we'll hit our target to triple sales within 2 years or less and that's before we've even launched any dedicated marketing, which is still to come. In addition, I'm excited to report that we're on track to launch our mobile app later this month. The Aritzia app is the introduction of an entirely new shopping channel for our clients. It will place duration, selling expertise and our quality product right in their hands. These new platforms provide clients with greater access to our product assortment, while reducing friction, increasing conversion and most importantly, further fueling the momentum in our e-commerce business. Turning now to product. Throughout the second quarter, demand for our assortment was broad-based across multiple categories. We saw an outstanding response to our fall launch across all geographies as clients responded well, both to our iconic franchises and our new styles. These included exciting new colors and prints. Due to the success of our spring/summer styles and focus on seasonal transitions, we drove stronger full price selling year-over-year. In addition, we remain well positioned with the right inventory in the right place to drive sales. Looking ahead, new winter styles and exciting drops and collaborations will surprise and delight our clients. We're confident these will keep clients engaged and attract new clients, all driving continued strong performance. We're continuing to refine our marketing engine across the organization to help grow awareness and spotlight all the different aspects that set Aritzia apart, namely high-quality, beautiful product, aspirational shopping environment, engaging client service and captivating communications, all of which is provided at an attainable price point. In Q2, we continued to deepen our focus to ensure that everyday luxury is synonymous with the Aritzia brand. Partnerships with Sperry and Whistle helped solidify Aritzia as a destination for exciting brand collaboration. In addition, celebrity sitings in iconically Aritzia pieces reinforced Aritzia as a much loved and highly sought-after brand with aspirational appeal. Our increased investment in digital marketing continues to fuel our growth, both online and in our boutiques. We're continuing to refine our programs and tactics across existing channels while launching new channels to further drive brand awareness. Our focus remains on reinforcing our everyday luxury brand ethos, growing awareness across U.S. demographics and acquiring new clients and retaining existing clients to drive incremental revenue. Shifting to the current trade environment, Previously, under the de minimis exemption, we utilized our existing supply chain network in Canada to fulfill a portion of U.S. e-commerce orders. However, the removal of the de minimis exemption in August required an operational pivot. We've relocated all U.S. order fulfillment to our distribution center in Ohio, which we strategically expanded last year to 560,000 square feet, more than double its prior size. We've also hired additional staff and pulled forward retrofitting work. We are now operating at triple the capacity compared to prior to the de minimis removal. And eventually, further optimization will allow us to quadruple our prior capacity. More importantly, there was no impact on the exceptional client service for which we are known and loved. This will allow us to handle U.S. order volume for the next 2 years. I'm extremely proud of our teams for the seamless transition. Despite headwinds from the elimination of the de minimis and higher reciprocal tariff rates on Vietnam and Cambodia, our proactive mitigation strategies and strong revenue growth have positioned us very well. As a result, our margin outlook for fiscal 2026 is unchanged at 15.5% to 16.5%. We're leveraging our agile global supply chain to minimize tariff exposure where possible. We continue to expect our China sourcing mix to be in the mid-single digits, if not lower for spring 2026. We've also received cost-sharing support from our long-standing supplier partners. In addition, we're continuing to focus on smart spending and IMU improvement to key multiyear initiatives to drive margin expansion. We continue to navigate macro development from a position of strength. The fact that we're still growing our margins this year in spite of these developments speaks to our agility and ability to execute with excellence. Without reciprocal tariffs and the removal of the de minimis, we would otherwise be tracking to an adjusted EBITDA margin of 18% to 19% for this year. That's in line with our long-range target 1 year early. Looking ahead, we're pleased with the start to our third quarter. The outstanding momentum in our business has continued across all channels and all geographies. We continue to be in a strong product position with the right product in the right place at the right time. We're also in a strong inventory position to meet the robust demand for our product. In addition, we continue to make progress with our digital initiatives. We're launching our mobile app later this month delivering ongoing site enhancements and operational improvements and continuing to refine our strategic marketing investments, which are all driving traffic and creating demand. And last, but certainly not least, we have a terrific pipeline of 9 new boutiques opening in the back half of this year as well as the reposition of our Flatiron flagship. The momentum in our business, our proven operating model and our healthy balance sheet give us confidence in our path forward as we capitalize on our vast opportunity for growth in the United States and beyond. In closing, I would like to thank our people for their hard work and commitment to excellence as we grow the Aritzia brand. Our consistent strong results would not be possible without all of our exceptional teams across the business. With that, I'll now hand it over to Todd to discuss the details of our financial performance. Todd Ingledew: Thanks, Jennifer, and good afternoon, everyone. In the second quarter of fiscal 2026, we generated outstanding net revenue growth above our expectations and delivered meaningful gross profit margin expansion and SG&A leverage. This resulted in over 600 basis points of improvement in our adjusted EBITDA margin and adjusted net income per diluted share that nearly tripled compared to the second quarter last year. Turning to the details of our performance, we delivered net revenue of $812 million in the second quarter, an increase of 32% from last year. This was above our guidance range of 19% to 22% as trends accelerated meaningfully in the back half of the quarter. Comparable sales grew 22%, driven by double-digit growth in all channels and across all geographies. Here's what drove this strong performance. First, our summer product performed extremely well, and we saw an exceptional response to the launch of our Fall product in late July, supported by our strong inventory position. Our growth was further fueled by a 25% increase year-over-year in total retail square footage. And finally, our increased investments in digital and brand marketing resulted in significant traffic growth across both channels. All of this manifested in a meaningful increase in active clients. In the United States, second quarter net revenue increased 41% to $486 million, exceeding our expectations. Our U.S. e-commerce business was driven by traffic growth of nearly 50%. In U.S. retail, our performance was driven by the opening of highly productive new and repositioned boutiques as well as strong comparable sales growth in our existing boutiques. Our ongoing success in the United States underscores the strength of our brand and our long runway for continued growth. In Canada, our performance also came in ahead of expectations. Net revenue growth accelerated for a third consecutive quarter, increasing 21% to $326 million. In addition to the strong performance of our product, we continue to benefit from our strategic investments in marketing. Turning to our sales channels. Retail net revenue was $572 million, an increase of 34%. This was driven by high teens comparable sales growth in our existing boutiques as well as the strong performance of our new and repositioned boutiques. In e-commerce, net revenue was $240 million, an increase of 26%. This was driven by strong traffic growth that was fueled by the positive response to our product as well as the halo effect from new boutique openings and our investments in digital marketing. We delivered gross profit of $356 million, an increase of 44% compared to the second quarter last year. Gross profit margin expanded 360 basis points to 43.8% despite 220 basis points of pressure from tariffs and the start of the de minimis elimination. The increase was primarily driven by IMU improvements, leverage on store occupancy costs, lower warehousing costs and improved markdowns. SG&A expenses for the quarter were $250 million, leveraging 160 basis points as a percentage of net revenue to 30.8%. The improvement was primarily driven by expense leverage and savings from our smart spending initiatives. Adjusted EBITDA was $123 million, an increase of 123% compared to the second quarter last year. Adjusted EBITDA margin expanded 610 basis points to 15.1%. This was driven by our ongoing efforts to deliver multiyear gross profit margin expansion as well as SG&A expense leverage. The margin improvements we've now delivered for 6 consecutive quarters, continue our progress toward achieving our previous adjusted EBITDA margin levels in the high teens. Turning to the balance sheet. Inventory was $527 million at the end of the second quarter, up 9% from last year. We are pleased with the composition and quantity of our inventory and are well positioned to meet client demand. Our liquidity position is strong with $352 million in cash, no debt and 0 drawn on our $300 million revolving credit facility at the end of the second quarter. Turning to our outlook. The strong momentum in our business has continued into the third quarter. Given quarter-to-date trends, we now expect net revenue in the third quarter to be in the range of $875 million to $900 million. This represents growth of 20% to 24%, driven by double-digit comparable sales growth and the contribution from our boutique openings. Our net revenue outlook for the third quarter is based on continued outperformance in the United States as well as strength in Canada. We expect gross profit margin in the third quarter to be approximately flat compared to the third quarter of fiscal 2025. This is driven by IMU improvements and leverage on store occupancy costs offset by approximately 400 basis points of pressure from tariffs and the elimination of the de minimis exemption. We forecast SG&A as a percentage of net revenue to also be approximately flat compared to the third quarter last year as strategic investments in projects to support our growth are offset by expense leverage. Given our year-to-date performance and improved expectations for the second half of the year, we are raising our net revenue forecast for the full fiscal year to the range of $3.3 billion to $3.35 billion, representing growth of 21% to 22% from fiscal 2025. Turning to tariffs. We now forecast 280 basis points of tariff-related headwinds for the full fiscal year compared to 150 basis points previously. There are 2 factors driving the 130 basis point increase. First, reciprocal rates on Vietnam and Cambodia increased to 20% and 19%, respectively. They had been at 10%. This results in an incremental 50 basis points of gross margin pressure for the fiscal year. Second, as Jennifer mentioned, the removal of de minimis exemption means that we will no longer be able to realize duty savings on a portion of our U.S. e-commerce orders. This creates an additional 80 basis points of gross margin pressure for fiscal 2026. Despite the incremental 130 basis points of pressure, our adjusted EBITDA margin forecast for the fiscal year is unchanged at 15.5% to 16.5%. Our ongoing mitigation strategies and the strength of our business fully offset the incremental tariffs and de minimis pressure. Importantly, excluding the 280 basis points of total tariff and de minimis related pressure, our adjusted EBITDA margin for fiscal 2026 would be in the range of approximately 18% to 19%. We are extremely pleased with the consistency and the strength of our performance. We are well on track to achieve our fiscal 2027 revenue target. We also continue to make strategic investments in our future growth while delivering ongoing margin improvement despite the incremental tariff impacts. In closing, our product is resonating extremely well with our clients. We have a robust pipeline of new boutiques and our growth opportunity in the United States remains sizable, with only 68 locations currently. Our digital initiatives are helping to build brand awareness, generate loyalty and drive revenue, all positioning us for continued growth now and into the future. The combination of our anticipated revenue growth and margin expansion will drive meaningful multiyear EPS growth and deliver long-term value to our shareholders. Thank you. Jennifer Wong: With that, operator, let's please open up the line for questions. Operator: [Operator Instructions] The first question comes from Irene Nattel with RBC Capital Markets. Irene Nattel: Great quarter. It certainly sounds as though there's very strong momentum in the business. Wondering whether as we look ahead to F '27, how confident you are in that high teens guide? What would be the factors that would cause you to either over or underdeliver relative to the soft guide that you include in the release? Todd Ingledew: Irene, it's Todd. The high teens guide, we updated that for FY '27 just due to the fact that we've now had another incremental 130 basis points of pressure from the tariff changes for Vietnam and Cambodia as well as the de minimis removal for the rest of the world. So that will create obviously pressure next year. But we still expect to deliver high teens adjusted EBITDA margin, which does include 19%, but we thought it was prudent to give ourselves a bit more of a range on that. And we still have multiyear IMU opportunities. Obviously, the strength in the business is supporting operating leverage, diversification of our sourcing continues as well as negotiation with suppliers. Our spend management initiatives are delivering benefits. So we still anticipate continuing to grow our margins next year despite all of the added pressure, and we do continue to have a multiyear runway for margin expansion. Irene Nattel: That's really helpful. And so how would you -- just following up on that, are you satisfied with sort of the margin mix that you're delivering across different categories at this point in time? Todd Ingledew: I mean we're extremely satisfied. We obviously delivered 600 basis points of EBITDA expansion, saw meaningful gross profit margin expansion, 360 basis points and also SG&A leverage. So we couldn't be more pleased with what we're seeing in the business. And obviously, if we didn't have any of this tariff and de minimis pressure, we'd be talking about our EBITDA margin forecast for this year being in the 18% to 19% range. So we're incredibly proud of the teams across all components of the business. Operator: Our next question comes from Martin Landry with Stifel. Martin Landry: Todd, I would like to touch on your cash balance. You guys are exceeding expectations, your own expectations for a couple of quarters now and your cash is building up. I think it's around $350 million for the quarter. Like what is at the level that you need to operate your business on a daily basis? And what is the level of extra cash that you currently have according to you? Todd Ingledew: I think we're obviously above the level of what we need from a working capital perspective. Anywhere between $100 million and $200 million would be a comfortable position from a working capital perspective, depending on the time of year. But we have started repurchasing shares last quarter during the open trading window. We purchased 200,000 shares under the NCIB. And we actually also purchased 250,000 shares to use for the settlement of our RSUs that we're vesting this year. So we have actually purchased back a meaningful amount of shares in the last several months. And we continue to target offsetting our option dilution for the year and at a minimum, buying back about 1 million shares. Martin Landry: Okay. So your targets for 1 million shares of buyback this year? And then what could we expect that to accelerate next year? I mean, your CapEx should not expand a ton and your earnings will continue to expand. So I mean, is it fair to expect that your buyback could accelerate in fiscal '27? Todd Ingledew: I mean, at this point, our plan is as -- has been communicated, which is to buyback to offset option exercising. We will, as we do every quarter, discuss our cash position with the Board. And at some point, we may increase the cadence. But at this point, we don't have plans currently to do that. Operator: The next question comes from Mark Petrie with CIBC. Mark Petrie: Obviously, the consumer is reacting incredibly favorably to the assortment. And I know it's broad-based strength, but helpful to hear anything specific that is working better than expected? Or were you sort of see opportunity to further lean in, and then I'm also hoping you can talk about the U.S. specifically and your momentum with regards to brand awareness and maybe that layer that into how you're approaching the marketing around the final New York City flagship opening next month or later this moment. Jennifer Wong: Yes. Thanks, Mark. That's a great question. As usual, when our performance is great, everything is working really well. In particular, in Q2, we mentioned we saw our business accelerate in July and August. So there wasn't anything in particular to call out in terms of categories or styles, colors, fabrics, they're all of it was working. One of the things that did happen in the quarter was our summer to Fall transition was particularly very well executed, I think our timing was impeccable. We did have some marketing around that, the product marketing around the earlier launch in July was very, very effective. And so that does lead to probably the second part of your question, which is our marketing is getting better. We're getting better at it, and we're seeing that it's really quite effective. And certainly, last year, when we opened 3 flagships, always in a matter of recent each other right around Black Fiveday, and we marketed it, it was very, very effective. That was somewhat of an unprecedented moment. That said, our Flatiron flagship will be opening around the same time, but the timing happens to incidentally work out for us. And given the success of what we saw last year, we do hope to have similar programming around the flagship in November. That said, it's 1 flagship -- it is also in Manhattan. The sale won't be necessarily the same as opening 3 flagships at once. But certainly, we do see that when we open a flagship and we amplify the news, it is quite effective. Mark Petrie: Yes. Okay. That's helpful. And then just given the even further improvement in the store paybacks, I'm wondering what you're thinking for new stores next year? And also if there's sort of value or merit in kind of further tweaking the store experience, whether that's store sizes or like more cafes or other features? Jennifer Wong: Maybe I'll sort of frame it up, zooming out in terms of the bigger picture and then Todd could speak to some more of the details. But certainly, what we're seeing with our store openings right now and in particular, as it relates to the flagship, they are an amazing showcase of our everyday luxury experience. And so what we're seeing like with the flagships and in some of our bigger format stores, introducing the A-OK cafes has been really, really successful. We just opened in Brickell in Florida, couple of weeks ago last week, and the A-OK cafe had lineups around the door, just like when I talked about the one here locally just outside of Vancouver. So those aspects of our retail experience really seem to be resonating very well with the customer. That, coupled with the in-store experience with the Italiers and just our style advisers in the store are some of our biggest differentiators when it comes to our retailing. And as you know, over the years, we've increased the size of our stores. When we -- 10 years ago, we were talking about stores that were 6,000 square feet, then a few years after that, 8,000 square feet. And now we're talking about an average store size of 10,000 square feet. So we are seeing lots of momentum in our retailing and our retail experience and a lot of these aspects that we've introduced over the years is really, really catching on and really resonating with our customer. Mark Petrie: Great. And then just to add on from a specific perspective, we do have a strong pipeline of boutique planned for next fiscal year with, again, a minimum of 12 new boutiques and 4 to 5 expansions and repositions with leases signed on a majority of those locations. So we have already -- and the specific locations for the others already identified and the negotiations underway. So yes, we're pleased with the cadence for next year, and it will be slightly more balanced to the first half, second half than weighted to the back half. Operator: Next question comes from Stephen MacLeod with BMO Capital Markets. Stephen MacLeod: Firstly, yes, congrats on the very solid quarter. Great to see. So I had 2 questions. One is sort of high level and one is a bit more nitty-gritty, I suppose. But just on the high level, just sort of picking up with the commentary you were currently discussing around the U.S. stores. Can you talk a little bit about kind of how you're thinking about your total U.S. store growth potential over time, whether it's new locations, new markets or just total sort of store count? Jennifer Wong: Thanks, Stephen. Yes, we see still a ton of runway in the U.S. As we've mentioned, there's only 68 boutiques in the U.S. today. And long term, we see an opportunity that might be closer to 200 -- 180 to 200. Our focus is on attracting and acquiring new clients. We still see that there's a lot of runway there, a lot of white space. And our strategy is clearly proven and strong. And the great news is that we have a pipeline of stores that are identified, and we see that this is something that we can really capitalize on over the next few years. Stephen MacLeod: That's great. And just along those lines, can you just remind us how many new markets you've entered or will be entering in fiscal '26? Todd Ingledew: The new markets this year are total 5. It's Raleigh, Salt Lake City, Pittsburgh, Cincinnati and then 2 stores in Scottsdale. Stephen MacLeod: Okay. Great. And then just my more specific question was around -- just on the SG&A leverage. I mean, obviously, this strong top line is continuing into fiscal Q3, but you're not seeing -- not expecting SG&A leverage. Can you just talk a little bit about some of the strategic investments that you called out in your guidance commentary around SG&A? Todd Ingledew: Yes, absolutely. So one is the distribution center here in Vancouver, where we have both capital and expenses related to that project. So there's incremental investment happening there compared to the prior year. And then we just have a number of projects underway that are across the business, whether that be RFID, merge planning software, ongoing investments in digital. We have workforce planning software development underway, really just improving on our world-class infrastructure. And just as it works out, the cadence between our project spend in Q3 and Q4 last year wasn't at the same level as the project spend for the back half of this year. Operator: [Operator Instructions] The next question comes from Dylan Carden with William Blair. Dylan Carden: Okay. It seems sort of a not insignificant piece of the acceleration over the last 3 quarters in part some of the incremental marketing and obviously, the awareness boost you're getting from the flagships. I'm just curious, you had a comment in there about sort of the meaningful increase in active customers and Todd in some of your last comments touched on sort of loyalty. Do you have a read or are you sort of confident with the profile of quality of some of these customers that are coming into the business quick? And particularly as you have a view to lapping 20-plus percent comp on the back end of this, presumably, you keep marketing at a similar level, you gain efficiencies. But anything around kind of how you're thinking about how these customers roll forward would be helpful. Jennifer Wong: Thanks, Dylan. That's a very good question, and I do appreciate it. I just want to reframe something before I get into the marketing aspect because it does -- ultimately, our business is driven by product. And the reason why our business is so good is because we have what the customer wants and our product is resonating extremely well. So I just want to start off by saying the assortment is performing exceptionally well. And then, of course, the marketing amplifies that. And yes, we have introduced more marketing in the last 1.5 years, and we are getting better at it. And certainly, it's driving -- we're looking at full funnel marketing. So it's driving brand awareness at the top of the funnel and then driving traffic and conversion at the bottom of the funnel is kind of classic. And I guess what is really the headline here is that the new customer growth is a combination of both boutique openings and the marketing. And the great news is that this is a customer that's very consistent with our existing active client base, meaning that it is a high-quality customer, and we have enjoyed and benefited from a very loyal customer for decades now. And what we're seeing is a very similar customer. And in particular, what we love is when a young customer discovers Aritzia, falls in love with our brand and continues to grow with us for many years to come. And certainly, we've been able to attract this customer, and we are seeing the new customer come back. So I think all of those points -- point to that it's all working, starting with having a great product that then we can tell people about and amplify through our store openings and marketing. Dylan Carden: Certainly. And there's a huge difference between acquiring a customer with product and with a discount. So I appreciate that. And the last one for me. I assume that we're going to hear a lot about sort of a warm fall in the United States come earnings season. And it sounds like between pulling forward your Fall launch and kind of the trends continuing into September, you're not seeing any of that. And I just was hoping you could sort of square that circle for us. Jennifer Wong: Yes. Another great question. We have had some internal conversations about the weather. And certainly, with the 30 degree Celsius -- 30 degrees in the East in Toronto as of late, that does affect the product mix. But the great thing about us, as we've said in the past, too, is that we have such a broad assortment that you sell more sweaters instead of jackets when it's a little warmer. We did have some great transitional pieces. And so maybe some of the outerwear -- even though the outerwear is selling and a lot of folks are buying that early to get a jump on the season, we do have things that suit the weather. And so I would say, over on the whole, we're not going to be citing weather. We're not citing weather at all right now in terms of the performance of our business. Clearly, you can see that we have many other things going on that allow us to perform the way that we are. So really, that's not a factor for us. Operator: The next question comes from Joe Civello with Truist. Joseph Civello: Congrats on a great quarter. Just wondering if you could give a little bit more color on the IMU and smart spending opportunities. What inning are we on those? And where are the biggest opportunities you're looking at for on the efficiency side? Todd Ingledew: Yes. From an IMU perspective, obviously, we have benefits from cost improvements with negotiations with suppliers sourcing, relocations as we grow and scale, we just have more and more negotiating power. So that's a key benefit that we're seeing on the IMU side, our seasonal pricing adjustments, there will obviously be another -- we have an ongoing tailwind from just the mix of our business as our business grows in the United States. There's IMU benefits there. And then from a spend management perspective, for this year, we're really focused on process improvements and looking across the business as we do every year, but we have a really distinct focus on it this year as well as procurement. And just again, dialing in our negotiations across the business. Those are the key things that we're focused on in those 2 buckets for this year. Joseph Civello: Got it. And then great to hear on the international website surpassing expectations. Just wanted to see if we could drill down a little more color and also how we're thinking about those markets eventually for a physical footprint. Thanks so much. Jennifer Wong: Thank you, Joe. Yes, I don't think I met you yet. Nice to hear from you. Certainly, the day we turned on our international e-commerce side, we immediately saw our dailies double effectively. So that was driven primarily by conversion. As we mentioned, we haven't even turned on any marketing, dedicated marketing yet. That is to come. We'll start that next month. And so again, really encouraged by our efforts with that platform and its customer experience has significantly improved. Now I'll remind you that the e-commerce business before we had the new -- the international side was just a little over 1% of our e-com sales. So we're not talking about big dollars here. But certainly seeing that there is worldwide demand for Aritzia and everyday luxury in our products. And it's quite, again, expands it with 3 different continents in terms of where our top countries are. So I think it's very encouraging. It's still obviously early days, but it's very encouraging because what this is helping us with is -- we continue to gather more data about how we could perform beyond the borders of Canada and the U.S. And I think it's a really good start for us to continue to monitor. Operator: The next question comes from Michael Glen with Raymond James. Michael Glen: Maybe just first, Jennifer, can you maybe give some thoughts on the mobile app launch, what you would expect? Do you expect this to be a contributor to sales? Like how you think about increase in spending per customer? Anything along those lines that you think will happen with the mobile app launch? Jennifer Wong: Yes. Thanks, Michael, for raising that. We're all very excited about the mobile app that's scheduled to launch at the end of this month. I've talked about it now for a few quarters about it being our digital flagship. So just like our boutique flagships have been a huge brand propelling marketing vehicle that, again, they showcase everyday luxury. They offer a great product assortment. The same thing goes for our mobile app. It will certainly drive brand awareness. I believe it will be a best-in-class experience. It completely embodies the everyday luxury ethos. And I see this being a vehicle for driving frequency among our existing base of clients as well as growing base of clients. And so we do envision a meaningful amount of our digital business running through the mobile app. Obviously, it hasn't launched yet, so we can't really talk too much about what that is other than we know that our peers do have anywhere between 20% to 40% of their business running through their app, and we always pride ourselves on being best-in-class. So right now, when we launch it, it's going to be about the downloads. It will be about monitoring the downloads. That will be a great early indicator as far as the potential for the app. And it become -- it's an iterative kind of process in terms of making sure that we keep up with interesting releases and engaging releases. And so we'll be able to report more once it's launched. But right now, very excited for the launch and monitoring the downloads. Michael Glen: Okay. And just on the store fleet, I know we talk about store openings a lot, but what's the opportunity for renovations and relocations within the store fleet right now? And are you able to give any indications what those -- what that type of activity, like how much it contributes to top line, what some of the paybacks are on those type of investments, how they impact square footage? Anything you can add there? Todd Ingledew: Yes. I mean, Michael, it's highly dependent, obviously, on the type of relocation you're talking about. Last year, when we relocated our SoHo and Fifth Avenue stores, we had meaningful expansions of square footage. And this year, we have the Flatiron store. But our typical expansion would be moving from, say, 5,000 to 7,000 square feet to maybe 10,000 to even 15,000 square feet, and it's very dependent. So it doesn't -- I don't -- I wouldn't say there's one tried tested rule on that. We do have a pipeline of what we feel is about 4 to 5 expansions or repositions a year. And that evolves. As Jennifer mentioned, our store size has been growing larger and larger. Our average new store is now 10,000 square feet. So obviously, as we grow the optimal size of our stores, that creates more opportunity for expansions and repositions. From a payback perspective, we typically target 18 to 24 months of payback for those stores. It's a little higher than the new store paybacks of typically under 12 months, but that's because we're only using obviously the incremental revenue and contribution against the capital expenditures for the store. But we continue to be extremely pleased with how they're performing, and they're a meaningful component of our real estate expansion strategy. Operator: The next question comes from Brian Morrison with TD Cowen. Brian Morrison: First question for Todd, please. The strategic initiatives that you announced that are going away a little bit on the margins in the back half of the year. Were any of those incremental to your prior guide for fiscal 2026. I'm talking about the RFID, the merged software, or were those also included in your previous guidance? Todd Ingledew: No. Those have all been contemplated, the ones that I listed. Brian Morrison: Okay. So nothing incremental then? Todd Ingledew: Not from those, no. We have -- we do have -- and we have incremental projects, but they're not ones that I just listed. Brian Morrison: Okay. I guess the second question is for Jen. You have many top line category drivers, including the mobile app that you just talked about. And clearly, your product is resonating very well. But absent in terms of your revenue drivers or potential offsets to the tariff pressures, anything about price increases? I'm just wondering how you think about that lever. Jennifer Wong: Yes. We -- again, a fair question. We are thinking about pricing the same way we always think about pricing, which is our pricing strategy is to uphold everyday luxury. It is not based on tariffs. So we will continue to do what we've always done, which is we do evaluate our pricing every season. It's on a seasonal basis. It's very important that our priorities to stage that everyday luxury value proposition. That said, any pricing actions we take is more part of a broader IMU improvement initiatives that Todd referenced, I think I've referenced it as well, that's a multiyear initiative that involves cost savings negotiations as well as pricing actions. Operator: The next question comes from Mauricio Serna with UBS. Mauricio Serna Vega: First on Canada, could you talk a little bit more about what kind of customer like describe a little bit more about the new customer that you're having there because it's pretty impressive considering that the brand has been there for over 40 years. So more curious to hear about the type of customer that you are tracking? And then maybe could you just talk about like for fourth quarter, what is the implied comp range that you are contemplating in your current time? Jennifer Wong: Thanks, Mauricio. I'll take the first part, and then maybe I'll let Todd take the second part. Regarding the new customer in Canada, or -- I guess I'll start off by saying we're -- we continue to attract the same sort of profile of customer. Remember that we have a very, very broad appeal across 3 generations effectively. Gen Zs, Millennials, Gen Xers. And so the majority of our customers do tend to be in the Gen Z, millennial category. So as I alluded to earlier in the call, when a younger customer discovers Aritzia and falls in love with our brand and they become a very, very little customer and continue to grow with us. So in spite of being in Canada now for over 40 years, we continue to attract a customer that's between the ages of the core of 15 to 45 and even younger and even older. So the fact that, that customer still remains and loves high quality, beautiful products and attainable price point and really enjoys the boutique experience as well as our online experience. It's again, very encouraging for us to know that our brand still resonates with our new customer, even in Canada. And so we are seeing, in fact, double-digit growth in our customer in Canada. Todd Ingledew: Great. And the second part of the question was about our comp for Q4. Is that correct, Mauricio? Mauricio Serna Vega: Yes. Just like the implied range of that comp. Todd Ingledew: Yes. So we've updated our guidance to $3.3 billion to $3.35 billion for the fiscal year, which is growth of 21% to 22%. Maybe I'll just talk about Q3 first and then give you some color on Q4. As we've discussed, quarter-to-date trends in Q3 are consistent with what we saw in Q2 with total growth outpacing or pacing 30%. So we're just above 30%. But we're only 5 weeks into the quarter and our highest volume period of the quarter is still ahead. We'll be lapping exceptionally strong growth from last November. So therefore, in Q3, our guidance range assumes a total comp growth in the mid-teens, delivering that total growth of 20% to 24% that we've guided to. And then for the fourth quarter, we're lapping extremely robust growth with comp of 26% last year. There's actually some FX headwinds with our forecasted rate at $1.38 on compared to $1.43 last year. And there's also some conservatism. But our Q4 guidance assumes mid-single-digit comp growth and high single-digit total growth for Q4. But I mean, I think it's important to remember that we do have a great momentum in our business. And I don't know if you want to go into some of the things. Jennifer Wong: Yes. Let me just remind everybody that we're definitely set up to succeed with all the elements in place to deliver in the back half of the year. We talk about it a lot, but let me just run through it all. It starts with product. Having the right product in the right place at the right time. Our product assortment is outstanding right now. I love seeing it in the stores. It's absolutely merchandises and present well. We're hearing anecdotally as well as obviously, to our sales results that it's resonating well. We are in an excellent inventory position between what's on hand, on order, in transit. We are in an excellent inventory position. We have 9 boutiques opening in the back half of the year, 6 of which are in Q3 alone. That includes the flagship in Flatiron. As we said before, our new boutiques are the most predictable driver of top line growth. We're well on track with all of our digital initiatives. We're delivering those on time. The mobile app is scheduled in a few weeks. We do have these exciting collaborations that continue to drive interest and engagement and traffic to aritzia.com, and in our boutiques and top it off with some strategic investments in marketing, and we are getting better in our marketing and more effective. We are seeing a return of creating demand and driving traffic and looking forward to some of our best campaigns ever during the holiday time. And so all of these things across the business, we have already executed very well on in the last couple of quarters and continue to go into the next couple of quarters in a very, very, very strong position. And I suppose -- what I would add at the end is last but not least, our teams, our teams are phenomenal. Our teams are highly motivated right now and highly poised to execute with excellence. Operator: The last question comes from Chris Li with Desjardins. Christopher Li: Thanks for all the great discussion so far. I wanted to just maybe ask about your EBITDA margin guidance for the year. I guess first, at a very high level, what needs to happen for you to achieve the higher end of your guidance? And then maybe vice versa, what should happen to get you to the lower end of your guidance for the year? Todd Ingledew: Yes. I mean I would just simply put that to the revenue and leverage at the top end of the range from higher revenue and the bottom being more reflective of the lower part of our range from a revenue perspective. We obviously have all of our mitigation strategies in place to -- that are what's helping us offset, the increased tariff pressure and why we've been able to keep the adjusted EBITDA range for the year, unchanged at $15.5 million to $16.5 million. But it's predominantly the revenue range that would push us both up and down. Christopher Li: Okay. That's helpful. And maybe just a follow-up. If I do the math correctly, just based on your guidance, it would imply Q4 EBITDA margin might be down kind of in that 100 to 150 basis points depending on your assumption. Am I -- is that directionally correct? That's what you're saying? Todd Ingledew: We're expecting flat both gross profit and SG&A in Q4 also. It's really the -- unfortunately, the other income, I hate to bring that up, but it is -- it's the other income that we benefited meaningfully in Q4 last year because of the exchange rate strength in Q4 last year. We can take that offline, but that's really what's driving the change in the fourth quarter. Operator: This concludes the question-and-answer session and today's conference call. Thank you for joining, and have a pleasant day. You may now disconnect your lines.
Operator: Good morning. I would like to welcome everyone to the FTG Third Quarter 2025 Analyst Call. [Operator Instructions]. Please note that this call is being recorded. I would now like to turn the call over to Mr. Brad Bourne, President and Chief Executive Officer of FTG. Mr. Bourne, you may proceed. Bradley Bourne: Thank you. Good morning. I'm Brad Bourne, President and CEO of Firan Technology Group Corporation, or FTG. Also on the call today is Jamie Crichton, our Chief Financial Officer. Before we go any further, I must caution you that this call may contain forward-looking statements. Such statements are based on the current expectations of management of the company and inherently involve numerous risks and uncertainties, known and unknown, including economic factors in the company's industry generally. The preceding list is not exhaustive of all possible factors. Such forward-looking statements are not guarantees of future performance, and actual events and results could differ materially from those expressed or implied by forward-looking statements made by the company. The listener is cautioned to consider these and other factors carefully when making decisions with respect to the company and not place undue reliance on forward-looking statements. The company does not undertake and has no specific intention to update any forward-looking statements written or oral that may be made from time to time by or on its behalf, whether as a result of new information, future events or otherwise. Our third quarter was another solid quarter for FTG. Our financial results were in line with our expectations, particularly given it included the summer months of June, July and August, where we lose about a week of production due to summer holidays. In the third quarter of 2025, FTG accomplished many financial goals, including bookings were $51.5 million, resulting in a book-to-bill ratio of 1.08 in the quarter. Our quarter end backlog stood at $137 million, a 12% increase from the previous year-end. Our revenue in Q3 was $47.7 million, an 11% increase over Q3 last year. Our adjusted EBITDA was $7.6 million in the quarter, up from $7.2 million in Q3 last year. Our adjusted net earnings rose by 5.9% to $2.9 million. Our net debt was reduced by $4 million to $9.5 million, including $11.6 million of government loans, and our net debt-to-EBITDA was 0.3x on a trailing 12-month EBITDA basis. And finally, we generated operating cash flow less lease payments of $5.5 million in the quarter. Other accomplishments in our third quarter included a recent acquisition of FLYHT was profitable for a second straight quarter. The supplemental type certificate or STC was completed with the European Aviation Safety Agency or the AFIRS Edge+ product on the Airbus A320 family of aircraft. We now have STCs for both the Airbus A320 and Boeing 737 aircraft in at least one jurisdiction and working to expand these approvals to other key jurisdictions. And we booked our first Edge+ order from an Asian customer. We initiated qualification activity for some further U.S. defense programs. But maybe most importantly, we made a series of organizational changes to continue to position FTG with future growth and success. First, we have had some succession activities underway at FTG, and we have 2 new hires to continue our progress in this area. As part of this, we hired Steve Eldefonso to lead our corporate quality function taken over from Bryan Clark, who retired at the end of Q3. Steve comes with a strong experience in both printed circuit board and assembly operations. And subsequent to quarter end, we hired Drew Knight as our new Chief Financial Officer, replacing Jamie Crichton who is retiring. Drew has significant public company experience as a CFO and equally importantly, a strong manufacturing experience, including time at Magna and other companies significantly larger than FTG. Drew will start at FTG at the end of October. Also, as we scale up and we report strong results, we have found more people interested in joining FTG and being part of our future success. As a result, we have leveraged our attractiveness to upgrade our leadership at the next level to make FTG even stronger going forward. To this end, we have replaced our General Manager in our Circuits Fredericksburg facility with Trey Adams, who comes with a strong industry experience and a can-do approach to business. Trey will also be responsible for our Haverhill facility as Peter Bingel retired from FTG earlier this year. We have replaced our General Manager in our Aero Toronto facility. And subsequent to quarter end, we replaced our General Manager in our Circuits Minnetonka facility with Curtis Olson, who also comes with strong industry experience where he has had operational leadership roles at sites larger than our Minnetonka facility. All these changes did have some financial impact in the quarter, but I am convinced the long-term benefit will far outweigh the costs. Jamie will provide more results on our Q3 results shortly. Let me turn to some external items. Our end market demand remains strong. Airbus delivered 766 aircraft last year, but more importantly, they're looking to ramp to over 1,000 aircraft annually in the next few years. Airbus has a backlog of over 8,000 orders which is over a decade worth of production at current production rates. For 2025, they are projecting growth of 7% over last year. And they just reported September deliveries at 73 aircraft, their best September ever and up 46% from last September. At Boeing, they shipped just under 350 planes last year, down from the 500 in 2023. The drop was due in part to the safety incident on the Alaska Air 737 as well as the machine strike later last year. But looking forward, Boeing has plans to ramp their production almost 700 planes annually in the next few years. Boeing's backlog is almost 6,000 planes, so also over a decade worth of orders at current production rates. In the first 9 months of 2025, Boeing has shipped 385 aircraft, which is higher than their total shipments for all of last year. They are on track for shipments of over 500 aircraft this year. While 2024 might have been a low point for Boeing, it has been clear that Airbus has outperformed in Boeing in the air transport market with a 2:1 advantage in aircraft shipped in the last year and a 60% market share on order backlog. This has implications for FTG's plans going forward. In the business jet market, Bombardier reported a mid-single-digit shipment increase for 2024. In Q3 this year, Bombardier announced a new order for 50 aircraft with options for 70 more, which represents almost another year of backlog for them. They're pushing hard to add a defense component to their business, and they had some success in selling their business jets for these defense applications. In the helicopter market, Bell helicopter reported a 28% revenue increase in their latest quarter, driven by increased defense programs. All of this bodes well for us as we look to future demand in the coming years. I've also looked at results from some key defense contractors. For instance, Lockheed, reported 1% revenue growth in Q3 this year, also related to defense, Boeing was selected to develop and produce the Next Generation Air Dominance fighter. This is good news for them. Based on the supply chain approach for the previous U.S. Air Superiority fighter, the F-22, I would expect sourcing will be for U.S.-only suppliers. We did have small content on the F-22 when it was in production through our Chatsworth facility. But we are now better positioned to increase our content on U.S.-only procurements with our 5 U.S.-based sites. In addition, there are new commitments from all NATO members, including Canada, to rent defense spending to 3.5% of GDP with another 1.5% for defense infrastructure. And Canada has said they will increase defense spending in this year to 2% of GDP. All of this indicates significant increases in defense budgets for all European countries and Canada. The recent creation of a defense investment agency in Canada to accelerate and streamline future defense procurement activities is positive for the industry here. And the U.S. is also looking to increase defense spending this year. Looking at the longer term, Boeing's most recent 20-year forecast for commercial aircraft shows significant long-term industry growth and continue to show 20% of all new aircraft deliveries going to China and close to 40% to Asia, as has been the case in their recent forecast. The business jet market that's seen traffic recover and a recent business jet market forecast from Honeywell similarly predicts growth in this market in the coming years with near-term double-digit growth rates for the sector. The simulator market mirrors the end market application. But as we always remind everyone about this market, it is lumpy, so large year-to-year variations do occur. We are starting to see more quote activity in this segment. But we have said for many years, FTG's goal is to participate in all segments of the aerospace and defense markets as each of these move through their independent business cycles. It is not often all segments are growing, that seems to be the case now. Beyond all of this, let me give you a quick update on some key metrics for FTG for our third quarter this year. First, as already noted, the leading indicator of our business is our bookings or new orders. Our bookings were $51.5 million in the quarter. This resulted in a backlog of $137 million. The high volume of qualifying activity on new programs is also a leading and positive indicator for FTG. In our third quarter, sales were $47.7 million, which is up 11% over Q3 last year. The growth is driven by the acquisition of FLYHT earlier this year. In our Aerospace business, sales were up 25% in Q3 compared to Q3 last year. The increase is primarily due to the acquisition of FLYHT that occurred in Q1 this year. During the quarter, we had a lot of intercompany activity between the various aerospace sites, assisting each other in production. And much of this activity did end up not shipping to customer by quarter end. And this dampened our revenue a little bit in the quarter. This has included the transition of the C919 assembly product from our Toronto facility to our Tianjin facility, which slowed planned Q3 deliveries and could do so again in Q4, but the C919 demand remains strong and is even increasing. On the circuit side of our business, sales in the third quarter this year were up 4% over Q3 last year. All of this growth is organic. We saw double-digit growth in our Chatsworth Fredericksburg and joint venture facility in China, offset by lower growth in Toronto and Minnetonka. Overall, at FTG, our top 5 customers accounted for 52.7% of total revenue in our third quarter. This compares to 59.3% in Q3 last year. It's great to see the dropping customer concentration as we add sites and expand our customer base, partly through the acquisition of FLYHT. Airlines were 3 of our top 20 customers in Q3 due to the FLYHT acquisition. Also interesting to note, of the top 10 customers, 6 are customers shared between Circuits and Aerospace. We like to see the shared customers as it means we are maximizing our penetration of these customers by selling both cockpit products and circuit boards. Given the actions of the new administration in the U.S. of implementing tariffs, it's also good to see the one of our top 10 customers, they're primarily outside of the U.S., and this is in China and another 7 have operations both inside and outside the U.S. On this topic, 71.9% of sales are to U.S.-based customers. This includes sales by U.S. sites as well as sales from FTG sites in Canada or China, this compares to 76.6% in Q3 last year. While sales grew by 4% in the U.S., they grew by 12% in Asia and 140% into Europe, while they were flat in Canada as we benefit from previous efforts to expand globally, including things like our content on the C919 aircraft in China and acquiring FLYHT with sales globally. This increase in sales outside the U.S. are helpful in the event any tariffs the U.S. might impose. Our goal is to continue to grow our U.S. -- our non-U.S. revenue for our non-U.S. sites wherever possible. In Q3 this year, 35% of our total revenues came from our Aerospace business compared to 31% last year. The Aerospace business share increased due to the acquisition of FLYHT. I'd now like to turn the call over to Jamie, who will summarize some financial results for Q3. And afterwards, I will talk about some key priorities we are working on. Jamie? Jamie Crichton: Thanks, Brad, and good morning, everyone. I'd like to provide some additional detail on the financial performance for Q3. On sales of $47.7 million, FTG achieved a gross margin of $14.5 million or 30.3% compared to $11.6 million or 27% on sales of $43.1 million in Q3 2024. Regarding the increase in gross margin dollars, approximately $2 million is from the FLYHT acquisition and approximately $0.9 million is from organic growth and operational improvements. The average exchange rate experienced in Q3 '25 was $1.37, essentially unchanged from Q3 2024. The Q3 2025 year-to-date gross margin rate of 32.2% is up from 26.8% for the comparable period in 2024. The year-to-date number includes a reclassification of $1.5 million of R&D costs incurred at the flight operation, which were previously included in cost of sales in our financial statements for the first and second quarters of 2025. We continue our focus on operational efficiency to financial performance for our shareholders and operating performance for our customers. For Q3 2025, annualized revenue per employee is approximately $247,000, which is down 1.5% from the comparable quarter of 2024. We have ramped up head count at certain sites to support the backlog and the impact will be appear in the upcoming quarters. SG&A expense was $6.3 million or 5.1% of sales in Q3 '24 as compared to $5.1 million or 11.8% of sales in the prior period. The increased expense level includes the impact of the FLYHT acquisition, severance costs of $212,000 and India start-up costs of [ $44,000 ]. R&D costs for Q3 2025 were $2.6 million or 5.4% of net sales compared to $1.7 million or 4.4% of sales for Q3 2024. R&D efforts include product and process improvements at the Circuits segment and efforts to develop and qualify products for future aerospace programs, including the flight product. The exchange rate at the Q3 2025 close was $1.37 as compared to $1.38 in Q2 2025, which means a slightly stronger Canadian dollar. FTG's balance sheet includes assets and liabilities denominated in U.S. currency, with a net asset balance of approximately USD 28.2 million. The translation of our U.S. dollar net assets and liabilities into Canadian currency at the end of Q3 2025, [indiscernible] and other FX items resulted in a foreign exchange loss for the quarter of $0.6 million compared to a foreign exchange gain of $0.2 million in the prior year quarter. The Q3 2025 FX loss disproportionately impacted the Aerospace segment operating results. Earnings before interest, tax, depreciation and amortization, was $7.3 million for Q3 2025 as compared to $6.9 million in Q3 2024. Adjusted EBITDA was $7.7 million for Q3 2025 and or 16.1% of sales and $7.2 million for Q3 2024 or 16.7% of sales. Adjustments to EBITDA for Q3 2025 included severance costs, India startup costs as well as stock-based comp, which is a recurring item. Adjusted EBITDA for the trailing 12-month period ended Q3 2025 was $32.1 million, which equates to an adjusted EBITDA margin of 17.4% on sales. For Q3 2025, FTG recorded earnings before income taxes of $4.1 million or 8.5% of sales as compared to earnings or EBIT for Q3 2024 of $4.3 million or 9.9% of sales. The Q3 '25 tax provision was $1.2 million or 30% of the pretax earnings as compared to 34% and in Q3 2024. Cash flow from operating activities less lease liability payments was $5.5 million in Q3 '25 as compared to $4.3 million in Q3 '24, primarily due to favorable change in noncash working capital. Year-to-date cash flow from operating activities less lease liability payments was $11.2 million in '25 as compared to $7.2 million in the same period in 2024, primarily due to higher net earnings. Our net debt position as of Q3 '25 is $9.5 million which equates to 0.3x 12 months adjusted EBITDA. As at quarter end, the company's primary sources of liquidity exceeded $88 million, consisting of cash accounts receivable, contract assets and inventory. Working capital at Q3 quarter end was $53.3 million as compared to $49.5 million at the 2024 year-end. Accounts receivable days outstanding were 55 at the Q3 quarter end compared to 59 at 2024 year-end. Inventory days were 114 at the Q3 quarter end as compared to 104 and accounts payable days outstanding were 62 at the Q3 quarter end as compared to 63 in the 2024 year-end. We completed Q3 '25 with a backlog of $137 million, with approximately 80% of this expected to be converted to revenue in the next 12 months. We'll continue to focus on profitable growth, cash management and operating efficiency. And finally, the past 6 years have been truly rewarding to me and I'd like to thank Brad for providing the opportunity. I'd like -- I also like to wish all of our FTG nearly 800 employees, great success in the future. Our complete set of filings are now on SEDAR. With that, I'll turn things back to Brad. Bradley Bourne: Thanks, Jamie. And I would like to truly thank you for your efforts at FTG. You have helped transform FTG into a high-performing company with a great future. Thank you. Now let me delve into some other important items for the future of FTG, starting with the potentially negative items. Tariffs or the threat of tariffs in the U.S. are the new normal and uncertainties surrounds tariffs. This makes it challenging to plan and react, but we are focused on this every day as it evolves. We have 2 sites in China, which are now subject to U.S. tariffs, but a relatively small portion of their work ships to the U.S. For Aerospace Tianjin, this should have minimal impact as the site ships completed products to our Canadian and Chinese customers. They ship some components and subassemblies to our Toronto site who then makes the final product for shipment to U.S. customers. For our circuit board joint venture, a small amount of their work shifts to the U.S. and will be subject to the new tariff. Over the past 5 years, they've had a 25% tariff on their exports to the U.S. So this is not new. But they also have worked from Canada and Europe that will not be subject to U.S. tariffs. The growth plans for this business is to focus on customers in China, Europe and Canada, and we are making progress on all of these plans. Our U.S. sites are almost exclusively shipped to U.S. customers, so there will not be any tariffs on shipments to customers, but they're starting to see tariffs on input costs raw materials they buy, some of which come from Europe or Asia. We have implemented plans to pass these tariffs on to our customers. And then surprisingly, at this moment, the FTG sites in the best situation are our Canadian sites. They are not subject to any tariffs on input costs, and at this moment, we are not subject to any tariffs on shipments to U.S. customers as FTG products are USMCA compliant. But every day is a new day so all this could change at any time. As a reminder, we estimated about 55% of sales to customers last year, located in the U.S. originated at FTG sites outside of the U.S. While we are not exposed to tariffs between Canada and the U.S. at this moment, if this did happen, we do not believe the impact would be immediate. It will take time for the aerospace and defense industry supply chain to react to tariffs and find alternate sources of supply. But we are concerned and we are taking actions to mitigate any impact to FTG. First, our acquisitions in the U.S. over the past years have reduced our exposure as they are inside the wall and would not be subject to tariffs on sales. Going along with this, our long-term strategy to be a global player has resulted in sales outside of North America of over $26 million in 2024 and is already over $40 million so far in 2025. We're taking additional steps. In 2024, we made a conscious decision to find ways to increase our exposure to Airbus, not because of tariffs, but because they are the stronger performer in the air transport market. But whatever we do in this regard can also help mitigate U.S. tariffs. And more recently, we have made a conscious decision to pivot away from the U.S. market for our sites based in Canada. Obviously, a focus on Airbus is part of this. Also, in Q1 this year, we announced a significant new contract with De Havilland on their Canadair 515 water bomber aircraft. This is a Canadian program that we will support from our Toronto facility. We are also looking to become more locally focused by aligning U.S. customers with U.S. sites and non-U.S. customers with non-U.S. manufacturing sites. We have identified $4 million to $5 million of revenue for non-U.S. customers being manufactured in the U.S. right now. We have begun the process of moving this work out of our U.S. sites and thereby potentially freeing up some capacity to move work in the other direction. The acquisition of FLYHT will also help mitigate our exposure to tariffs, FLYHT's largest customer is in Canada, and they sell globally. As we look to in-source the manufacturing of FLYHT products, we will do so in a manner to minimize our exposure to tariffs. On the topic of FLYHT, we acquired it for a couple of strategic reasons. First, we've expressed our desire to increase our activity in the high-margin aftermarket segment of our business for a number of years and the acquisition of FLYHT does this. Also, as noted earlier, we are looking for a way to increase our activity with Airbus and FLYHT has a SATCOM radio that is installed as a factory option on new Airbus aircraft. They are sold by our licensing agreement with the average annual volume being 200 to 300 units. Finally, we think the timing on this acquisition could be superb. FLYHT has spent significant time and money investing and updating and developing new products. The bulk of these investments are done. We think we can leverage these investments to generate strong results for the company going forward. Now that we own FLYHT, we have 3 key assets: First, we need to reduce costs. And this action is essentially complete. Second, we need to sell the new products they developed. This is really the key action now. So let me delve a little deeper into this. There are 3 products that matter. There's a SATCOM radio that is sold into the aftermarket and license for delivery to Airbus as a factory option. For the aftermarket, the product is established and the sales are well established and ongoing. The product can be used as a safety backup voice system or can be used to transmit data useful for airline operations over the Iridium satellite system. When it is used for airline data over Iridium, FLYHT gets a recurring revenue stream, reselling the Iridium data services. The licensing agreement to Airbus has been in a hiatus mode for a few years due to a multiyear delivery in 2022. But this kicked back in during our third quarter this year and is expected to result in a multimillion dollar annual revenue uptick when fully reestablished. There's also a water vapor sensing system or WVSS-II. Its purpose is to collect humidity data outside of the aircraft as it flies and provide this data to weather agencies such as NOAA in the U.S. and U.K. Met in England who find this data useful in weather forecast. This product design was modernized and updated last year. The qual testing is complete. There are firm orders from both NOAA and U.K. Met for the products. These can ship as we complete STCs for the relevant aircraft in the near term. Once in service, there's also a data revenue stream associated with this product. Also related to this product, there's potentially additional commercial and military applications for it to monitor aircraft contrails, and we are exploring these. And the third product is brand. It is a 5G wireless quick access recorder or WQAR. This product collects data from the aircraft in flight and downloads it to the airline operations, while at the gate using a wireless or cell phone connection. The FLYHT product is the first 5G WQAR on the market. This product is qualified. The key now is to get approvals to install it on various aircraft types. The Boeing 737 approval has been received in Canada. The European STC for the A320 family of aircraft is also now complete. The priority is to expand these approvals into China. We have the FLYHT sales team focused on aggressively selling these products as they become available, and we received our first ever Edge+ order in the third quarter. And the third priority for FLYHT is to in-source manufacturing to capture this margin within FTG. We are looking at options for both the SATCOM radio and the WQAR product from our facilities in U.S., Canada and China. These additions should enable FLYHT to become a positive addition to FTG and further mitigate the risks from U.S. tariffs. Also, as announced in Q1, we are implementing plans to open an aerospace facility in Hyderabad, India. First, our decision to expand geographically was partly to look for an insurance policy against anything negative happening to our China operations, but it was also partly to expand into new regions with growth potential. As we analyzed options, we concluded India as a very cost-effective place for manufacturing, for Prime Minister Modi's Make in India policy, coupled with significant expense spending that would be an ideal place to operate. We have selected Hyderabad, as it has an aerospace hub primarily focused on manufacturing. Our legal entity in India is established, we have selected to have the facility built-to-suit due to the favorable location and the option to expand if or when necessary. The facility construction is now our pacing item, and it now looks like Q2 2026 before it will be ready. In the meantime, we've been sourcing the necessary equipment to be ready to go. We have funded this entity with about $2.5 million as of Q3 this year. While not the original intent, we believe this initiative has also helped mitigate any negative impact from U.S. tariffs. And finally, we are developing plans to add sales resources in Canada, Europe and even Asia to support our pivot away from the U.S. market. This would be for both legacy FTG sites as well as FLYHT. As we enter Q4 2025, we see continued strong demand across most sites, our $137 million in backlog -- of our $137 million in backlog, over $60 million is due in Q4. We still expect to see further benefit from the higher-value assembly orders first booked in 2023, with more in 2024 for our Aerospace business. These assemblies go on Boeing and Airbus aircraft. And we will see the benefit of the C919 program in China as it ramps its production. We shipped our first production orders last year, and production rate increases are planned in 2025 and beyond. The geopolitical situation in China does remain complex. In '24, both our operations had another record year. We repatriated cash to Canada every year since 2022, and we repatriated more this year, including further increments in our third quarter, with our first amount being repatriated as a dividend rather than a return of capital. By doing this, we don't have surplus cash stranded in China and it reduces our exposure if things ever did deteriorate between China and the West. We continue to assess possible corporate development opportunities that could fit with either of our businesses, but our near-term priority is to continue to integrate FLYHT. With the focus on operational excellence in all parts of FTG, our strong financial performance last year and the first 9 months of this year, our recent acquisitions are key sales wins, we are confident we are on the strong long-term growth trajectory. This concludes our presentation. I thank you for your attention. I would now like to open the phones for any questions. Jenny? Operator: [Operator Instructions] And your first question is from Steve Hansen from Raymond James. Steven Hansen: Brad, how should we think about the organic growth piece here for Aerospace for the back half? I think you described a few of the headwinds you might have seen. But if we just strip out the contribution from FLYHT, it does look like the underlying business retraced a bit. It sounds like there might have been a few moving parts in there that contributed that. How should we expect that to recover through the back half of this year and into next year? Bradley Bourne: Yes. I guess first point, for sure, I do think it will recover and grow going forward. A couple of things that I did talk about the C919 production. So that wasn't Toronto. We're in the process of moving it to China to our Tianjin facility. There's just a bunch of hoops to go through to get that done. And that's making shipments a little bit more challenging right now. But as I said, the demand is strong and it's probably growing -- not probably it is growing. So if we can get through that transition and transition to aerospace are always difficult. It's just an infinite amount of paperwork. So we're working through it with our customers. So that will come back. We've had some high-volume production opportunities in our Aerospace business, also at the assembly level more for both our Toronto and Chatsworth facilities. They have same thing. We've been working with the customer and there's an intermediary, there's us and our customer, then either Boeing or Airbus. Again, millions to get through to get into production. Good news is on -- most no, that's not fair, some of the assemblies we actually managed to ship some product at the end of Q3 this year, which was great. We expect to ship more in Q4. And then primarily related to our Chatsworth facility, we're going to see some of the balance kick in at some point next year. So that's a big growth opportunity. On the defense side, we have got through some qualification activity and say, primarily for our Chatsworth facility, and we're waiting for program awards on that. No idea what it's going to be, but it's going to be more than 0. So that represents growth opportunity. So stuff happens day to day, as you could see in the quarter, but long term, I am still very optimistic. There's some great growth opportunities for our aerospace business. And this is not -- this is not opportunities we're dreaming about. This is opportunities that we have that we just need to convert to production revenue. Steven Hansen: That's very helpful. Just I think you referenced in your prepared remarks that some of those transfer challenges will linger into Q4. So is it fair to say that growth will still be fairly modest in Q4, and it's more of a '26 story? Bradley Bourne: Yes. I don't know. I guess, is my honest answer. I'm hoping we get more in Q4. In my prepared remarks, I was talking specifically around the C919. We're building units. But in September, we shipped 0 as we're trying to get through the transition. So will they kick in and ship out in Q4? Don't know yet. But -- so we'll see. I mean it's not a great answer, but I don't control my customers. And in that case, I don't control COMAC in China. So we're a little bit at the mercy of all these guys and how fast they approve transition. Steven Hansen: Understood. That's fair. And just on the margin side, then again, as well I presume it's interrelated, but the Aerospace margins have been subdued for 2 quarters now. I presume that's related to some of the revenue items just discussed. But is there anything else in there that we should think about? Or is it just sort of a volume revenue sort of flow through? Bradley Bourne: I'm sorry, Steve, can you say that again? I lost it. Steven Hansen: Yes. Yes, just the Aerospace margins. So just looking at that, the last 2 quarters, it's been in the low teens. I'm referring to EBITDA margin. Historically, it's been in the high teens or even in the 20s. And so I'm just asking, is there more than just a revenue pause that you've described impacting that? Or is it just that flow-through from the revenue challenges that we've seen? Bradley Bourne: Yes, it's more of the latter. Just the revenue pause or there is -- in terms of end market demand, end market growth rates, that is not changing. It might even be increasing in some ways. As I said, Airbus had a world record in September, which was great to see. That ultimately creates pull-through demand. So yes, end market demand is strong or stronger, just transition and ramp issues are what happened in Q3. Steven Hansen: Okay. Very helpful. Just one last one and I'll jump back in the queue. Just really curious about the AFIRS opportunity set, you've had it under your belt now for a couple of quarters, a key -- couple of key STCs that have come through. Are you optimistic about bookings in that product set or any of the 3 that you described here? Do you have visibility on that? How should we think about that starting to contribute through '26? Bradley Bourne: Yes. I am actually very optimistic on that. This -- a brand-new product of FLYHT, the AFIRS Edge+, I think has a huge potential. I think it was a brilliant idea for a product. And I've been really happy with the way everyone at FLYHT has worked in terms of getting the getting the product qualified and getting the STCs approved for different aircraft types and different jurisdictions. They've been doing a really good job. And I -- we are seeing significant quote opportunities on that. And so yes, I really expect that's going to be a home run product for FLYHT in '26 and beyond. Operator: [Operator Instructions] And your next question is from Russell Stanley from Beacon. Russell Stanley: Just coming back to your comments around pull-through demand. Brad, I'm wondering on Boeing, in particular, I've seen media reports, they may see an increase in their production cap. I think on the 737 from 38 units a month to 42 a month. I'm just wondering how your production profile changes, how quickly that filters through our -- have your direct customers already been buying in anticipation of that? Or does this lift translate into actual incremental demand from your perspective? Bradley Bourne: Yes. I can say it's a bit of both, to be fair that some customers have been ramping demand to us. So that's in advance of any production rate increase at Boeing because they don't officially have it yet. And so some are trying to ramp ahead of it and some have not. So maybe it's an arbitrary number, I can say half have already increased their demand and half are still to come. Russell Stanley: And maybe looking at bookings in the quarter, wondering if you can provide any granularity, I guess, how much of that number was flight and maybe even a rough estimate how much of that number is new programs as opposed to existing programs. Bradley Bourne: That's a really good question that I really don't have an answer to at this moment. I can -- I'd have to go dig it up and get back to you on that unless, Jamie, you have anything on that, but I don't at this moment. Jamie Crichton: Not right here. No, no, Brad. Let's get also something after. Bradley Bourne: Yes, but great question. Just no answer. Russell Stanley: I understood there. And then maybe just one last one for me. The -- I guess, the Reuters ran a report talking the Navy, we should see a decision soon around the next -- their next stealth fighter, I think the F/A-XX, I think it's called there. Anyway, I think it's Boeing and Northrop Grumman competing there. How should we think about the winner there? Do you have a view as to who you'd like to see win assuming the program goes ahead? And how -- what's your level of optimism for participation there? Bradley Bourne: Yes. I'm going to say, generally, I don't have preference for who wins these programs. My goal generally is just to find a way in with whoever wins. And to be fair, our product generally gets awarded or suppliers get selected a year or 2 after the initial award but some period of time. So we're generally not involved at this moment. So we wait to see who wins and then we try to engage with them. We have decent relationships with, in that case, both those customers. So we're going to wait and see and then jump on it at the right moment. Operator: [Operator Instructions] And your next question is from Steve Hansen from Raymond James. Steven Hansen: Brad, on the bookings side, the order flow look quite good. Has there been any notable shift in the bookings as they've come in relative to past months? I'm just trying to get a sense where there's any composition shift in the backlog at all taking place that's relevant. Or is it more of the same? Bradley Bourne: Not wild shifts for sure. Occasionally, we have big lumps that show up, but there was no significant lumps in Q3 this year. I'd say maybe we're seeing a little bit more orders on the defense side at this moment as it compared to the commercial aerospace side, just -- and in particular, for our Circuits Minnetonka site, they just continue to have easy good bookings, almost all related to some U.S. defense programs. But it's not a huge shift, but maybe a little bit more on the defense side. Steven Hansen: Okay. Helpful. And I think you referenced a slight uptick in the simulator. I know it was the RFPs or the bookings, but just maybe give us a sense for how long be that we should expect that to be over the next year or so? Is that going to ebb and flow consistently? Or how should we think about it? Bradley Bourne: Yes. It definitely is -- there's ups and downs and there's no good way to predict it. I'd say, generally speaking, on the simulator business for us, it's more on the defense side of our business as opposed to the commercial side. It's just for some reason, the nature of the way they do simulator construction. But what I had said is we're seeing more quote activity. So I haven't seen more booking activity of any significance, but we are seeing some good quote opportunities on programs where we are the incumbent. So in that case, I put our probability of success is as high -- but over the last, I don't know, maybe a decade now, our simulator revenues range from maybe a little few million in the year to north of [ $10 million ], I would -- I guess I would expect next year, we're going to be somewhere in the middle of that. We're not going to be at the bottom end, we're not going to be at the top end. Steven Hansen: Okay. Helpful. And then just last for me is just the balance sheet and capital allocation. I think you referenced you continue to look at opportunities, but you're focused on integration. What does the opportunity set look like today in the M&A market out there? Is there opportunities that you're seeing, that you're pursuing? I guess how do we think about that given the liquidity you've got? Bradley Bourne: Yes and I guess a number of comments on that. The first one, and to be early this year, I hired 2 kind of key guys from me, [ Bill Sezate ] and [ Marco Viinikka ] and each one of them runs half of FTG, one runs the circuits business, one runs aerospace. The good news for me is that frees up some of my time, which has been great. So I appreciate them letting me do that. But it also gives me time to spend more of my time looking at what's next. I am going to say there's nothing active at this moment. And if there was, I'm not sure I'd be able to tell you anyways, but there isn't. But I'm exploring a few things. I've talked over the last few years, and I talked today about I'm interested in doing more work with Airbus. I think the European defense spend is going to ramp significantly. I talked about trying to do more work outside the U.S. for my non-U.S. sites. So Europe is on my list right now, I've been doing, I'm going to say, basic research to understand the market, understand opportunities. Where that leads, I don't know yet. But for sure, that's on my list of things of interest and stay tuned as to what happens going forward. But that's probably my #1 interest right now. Operator: Your next question is from Russell Stanley from Beacon. Russell Stanley: I hate to nitpick, Brad, but just coming back to one of your comments around demand. I think at one point later in your prepared remarks, you said that demand remains strong across most sites. I guess I'm curious, any sort of soft spots that you could call out for us there. Any color there would be helpful. Bradley Bourne: Yes. For sure, it's kind of -- our demand across all the sites is never 100% uniform. I would say the -- I think it through. So the sites -- Minnetonka, crazy strong demand, as I said, California Chatsworth both sites, pretty strong demand, a little bit of delay or challenge in Q3 in Aero Chatsworth but not demand related just getting product at the door primarily due to component issues and not getting them in the door, so we could complete the assemblies, but strong demand there. Our Fredericksburg and Haverhill sites were probably at the lower end in terms of demand. But I'm actually working really hard, and it's really painful because it's another transition of pushing work from Minnetonka to Fredericksburg and we finally had some good success on that in Q3, and we pushed about $1 million of work out of Minnetonka into Fredericksburg. So we're -- because they were a little bit lighter, we're trying to just help them balance the load. So we're going to solve that one. The same with Haverhill, it was a little bit light in the quarter, still up from last year, but we want to do more, and we are working with a customer on the program, a multimillion-dollar program that we need to succeed with. We need to get through qualification with, but it's -- it started. And so I see a path to get them ramp significantly going forward. Demand in the Canadian sites has been strong. Demand in China be surprisingly strong. So hopefully, that helps. Russell Stanley: It does. And I guess maybe just to put words in your mouth around Fredericksburg and Haverhill. It's not -- the relative softness there can be -- is it fair to say it's not about the programs they serve, but maybe a difference in what they're qualified to do by customers, and that's part of why you can reallocate some work out of Minnetonka into those sites. Bradley Bourne: Yes. I mean that's exactly true. And Minnetonka has a lot more capability than Fredericksburg. So I want to put the higher end product or keep the higher-end product in Minnetonka. But there's a fair amount of work in Minnetonka that is not super high end. And so it's that sort of stuff, I'd like to push to Fredericksburg. And it helps Fredericksburg ramp, but it also frees up capacity and Minnetonka to do more higher-end products. So it's kind of a win-win for me. But definitely, the capabilities that various FTG sites are different, and we need to take advantage of that and factor that in as we try to push work around between different sites. Russell Stanley: Got it. One last question for me. I appreciate all the color. Just on SG&A, apologies if I missed it, but I guess it ticked down over $0.5 million quarter-over-quarter. Any color you can provide on that? How sustainable should we think of this quarterly number around $6.2 million, $6.3 million. Bradley Bourne: I don't know, Jamie, can you help me on that? I didn't see it as a material change, but yes, I didn't really dig in to understand that change. But Jamie, do you have anything. Jamie Crichton: No, nothing really sticks out, Brad, I think just timing of certain types of expenses. Actually, Russell, I could probably -- sorry, I could probably answer you on FLYHT bookings. First of all, FLYHT has a pretty short-term bookings like time horizon, things tend to come in and go out pretty quick. But having said that, it had a book-to-bill of 1.12. So a little bit better than FTG overall in terms of book-to-bill for Q3. Operator: Thank you. There are no further questions at this time. Please proceed with the closing remarks. Bradley Bourne: Okay. Thank you. A replay of the call will be available until Friday, November 14, at the numbers on our press release. A replay will also be available on our website in a few days. I thank you all for your interest and participation. Operator: Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may all disconnect your lines.
Operator: Good afternoon, everyone, and thank you for participating in today's conference call to discuss Educational Development Corporation's financial and operating results for its fiscal 2026 second quarter and year-to-date results. As a reminder, this conference is being recorded. On the call today are Craig White, President and Chief Executive Officer; Heather Cobb, Chief Sales and Marketing Officer; and Dan O'Keefe, Chief Financial Officer. After the market closed this afternoon, the company issued a press release announcing its results for the fiscal 2026 second quarter and year-to-date results. The release will be available later today on the company's website at www.edcpub.com. Before turning to the prepared remarks, I would like to remind you that some of the statements made today will be forward-looking and are protected under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those expressed or implied due to a variety of factors. We refer you to Educational Development Corporation's recent filings with the SEC for a more detailed discussion of the company's financial condition. With that, I would like to turn the call over to Craig White, the company's President and Chief Executive Officer. Craig, please go ahead. Craig White: Thank you, operator, and welcome, everyone, to the call. We appreciate your continued interest. I will start today's call with some general comments regarding the quarter, then I'll pass the call over to Dan to run through the financials. After which, I will provide an update on our sales and marketing and end up the call with an update on our progress of the sale leaseback of our headquarters, the Hilti Complex. During the second quarter, we experienced decreased sales compared to the prior year second quarter. This was driven primarily by our reduced brand partner levels within our PaperPie division. Also, recent sale events which offer our products at higher than normal discounts have been short-term tactics used to generate cash and to reduce our borrowings. Over the past year, we have seen our brand partner levels decline due primarily to the challenging sales environment with the fact that we have not introduced new titles that typically energize our sales force for roughly 18 months. We have developed a conservative phased approach to introducing new products for post building sale close arriving later in the spring. Further, the direct sales industry, especially those within the product sector, have experienced a challenging period of sales. We are focusing our IT and marketing efforts toward increasing brand partner counts as opposed to only focusing on the incoming cash. With this focused effort, we are targeting a new generation to the industry, young millennials and older Gen Z. Recent studies have shown this age group is very receptive to this business model, but a few have taken steps to join this industry. There's a great opportunity right now. We know they have very little patience for technology that is clunky or unnecessary. As a result, we are improving our technology to have a mobile-first impact and make it easier to do business with us, including our onboarding process. Next, I am encouraged with our continued focus on reducing our costs and improving our results by seeing lower losses even on lower sales. The next big step towards profitability will be returning to revenue growth, which will be driven by adding brand partners, as mentioned before. With that, I will now turn the call over to Dan O'Keefe to provide a brief overview of the financials. Dan? Dan O'Keefe: Thank you, Craig. Second quarter summary compared to the prior year second quarter: Net revenues were $4.6 million compared to $6.5 million. Average active PaperPie brand partners totaled 5,800 for the quarter compared to 13,900 in the second quarter last year. Losses before income taxes were $1.8 million compared to a loss of $2.5 million in the second quarter. Net loss totaled $1.3 million compared to a loss of $1.8 million, and loss per share totaled $0.15 compared to a loss of $0.22 on a fully diluted basis. Year-to-date number compared to the prior year: Net revenues were $11.7 million compared to $16.5 million. Our average active PaperPie brand partners totaled 6,800 compared to 13,700. Losses before income taxes totaled $3.2 million compared to $4.2 million, and net losses totaled $2.4 million compared to $3.1 million. Our loss per share totaled $0.28 year-to-date compared to $0.37 on a fully diluted basis. Now for an update on our working capital and banking relationship. Inventory levels have decreased from $44.7 million at the beginning of fiscal year 2026 to $40.7 million at the end of August, generating $4 million cash flow from inventory reductions. This cash flow has been used to pay down vendors, reduce bank debts and to fund our operational losses. Our bank loan agreement expired on September 19, and the bank has indicated that they are not going to renew them at this time. Following the credit agreement expiration, we received a notice of default and reservation of rights from the bank detailing their ability to demand payments, liquidate collateralized assets and charge an additional default rate on our loans of 2%. To date, the bank has not taken any of the rights outlined in the notice of default. Craig will discuss this further on in the call. That concludes the financial update, and I'll turn it over to Heather Cobb for a sales and marketing update. Heather? Heather Cobb: Thanks, Dan. During the second quarter, our sales and marketing efforts focused on engagement, recognition and positioning the business for future growth. In June, we wrapped up our 2025 StoryMaker Summit events, a 5-city training series that brought together brand partners and leaders from across the country. These regional summits happened in Dallas, Atlanta, Salt Lake City, Chicago and Philadelphia, and offered hands-on training, leadership development and inspiring keynote sessions from field experts. The feedback from attendees was incredibly positive and the energy generated at those events will resonate throughout the field. These gatherings are a key investment in our people, helping brand partners feel equipped, supported and connected not only to our mission of gathering for good around literacy and learning, but also to other brand partners, leaders and home office team members. In July, we celebrated our StoryScape incentive trips to Scotland, recognizing top-performing brand partners who achieved outstanding sales and leadership milestones. These incentive trips are an important part of our culture. They both reward hard work and dedication, and they also strengthen relationships and loyalty within our PaperPie community, which directly contributes to retention and sustained engagement across the field. As we moved into late summer and early fall, our focus shifted to the upcoming seasonal selling period, historically one of our strongest times of the year. The team has been executing targeted promotions and end-of-year campaigns to drive customer engagement and increase order activity, while also spending time and strategic planning for 2026. Those planning efforts include improving the brand partner experience, refining our sales programs and aligning our product and promotional calendars to support growth in the coming year. On the retail side of our business, we continue to see steady performance, particularly in the specialty, toy and gift markets. Our products remained well received and our relationships with key retail partners continue to strengthen. This channel provides an important layer of consistency and diversification in our overall revenue base. While the broader selling environment remains challenging, we are encouraged by the enthusiasm and resilience of our brand partners, the strength of our retail partnerships and the groundwork that we are laying for 2026. Craig, back to you. Craig White: Thank you, Heather and Dan. As Dan mentioned, we no longer have an active credit agreement with our bank and our loans are currently in default status. The notice of default and reservation of rights is merely a formality and used to put pressure on us to complete the building sale. We have continued to make our monthly interest and principal payments, and our working capital is sufficient to meet our ongoing needs until the sale is completed. The bank understands that the sale of the building will pay off their loan balances and they support this direction. We expect the sale to be completed prior to the allotted close period deadline of November 25, 2025, and our brokers are targeting an earlier close date. We continue to develop options for financing post building sale close. So this will be resolved shortly, and we can get back to focusing on growing our business. Lastly, I want to thank all of our shareholders for their patience, our employees for their commitment to our mission, and our customers and brand partners for their loyalty during this difficult period. I'm confident in our collective ability to emerge stronger and more resilient than ever before. Now that we've provided a summary of some recent activity, I'll now turn the call back over to the operator for questions and answers. Operator? Operator: [Operator Instructions] Your first question comes from Paul Carter of Capstone Asset Management. Paul Carter: So just quick -- first of all, on the real estate. So can you confirm, is the buyer group, are they related to 10Mark Holdings in Encino, California, who have quite a bit of real estate holdings in Oklahoma City and Tulsa? Craig White: Yes, they are. The -- yes, as you -- it sounds like you researched, they have a great deal of real estate in the Oklahoma market. So they understand the area. They understand the environment. So yes, we're very pleased. Paul Carter: And then how much was the earnest money that you now are entitled to? Craig White: Well, it's $100,000. I think it's probably stayed in escrow until closing. Paul Carter: Okay. And then do you know yet sort of how much you're going to net from the property sale in November after commissions and any other costs? Craig White: We do. There are several things that need to probably shake out, but we're going to come out with enough to kind of get us started on our plans. Do you want to add anything to that, Dan? Dan O'Keefe: No, it's good. Craig White: Yes. We'll have a little bit left over to get us started. Paul Carter: Okay. So -- and I know you're probably tired of thinking about the real estate sale. But on this one, it seems a little bit more encouraging than maybe some of the other tentative transactions that you entered into. How confident would you say that this one will actually close at the $32.2 million level? Dan O'Keefe: Net degree -- high degree, Paul. Craig White: Very high degree. Very, very confident. There's third parties that know this buyer. And since they know the area so well, we are very confident it's going to close. Paul Carter: Okay. Great. And then I know once you pay off the debt, you mentioned that you're looking at having some sort of credit line with a different party. I guess, number one, how close are you to establishing that? And number two, do you have an idea of like how much flexibility you want there? Is it going to be a fairly small like $2 million or $3 million? Or is it going to be closer to $10 million? What's your thoughts there? Craig White: Yes. We're developing several options. We're just -- honestly, most of the banks are kind of waiting to see that this sale does close. We're looking at some alternate forms of financing, which are not necessarily tied to the building close. But -- so we're just kind of developing several options, but it's going to be very conservative. We're going to start with the smaller $3 million to $5 million number. Paul Carter: Okay. Okay. And then -- so I know, obviously, your brand partner count has been coming down most quarters and you're sort of trying to keep up by cutting costs. I guess maybe just in the last couple of quarters, what is it that you -- what costs have you cut out of the business? And what is left to cut? Like at 5,800 -- at a brand partner count of 5,800, understanding you want that to grow from here. But at that level, like is it possible to get to accounting profitability? Or like are there still cuts that could be made to get there? Or do you need that number to come back up somewhat? Dan O'Keefe: That's a good question, Paul. And it's been several years since we've been at this kind of level with brand partner numbers. But some of the biggest impacts to our P&L, interest expense is a big one. And so that's going to be negligible. That's the #1 and biggest item. After that, discounts are actually the next biggest impact to our P&L. We've done some aggressive discounting with some of the sales as Craig mentioned earlier, that are not in our normal business model. And so those 2 items will have the biggest impact. Now there are some smaller items that we're always looking to improve on. We do have excess inventory. We do have additional outside warehouse rental space that is about $1 million a year by itself. So working down the excess inventory, exiting these short-term storage facilities will be another big impact on a -- we're talking about big numbers, right, big changes. But then we're always -- I mean, we've got 2 or 3 cost savings initiatives ongoing right now that are in the $50,000 to $100,000 ranges. Paul Carter: Okay. Okay. And then -- so I know -- and this is hard to kind of figure out exactly, but your brand partner count has obviously been decimated in the last few years. There's a lot of different reasons for that. Some are related -- unrelated to you, the economy and inflation and all that. But do you -- how much of that decline do you figure is because of your inability to sort of energize the sales force through new titles? And a different way of asking, I guess, would be once you get from -- out from under the bank and you're able to start buying some new titles, like can we expect and do you expect like an immediate turnaround in that number from 5,800 back up to closer to the 10,000 level? Or -- and I know there's other factors still at play, but can you give a little bit of sense for what your expectations are there? Heather Cobb: Sure, Paul, that's a great question. I think that the thing to remember is that as you stated at the end, there's a number of factors and being able to introduce new titles is definitely a big one. But there's other things that, as we alluded to, we are working on for end of calendar year as well as into 2026 initiatives and programs, updates and different things like that. We think that the -- all total of all of those is what will eventually result in those numbers turning around. So I don't think it's a matter of your words of like new titles are introduced and all of a sudden, that number doubles. But I think all of the "red flags" that we've been throwing up of not introducing new titles, not reordering some of our best sellers and different things like that as each of those become green flag, we'll definitely see those numbers continue to rise. Craig White: Yes. And let me just add on to that a bit, Paul. I think with the new titles, it would definitely stem the loss of brand partners and then with some of our marketing and IT efforts will attract again more brand partners or maybe reactivate ones that left when they were frustrated with our lack of new titles. So there's a lot around new titles. But then we're doing everything we can. It's our major focus to increase that. Paul Carter: Okay. Okay. Great. And then just last question for me, and this might sound like a dumb question considering you just received a notice of default on your credit agreement. But assuming everything goes according to plan with real estate sale and then you kind of reinvigorate the business a little bit from new titles and whatnot, I know the original plan was to -- once you got out from underneath the bank that you would be generating cash -- positive cash flow just from working down the excess inventory and then reinstate the quarterly dividend that you haven't had in place for a few years now. Is that still the plan? And if so, have you decided what that dividend might possibly look like 3 or 6 months down the road? Craig White: Easy there, killer. Let us get out from under this and get this thing turned around to where it makes sense. But yes, definitely, I mean, we'd like to say some of these things will happen immediately, but that's just probably not realistic. I mean, it's going to take us some time to increase headcount, increase sales, all those things. So it's definitely the goal. I wouldn't see it for a quarter or 2 at least. Operator: Your next question comes from Alexander Smithley of Mitchell DeClerck. Alexander Smithley: This is Alex here. I just had two questions, so not quite the gauntlet Paul just had for you, and they're fairly simple. The first one that I have is I know that the notice of default is merely formality likely, but you mentioned there are a couple like rights they had towards collateralized items. What items are collateralized, if any? Dan O'Keefe: Yes. So our bank agreement cross-collateralizes all of our assets. So that includes the building, AR, inventory and equipment and land. Alexander Smithley: Okay. Okay. Sorry about that. Dan O'Keefe: No problem. All of those will be released when we sell the building and pay them off. We'll be left with AR, inventory, excess land and our equipment. Alexander Smithley: Okay. Yes. That makes sense. My last question is I was also following along with the brand partner numbers. And you mentioned that you were going to do some like sort of marketing. What sort of plans do you have for actually increasing the brand partner account? Is it going to be like some sort of technological ad campaign or something like that? Heather Cobb: Yes. Good question, Alex. It's a multipronged approach because the way that our business is structured that brand partners recruit new brand partners, we basically take a top-down approach that we provide them with various different tools and assets and different things like that, that enable them to go out and find the next brand partner and the next person who is going to want to sell our products. So having said that, as I mentioned in response to Paul's question about new titles, that will definitely generate interest and garner a lot of attention on its own. We do have some enterprise IT and marketing initiatives that we also believe will definitely attract quite a bit of attention and that specific audience that Craig referred to of the younger millennials and older Gen Zs, which are the new parents having babies, raising toddlers and different things like that right now that are just the perfect audience for what we have to offer. Operator: [Operator Instructions] There are no further questions at this time. I would hand over the call to Craig White for closing remarks. Please go ahead. Craig White: Thank you. Thanks, everyone, for joining us on our call today. We appreciate your continued support and expect to provide an additional update on the Hilti Complex sale progress prior to our next scheduled earnings call. As always, you can reach out if you have further questions to me, and I'd be happy to answer them. So with that, have a great day, and we'll talk to you again sometime in the next few months. Thanks. Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation, and you may now disconnect.
Operator: Good afternoon, ladies and gentlemen, and welcome to the Richelieu Hardware Third Quarter Results Conference Call. [Operator Instructions] Also note that this call is being recorded on October 9, 2025. [Foreign Language] Richard Lord: Thank you. Good afternoon, ladies and gentlemen, and welcome to Richelieu's conference call for the third quarter and first 9 months ended August 31, 2025. With me is Antoine Auclair, CFO and COO. As usual, note that some of today's issue include forward-looking information, which is provided with the usual disclaimer as reported in our financial filings. We had a good third quarter with solid growth and expansion. All our results are on the rise, and we successfully pursued our acquisition strategy, closing two additional acquisitions following the quarter. Except for Ontario, all our market segments in Canada and the U.S. performed well, driving our total sales up 6.7%. Our sales in Canada increased by 2.9%, while in the U.S., they rose by 11.4% in U.S. dollar, accounting for 45% of total sales for the quarter. Sales climbed 6.5% in the manufacturer market and 8.6% in the retailers and renovation superstore market. Our margins improved slightly with EBITDA margin of 11.4%, and diluted net earnings per share increased by 4.9% to $0.43. I would also point out that our operations generated cash flows of $82.7 million in the third quarter. This includes a $16.2 million reduction in inventories. We ended the period with a positive cash position of $12 million and a working capital of $632.7 million, which reflects a solid and healthy financial position and an outstanding balance sheet. I will now ask Antoine to review the financial highlights for the quarter and the first 9 months. Antoine Auclair: Thanks, Richard. In the third quarter, sales reached $499.2 million, up 6.7%, representing an increase of $31.5 million, equally driven by internal growth and acquisitions. In Canada, sales totaled $272 million, up 2.9% compared to last year, despite the decline in sales in Ontario, where the business environment is actually more challenging. Sales to manufacturers amounted to $226 million, up 1.9%, while sales to the hardware retailers totaled $46 million, up 8.5%, mainly due to timing differences as year-over-year sales show a slight increase with the same period last year. In the U.S., sales grew to USD 165 million, up 11.4%. Sales to manufacturers reached USD 158 million, up 11.6% with 7.3% coming from internal growth. This internal growth is mainly driven by price increases, partly due to new import tariffs, an increase that offset the additional cost of the tariff with no impact on gross margin dollar. In hardware retailers and renovation superstores market, sales reached $7.7 million, up 6.9%. In Canadian dollars, total sales in the U.S. reached $227 million, up 11.7% and accounting for 45% of total quarterly sales. For the first 9 months, total sales reached nearly $1.5 billion, up 7.2%, of which 4% resulted from internal growth and 3.2% from acquisitions. In Canada, sales reached $790 million, up 2.2%, primarily due to acquisitions. Sales to manufacturers totaled $657 million, up $14.2 million or 2.2%. Sales to hardware retailers and renovation superstores were $132.9 million compared to $130.3 million, up 2%. In the U.S., sales amounted to USD 473 million, up 10.4%, with half from internal growth and half from acquisitions. They reached CAD 663 million, up 13.8%, accounting for 46% of total sales. In U.S. dollars, sales to manufacturers totaled $447 million, an increase of $42.6 million or 10.5%, driven by 5% internal growth and 5.5% from acquisitions. Sales to hardware retailers and renovation superstores were up 7.9% compared to last year. Third quarter EBITDA reached $57 million, up $4.1 million or 7.7% over last year. This increase reflects higher sales and effective cost management. Growth in EBITDA margins slightly improved with an EBITDA of 11.4%. For the first 9 months, EBITDA totaled $154.7 million, up 5.1% with EBITDA margins at 10.6%. Third quarter net earnings attributable to shareholders amounted to $23.9 million, up 5.2%. This increase mainly reflects higher EBITDA, partly offset by higher amortization and interest expenses resulting from new leases and lease renewals. Consequently, diluted net earnings per share was $0.43 compared to $0.41 last year, an increase of 4.9%, consistent with the improvement in overall profitability. For the first 9 months, net earnings attributable to shareholders reached $60.3 million, down 1.8%. Diluted net earnings per share stood at $1.08 compared to $1.09 last year. Third quarter cash flow from operating activities before net change in noncash working capital reached $48.1 million, up 12.5% from $42.7 million last year. Change in noncash working capital contributed a cash inflow of $34.6 million, driven by a $16.2 million reduction in inventories. As a result, operating activities generated a cash inflow of $82.7 million for the quarter, reflecting higher net earnings and effective working capital management. For the first 9 months, cash flow from operating activities represented a cash inflow of $133.6 million compared to a cash inflow of $106.4 million last year. The increase highlights the business' ability to generate consistent cash supporting ongoing investments and shareholder returns. For the third quarter, financing activities used $25.4 million in cash, up from $18.4 million last year, mainly due to the repurchase of common shares totaling $3.7 million. For the first 9 months, financing activities used cash flow of $70.1 million compared to $76.1 million in 2024. In the first 9 months, we invested $39 million, including $27.5 million for six business acquisitions, and $11.5 million primarily for equipment required to maintain and improve operational efficiency. We continue to maintain an outstanding balance sheet with working capital of $632.7 million and a positive cash balance. I now turn it over to Richard. Richard Lord: Thank you, Antoine. Subsequent to the quarter, we are pleased to have closed two acquisitions, namely Ideal Security on September 2 and Finmac Lumber on October 1. Specializing in hardware products for doors and windows, Ideal Security is located in the Greater Montreal area and mainly serves Canadian and U.S. retailer market. This adds up to our existing offering of eight different brand names, already present in all retailers and renovation superstores served by Richelieu. It also reinforced our one-stop shop strategy for this market. Finmac Lumber is a distributor of specialized wood products operating in the Winnipeg area and covering Western Canada, where it serves a customer base consisting mainly of woodworkers, cabinet makers and building material retailers as well as innovation centers. These two acquisitions add additional annual sales of $22 million and will, therefore, expand and diversify our offering in markets where we are already present, while creating new sales synergies. Together, with the six acquisitions made in the first half, this represents $75 million in additional annual sales. To conclude, I would say that, particularly, in the current context of uncertainty related to market conditions, our business model is proving its robustness and flexibility. It also enables us to respond with agility to our customers' needs with our one-stop shop Canadian and U.S. network, protect our margin and maintain our leadership position. In these circumstances, our customers will need to protect their cash flows and rely on a trusted supplier like Richelieu. We are continuing on this path with confidence and discipline and expect the end of the financial year with very solid results. Thanks, everyone. We'll now be happy to answer your questions. Operator: [Operator Instructions] First, we will hear from Hamir Patel at CIBC Capital Markets. Hamir Patel: Richard, are you able to share how your sales fared year-over-year in the month of October? And if there's any notable differences there, Canada versus U.S., manufacturers versus retailers? Richard Lord: We're feeling very well comparable to last year. I think we -- the market is not really strong, but we -- with all the actions that we have taken in the last few months, we see very good results, and we keep capturing more market share, and increasing our sales to the same customers that we already have. So basically, I would say it's positive as we speak. Hamir Patel: Okay. So maybe in line with the sort of 4% that you delivered in Q3, organic. Antoine Auclair: Yes. Pretty much in line with what you've seen in the third quarter so far. Hamir Patel: Okay. Great. And Antoine, are you able to share how much is Ontario as a share of your total sales? Because I know it seems like you called that out as maybe the only region that was negative comps. Antoine Auclair: Yes, Ontario, just a second. Ontario represents 18% of our total sales. Hamir Patel: And then, Richard, I know, I think it was Q2 of 2024, you had lost some business with a major U.S. retailer customer. Can you speak to maybe any ongoing efforts you have to either replace that business with other customers or potentially even regain share with that customer? Richard Lord: First of all, we're still working with these customers in order to recapture that business. So far, the news are positive. I don't want to feel like we depend on one customer. We have other projects in the U.S., many projects, it takes -- it's long, [ though, ] to get conclusion on many of these projects, but we're working on many, many customers with many projects that could bring some good opportunity for us. And those is, just would be -- if it's working, okay, that's going to be a nice comeback of that business, but we don't only count on that. Operator: [Operator Instructions] Next question will be from Zachary Evershed at National Bank Capital Markets. Zachary Evershed: Congrats on the quarter. Could you describe how much of your internal growth in the U.S. was the pricing pass-throughs related to the country-specific tariffs? Antoine Auclair: Yes. Pretty much all of it is price increase, not necessarily most of it due to tariffs, but from -- most of it is inflation. Zachary Evershed: Got you. And when you say that the tariff pass-throughs have no impact on gross margin, are we talking about the gross margin percentage or that you're keeping gross profit dollars stable? Do you get operating leverage off of this? Antoine Auclair: Yes, dollars. Zachary Evershed: Dollars. Got you. And then so far this year, how do you think customer backlogs are translating to volumes for RCH? Do you think that they're doing worse than you guys are or that they're picking up, and that you will see those orders translate to your own sales soon? Richard Lord: I think, our customers, they have a nice backlog. They have -- the book of orders is reasonable, but nothing is booming. So our customers are busy for 2 or 3 months, and they don't know after. But we think that the renovation market will remain strong. And basically, we don't see any negative impact regarding the book of the orders that our customers have on hand. Zachary Evershed: Perfect. And then if we look historically, Q4 is seasonally stronger than Q3 on the margin front. Is there anything that would stop that from being the case this year? Or do you see Q4 rising versus the 11.4% you got in Q3? Antoine Auclair: No, I think that the trend that you're seeing in Q3 should be pretty much similar in Q4. Zachary Evershed: Understood. And then if we dial out to the macro, we did see the conclusion of the Section 232 investigation, and that resulted in tariffs on kitchen cabinets and bathroom vanities. In your view, what's the impact on Richelieu, your customers and the overall market? Richard Lord: I like very much that question. I think, we have a few information that we can share with you if you have a couple of minutes. First of all, it's important to mention, as you know, that Richelieu is on both sides of the border. So we see if some business is switched from other country and from Canada to the U.S., fortunately, we are very well established with the customer base that we have in the U.S. that could recapture that business. So -- and regarding the sales to residential furniture, it's only 2.8% of our sales. So with the kitchen cabinet, it's higher, but for the residential furniture, it's only 2.8% of our business. So we don't expect any negative impact regarding those sales. It might be even a positive impact. I will explain a little bit later on. The kitchen cabinet only represent -- the kitchen cabinet exported to the U.S., it's only 12% of the kitchen cabinet being made in Canada, representing USD 400 million. So it's not a huge business. But it's substantial for Richelieu. It could represent, let's say, something like $35 million, $40 million of sales. But what we see is that our customers are working to mitigate the impact of these -- of -- the impact of those additional costs in order to keep up with their sales. So these guys are very smart. They have a way of reducing their costs. And also, they still benefit from the current exchange rate, which is good. And Richelieu is very well positioned to support them in their effort to reduce their cost because we have many product category at Richelieu, we have product that could reduce their costs. And some of them, the bigger ones -- sometimes they buy some product from overseas. They might have an advantage now as we speak to transfer some of those purchasing to Richelieu instead of buying overseas because then they protect their cash, they have a just-in-time inventory system with Richelieu, and that could reduce their operating costs. So basically, there's not much negative. We just have to be careful and make sure that we manage well with our customers. In total, what we see is that U.S. imports for a value of $2 billion of kitchen cabinet, of which only $400 million come from Canada. So there is $1.6 billion left that come from other countries. So if some business is recaptured by our U.S. customer, it could be quite material. Regarding the furniture market, we've learned from the web report -- what's the name of the report, that one? Antoine Auclair: It's called IBISWorld. Richard Lord: IBISWorld, which is the reference in the industry. U.S. imports for $26 billion of furniture of only $650 million come from Canada. So that means there is billions in U.S., $24 billion at least -- $25 billion coming from other countries. So basically, we don't expect the U.S. market to switch to U.S. manufacturer. It will take time. But it might mean some improvement in the U.S. manufacturing market because of that. So Richelieu is well positioned to benefit of that as well. So our plan is really to be on both sides of the cover -- of the border with extended product range that is unique in North America in order to support our customers and to make sure that we make the right move and benefit whatever is going to be benefited from both sides of the border. Zachary Evershed: Excellent color. Moving on to your inventory. There was a step-up in obsolescence. Could you speak to what's driving that? Antoine Auclair: You've seen the reduction in inventory, Zach, during the quarter. So we've been able to reduce inventory by $16 million in the quarter and still expecting a reduction. I would say that I'm hoping around $10 more million in terms of inventory reduction over the next few periods, helping us to generate $82 million from operations during the quarter. Zachary Evershed: Got you. And does that come paired necessarily with additional inventory obsolescence? Antoine Auclair: No, it's basically excess. So we've been talking about it since over a year. So we've been reducing last year inventory significantly. I've told you guys at the beginning of the year that we're expecting a reduction this year. It took 2 quarters to happen. So now it's happening. So it should continue towards the next few periods. Zachary Evershed: Got you. And just the last two, CapEx plans for next year and your M&A pipeline, how is it looking? Antoine Auclair: M&A pipeline is still strong. So we've closed eight acquisitions this year, as you've seen, and it's still very healthy in both sides of the border, so Canada and the U.S. Regarding CapEx, the main investments are behind us. So the last 3 years, you've seen the CapEx higher than expected because we were more in an investment mode than in maintenance mode. We're back to a normal level of CapEx. So we've spent $11 million so far. We should end the year around, I would say, $15 million, $16 million. So regular maintenance CapEx. We always said that maintenance CapEx is around 1% of sales. So we're going to be slightly below that this year, and you should expect the same next year. So we don't have major projects that -- and if we do, we'll tell you guys. Zachary Evershed: Beautiful. And then I'll actually just sneak one last one in. I've noticed that Richelieu is completing more panel and hardwood acquisitions recently, like the one in Winnipeg that you guys just announced. Are there any larger targets in that space that could be interesting? Richard Lord: No, we are interested in that type of lumber. So don't forget that we don't sell 2x4 and 2x3. So we sell only the sophisticated wood for the purpose of woodworkers that do a fine job -- fine working jobs. So basically, these products are higher-margin products. And basically, they bring constant sales because there is mainly in Ontario and Western Canada, more than Quebec, we see people -- the woodworkers using more woods as well as the -- what we call the lumber yards over there. So basically, it's a good market. And I like the market like Manitoba, for example, there's not many competitors there. And Richelieu, we've bought something that is really well positioned in this market. So basically, I'm very happy with that acquisition. So we're going to continue on, to answer your question, to buy such company when they meet our criteria of EBITDA margin. I would say that the one that we acquired, and we pay something, it's a 15% EBITDA margin. So basically -- which is sustainable. So basically, I like that type of deal. Operator: Next question is a follow-up from Hamir Patel. Hamir Patel: Richard, I just wanted to follow up on the M&A side. When you think about the pipeline, and I know it can be lumpy, but is there a sort of annual revenue contribution that you'd expect going forward from acquisitions? Richard Lord: We try to make $100 million worth of acquisition every year. I don't know if we're going to reach that this year. We're going to be very close to. So basically, the contribution is positive. We usually buy companies sometimes that make little profit, but that we -- when integrated to Richelieu, have a huge benefit. Like Ideal, for example, is a perfect example. We buy something that is already in the stores where we are already with our displays and everything else. They share a base of the product that we already have, so we can merge those product lines. We acquire very talented people that are very good at selling, they sell in the U.S., and they sell to Amazon. They have a substantial amount of sales to Amazon, and they have specialists in those type of sales. So we like that very much. So that acquisition within the course after integration is going to take 18 months probably because we have to transfer the warehouses. We already have a lease where they are. And the purpose is to have a one-stop shop in kitchen in Ontario for all the retailers in Eastern Canada. So basically, the products are going to be transferred there as soon as we can to make sure that the customer might benefit of the -- not only the one-stop shop, but the one delivery for eight different brand name of products. So basically, these moves are very, very positive, even though sometimes the amount of contribution is little in the year of the acquisition, but the potential for that type of business is great for the future of Richelieu. And it does reinforce our market position, and it does prevent our competitors sometimes to get into the store that we are already servicing. So basically, the two purpose of the acquisition is to make sure that we consolidate Richelieu, we reinforce Richelieu, and we bring EBITDA margin as well as much as we can. Hamir Patel: Okay. Fair enough. I appreciate the color there. And Richard, when you think about the retailer business in Canada, I know RONA has got some ongoing investments. Maybe you could speak to the opportunity you see to drive further growth there. Richard Lord: With all the retailers in Canada, we keep gaining market share because we have an excellent product offering that do answer the need of the consumer as we speak, because, let's say, managing space is a top priority for the retailers. Decorative otherwise is a top priority, but we keep adding products in each of the store. RONA is an excellent customer that is a customer that buys something like -- it's less than 5% of our sales, but it's substantial, and we work very well. They are very good partners, and we work very well with them as well as Home Depot. We keep adding product at Home Depot and other hardware stores as well. So basically, the retailers market is excellent for Richelieu, because we have so many products to sell to the pro business. There is a lot of products that are suitable for the consumers. These products suitable for the consumers are the product that we introduce to the retailers. With the right prices and the right instruction, so the product can be easily installed for consumers. But I'm very positive for the long term that sales to hardware retailers remain substantially important for our future in terms of generating profit as well because we don't have two CFO and five more accountants because we sell to retailers. The only variable cost applies to commission to salespeople and people that work in the warehouse. So basically, this is very beneficial. Hamir Patel: Okay. Great. And just a final question I had. Antoine, looks like with -- if Q4 margins end up being comparable to Q3, you probably end the year close to 10.8% EBITDA margins. I think, 2024, you were at 11% EBITDA margins. Can you drive further margin growth in '26 if the housing market does not improve? If it's the same housing outlook, is there enough levers to drive some additional margin expansion? And maybe you could -- I don't know if you're able to quantify that sort of self-help that is within reach. Antoine Auclair: I think, the trend that you saw in the third quarter could continue in 2026 with the current market. Of course, to drive a significant increase in EBITDA, we would need a more vigorous market. But let's say that it remains like where we are today, I think, the trend that you've seen in Q3 could continue next year. Hamir Patel: Okay. So sort of in the mid-11s sort of range. Operator: And at this time, Mr. Lord, we have no other questions registered. Richard Lord: So thank you very much to all of you for attending. We all are willing to receive your call if you want to contact us. Thank you very much. Operator: Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we ask that you please disconnect your lines.
Robert Forrester: Welcome to the results presentation of the interim results of Vertu Motors plc for the 6 months ending August 2025. My name is Robert Forrester, Chief Executive, and I've got Karen Anderson, our long-serving CFO, who's going to go through the financials. If we turn to the investment case for Vertu Motors, we continue, we believe, to do the right things to create a very strong business within U.K. motor retail. We believe scale drives benefit and actually, we believe these benefits are increasing over time, particularly in the area of the ability to invest in technology to drive productivity increases and cost reductions, and the benefit of having large single brands across the national space to drive brand awareness. In the period, we've announced today the appointment of two new managing directors, two new roles for internal promotions, who will take the operational responsibilities of the divisions and provide greater bandwidth at a very senior level. We continue to focus on delivering great colleague and customer satisfaction levels. Our customer experience scores as measured by the manufacturers are well above national average. We continue to invest in technology, and this is proving absolutely pivotal in the cost initiatives that we are driving through not only to lower cost, but also to make us more efficient and to help the customer journeys. We have delivered in these results excellent cost trends despite the headwinds, and that focus on cost through the use of technology will indeed continue. Portfolio management and capital allocation remain an absolute priority. We are clearly seeking to manage the growth of Chinese brands within the U.K. market, but also the need to modify the portfolio to recycle capital from low-return to high-return activities, which we've continued to do so in the period. Our share buyback continues and clearly, that's important, especially given our tangible net assets have grown to 76p per share. The U.K. consumer space is clearly challenging. The sector itself has issues around the government's electrification agenda, and they do provide headwinds. However, the group has delivered a strong operational performance as we seek to focus on what we can control. We have delivered market share gains across all channel of vehicle sales. We have been absolutely focused on cost control, and we had a 0.3% rise in Core costs despite noticeable headwinds. Our battery electric vehicle retail sales have increased 82% in the period against a market growth of 55%. We're gaining share in that all-important market. What we did not anticipate at the beginning of September was a global one-off event being the cyber-attack on Jaguar Land Rover, one of our major partners. That has caused major disruption to our 10 dealerships in the U.K., but I'm pleased to report the situation is now easing. The attack impacted our September profitability by GBP 2 million. And when we look at the potential full year impact in the current financial year, and this is clearly highly uncertain and dependent on getting systems back, getting back to normal trading, we anticipate the result could be impacted by up to GBP 5.5 million in total. This year, we extended our cyber insurance risk to business interruption from third-party outages. Clearly, we are now working with our advisers to progress a potential claim where possible in respect of the losses that we have incurred in relation to this JLR outage. We have appointed forensic accountants to help the group to work with our insurers on this. We will clearly update shareholders on the impact over the next few months of the cyber-attack and indeed on the impact of any potential upside from an insurance claim. Moving on to current trading and outlook and particularly the September result, which is a plate change month and therefore, very important for delivery of an H2 result. I'm pleased to report, excluding the impact of JLR, that September was a good month with profits up on last year. We had a strong used and aftersales performance. Used cars, for example, were up 5.3% like-for-like, a much stronger rate than in the previous months. Acquisitions positively contributed on top of the Core performance. New cars remained a challenge. Motability sales were down 15% in volume terms, and that clearly impacted gross profit generation for the Group. Manufacturers without grant support on electric vehicles faced competition from manufacturers with grants and indeed utilize some of the retailer margins to compete with strong consumer offers. That clearly impacted our margins. We also saw a market that shifted quite considerably to high preregistration activity at the end of the month, which I think will impact registrations in future months. Overall, however, it's pleasing to see that the Group did deliver increased retail new car volume on a like-for-like basis of 1.8%. Also on the positive side, we saw a 25% increase in Fleet car volumes, aided by significant BEV sales and indeed the impact of the grant, which isn't just for retail customers. There's probably going forward into quarter 4 calendar, less pressure on the manufacturers this year around BEV targets, which is a good thing. The ZEV mandate has seen some extra flexibilities and the grants have clearly led to an increased consumer demand and uptake of battery electric vehicles. That should make quarter 4 easier than last year. Turning to Motability, which has been weak throughout H1 and in September, we now see comparatives at a much-reduced basis going forward. And additionally, we expect the Motability market will recover from March next year due to the timing of renewals. Overall, excluding JLR, we expect full year profits to be in line with market expectations, but the Board are mindful of a cautious outlook on the consumer side and business sales side. The Autumn Statement at the end of November is clearly of key interest. We turn to the strategic update. The Group has had a consistent strategy and was recently reaffirmed by our Group strategy day with the Board in September. If we take growth in particular, we will see further growth in Q4 in outlets. Our expansion with BYD, which is the leading Chinese manufacturer, it gathers a pace. We will open our former Citroen dealership in Nottingham as a new Skoda business, which we're excited about, and we will see some further small-scale acquisition activity. Our cautious outlook means that our focus in the near term will be very much on maximizing our existing portfolio in the remaining months. If we look at sector trends in the near term, it's interesting that of the three trends we're going to talk about, we are not talking about the rollout of the agency model as one of the big three. We have BMW planning to launch agency in the U.K. in 2027, but there's been a general rollback and ceasing of agency as a strategy. Clearly, electrification is the big issue facing the new car market. There is still pressure from the ZEV mandate and the targets going forward and indeed in 2025, where the government set a target of 28% are not going to be achieved. This is a headwind on the new car market and indeed profitability. I think we're more optimistic than last year. The ZEV mandate flexibilities, the EV grants have gone down well with consumers. The demand for the Ford Puma, for example, was absolutely startling in September, and we've got a future order bank for that product. There are far more affordable cars, some less than GBP 20,000 that are battery electric vehicle in the market today. This was not the case in the new car market in the prior year. Products like the Hyundai INSTER, the Dacia Spring are two that spring to mind. However, Volkswagen brands are also bringing out much more affordable product into the marketplace. Electrification is the long-term answer, and it will come, but it will not come at the government's pace. The second issue to discuss is the role of Chinese new entrants into the marketplace. The starting point here is that the Chinese domestic car market is in carnage, well-documented carnage, oversupply, price wars, discounting and a trend now for natural selection amongst Chinese domestic manufacturers. The U.K. is seen as the go-to place for the Chinese to come. Why? Well, we haven't got major tariffs on Chinese product, and there's no clear national champion amongst U.K. manufacturers as in other countries, except perhaps JLR. You have recently read that the U.K. is now BYD's biggest market outside of China. The Chinese cars typically have great technology, fantastic electric vehicles with great battery technology and their hybrid cars are also much sought after. However, there will be a somewhat break on the exponential growth of the Chinese in all likelihood. We've got a lot of new brands coming into the United Kingdom, all requiring 6 car showrooms, but there's no new build showrooms being put in place. This will limit growth, how many spare 6 car showrooms actually are there. And we, as Vertu, need to balance chasing market share and growth of car sales with making money, and we will play the long game here. We will assess new entrants, and we will assess in the short term whether we want to invest. You've got to remember, for a Chinese new brand, there is no high-margin aftersales. We have concentrated and will continue to do so on MG and indeed BYD, and we will clearly assess others over time. The third and topical discussion is around Finance Commission. The Supreme Court sat in the period and indeed did curtail the wildest aspects of potential claims against lenders in relation to Finance Commission in the auto sector. In what was perfect timing, last night, the FCA released a consultation paper on any redress scheme. We're now in a period of consultation, and we will be diligent to respond to the FCA in a very structured way. The FCA's focus on redress is likely to be levied at least initially on lenders. We will, as retailers, be key to providing the data to actually calculate our redress scheme. We will continue to assess the position, but we do not currently consider the need for provisions. Our digitalization strategy has always had two components. One is the push technology to increase productivity and indeed control costs; and secondly, to increase our sales and marketing effectiveness. We have to do both, though in this period, given the cost pressure, we probably put more effort into the cost control. Our Finance Efficiency project, which has been going on for the last 12 months is now really bearing fruit, and we're starting to deliver significant cost savings. We have reduced significantly the amount of invoicing between internal departments and particularly, we've developed technology to make sure cash processing doesn't need manual involvement for a lot of intercompany transactions, but also for external transactions. So we now have Internet-based payment systems that are seamless that a service customer can now pay and the cash gets automatically posted into our dealer management system. There is more of this to come and more savings to be had. In terms of Data and AI, our data warehouse is complete. Our customer data platform has gone from concept to reality, and we are now delivering multiple use cases to make us far more efficient and effective in personalized marketing. If you go on to the web and you have bought a function such as trying to book online service booking, you are likely to receive a personalized piece of marketing to get you back on track. This is delivering a good ROI. There is no doubt in our business that AI is actually real. The executive sat down and defined a strategy, which now our development teams are implementing. We have a formal AI policy to protect the business from AI issues. We actually held a competition for our 60-strong development arm, a Dragons Den AI competition with a GBP 10,000 prize to flush out great ideas that were capable of immediate implementation, and we are implementing them. Examples of use of AI. Use of customer-friendly technology to reduce calls into our contact center. We're using AI e-mail systems to prospect service bookings from our database, and those bookings are effectively all done via e-mail correspondence and the booking goes straight into our dealer management system. One of big areas to look at is that e-mail sales inquiries are historically very low-converting, and there's a lot of human effort gone into corresponding by e-mail with potentially little reward. We're now starting to use AI to warm up those e-mail sales leads to get them to a sufficiently hot prospect to enable humans then to finish off the job. We are at the start of the journey on this for sure. Third element is our new website, which -- we now have one single brand of Vertu, and we, therefore, took the opportunity to revamp our website. We're doing it in modular stages, so it's not a big-bang approach. We have made massive progress in terms of search engine optimization and user friendliness and the full website will be redone by mid-2026. An area of weakness, I think, in our offering online is YouTube content, particularly around new and used vehicles, and we will certainly -- we've certainly developed a strategy to make sure that we address that. Turning to brand aspects. The single Vertu brand is now in place, and I think we've avoided the major pitfalls in moving our major brand of Bristol Street Motors into Vertu in April. In September, the Vertu brand had a U.K.-prompted brand awareness of 11%, that has grown to 19% in September, and we fully expect us to hit 30% during the next financial year. The reasons for this growth is very simple. Having one brand increases our ROI on marketing activity. Team Vertu with its fantastic BTCC racing team were at Brands Hatch last weekend and won many trophies, including Best Driver and indeed, Best Manufacturer. So, this then affects 191 sales outlets. The EFL Trophy at Wembley is a massive exercise in brand building, 75,000 people attended, never mind the early rounds, and it affects every single one of our dealerships. In recent weeks to support the Vertu Trophy, I've had the pleasure of going to Barnett and MK Dons for the early round games, and it's great to see the Vertu brand very prominent. This isn't only about brand awareness, though, our partnerships with the Manchester concert venue of Coke Live and the EFL gives us access to marketing databases with which we can then do direct marketing. In July, we took the step of having our first ever group-wide used car event under one brand. We used a full gamut of media, including a TV campaign to drive increased inquiries through our dealerships and a good time was had. We got a lot of excitement into our businesses, and we saw like-for-like used car sales in July up 12%, which is no mean feat. Next year, we intend to extend this strategy of having two 10-day used car events, but also having three new car events, the first time that we've used the power of the Vertu brand to have one event across the entire estate to drive new car sales. I think it will be a success. Finally, before Karen deals with the Financial Performance, I wanted to update you on a senior management structure change that we intend to make from the 1st of January and which we have announced today. The three founding directors of the business, myself, Karen and our COO, David Crane, have been in place from 2006 when we formed a cash shell, and we now lead a GBP 5 billion revenue group. My span of control, I think, has been too large. I don't think it's fully amended the fact that we now run a highly complex and very large group. All the operation divisions report directly into me and I think it's time to augment management. From the 1st of January, two of our trusted group operations directors, one who currently runs the BMW division and another who currently runs the Jaguar Land Rover division, will be promoted to managing director roles with the operating divisions reporting into them. This will give us greater bandwidth and will allow me to focus on the strategy and execution, particularly around growth and portfolio changes, seeing of more of the manufacturers, which is a franchise operator is a very good thing, spending more time in the dealerships and indeed developing our senior leadership team. I am excited about this. I think it sets us fair for the years ahead. Karen? Karen Anderson: Thank you, Robert. Slide 13 shows a summarized income statement for the Group for the period. Group revenues grew by GBP 35.4 million, with this growth attributed to acquisitions, particularly the Burrows acquisition, which was completed in October 2024. Core Group revenues declined GBP 49.2 million, predominantly in new vehicle sales due to lower Motability vehicle volumes and the move to agency in the Group's mini dealerships. Gross margin increased to 11.2% due to the increased mix of higher-margin aftersales revenues. Costs grew as a percentage of revenue, however, were tightly controlled with Core Group costs rising just 0.3% or GBP 0.7 million on prior year despite the cost headwinds we faced. Adjusted operating profit reduced on prior year levels, driven by the reduction of profitability from the new car channel, with this reduction flowing through to EPS. The group's interest costs grew slightly with increased manufacturer stocking charges and lease interest, partially offset by increased deposit income and the impact of reduced interest rates on our borrowings. Non-underlying costs represent redundancy costs as the Group applied technology to improve the efficiency, particularly in the finance function, which moved to divisional accounts processing hubs in the period. In addition, exceptional non-underlying costs include the cost of closure of two of the Group's dealership locations. Turning over to Slide 14. Here, we have a profits bridge of the adjusted profit before tax compared to prior year for the period. Core Group gross profit declined by GBP 1 million over the prior year period. And clearly, the standout negative here is the GBP 4.4 million reduction in gross profit from new vehicle sales. This decline was driven by a significant reduction in Motability sales volumes consistent with the market decline in this channel as well as significant discounting of battery electric vehicles, which impacted new vehicle margins. Offsetting this shortfall was the significantly improved gross profit generation from the Group's resilient and high-margin aftersales operations. Our service department here benefited from an increase in the internal rate charged to the vehicle departments in the preparation for vehicle sales, which did actually move some gross profit from new and in particular, used car sales into aftersales. Used gross profit generation exceeded prior year levels, even after having absorbed the additional cost of preparation from service. Margins and volumes were broadly stable in the period with the improvement in overall gross profit generation arising from improved gross profit per unit, which was aided by the Group's used vehicle algorithm valuation tool. Core Group operating expenses, as I said, grew just GBP 0.7 million, and I'll cover those movements in more detail on my next slide. Contributions from dealerships acquired or started up represents a year-on-year movement of GBP 0.2 million. And this was expected given the start-up nature of some of the dealerships within this category with improved returns expected as these dealerships mature. Turning to Slide 15. We've given you further detail on the Core and Total Group underlying expenses. Overall, Core Group operating expenses rose just 0.3% over the period despite a significant increase in cost of employment driven by the Autumn 2024 budget, which increased national minimum wage and company NIC costs considerably. The biggest single cost of the Group is salary costs, remembering that the figures on this slide actually don't include the productive cost of technicians, which are in cost of sales. Salary costs in the Core Group in operating expenses rose just GBP 0.3 million over the period. And this reflected the impact of the Group's cost-saving initiatives, which we completed largely by 28th of February to offset the impact of that Autumn budget increase, but also reflects some of the cost savings we've done in the current year in respect of things like finance efficiency. The greatest percentage cost rise was seen in marketing costs, which rose GBP 2.1 million over the prior year in the period. The Group invested in marketing both in the move to the single brand Vertu in the period and also in a 10-day used vehicle sale event for which there was no comparative in the prior period, which helped drive used vehicle sales volumes in what was undoubtedly a subdued market. The Group delivered a saving of GBP 1.9 million in vehicle and valet costs, reflecting cost-saving activity in this area, and Robert will cover this in more detail shortly. But this actually was combined with tight cost control in respect of the Group's demonstrator and courtesy vehicle fleet. The Group's share-based payments charge now in underlying costs has increased as a result of the increase in number of management colleagues in the group to which awards are made following the acquisition of the Burrows dealerships in October last year. Turning to Slide 16, we've summarized the group's balance sheet. It remains very stable and strong, underpinned by the Group's freehold and long leasehold property portfolio of GBP 336 million, which is carried at historic depreciated cost. The increase in current assets compared to August 2024 relates predominantly to the movement in inventory shown here. New vehicle pipeline inventory, much of which is funded by our manufacturer partners has increased since that date, while the Group has been successful in reducing both used vehicle and demonstrated inventory levels again since August 2024. Used vehicle inventory has, however, increased by GBP 17 million compared to the position at the year-end at the end of February. And this relates to the tight supply of particularly 3- to 5-year-old vehicles in the market. And as a result of that, the Group took the decision to retain higher inventory levels at the 31st of August than we did at the end of February to ensure that the Group had sufficient inventory to enable a good sales performance in September. And the 5.8% like-for-like growth in used vehicle sales volumes in September was undoubtedly aided by this decision. Crucially, though, used vehicle inventory was lower than the position at August last year despite the acquisition of Burrows. Tangible net assets per share of 76.1p, and this clearly reflects the strong asset backing of the Group, and it's also increased on the level in February due to the share buyback program. Turning over to Slide 17. This highlights the Group's cash flows in the period. We generated a free cash inflow of GBP 0.4 million, which was impacted by a GBP 21.2 million cash outflow from working capital compared to the position at the end of February. The main elements of this outflow were a GBP 14.5 million outflow relating to the increase in used vehicle inventory and our decision to retain higher inventory levels at the end of August and an GBP 11.2 million outflow from reduced deposits on Board orders. Deposits at February reflected the strong March order take ahead, in particular, of vehicle excise duty changes in April, while at the end of August, we saw some customers deferring orders pending clarification on EV grants. This explains the comparative difference here in vehicle deposits held. Sustaining capital expenditure of GBP 8.5 million was spent in the period, with this partially offset by proceeds from the sale of surplus properties of GBP 3.3 million. A further GBP 2.5 million was spent on the period on capital projects which enhance the operating capacity of the Group. And this includes a new off-site 28.10 vehicle preparation facility in York, together with, for example, the expansion of our Toyota outlet in Chesterfield. Net Debt at the end of the period was GBP 78.3 million, excluding lease liabilities, representing a GBP 5.6 million decrease on the position last August despite expending GBP 22.5 million to GBP 2.4 million on the Burrows acquisition. Slide 18, which is my final slide, covers the Group's capital allocation discipline. We remain focused and thoughtful around capital allocation, looking to achieve a balance between investment and growth, and shareholder returns. When we look at growth, we target returns in excess of weighted average cost of capital and with our strong asset base and low Gearing, we believe we can successfully balance both growth and shareholder returns. A key element of the Group's approach to capital allocation is our pruning process. This is where we constantly review dealership operations to ensure an adequate return on investment and contribution to Group profitability. Following such reviews, the Group has exited the Citroen outlet in Nottingham in the period and the leasehold premises will be refranchised to the Skoda franchise in November. In the period, the Group also took some of these recycled properties held for resale and realized cash of GBP 3.3 million, 10.7% in excess of book value. The Group actually has a good track record of disposal of surplus properties, in particular, at values in excess of book value, and this really reflects the policy of carrying our assets at historic depreciated cost. The Group has had a program of share buybacks in place since FY '17. The Group spent GBP 5.6 million in the period on share buybacks and since the start of these programs has now bought back over 19% of issued share capital. The Group announced a GBP 12 million share buyback program in February and to the end of September had spent GBP 7 million of this program, leaving GBP 5 million remaining for the rest of FY '26. As a reminder, the Group has a stated full year dividend policy of 2.5x to 3.5x fully adjusted diluted EPS. And bearing that in mind, the FY '26 interim dividend has been held at 0.9p per share. It's worth remembering, though, that the cash cost of each of our dividends is reducing as a result of the share buyback program in action. I'll now hand back to Robert for a more detailed update on the Group's trading in the period. Robert Forrester: Thank you, Karen. So let's turn to the Group vehicle sales performance. We're pleased to report we gained market share in all channels. In addition, margins were stable in new and used cars. There was a slight dilution in fleet and commercial, and this was a mix issue because we saw substantial growth in Fleet cars and a decline in vans, and that mix impacted gross profit per unit. We saw weak growth returning to the new retail market. Now this was after a very strong March, and it got weaker as the period went on. I think the government grants that have been introduced in the late summer are starting to reverse that. Motability saw continued weakness due to the renewals timing and indeed, manufacturers having pressure on their margins and trying just to pull back. The 16.6% increase in Fleet car volume is clearly to be applauded, and we took full advantage of the vibrancy of the fleet market, particularly in battery electric vehicle growth in areas such as leasing and salary sacrifice. The Group has a Core competency in the fleet channel. The van market was weak. It was down nearly 10% in the U.K., and we think this reflects weak business confidence. We, therefore, saw overall a reduced gross profit in that channel. The used car market actually exhibited continued supply constraints, which held back volume for franchise retailers, especially in the 3- to 5-year-old park. This is the post-COVID new car supply problems working its way through the park. At some point, relatively soon, we should see that work its way into 5-year plus, and that affects independent used car operators more than franchise. We should see a franchise market share recovery. Trade prices, reflecting those supply constraints have remained strong and stable. It's fair to say, though, that the subdued consumer probably put a lid on the extent to which retail prices could rise and it didn't rise in proportion to trade prices. This led to the potential for some margin compression. If we take the Group as opposed to the market, we're delighted actually that the group delivered increased gross profit in the used car channel and stable margins. We think our Vertu analytics algorithmic pricing helped to navigate the market successfully. In addition, the July event saw a considerable difference being made to gross profit generation and volume, even to the extent of slightly weaker margins. But overall, our margins in the period were stable. The GBP 600,000 increase then in the period in gross profit on a like-for-like basis in used cars was despite a significant shift in costs for the service department on to the used car department as a result of putting up our internal rates. This, we thought was the right thing to do to reflect higher technician wages. If we turn to the U.K. BEV market, there is growth in the battery electric vehicles, but it is nowhere near getting the industry to the 28% ZEV mandate target that the government has set for 2025. It's fair to say that the private channel remains the weakest when the period reported 13.4% of registrations in the retail channel were BEVs, but the EV grants in August did boost interest in BEVs and increased the rate of growth. Clearly, we are absolutely delighted that while in the 6-month BEV private retail sales were up 55.2%, the Group delivered 82.4%, and that was on the basis actually a very strong growth in H2 last year as well, so we've had two 6-month period now of excellent outperformance in gaining market share in the BEV market. I also should probably note, just for updating for September, the grants did lead to an increase in BEV mix. Overall, BEV mix rose to 23% in the month of September compared to 21% in the 6-month period, but we are still a long way short from 28%. If we turn to Group aftersales, clearly, another very strong performance from the aftersales side of the business. The star performer again was service, GBP 3.6 million worth of increased gross profit in the Core business, albeit GBP 2.1 million came from higher internal charges to sales departments. Our vehicle health check process is being tightened up. Our Pay Later product is making a significant difference both to conversion of repair work identified and to the margin. We think there is still more to come if we can get more consistency across our businesses. We increased some prices in the service department, and that also aided average invoice value. Turning to the parts department, there was GBP 0.5 million more profit coming out of this in the Core business, albeit on slightly weaker margins. We have appointed in September an internal promotion to Group Parts Director to give us more focus on this channel. If there was a weakness in aftersales, it came in the accident repair side of the business. Our smart repair business is still in growth mode, and we are adding vans both to our internal smart repair business for used car preparation and in an increasing business to external customers. The pressure came in accident repair centers. This is quite easy to explain. There has been a significant double-digit reduction in the number of accidents in the U.K., which we are putting down to the increased technology within modern cars, which prevent accidents. My car just stops quite often, far quicker than I would respond to risks. We are seeing as the work has got reduced lower margins as people in the sector reduce margins to try and gain some volume. Our accident repair centers continue to perform at a high level. If we look at more detail of service repairs, we've given some more data here. We've discussed the impact of the internal rate change where we increased the labor costs that our used car department and new car departments had on internal work, so when a used car comes in, we spend 2.5 to 4 hours of labor time on each car to prepare it for sale. Clearly, that has transferred cost to used car department. We're delighted that used cars more than absorb that and indeed, 58% of the like-for-like service profit growth actually came from this change, which we think is right. There's no question that retention into our aftersales business is absolutely critical. And how do we build retention? If this is clearly multifaceted. The first thing we've got to do is sell cars from the dealership locally in the area. No one travels 100 miles for a service. We've then got to deliver excellent customer experiences, not only on a sales visit, but then subsequently on a service visit and more often than not, we do. We have excellent CRM processes, including now some AI components to make sure we're contacting the customer in a user-friendly way to actually get that booking back in. But retention products are also absolutely critical. We have 160,000 customers with a service plan, which means they've prepaid for their service over 2 to 3 years. We have a target that of the used cars that we sell, 50% have this retention product, and we're delivering on that metric. It's probably obvious, but as a vehicle park ages, and we've seen a significant aging over the last 5 years, older cars need more work and have higher bills, higher average invoice value. As you can see, over 3 years, old cars have a GBP 375 average invoice value, less than 3 years, GBP 275. The average age of a car in our workshop is now 4.85 years, which belies -- really goes against the perceived wisdom that franchise dealers only deal with cars in the warranty period. Our search for cost savings has been extensive, where we believe that we cannot afford to do things for customers that are free, certainly if they involve labor due to the impact of the national minimum wage. Historically, when you brought your car in for a service, we've given you a free wash and vac, not a valid, but certainly a wash and vacuum. This is now expensive. We've had a two-pronged attack to try and make sure we can control this cost. The first is using behavioral science to give customers the reason to opt out from that service of a free wash and vac. 60% of our customers actually check in for a service now prior to the visit online, and we then use behavioral science to promote opt outs. In addition, one of our Core divisions actually piloted a charge for a wash and vac, so ceased to do a free wash and vac, and we charged GBP 6.99. This led to a 60% drop in the demand for the free wash and vac, and clearly, we could then remove resource that was actually going to do that. That one division in the period saved GBP 400,000 and had no perceptible increase on customer experience scores. We're now rolling that out in the next few months over our non-premium businesses and expect further cost savings, both from an annualized perspective and across more businesses. So we believe the Group is well positioned. We are a Scaled Group that's stable from a management perspective, well capitalized and certainly asset backed. We have the Firepower, both from a managerial perspective and from a financial perspective to expand our operations and indeed grow our scale. The digitalization strategy, which we've always had is gathering pace. Certainly, AI transforms, I think, what we are capable of to the benefit of productivity and indeed customers. We remain a very people-focused business. AI will not change that. We have excellent people in the business up and down the country from Glasgow to Truro and aided by our technology, they can deliver for our customers. They are motivated to do so. They can also deliver for our manufacturers. And if manufacturers like what we do, we can get more franchise businesses. We are focused on doing the right things and working hard to win. Operator: Thank you. We've had a number of questions pre-submitted and submitted live. [Operator Instructions] And the first question that we have is, what has been the specific impact on dealer profitability given the recent increase in employer NI charges? And what actions do you envisage taking to mitigate against further potential external employment cost increases? Robert Forrester: Well, we clearly have mitigated the GBP 10 million that we disclosed in relation to the last Autumn Statement. Karen can sort of just outline which areas we've hit in fairness; I think it was quite clear in the presentation. I think the key question there is the future. There are some more cost headwinds coming around National Minimum Wage again in April, around changes to the ECO scheme, which are all disclosed in the statement and anything else that's counted up in the Autumn budget. Clearly, we're on a journey on cost. We've got some ideas that we haven't fully operationalized, wash and vac point being one of them. And then there's the role of technology. And actually, where we end up next year at this point, I don't quite know -- I don't quite know what the government is going to do and the extent to which we can operationalize speedily the ideas and initiatives that we've got, and we will clearly get into that business planning in the next couple of months. But our aim is to race to try and mitigate as much as possible, just like we did this year, I mean the facts are starting, a GBP 10 million hit due to the budget, but operating costs only up 0.3%, which I think is very good. Operator: Thanks for that Robert. How is Vertu positioned to weather the ongoing macroeconomic uncertainty? Robert Forrester: Well, I think we've got some positives. We've got a very stable management team. The management changes we're proposing help us, I think, in terms of giving us more bandwidth to deal with situations as and when they arrive and to take advantage of opportunities. Macroeconomic headwinds will give us opportunities actually and I think we're quite cognizant of that. And when the timing is right, we will action them. The fact we've got an in-house technology arm with stable management means we should know how our business operates. We should be able to identify the areas we want to action from a technology point of view. And I am convinced having seen it in action and actually impacting productivity and cost that technology in general and AI within it is quite an opportunity for us, so we'll certainly be focusing on that. Karen Anderson: I think the move to a single brand helps us in terms of the marketing message as well. In terms of [indiscernible] Robert Forrester: It should give us more marketing ROI and give us efficiencies. We've got a job to do at the moment to build the prompted brand awareness in the U.K. for marketing, but it certainly helps make us more efficient and productive for sure. Operator: Next question is around the FCA announcement. Could you give us more detail on your thoughts on the FCA announcement yesterday and its impact on Vertu? Robert Forrester: I'm not sure I've got much more to add than we put in the presentation really. The situation is relatively clear of what the FCA's position is. The redress schemes are primarily directed -- are directed at motor lenders. You would have seen further announcements from motor lenders about the need for increased provisions from the sales. We are involved in discussions with the FCA, and we will be looking at the document. We will make sure we respond in a structured and measured way within the time frames. And I don't think -- I think things have moved on, but I don't think our fundamental views on liabilities, where they sit, et cetera, change and the Board don't consider at this current point that we need provisions in relation to the redraft. Karen Anderson: I think the best thing is the removal of uncertainty actually as well, so once this is finalized, the uncertainty that's been hanging over the sector and potentially holding up acquisitions, certainly, we are reticent sometimes, has gone, so we've got more certainty. Robert Forrester: I've been much better when this issue was off the table and I think actually that's the view lenders are taking, let's just get this thing done and move on. Karen Anderson: Yes. Operator: How do you see OEM manufacturer relationships evolving as the market transitions to agency models? Robert Forrester: Well, the market isn't transitioning to an agency model. It's clearly a fallacy. We have seen some manufacturers move in that direction, Volvo, Mercedes, SMART franchise has moved towards agency. We saw MINI in the U.K., move towards it in March and BMW are set to move there in 2027. There is no general move in the rest of the sector. In fact, the reverse, Land Rover proposed it and then reversed. Volkswagen brands, Audi, Skoda actually introduced it and reversed. So I don't think this is a major theme we're going to have to deal with. Operator: Thank you. Next question, the balance between reinvestment in the business and returning capital to shareholders. How do you manage this? Karen Anderson: I think we've got the strength in balance sheet and the cash generative ability to manage it quite well, and we try and strike a balance between growth. Clearly, it's one of our strategic objectives to grow. But we're quite measured about growth. It isn't growth for growth's sake. It's making sure that whatever we spend our money on gives us a return in excess of weighted average cost of capital, and we like to balance that up with share buybacks and dividends. One of the arguments is the share price of the group being what it is compared to our tangible net assets value means that we can effectively buy ourselves at a discount. We can't really do that for acquisitions. So I can see the argument for sort of balancing it more towards share buyback. But we think we want to maintain our position as one of the bigger players. We think scale is important, and therefore, it's vital we balance up the two. Operator: Thanks, Karen. A technical question around the share buyback. The question is your share buyback, what is the average price you've paid since you started the buyback, including pension shares? Karen Anderson: Including which pension shares? Operator: Including pension shares. Karen Anderson: Share incentive plan shares. Not sure about the share incentive plan shares, but of the 78 million shares we've bought back since the program began, we've paid an average price of 54p. Robert Forrester: Employee trust shares are bought in and then sent back out again, so I don't think that's particularly relevant, it's not buyback. Yes, 54p, which is actually significantly lower than tangible net assets per share. Karen Anderson: Yes. Operator: Yes. Next question. Robert, you mentioned the management changes so you can focus on more strategic elements of the business. Is this also an element of succession planning? Robert Forrester: Yes. I think that -- I don't actually agree that the change has been made for me like to be more strategic. I think it's a little bit more nuanced than that. I aim to spend my time actually more with manufacturers, of which we've got over 34, a lot of new manufacturers coming on. I think it's important I build relationships with them, and I haven't spent enough time in my view, with manufacturers. I actually want to spend more time in dealerships and actually get closer to the action and understand what's going on for colleagues and for our customers. The two new Managing Director roles will take responsibility for the operation directors who currently report to myself. They will do the monthly reviews and hopefully execute tighter within the business. I think we've been lacking a bit of bandwidth. We are literally a GBP 5 billion business, and we were broadly running it a bit like it was half the size. So I think this is the right thing to do. There is clearly a succession planning element to this. But I think that is not willing a long time off, not a short time off, but actually making the step up, say, to CEO, we would envisage to be much easier from an MD role than it would be from a Group Operations Director role, and actually one of the key focus areas is for me to spend time with senior management and executives, and continue to develop them. Both Leon and Anthony have come out of our next-generation program. We've got a new round of next generation of 12 people who are being put through their paces for senior development. And I think that's very important for the sustainability of the group and for us to generate value for shareholders. I wouldn't get too excited about succession planning just yet, but I think there is a general direction. Operator: Thank you. We've had a lot of questions relating to Jaguar Land Rover. Robert, maybe you could talk us through what we should expect to happen next. Robert Forrester: Well, surprisingly, I have not got a crystal ball. So I think the main thing to say is nobody knows actually. All we can set out is the impact in September, which was marked, a GBP 2 million impact on profits and a statement which is fact that things have eased in the last 10 days. We're getting far more parts now. Clearly, production has just started, but there's a question mark over the extent to which we will get new car product. There will be -- there clearly has been a gap and now is an unknown about that. And we've done an assessment of the full year impact. We think we hope we've had somewhat on the side of caution with the GBP 5.5 million -- in the words were up to GBP 5.5 million, but the answer is no one knows. And when you look at the history of other cyber impacts around M&S, it's taken quite a while. So I think we are pretty cautious and flagging that there clearly is an issue. There was an issue but the two of the 5.5 billion is literally banked. So there is continuing disruption, though it has actually better than I expected, I think, in the last sort of 10 days, and I think our assessments reflect that. Clearly, a completely an unfortunate one-off event. Now we do have, as we flagged, an insurance policy that covers us for business interruption from third-party outages clearly is a positive thing. The GBP 5.5 million up to does not include any recompense from any insurance policy, so it's potential that we'll have some upside thereafter. We have appointed forensic accountants to help us put together the claim and are clearly working in insurance, but you can't finalize a claim when you haven't finalized the impact. So this will clearly be covered in further announcements in due course. Operator: Thank you, Robert. Slower-than-expected EV adoption has been in the news. How are you managing the potential impact? Sorry, there's an additional element to that as well, so I missed that. And how have the recent EV incentives affected the market was the other part of that question, apologies. Robert Forrester: Yes. I think there's a short-term and a medium-term element to this. I think we've been quite vocal that there's more chance of burn less than in the Premier League than there is a bit in these EV target. There is no chance of the industry hitting these EV targets. So the target for 2025 is a battery electric vehicle mix of 28% with the electric vehicle grants clearly aiding the September market, but definitely did aid the September market and they will aid these market for the rest of this year, maybe into next year. The industry hit 23% or just over 23%. So clearly, no one is going to hit those targets. In the short term, I am more optimistic today than I was 12 months ago about the near-term prospects for the rest of our financial year. And I think there are 3 reasons, which I outlined in the presentation. First off, the government has improved the amount of flexibility within the ZEV mandate target, so they can effect -- the manufacturers can effectively not hit 28% and still not pay fines. That's positive. That takes a bit of pressure. Second, the EV grants that were put in place, which are not for everybody in terms of not every manufacturers got them, but they have led to increased consumer demand for battery electric vehicles. Now there's a fascinating debate about whether this is making people switch from petrol and diesel into -- and hybrids into battery electric vehicles or whether it's actually augmenting the overall market. I think there's probably a bit of both. The third element is we are now getting desperately what we needed, which is our cheaper battery electric vehicles, and I outlined that in the presentation. That helps. So in the near term, I am optimistic. However, I wouldn't like investors to think that this whole electrification thing has got kicked into the long grass and has gone away. It hasn't. The targets are unachievable. This is a headwind on future manufacturer profitability and therefore, by definition, sector retail profitability. If you look at our last 3 periods of 6 months, we've seen new retail, Motability, profitability decline in each of those periods, quite markedly actually. So clearly, there is a headwind and a sector issue. And I think the industry manufacturers and retailers, predominantly manufacturers will come back to the government at some point because the pressure will build again. And we haven't really talked about the [indiscernible] that mandate targets, which I think are even worse actually. I don't think why [indiscernible] wants an electric van. So near term, a bit happier; medium term, still concerned and the whole thing will have to get revisited. There is a global move back to petrol and hybrid. started off in the U.S. under Trump, but it's actually well advanced now in Europe. There's a lot of thinking going on in Europe about extending time scales. It's fair to say our government are not at the front of the queue in rethinking the policy, but the zeitgeist noise among certainly the opposition parties is this has to be tackled because it is not creating value. So I think it's one to watch really. The problem has not gone away, but I am more confident actually in the short run than I was this time last year. That is for sure. Operator: Thanks, Robert. Just conscious of time at the moment, so maybe we'll go a bit more quick fire questions at the moment as we've only got sort of 4 minutes left. Karen, given the strong balance sheet of freehold, favorable leasehold properties and cash position, would you consider relisting as a property company with a healthy cash balance generating tenants? Karen Anderson: Never thought about it. No. Robert Forrester: I don't think it's a serious question, to be honest. Successful retailers have always had high levels of freehold property, and those with only leasehold property tend to find problems. We are an operational business primarily, albeit with a very, very strong property portfolio. So I understand where the question is coming from. It's just not -- It's not on the agenda. Operator: Thank you, Robert. Can you expand on potential BYD and Chinese manufacturers in the U.K.? Robert Forrester: Well, I think we will expand. I think that's what the question was asking. We will engage with the Chinese manufacturers because I think they will take some share; that share will be limited by the number of showrooms available in the United Kingdom. We've got to be very clear that we will prioritize profitability in the short and medium term rather than go and chase market share. Remember, Chinese operators have no aftersales in the book. A lot of our profit comes from aftersales. So we will not go chasing shiny new toys. We will make financial decisions based on investment hurdles. And if that means we're slower in adopting Chinese brands, then so be it. It doesn't preclude you from then acquiring them later on in acquisitions and I suspect that's where we'll end up. We are very confident on BYD. I think it is an excellent technology company that makes cars and their marketing is excellent. So I think we're very confident in that. We will grow with some others, but I don't think we'll be at the front of the queue actually. Operator: And with limited historic vehicle parts in – Sorry, it just disappeared for me. Sorry, we'll move on to a different one that’s there. And what impact will increased BEV vehicles share have on high-margin service revenues in the future due to their reduced service to repair requirements? Robert Forrester: That's a good question. And I think Scandinavians are obviously ahead on the curve. I think it switches between parts and labor. You get less parts. Oil filters being a classic example, oil being another example, but there's still a labor requirement. When things go wrong, they go wrong big, and they go wrong with heavy labor. We make 75% labor margins and we make 20% parts margin, so actually, we could afford for average invoice values to come down, but that makes us still protect profitability. The key question is will modern cars be serviced and repaired by franchise retailers or by independents or not at all. And I think we're pretty confident actually that the technology is so sophisticated that if something goes wrong with one of these modern cars, they're coming back to the franchise retailer and I've seen very little evidence to say that isn't going to happen. Operator: Thanks, Robert. Last question. The potential regulatory changes to employee car ownership schemes could increase costs by around GBP 2.5 million per annum. What mitigation strategies are being explored? Robert Forrester: None. That's the point, isn't it? There's no mitigation strategy, that is a fact. What we have to do clearly is, as I said in the earlier question, is a race, isn't it, of structural cost changes and then trying to find structural cost savings on the other side, which we have been spectacularly successful this year. But clearly, it is an exceedingly unhelpful development and symptomatic of this government's policy towards British business. Operator: Well, Robert and Karen, thank you very much for the questions today. Robert, just going to hand back to you for any closing remarks at the moment. Robert Forrester: Well, I'd just like to say thank you for giving up your time. I know your time is very precious. There are a lot of companies you could spend time looking into and investing in. We feel we've got a very, very strong operational business. The U.K. is not the easiest place in the world to do business at the moment, but one day, the clouds will clear, and we will have an exceptionally strong large business with which then to expand and do very well in. Thank you. Karen Anderson: Thanks. Operator: Thank you very much. And that concludes the Vertu Motors investor presentation. I'd like to thank Karen and Robert for that. Please take a moment to complete the short survey following this event. The recording of the presentation will be made available on the Engage Investor platform. I hope you enjoyed today's webinar. Thank you. Karen Anderson: Thank you.
Robert Forrester: Welcome to the results presentation of the interim results of Vertu Motors plc for the 6 months ending August 2025. My name is Robert Forrester, Chief Executive, and I've got Karen Anderson, our long-serving CFO, who's going to go through the financials. If we turn to the investment case for Vertu Motors, we continue, we believe, to do the right things to create a very strong business within U.K. motor retail. We believe scale drives benefit and actually, we believe these benefits are increasing over time, particularly in the area of the ability to invest in technology to drive productivity increases and cost reductions, and the benefit of having large single brands across the national space to drive brand awareness. In the period, we've announced today the appointment of two new managing directors, two new roles for internal promotions, who will take the operational responsibilities of the divisions and provide greater bandwidth at a very senior level. We continue to focus on delivering great colleague and customer satisfaction levels. Our customer experience scores as measured by the manufacturers are well above national average. We continue to invest in technology, and this is proving absolutely pivotal in the cost initiatives that we are driving through not only to lower cost, but also to make us more efficient and to help the customer journeys. We have delivered in these results excellent cost trends despite the headwinds, and that focus on cost through the use of technology will indeed continue. Portfolio management and capital allocation remain an absolute priority. We are clearly seeking to manage the growth of Chinese brands within the U.K. market, but also the need to modify the portfolio to recycle capital from low-return to high-return activities, which we've continued to do so in the period. Our share buyback continues and clearly, that's important, especially given our tangible net assets have grown to 76p per share. The U.K. consumer space is clearly challenging. The sector itself has issues around the government's electrification agenda, and they do provide headwinds. However, the group has delivered a strong operational performance as we seek to focus on what we can control. We have delivered market share gains across all channel of vehicle sales. We have been absolutely focused on cost control, and we had a 0.3% rise in Core costs despite noticeable headwinds. Our battery electric vehicle retail sales have increased 82% in the period against a market growth of 55%. We're gaining share in that all-important market. What we did not anticipate at the beginning of September was a global one-off event being the cyber-attack on Jaguar Land Rover, one of our major partners. That has caused major disruption to our 10 dealerships in the U.K., but I'm pleased to report the situation is now easing. The attack impacted our September profitability by GBP 2 million. And when we look at the potential full year impact in the current financial year, and this is clearly highly uncertain and dependent on getting systems back, getting back to normal trading, we anticipate the result could be impacted by up to GBP 5.5 million in total. This year, we extended our cyber insurance risk to business interruption from third-party outages. Clearly, we are now working with our advisers to progress a potential claim where possible in respect of the losses that we have incurred in relation to this JLR outage. We have appointed forensic accountants to help the group to work with our insurers on this. We will clearly update shareholders on the impact over the next few months of the cyber-attack and indeed on the impact of any potential upside from an insurance claim. Moving on to current trading and outlook and particularly the September result, which is a plate change month and therefore, very important for delivery of an H2 result. I'm pleased to report, excluding the impact of JLR, that September was a good month with profits up on last year. We had a strong used and aftersales performance. Used cars, for example, were up 5.3% like-for-like, a much stronger rate than in the previous months. Acquisitions positively contributed on top of the Core performance. New cars remained a challenge. Motability sales were down 15% in volume terms, and that clearly impacted gross profit generation for the Group. Manufacturers without grant support on electric vehicles faced competition from manufacturers with grants and indeed utilize some of the retailer margins to compete with strong consumer offers. That clearly impacted our margins. We also saw a market that shifted quite considerably to high preregistration activity at the end of the month, which I think will impact registrations in future months. Overall, however, it's pleasing to see that the Group did deliver increased retail new car volume on a like-for-like basis of 1.8%. Also on the positive side, we saw a 25% increase in Fleet car volumes, aided by significant BEV sales and indeed the impact of the grant, which isn't just for retail customers. There's probably going forward into quarter 4 calendar, less pressure on the manufacturers this year around BEV targets, which is a good thing. The ZEV mandate has seen some extra flexibilities and the grants have clearly led to an increased consumer demand and uptake of battery electric vehicles. That should make quarter 4 easier than last year. Turning to Motability, which has been weak throughout H1 and in September, we now see comparatives at a much-reduced basis going forward. And additionally, we expect the Motability market will recover from March next year due to the timing of renewals. Overall, excluding JLR, we expect full year profits to be in line with market expectations, but the Board are mindful of a cautious outlook on the consumer side and business sales side. The Autumn Statement at the end of November is clearly of key interest. We turn to the strategic update. The Group has had a consistent strategy and was recently reaffirmed by our Group strategy day with the Board in September. If we take growth in particular, we will see further growth in Q4 in outlets. Our expansion with BYD, which is the leading Chinese manufacturer, it gathers a pace. We will open our former Citroen dealership in Nottingham as a new Skoda business, which we're excited about, and we will see some further small-scale acquisition activity. Our cautious outlook means that our focus in the near term will be very much on maximizing our existing portfolio in the remaining months. If we look at sector trends in the near term, it's interesting that of the three trends we're going to talk about, we are not talking about the rollout of the agency model as one of the big three. We have BMW planning to launch agency in the U.K. in 2027, but there's been a general rollback and ceasing of agency as a strategy. Clearly, electrification is the big issue facing the new car market. There is still pressure from the ZEV mandate and the targets going forward and indeed in 2025, where the government set a target of 28% are not going to be achieved. This is a headwind on the new car market and indeed profitability. I think we're more optimistic than last year. The ZEV mandate flexibilities, the EV grants have gone down well with consumers. The demand for the Ford Puma, for example, was absolutely startling in September, and we've got a future order bank for that product. There are far more affordable cars, some less than GBP 20,000 that are battery electric vehicle in the market today. This was not the case in the new car market in the prior year. Products like the Hyundai INSTER, the Dacia Spring are two that spring to mind. However, Volkswagen brands are also bringing out much more affordable product into the marketplace. Electrification is the long-term answer, and it will come, but it will not come at the government's pace. The second issue to discuss is the role of Chinese new entrants into the marketplace. The starting point here is that the Chinese domestic car market is in carnage, well-documented carnage, oversupply, price wars, discounting and a trend now for natural selection amongst Chinese domestic manufacturers. The U.K. is seen as the go-to place for the Chinese to come. Why? Well, we haven't got major tariffs on Chinese product, and there's no clear national champion amongst U.K. manufacturers as in other countries, except perhaps JLR. You have recently read that the U.K. is now BYD's biggest market outside of China. The Chinese cars typically have great technology, fantastic electric vehicles with great battery technology and their hybrid cars are also much sought after. However, there will be a somewhat break on the exponential growth of the Chinese in all likelihood. We've got a lot of new brands coming into the United Kingdom, all requiring 6 car showrooms, but there's no new build showrooms being put in place. This will limit growth, how many spare 6 car showrooms actually are there. And we, as Vertu, need to balance chasing market share and growth of car sales with making money, and we will play the long game here. We will assess new entrants, and we will assess in the short term whether we want to invest. You've got to remember, for a Chinese new brand, there is no high-margin aftersales. We have concentrated and will continue to do so on MG and indeed BYD, and we will clearly assess others over time. The third and topical discussion is around Finance Commission. The Supreme Court sat in the period and indeed did curtail the wildest aspects of potential claims against lenders in relation to Finance Commission in the auto sector. In what was perfect timing, last night, the FCA released a consultation paper on any redress scheme. We're now in a period of consultation, and we will be diligent to respond to the FCA in a very structured way. The FCA's focus on redress is likely to be levied at least initially on lenders. We will, as retailers, be key to providing the data to actually calculate our redress scheme. We will continue to assess the position, but we do not currently consider the need for provisions. Our digitalization strategy has always had two components. One is the push technology to increase productivity and indeed control costs; and secondly, to increase our sales and marketing effectiveness. We have to do both, though in this period, given the cost pressure, we probably put more effort into the cost control. Our Finance Efficiency project, which has been going on for the last 12 months is now really bearing fruit, and we're starting to deliver significant cost savings. We have reduced significantly the amount of invoicing between internal departments and particularly, we've developed technology to make sure cash processing doesn't need manual involvement for a lot of intercompany transactions, but also for external transactions. So we now have Internet-based payment systems that are seamless that a service customer can now pay and the cash gets automatically posted into our dealer management system. There is more of this to come and more savings to be had. In terms of Data and AI, our data warehouse is complete. Our customer data platform has gone from concept to reality, and we are now delivering multiple use cases to make us far more efficient and effective in personalized marketing. If you go on to the web and you have bought a function such as trying to book online service booking, you are likely to receive a personalized piece of marketing to get you back on track. This is delivering a good ROI. There is no doubt in our business that AI is actually real. The executive sat down and defined a strategy, which now our development teams are implementing. We have a formal AI policy to protect the business from AI issues. We actually held a competition for our 60-strong development arm, a Dragons Den AI competition with a GBP 10,000 prize to flush out great ideas that were capable of immediate implementation, and we are implementing them. Examples of use of AI. Use of customer-friendly technology to reduce calls into our contact center. We're using AI e-mail systems to prospect service bookings from our database, and those bookings are effectively all done via e-mail correspondence and the booking goes straight into our dealer management system. One of big areas to look at is that e-mail sales inquiries are historically very low-converting, and there's a lot of human effort gone into corresponding by e-mail with potentially little reward. We're now starting to use AI to warm up those e-mail sales leads to get them to a sufficiently hot prospect to enable humans then to finish off the job. We are at the start of the journey on this for sure. Third element is our new website, which -- we now have one single brand of Vertu, and we, therefore, took the opportunity to revamp our website. We're doing it in modular stages, so it's not a big-bang approach. We have made massive progress in terms of search engine optimization and user friendliness and the full website will be redone by mid-2026. An area of weakness, I think, in our offering online is YouTube content, particularly around new and used vehicles, and we will certainly -- we've certainly developed a strategy to make sure that we address that. Turning to brand aspects. The single Vertu brand is now in place, and I think we've avoided the major pitfalls in moving our major brand of Bristol Street Motors into Vertu in April. In September, the Vertu brand had a U.K.-prompted brand awareness of 11%, that has grown to 19% in September, and we fully expect us to hit 30% during the next financial year. The reasons for this growth is very simple. Having one brand increases our ROI on marketing activity. Team Vertu with its fantastic BTCC racing team were at Brands Hatch last weekend and won many trophies, including Best Driver and indeed, Best Manufacturer. So, this then affects 191 sales outlets. The EFL Trophy at Wembley is a massive exercise in brand building, 75,000 people attended, never mind the early rounds, and it affects every single one of our dealerships. In recent weeks to support the Vertu Trophy, I've had the pleasure of going to Barnett and MK Dons for the early round games, and it's great to see the Vertu brand very prominent. This isn't only about brand awareness, though, our partnerships with the Manchester concert venue of Coke Live and the EFL gives us access to marketing databases with which we can then do direct marketing. In July, we took the step of having our first ever group-wide used car event under one brand. We used a full gamut of media, including a TV campaign to drive increased inquiries through our dealerships and a good time was had. We got a lot of excitement into our businesses, and we saw like-for-like used car sales in July up 12%, which is no mean feat. Next year, we intend to extend this strategy of having two 10-day used car events, but also having three new car events, the first time that we've used the power of the Vertu brand to have one event across the entire estate to drive new car sales. I think it will be a success. Finally, before Karen deals with the Financial Performance, I wanted to update you on a senior management structure change that we intend to make from the 1st of January and which we have announced today. The three founding directors of the business, myself, Karen and our COO, David Crane, have been in place from 2006 when we formed a cash shell, and we now lead a GBP 5 billion revenue group. My span of control, I think, has been too large. I don't think it's fully amended the fact that we now run a highly complex and very large group. All the operation divisions report directly into me and I think it's time to augment management. From the 1st of January, two of our trusted group operations directors, one who currently runs the BMW division and another who currently runs the Jaguar Land Rover division, will be promoted to managing director roles with the operating divisions reporting into them. This will give us greater bandwidth and will allow me to focus on the strategy and execution, particularly around growth and portfolio changes, seeing of more of the manufacturers, which is a franchise operator is a very good thing, spending more time in the dealerships and indeed developing our senior leadership team. I am excited about this. I think it sets us fair for the years ahead. Karen? Karen Anderson: Thank you, Robert. Slide 13 shows a summarized income statement for the Group for the period. Group revenues grew by GBP 35.4 million, with this growth attributed to acquisitions, particularly the Burrows acquisition, which was completed in October 2024. Core Group revenues declined GBP 49.2 million, predominantly in new vehicle sales due to lower Motability vehicle volumes and the move to agency in the Group's mini dealerships. Gross margin increased to 11.2% due to the increased mix of higher-margin aftersales revenues. Costs grew as a percentage of revenue, however, were tightly controlled with Core Group costs rising just 0.3% or GBP 0.7 million on prior year despite the cost headwinds we faced. Adjusted operating profit reduced on prior year levels, driven by the reduction of profitability from the new car channel, with this reduction flowing through to EPS. The group's interest costs grew slightly with increased manufacturer stocking charges and lease interest, partially offset by increased deposit income and the impact of reduced interest rates on our borrowings. Non-underlying costs represent redundancy costs as the Group applied technology to improve the efficiency, particularly in the finance function, which moved to divisional accounts processing hubs in the period. In addition, exceptional non-underlying costs include the cost of closure of two of the Group's dealership locations. Turning over to Slide 14. Here, we have a profits bridge of the adjusted profit before tax compared to prior year for the period. Core Group gross profit declined by GBP 1 million over the prior year period. And clearly, the standout negative here is the GBP 4.4 million reduction in gross profit from new vehicle sales. This decline was driven by a significant reduction in Motability sales volumes consistent with the market decline in this channel as well as significant discounting of battery electric vehicles, which impacted new vehicle margins. Offsetting this shortfall was the significantly improved gross profit generation from the Group's resilient and high-margin aftersales operations. Our service department here benefited from an increase in the internal rate charged to the vehicle departments in the preparation for vehicle sales, which did actually move some gross profit from new and in particular, used car sales into aftersales. Used gross profit generation exceeded prior year levels, even after having absorbed the additional cost of preparation from service. Margins and volumes were broadly stable in the period with the improvement in overall gross profit generation arising from improved gross profit per unit, which was aided by the Group's used vehicle algorithm valuation tool. Core Group operating expenses, as I said, grew just GBP 0.7 million, and I'll cover those movements in more detail on my next slide. Contributions from dealerships acquired or started up represents a year-on-year movement of GBP 0.2 million. And this was expected given the start-up nature of some of the dealerships within this category with improved returns expected as these dealerships mature. Turning to Slide 15. We've given you further detail on the Core and Total Group underlying expenses. Overall, Core Group operating expenses rose just 0.3% over the period despite a significant increase in cost of employment driven by the Autumn 2024 budget, which increased national minimum wage and company NIC costs considerably. The biggest single cost of the Group is salary costs, remembering that the figures on this slide actually don't include the productive cost of technicians, which are in cost of sales. Salary costs in the Core Group in operating expenses rose just GBP 0.3 million over the period. And this reflected the impact of the Group's cost-saving initiatives, which we completed largely by 28th of February to offset the impact of that Autumn budget increase, but also reflects some of the cost savings we've done in the current year in respect of things like finance efficiency. The greatest percentage cost rise was seen in marketing costs, which rose GBP 2.1 million over the prior year in the period. The Group invested in marketing both in the move to the single brand Vertu in the period and also in a 10-day used vehicle sale event for which there was no comparative in the prior period, which helped drive used vehicle sales volumes in what was undoubtedly a subdued market. The Group delivered a saving of GBP 1.9 million in vehicle and valet costs, reflecting cost-saving activity in this area, and Robert will cover this in more detail shortly. But this actually was combined with tight cost control in respect of the Group's demonstrator and courtesy vehicle fleet. The Group's share-based payments charge now in underlying costs has increased as a result of the increase in number of management colleagues in the group to which awards are made following the acquisition of the Burrows dealerships in October last year. Turning to Slide 16, we've summarized the group's balance sheet. It remains very stable and strong, underpinned by the Group's freehold and long leasehold property portfolio of GBP 336 million, which is carried at historic depreciated cost. The increase in current assets compared to August 2024 relates predominantly to the movement in inventory shown here. New vehicle pipeline inventory, much of which is funded by our manufacturer partners has increased since that date, while the Group has been successful in reducing both used vehicle and demonstrated inventory levels again since August 2024. Used vehicle inventory has, however, increased by GBP 17 million compared to the position at the year-end at the end of February. And this relates to the tight supply of particularly 3- to 5-year-old vehicles in the market. And as a result of that, the Group took the decision to retain higher inventory levels at the 31st of August than we did at the end of February to ensure that the Group had sufficient inventory to enable a good sales performance in September. And the 5.8% like-for-like growth in used vehicle sales volumes in September was undoubtedly aided by this decision. Crucially, though, used vehicle inventory was lower than the position at August last year despite the acquisition of Burrows. Tangible net assets per share of 76.1p, and this clearly reflects the strong asset backing of the Group, and it's also increased on the level in February due to the share buyback program. Turning over to Slide 17. This highlights the Group's cash flows in the period. We generated a free cash inflow of GBP 0.4 million, which was impacted by a GBP 21.2 million cash outflow from working capital compared to the position at the end of February. The main elements of this outflow were a GBP 14.5 million outflow relating to the increase in used vehicle inventory and our decision to retain higher inventory levels at the end of August and an GBP 11.2 million outflow from reduced deposits on Board orders. Deposits at February reflected the strong March order take ahead, in particular, of vehicle excise duty changes in April, while at the end of August, we saw some customers deferring orders pending clarification on EV grants. This explains the comparative difference here in vehicle deposits held. Sustaining capital expenditure of GBP 8.5 million was spent in the period, with this partially offset by proceeds from the sale of surplus properties of GBP 3.3 million. A further GBP 2.5 million was spent on the period on capital projects which enhance the operating capacity of the Group. And this includes a new off-site 28.10 vehicle preparation facility in York, together with, for example, the expansion of our Toyota outlet in Chesterfield. Net Debt at the end of the period was GBP 78.3 million, excluding lease liabilities, representing a GBP 5.6 million decrease on the position last August despite expending GBP 22.5 million to GBP 2.4 million on the Burrows acquisition. Slide 18, which is my final slide, covers the Group's capital allocation discipline. We remain focused and thoughtful around capital allocation, looking to achieve a balance between investment and growth, and shareholder returns. When we look at growth, we target returns in excess of weighted average cost of capital and with our strong asset base and low Gearing, we believe we can successfully balance both growth and shareholder returns. A key element of the Group's approach to capital allocation is our pruning process. This is where we constantly review dealership operations to ensure an adequate return on investment and contribution to Group profitability. Following such reviews, the Group has exited the Citroen outlet in Nottingham in the period and the leasehold premises will be refranchised to the Skoda franchise in November. In the period, the Group also took some of these recycled properties held for resale and realized cash of GBP 3.3 million, 10.7% in excess of book value. The Group actually has a good track record of disposal of surplus properties, in particular, at values in excess of book value, and this really reflects the policy of carrying our assets at historic depreciated cost. The Group has had a program of share buybacks in place since FY '17. The Group spent GBP 5.6 million in the period on share buybacks and since the start of these programs has now bought back over 19% of issued share capital. The Group announced a GBP 12 million share buyback program in February and to the end of September had spent GBP 7 million of this program, leaving GBP 5 million remaining for the rest of FY '26. As a reminder, the Group has a stated full year dividend policy of 2.5x to 3.5x fully adjusted diluted EPS. And bearing that in mind, the FY '26 interim dividend has been held at 0.9p per share. It's worth remembering, though, that the cash cost of each of our dividends is reducing as a result of the share buyback program in action. I'll now hand back to Robert for a more detailed update on the Group's trading in the period. Robert Forrester: Thank you, Karen. So let's turn to the Group vehicle sales performance. We're pleased to report we gained market share in all channels. In addition, margins were stable in new and used cars. There was a slight dilution in fleet and commercial, and this was a mix issue because we saw substantial growth in Fleet cars and a decline in vans, and that mix impacted gross profit per unit. We saw weak growth returning to the new retail market. Now this was after a very strong March, and it got weaker as the period went on. I think the government grants that have been introduced in the late summer are starting to reverse that. Motability saw continued weakness due to the renewals timing and indeed, manufacturers having pressure on their margins and trying just to pull back. The 16.6% increase in Fleet car volume is clearly to be applauded, and we took full advantage of the vibrancy of the fleet market, particularly in battery electric vehicle growth in areas such as leasing and salary sacrifice. The Group has a Core competency in the fleet channel. The van market was weak. It was down nearly 10% in the U.K., and we think this reflects weak business confidence. We, therefore, saw overall a reduced gross profit in that channel. The used car market actually exhibited continued supply constraints, which held back volume for franchise retailers, especially in the 3- to 5-year-old park. This is the post-COVID new car supply problems working its way through the park. At some point, relatively soon, we should see that work its way into 5-year plus, and that affects independent used car operators more than franchise. We should see a franchise market share recovery. Trade prices, reflecting those supply constraints have remained strong and stable. It's fair to say, though, that the subdued consumer probably put a lid on the extent to which retail prices could rise and it didn't rise in proportion to trade prices. This led to the potential for some margin compression. If we take the Group as opposed to the market, we're delighted actually that the group delivered increased gross profit in the used car channel and stable margins. We think our Vertu analytics algorithmic pricing helped to navigate the market successfully. In addition, the July event saw a considerable difference being made to gross profit generation and volume, even to the extent of slightly weaker margins. But overall, our margins in the period were stable. The GBP 600,000 increase then in the period in gross profit on a like-for-like basis in used cars was despite a significant shift in costs for the service department on to the used car department as a result of putting up our internal rates. This, we thought was the right thing to do to reflect higher technician wages. If we turn to the U.K. BEV market, there is growth in the battery electric vehicles, but it is nowhere near getting the industry to the 28% ZEV mandate target that the government has set for 2025. It's fair to say that the private channel remains the weakest when the period reported 13.4% of registrations in the retail channel were BEVs, but the EV grants in August did boost interest in BEVs and increased the rate of growth. Clearly, we are absolutely delighted that while in the 6-month BEV private retail sales were up 55.2%, the Group delivered 82.4%, and that was on the basis actually a very strong growth in H2 last year as well, so we've had two 6-month period now of excellent outperformance in gaining market share in the BEV market. I also should probably note, just for updating for September, the grants did lead to an increase in BEV mix. Overall, BEV mix rose to 23% in the month of September compared to 21% in the 6-month period, but we are still a long way short from 28%. If we turn to Group aftersales, clearly, another very strong performance from the aftersales side of the business. The star performer again was service, GBP 3.6 million worth of increased gross profit in the Core business, albeit GBP 2.1 million came from higher internal charges to sales departments. Our vehicle health check process is being tightened up. Our Pay Later product is making a significant difference both to conversion of repair work identified and to the margin. We think there is still more to come if we can get more consistency across our businesses. We increased some prices in the service department, and that also aided average invoice value. Turning to the parts department, there was GBP 0.5 million more profit coming out of this in the Core business, albeit on slightly weaker margins. We have appointed in September an internal promotion to Group Parts Director to give us more focus on this channel. If there was a weakness in aftersales, it came in the accident repair side of the business. Our smart repair business is still in growth mode, and we are adding vans both to our internal smart repair business for used car preparation and in an increasing business to external customers. The pressure came in accident repair centers. This is quite easy to explain. There has been a significant double-digit reduction in the number of accidents in the U.K., which we are putting down to the increased technology within modern cars, which prevent accidents. My car just stops quite often, far quicker than I would respond to risks. We are seeing as the work has got reduced lower margins as people in the sector reduce margins to try and gain some volume. Our accident repair centers continue to perform at a high level. If we look at more detail of service repairs, we've given some more data here. We've discussed the impact of the internal rate change where we increased the labor costs that our used car department and new car departments had on internal work, so when a used car comes in, we spend 2.5 to 4 hours of labor time on each car to prepare it for sale. Clearly, that has transferred cost to used car department. We're delighted that used cars more than absorb that and indeed, 58% of the like-for-like service profit growth actually came from this change, which we think is right. There's no question that retention into our aftersales business is absolutely critical. And how do we build retention? If this is clearly multifaceted. The first thing we've got to do is sell cars from the dealership locally in the area. No one travels 100 miles for a service. We've then got to deliver excellent customer experiences, not only on a sales visit, but then subsequently on a service visit and more often than not, we do. We have excellent CRM processes, including now some AI components to make sure we're contacting the customer in a user-friendly way to actually get that booking back in. But retention products are also absolutely critical. We have 160,000 customers with a service plan, which means they've prepaid for their service over 2 to 3 years. We have a target that of the used cars that we sell, 50% have this retention product, and we're delivering on that metric. It's probably obvious, but as a vehicle park ages, and we've seen a significant aging over the last 5 years, older cars need more work and have higher bills, higher average invoice value. As you can see, over 3 years, old cars have a GBP 375 average invoice value, less than 3 years, GBP 275. The average age of a car in our workshop is now 4.85 years, which belies -- really goes against the perceived wisdom that franchise dealers only deal with cars in the warranty period. Our search for cost savings has been extensive, where we believe that we cannot afford to do things for customers that are free, certainly if they involve labor due to the impact of the national minimum wage. Historically, when you brought your car in for a service, we've given you a free wash and vac, not a valid, but certainly a wash and vacuum. This is now expensive. We've had a two-pronged attack to try and make sure we can control this cost. The first is using behavioral science to give customers the reason to opt out from that service of a free wash and vac. 60% of our customers actually check in for a service now prior to the visit online, and we then use behavioral science to promote opt outs. In addition, one of our Core divisions actually piloted a charge for a wash and vac, so ceased to do a free wash and vac, and we charged GBP 6.99. This led to a 60% drop in the demand for the free wash and vac, and clearly, we could then remove resource that was actually going to do that. That one division in the period saved GBP 400,000 and had no perceptible increase on customer experience scores. We're now rolling that out in the next few months over our non-premium businesses and expect further cost savings, both from an annualized perspective and across more businesses. So we believe the Group is well positioned. We are a Scaled Group that's stable from a management perspective, well capitalized and certainly asset backed. We have the Firepower, both from a managerial perspective and from a financial perspective to expand our operations and indeed grow our scale. The digitalization strategy, which we've always had is gathering pace. Certainly, AI transforms, I think, what we are capable of to the benefit of productivity and indeed customers. We remain a very people-focused business. AI will not change that. We have excellent people in the business up and down the country from Glasgow to Truro and aided by our technology, they can deliver for our customers. They are motivated to do so. They can also deliver for our manufacturers. And if manufacturers like what we do, we can get more franchise businesses. We are focused on doing the right things and working hard to win. Operator: Thank you. We've had a number of questions pre-submitted and submitted live. [Operator Instructions] And the first question that we have is, what has been the specific impact on dealer profitability given the recent increase in employer NI charges? And what actions do you envisage taking to mitigate against further potential external employment cost increases? Robert Forrester: Well, we clearly have mitigated the GBP 10 million that we disclosed in relation to the last Autumn Statement. Karen can sort of just outline which areas we've hit in fairness; I think it was quite clear in the presentation. I think the key question there is the future. There are some more cost headwinds coming around National Minimum Wage again in April, around changes to the ECO scheme, which are all disclosed in the statement and anything else that's counted up in the Autumn budget. Clearly, we're on a journey on cost. We've got some ideas that we haven't fully operationalized, wash and vac point being one of them. And then there's the role of technology. And actually, where we end up next year at this point, I don't quite know -- I don't quite know what the government is going to do and the extent to which we can operationalize speedily the ideas and initiatives that we've got, and we will clearly get into that business planning in the next couple of months. But our aim is to race to try and mitigate as much as possible, just like we did this year, I mean the facts are starting, a GBP 10 million hit due to the budget, but operating costs only up 0.3%, which I think is very good. Operator: Thanks for that Robert. How is Vertu positioned to weather the ongoing macroeconomic uncertainty? Robert Forrester: Well, I think we've got some positives. We've got a very stable management team. The management changes we're proposing help us, I think, in terms of giving us more bandwidth to deal with situations as and when they arrive and to take advantage of opportunities. Macroeconomic headwinds will give us opportunities actually and I think we're quite cognizant of that. And when the timing is right, we will action them. The fact we've got an in-house technology arm with stable management means we should know how our business operates. We should be able to identify the areas we want to action from a technology point of view. And I am convinced having seen it in action and actually impacting productivity and cost that technology in general and AI within it is quite an opportunity for us, so we'll certainly be focusing on that. Karen Anderson: I think the move to a single brand helps us in terms of the marketing message as well. In terms of [indiscernible] Robert Forrester: It should give us more marketing ROI and give us efficiencies. We've got a job to do at the moment to build the prompted brand awareness in the U.K. for marketing, but it certainly helps make us more efficient and productive for sure. Operator: Next question is around the FCA announcement. Could you give us more detail on your thoughts on the FCA announcement yesterday and its impact on Vertu? Robert Forrester: I'm not sure I've got much more to add than we put in the presentation really. The situation is relatively clear of what the FCA's position is. The redress schemes are primarily directed -- are directed at motor lenders. You would have seen further announcements from motor lenders about the need for increased provisions from the sales. We are involved in discussions with the FCA, and we will be looking at the document. We will make sure we respond in a structured and measured way within the time frames. And I don't think -- I think things have moved on, but I don't think our fundamental views on liabilities, where they sit, et cetera, change and the Board don't consider at this current point that we need provisions in relation to the redraft. Karen Anderson: I think the best thing is the removal of uncertainty actually as well, so once this is finalized, the uncertainty that's been hanging over the sector and potentially holding up acquisitions, certainly, we are reticent sometimes, has gone, so we've got more certainty. Robert Forrester: I've been much better when this issue was off the table and I think actually that's the view lenders are taking, let's just get this thing done and move on. Karen Anderson: Yes. Operator: How do you see OEM manufacturer relationships evolving as the market transitions to agency models? Robert Forrester: Well, the market isn't transitioning to an agency model. It's clearly a fallacy. We have seen some manufacturers move in that direction, Volvo, Mercedes, SMART franchise has moved towards agency. We saw MINI in the U.K., move towards it in March and BMW are set to move there in 2027. There is no general move in the rest of the sector. In fact, the reverse, Land Rover proposed it and then reversed. Volkswagen brands, Audi, Skoda actually introduced it and reversed. So I don't think this is a major theme we're going to have to deal with. Operator: Thank you. Next question, the balance between reinvestment in the business and returning capital to shareholders. How do you manage this? Karen Anderson: I think we've got the strength in balance sheet and the cash generative ability to manage it quite well, and we try and strike a balance between growth. Clearly, it's one of our strategic objectives to grow. But we're quite measured about growth. It isn't growth for growth's sake. It's making sure that whatever we spend our money on gives us a return in excess of weighted average cost of capital, and we like to balance that up with share buybacks and dividends. One of the arguments is the share price of the group being what it is compared to our tangible net assets value means that we can effectively buy ourselves at a discount. We can't really do that for acquisitions. So I can see the argument for sort of balancing it more towards share buyback. But we think we want to maintain our position as one of the bigger players. We think scale is important, and therefore, it's vital we balance up the two. Operator: Thanks, Karen. A technical question around the share buyback. The question is your share buyback, what is the average price you've paid since you started the buyback, including pension shares? Karen Anderson: Including which pension shares? Operator: Including pension shares. Karen Anderson: Share incentive plan shares. Not sure about the share incentive plan shares, but of the 78 million shares we've bought back since the program began, we've paid an average price of 54p. Robert Forrester: Employee trust shares are bought in and then sent back out again, so I don't think that's particularly relevant, it's not buyback. Yes, 54p, which is actually significantly lower than tangible net assets per share. Karen Anderson: Yes. Operator: Yes. Next question. Robert, you mentioned the management changes so you can focus on more strategic elements of the business. Is this also an element of succession planning? Robert Forrester: Yes. I think that -- I don't actually agree that the change has been made for me like to be more strategic. I think it's a little bit more nuanced than that. I aim to spend my time actually more with manufacturers, of which we've got over 34, a lot of new manufacturers coming on. I think it's important I build relationships with them, and I haven't spent enough time in my view, with manufacturers. I actually want to spend more time in dealerships and actually get closer to the action and understand what's going on for colleagues and for our customers. The two new Managing Director roles will take responsibility for the operation directors who currently report to myself. They will do the monthly reviews and hopefully execute tighter within the business. I think we've been lacking a bit of bandwidth. We are literally a GBP 5 billion business, and we were broadly running it a bit like it was half the size. So I think this is the right thing to do. There is clearly a succession planning element to this. But I think that is not willing a long time off, not a short time off, but actually making the step up, say, to CEO, we would envisage to be much easier from an MD role than it would be from a Group Operations Director role, and actually one of the key focus areas is for me to spend time with senior management and executives, and continue to develop them. Both Leon and Anthony have come out of our next-generation program. We've got a new round of next generation of 12 people who are being put through their paces for senior development. And I think that's very important for the sustainability of the group and for us to generate value for shareholders. I wouldn't get too excited about succession planning just yet, but I think there is a general direction. Operator: Thank you. We've had a lot of questions relating to Jaguar Land Rover. Robert, maybe you could talk us through what we should expect to happen next. Robert Forrester: Well, surprisingly, I have not got a crystal ball. So I think the main thing to say is nobody knows actually. All we can set out is the impact in September, which was marked, a GBP 2 million impact on profits and a statement which is fact that things have eased in the last 10 days. We're getting far more parts now. Clearly, production has just started, but there's a question mark over the extent to which we will get new car product. There will be -- there clearly has been a gap and now is an unknown about that. And we've done an assessment of the full year impact. We think we hope we've had somewhat on the side of caution with the GBP 5.5 million -- in the words were up to GBP 5.5 million, but the answer is no one knows. And when you look at the history of other cyber impacts around M&S, it's taken quite a while. So I think we are pretty cautious and flagging that there clearly is an issue. There was an issue but the two of the 5.5 billion is literally banked. So there is continuing disruption, though it has actually better than I expected, I think, in the last sort of 10 days, and I think our assessments reflect that. Clearly, a completely an unfortunate one-off event. Now we do have, as we flagged, an insurance policy that covers us for business interruption from third-party outages clearly is a positive thing. The GBP 5.5 million up to does not include any recompense from any insurance policy, so it's potential that we'll have some upside thereafter. We have appointed forensic accountants to help us put together the claim and are clearly working in insurance, but you can't finalize a claim when you haven't finalized the impact. So this will clearly be covered in further announcements in due course. Operator: Thank you, Robert. Slower-than-expected EV adoption has been in the news. How are you managing the potential impact? Sorry, there's an additional element to that as well, so I missed that. And how have the recent EV incentives affected the market was the other part of that question, apologies. Robert Forrester: Yes. I think there's a short-term and a medium-term element to this. I think we've been quite vocal that there's more chance of burn less than in the Premier League than there is a bit in these EV target. There is no chance of the industry hitting these EV targets. So the target for 2025 is a battery electric vehicle mix of 28% with the electric vehicle grants clearly aiding the September market, but definitely did aid the September market and they will aid these market for the rest of this year, maybe into next year. The industry hit 23% or just over 23%. So clearly, no one is going to hit those targets. In the short term, I am more optimistic today than I was 12 months ago about the near-term prospects for the rest of our financial year. And I think there are 3 reasons, which I outlined in the presentation. First off, the government has improved the amount of flexibility within the ZEV mandate target, so they can effect -- the manufacturers can effectively not hit 28% and still not pay fines. That's positive. That takes a bit of pressure. Second, the EV grants that were put in place, which are not for everybody in terms of not every manufacturers got them, but they have led to increased consumer demand for battery electric vehicles. Now there's a fascinating debate about whether this is making people switch from petrol and diesel into -- and hybrids into battery electric vehicles or whether it's actually augmenting the overall market. I think there's probably a bit of both. The third element is we are now getting desperately what we needed, which is our cheaper battery electric vehicles, and I outlined that in the presentation. That helps. So in the near term, I am optimistic. However, I wouldn't like investors to think that this whole electrification thing has got kicked into the long grass and has gone away. It hasn't. The targets are unachievable. This is a headwind on future manufacturer profitability and therefore, by definition, sector retail profitability. If you look at our last 3 periods of 6 months, we've seen new retail, Motability, profitability decline in each of those periods, quite markedly actually. So clearly, there is a headwind and a sector issue. And I think the industry manufacturers and retailers, predominantly manufacturers will come back to the government at some point because the pressure will build again. And we haven't really talked about the [indiscernible] that mandate targets, which I think are even worse actually. I don't think why [indiscernible] wants an electric van. So near term, a bit happier; medium term, still concerned and the whole thing will have to get revisited. There is a global move back to petrol and hybrid. started off in the U.S. under Trump, but it's actually well advanced now in Europe. There's a lot of thinking going on in Europe about extending time scales. It's fair to say our government are not at the front of the queue in rethinking the policy, but the zeitgeist noise among certainly the opposition parties is this has to be tackled because it is not creating value. So I think it's one to watch really. The problem has not gone away, but I am more confident actually in the short run than I was this time last year. That is for sure. Operator: Thanks, Robert. Just conscious of time at the moment, so maybe we'll go a bit more quick fire questions at the moment as we've only got sort of 4 minutes left. Karen, given the strong balance sheet of freehold, favorable leasehold properties and cash position, would you consider relisting as a property company with a healthy cash balance generating tenants? Karen Anderson: Never thought about it. No. Robert Forrester: I don't think it's a serious question, to be honest. Successful retailers have always had high levels of freehold property, and those with only leasehold property tend to find problems. We are an operational business primarily, albeit with a very, very strong property portfolio. So I understand where the question is coming from. It's just not -- It's not on the agenda. Operator: Thank you, Robert. Can you expand on potential BYD and Chinese manufacturers in the U.K.? Robert Forrester: Well, I think we will expand. I think that's what the question was asking. We will engage with the Chinese manufacturers because I think they will take some share; that share will be limited by the number of showrooms available in the United Kingdom. We've got to be very clear that we will prioritize profitability in the short and medium term rather than go and chase market share. Remember, Chinese operators have no aftersales in the book. A lot of our profit comes from aftersales. So we will not go chasing shiny new toys. We will make financial decisions based on investment hurdles. And if that means we're slower in adopting Chinese brands, then so be it. It doesn't preclude you from then acquiring them later on in acquisitions and I suspect that's where we'll end up. We are very confident on BYD. I think it is an excellent technology company that makes cars and their marketing is excellent. So I think we're very confident in that. We will grow with some others, but I don't think we'll be at the front of the queue actually. Operator: And with limited historic vehicle parts in – Sorry, it just disappeared for me. Sorry, we'll move on to a different one that’s there. And what impact will increased BEV vehicles share have on high-margin service revenues in the future due to their reduced service to repair requirements? Robert Forrester: That's a good question. And I think Scandinavians are obviously ahead on the curve. I think it switches between parts and labor. You get less parts. Oil filters being a classic example, oil being another example, but there's still a labor requirement. When things go wrong, they go wrong big, and they go wrong with heavy labor. We make 75% labor margins and we make 20% parts margin, so actually, we could afford for average invoice values to come down, but that makes us still protect profitability. The key question is will modern cars be serviced and repaired by franchise retailers or by independents or not at all. And I think we're pretty confident actually that the technology is so sophisticated that if something goes wrong with one of these modern cars, they're coming back to the franchise retailer and I've seen very little evidence to say that isn't going to happen. Operator: Thanks, Robert. Last question. The potential regulatory changes to employee car ownership schemes could increase costs by around GBP 2.5 million per annum. What mitigation strategies are being explored? Robert Forrester: None. That's the point, isn't it? There's no mitigation strategy, that is a fact. What we have to do clearly is, as I said in the earlier question, is a race, isn't it, of structural cost changes and then trying to find structural cost savings on the other side, which we have been spectacularly successful this year. But clearly, it is an exceedingly unhelpful development and symptomatic of this government's policy towards British business. Operator: Well, Robert and Karen, thank you very much for the questions today. Robert, just going to hand back to you for any closing remarks at the moment. Robert Forrester: Well, I'd just like to say thank you for giving up your time. I know your time is very precious. There are a lot of companies you could spend time looking into and investing in. We feel we've got a very, very strong operational business. The U.K. is not the easiest place in the world to do business at the moment, but one day, the clouds will clear, and we will have an exceptionally strong large business with which then to expand and do very well in. Thank you. Karen Anderson: Thanks. Operator: Thank you very much. And that concludes the Vertu Motors investor presentation. I'd like to thank Karen and Robert for that. Please take a moment to complete the short survey following this event. The recording of the presentation will be made available on the Engage Investor platform. I hope you enjoyed today's webinar. Thank you. Karen Anderson: Thank you.
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