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Maggie Huang: Good afternoon, investors, and welcome to the AAC Technologies 2025 Annual Results Announcement Investor Conference. I'm the host of this event, Joyce Huang, IR Director at AAC Technologies. First, on behalf of the company, thank you all for your interest in AAC. Please allow me to introduce the company management present today. Mr. Benjamin Pan, Executive Director and CEO of AAC Technologies; Mr. Kelvin Pan, Executive Vice President of AAC Technologies; Ms. Dan Guo, Chief Financial Officer of AAC Tech; Mr. Jack Duan, Chairman of AAC Optics; and Mr. Shi Tingjia, Senior Vice President of Strategy of AAC Tech. Thanks, management's attendance. Today's meeting includes 2 parts, starting with my presentation on AAC 2025 annual financial performance and business development. This will be followed by a Q&A session. The statements made at this meeting contain forward-looking information, which are based on the company's assumptions and expectations regarding market conditions and the company's current development. [Operator Instructions] Next, I would like to present the group's results for 2025. In 2025, the group's revenue was RMB 30.8 billion (sic) [ RMB 31.82 billion ] a rapid year-on-year increase of 16.4%. Acoustics [indiscernible] optics has business maintained strong performance and emerging business made huge leaps. Gross profit was RMB 7.02 billion, up 16% year-on-year. The group's GP margin was 22.1%, flat year-on-year. And the group's revenue growth rate was significantly higher than its 3 expenses. Net profit increased by 39.8% to RMB 2.51 billion, mainly due to the continued improvement in the profitability of the optics and the growth of high-margin business. By 2025, the group's revenue growth significantly outpaced the expansion of global smartphone shipments, achieving both quality and efficiency enhancement. SSE, EMD and PM optics business revenue growth 103.1%, 21.3%, and 14.1% (sic) [ 14.5% ], respectively. The group achieved rapid breakthroughs across multiple views more diversified mix. Heat dissipation business revenue surged by over 400%, while the shipments of hybrid lenses exceeded 10 million units and the co-development of co-motors AI hardware with customers. During the reporting period, the group's operating cash inflow was RMB 7.18 billion, up 38.1% year-on-year and its free cash flow was RMB 4.88 billion, up 65.1%. The CapEx was RMB 2.83 billion, an increase of 21.5%, equivalent -- cash and cash equivalents was RMB 8.61 billion, increase of 14.1% (sic) [ 14.2% ]. Net gearing ratio was 2.1% and down 1.1 (sic) [ 1.7 ] percentage points. And this will support the development and innovation of the group. Next, I would like to share with you the performance by business segment. Acoustics. In the second half of 2025, the group's Acoustics business revenue was RMB 4.83 billion, increase of 1.6%. Full year revenue was RMB 8.35 billion, up 1.7% and gross profit margin was 27.6%. The decline was mainly due to the changes in customers and product mix with more module projects. Market share among key customers remained stable with increase. And industry's first coaxial speakers delivered distinct depth and fidelity and also enable a more immersive and superior interactive experience. Automotive acoustics. In the second half of 2025, the group achieved revenue of RMB 2.3 billion, an increase of 14%. Full year revenue was RMB 4.11 billion, increase of 16% (sic) [ 16.1% ]. Gross margin was 23.8%, a decrease of 1 percentage points due to the addition of new product forms and the positive impact of high-end branded automotive audio system on profitability will be materialized by 2026. Group has become one of the leading automotive audio system supplier, second only to Harman and Bose and also acquired Hebei First Light, a leading digital microphone company forming the vertical integrated business synergy. The group has supplied industrial leading 9.2.4.8n for Naim-branded acoustic system for SUV Zeekr 9X constructing an immersive auditory 4D experience. Optics. In the second half, revenue was RMB 3.08 billion and the full year revenue was RMB 5.73 billion. And looking at the subdivided business line, first, micro lenses, the group secured multiple 7P projects and continue to optimize its product mix. Shipments of 7-element lenses, including 7P plastic lenses and 1G6P hybrid lenses reached around 15 million units, further strengthening the group's positioning in the high-end Optics segment. Secondly, module with a resolution of 32 megapixels and above accounted for over 40% and OIS module shipments nearly doubled. And while the periscope modules achieved mass shipments for the first time secure a lot of customers. Let's focus on the combined EMD and PM segment. In the second half, revenue increased by 17% (sic) [ 17.6% ] to RMB 7.14 billion. For the full year, revenue was RMB 11.77 billion, mainly due to the continued volume growth of products such as X-axis linear motors, innovative side buttons and heat dissipation we see. And the group actively expanded its market share in mobile phone motors with X-axis linear motor shipments and shipments achieving double digit year-on-year. The group's market share in mid- to high-end Android phones continue to expand. And in PM, the heat dissipation business has made rapid progress with revenue of RMB 1.67 billion, an increase of over 400% year-on-year. And the group also break the upper limit of industry manufacturing efficiency and yield through its first fully automated production line. The revenue from metalment frames for the smartphones was RMB 3.82 billion, an increase of 4.2%. And the group will continue to maintain leading market share in the flagship and foldable phones. Finally, let's take a look at the Sensor and the Semiconductor business. And in 2025, this business achieved a revenue of RMB 1.57 billion, a significant increase of 103.1%, mainly benefited from increased market share of the group's higher SNR microphones, and we have already secured mass production and delivered our products to major customers in Shenzhen. After sharing this financial performance, let's focus on the core highlights and the development of the strategy. During the reporting period, we were committed to creating the ultimate experience and leading the upgrade of smart devices and also create the various interactive experiences for end consumers. In recent years, AI hardware has flourished. Small size and ease of interaction are common characteristics for future AI hardware with diverse forms. High-value AI innovative hardware jointly developed by the group and leading global players will be shipped in large quantities. In terms of the heat dissipation business and the group empowers and upgrading to consumers these products. And you see that the group's VC heat dissipation shipments have a compound annual growth rate of nearly 90% from 2020 to 2025. And the group has sufficient production resources to meet high technical and process standards for its clients. In the future, it will continue to accelerate the introduction of heat opportunities for new product categories. And in terms of the active cooling and leveraging innovative EMS and ultraprecision and secure its first products for the cooling fans. And we also have this different CTU and liquid cooling plate and manyfold product capabilities. And we also have different customers and make breakthroughs. For example, the different customers like Baidu, Tencent, JD, Alibaba and PDD and the Chinese insurance Cathay Pacific and Haitong, et cetera. Similarly, the group's WG-related products and [indiscernible] in breakthroughs and the group helped the domestic customers upgrade 1G6P main camera and micro-prisms of high-end flagship models, leading WG's important progress in high-end optics. In terms of the plastic lens, the group will strive for more market share on 6P and 7P to expand the main camera and also the periscope lenses. In terms of modules, the group has made the main camera and breakthroughs and milestone development in high-end module and through vertical integration advantages. In 2025, the group's brand system will be implemented the luxury model Zeekr and they will be equipped with the group's full station solution and our high-end speaker brand system. And also we will achieve the full coverage and on the car brand audio system of different grades such as 20,000 to 30,000 leading the way to a full station solution for automotive acoustics. In terms of AR optics group's end-to-end vertical integration and global delivery, mobility have won the favor of leading customers, designated a number of overseas leading customers' optic energy modules and optical Waveguide projects. And we also have the ability to supply with our customers the optical and one-stop full display module solutions. For example, the optical Waveguides, light engines and the push/pull lenses and eye tracking and electrochromics. Last but not least, let's talk about the group's complete global layout. R&D centers and the production basis have spread to nearly 20 countries and regions around the world and AAC technologies will also reach the new heights and bring higher returns to shareholders and customers. The above is my introduction to the performance of the full year for 2025, and then we will enter the Q&A session. Maggie Huang: And the first question is from Everbright Overseas. Mr. [indiscernible] , you can start asking questions. Tianzi Fu: The pressure of the industry, we see that our group has still achieved a stable progress. So I have 2 questions. The first one is about the development, about the mobile phones. And the second is about the acquisition. In terms of the first question, we see that in the year 2026 and many institutes have kind of a flat description prediction on the smartphones and its shipment. So I'd like to know more about your views of the global intelligent mobile phone and also its AI's influence. So how do you see the dissipation business and its upgrade? And what's our advantage? Kaitai Pan: Okay. Let me talk about briefly. I think there have been a lot of waves in the smartphone market from the second half of last year to present, meaning the entire AI influence, which has indeed created some impact on the supply chain and it caused the memory price increase. So it's true that some of the recent turmoil in the industry has been relatively large from our point of view. And the pressure capacity is still relatively good. The high-end models can actually foreseeable. So we see this as a new opportunities for the high-end products because memory price for this high-end -- proportion of the memory in this high end is relatively not as high as that of the low end. So that's one aspect. Number two, because of the memory problems in the need-end -- or low-end smartphones and some market predictors say that intel mobile phone market will 4 -- by 10% and this 10% is about RMB 100 million. So it's kind of very difficult to survive in this environment that this kind of influence for us is very limited because our products -- or heat dissipation products and the mechanics products in the mid to high end so their choice is especially in the mid to high end and upgrading. And our observation is that our customers are choosing products with better performance. In this way, the high-end models can be able to compete in this market have a better pricing. So I think the mid- to high end ASP smartphone will be increased, and this will become the main force. And of course, the competitive landscape will become more fierce. So this is about the entire mobile phone market. In the next 3 years, we think this is a very important period, and we will have more integrated -- vertical integration of our business and we will increase the outer staying products and as well as the co-owned access for further development, continue to improve its penetration rate. And in addition, we will also, for example, upgrade the wireless charging and even the magnetic section to help our customers to do the vertical integration and let them have a better competitive price and also have a higher cost performance we increased function and with more efficient product upgrade. This is a very efficient product upgrade routes we can provide to our customers, and through our motors and mechanic towards in optics. And this is the mindset we continue to apply in our to all business. In terms of the AI specification and the vertical integration and we like to provide with our customers the best solution. If we look at 3 years AI still very important topic. We see that AI voice interaction and heat dissipation demand is ramping up and this will bring us sustained highest grade growth of the VC cooling sector. And this is very important to help our customers stop computing power and battery life problems. In addition, we also see other new categories and explorations in the industry. For example, the MWC, they launched new products and apart from the traditional functions and whether there will be new functions. And another perspective is from the brand new perspective. For example, the AR and AI glasses. And you see Meta have entered this market and based on our interaction with our top customers and there will be more and joining customers launch the products of AI and AR technologies. This is a very important development track. And this optical waveguide and the unit price will be very high because this is a different concept with the traditional products. Number three, we see the smartphones and other companies are doing an AI business and of course, some AI companies. And we are cooperating with several leading AI companies and customers from the large language models and to the large scale the new models, our microphones and our motors will be very important core technologies. And starting from next year, we believe our products and its value will be much higher than that of the regional and mobile phones in the next 3 years. Another important potential is in the Automotive Acoustics. And after the acquisition of PSS and also the PSG, we are fully equipped with the full range of the sound systems and capabilities. And last year, the corporation with Zeekr's name systems has already proved our capability and this system is still positive in the industry. In terms of its public opinion, and it's still relatively flagship level influence system. So we think our autonomous layout has gone from a series of mergers of acquisition to the current system level capabilities. And recently, our focus was on China. And in the next 2 to 5 years and our automotive system will also be expanded to the overseas market and the growth space is still very considerable. Tianzi Fu: Thank you very much. we also believe that AI continues to have a lot to offer. My second question is about the about EMD, it's about far east technologies. So how do you consider this valuation? And I remember it's in the supply chain of NVIDIA. So any synergy we can create? So this is the second question. Tingjia Shi: Thank you for your question. The acquisition of Far East and we see that the revenue for this year is estimated above RMB 200 million. And based on this, we have completed 51% in equity acquisition. So this is a very reasonable pricing. And the -- this company is very important in its cooling -- liquid cooling system in the industry and its package includes all the main domestic Internet customers. So this will help us to lay out this business in the market and to gain a fast-growing domestic market and obtain the overseas market share. Maggie Huang: Next question is from Andy Meng from Morgan Stanley. Andy Meng: And we see that the results exceeded expectation. But I may pick the bones in the egg and ask a question here. If you look at the sector of this Acoustics business, the gross margin feels slightly lower than the expectation. So may I know the reason and any improvement in 2025? And my second question is what's the guidance for the business segments? Dan Guo: Thank you very much for your question. You talked about the gross margin of Acoustics is lower than the expectations. As mentioned by Kelvin. In recent years, our group has expanded our product mix and the products layout. From the early years, maybe the focus is on the speakers of master classic levels. It's more focusing on the single box or -- and the product form. And up to now, we have actually integrated the whole concept of a large module, including some progress we see and magnetism and the increment of this [indiscernible] is relatively fast. So the overall gross profit margin has changed compared to before. And in the second half, we see the gross margin is steadily going up. And in the 2026, we will see the stable growth. And your second question is about the guidance for 2026. So apart from Acoustics and in terms of PM and in this year and the revenue growth will be about 5% to 10% and the gross margin will maintain at a very stable level. And in terms of the PM, and this will maintain a very high growth rate in 2026 and the revenue growth will be more than 30%. And the gross margin will also rise steadily on the basis of the 2025. So in terms -- so this another business is about the Optics and ASP, annual growth is about 10%. And this year, we will also see growth on the ASP and we have the confidence to see the stable growth in Optics. With regard to the gross margins, you see that in terms of our yield and efficiency and our R&D have made significantly improvement. So we will see this gross margin will be steadily growing on the basis of 11.5% of 2025. In terms of Sensors and Semiconductors and it's about double-digit growth. It's about 15% to 20%. And Kelvin also talked about the Automotive. It's an upgrading business. We have already acquired some brands and the revenue will be maintained double digits. And the gross margin is relatively stable as well despite the fluctuation of the industry, there are different growth drivers in the industry, and we have the confidence to realize the stable growth of our revenue and not lower than our 2025 revenue. And of course, the gross margins will maintain steady rising. Andy Meng: Wish the company will achieve better results in 2026. Maggie Huang: And next question is from William Yang from JPMorgan. William Yang: I'd like to know, for example, the international CSP or the new CSP, they seem to be interested in -- stepping into the hardwares, so I'd like to more about the collaboration of the group with those big CSP and what is your expectations in the next 1 or 3 years? What's the revenue contribution they will make? Kaitai Pan: Okay. I will take the question. And from the perspective of AI, we see some big international AI companies, and they have different trials in the AI terminal devices. A more typical case, is Meta, right, it has its own model and then it has collaborated with Rayban glasses and have displayed AI on them and those are some simple AI features. And we also collaborated with our enjoying customers and we help them to develop light waveguide and also the light engine. So this value is not just some simple functions. This is the light wave and the light engine cost tens of dollars, right? So if we started -- we estimate at least USD 30 to USD 50 for each and for a pair of glasses, it would be worth at least $100. So we see when it reach to the large scale and the value of this is very considerable. And some domestic companies in the industry, including, for example, some overseas top companies, they are developing AI wearables, devices like portable devices, like portable camera inside and there will be some motors embedded in the equipment. And they will also recommend -- make recommendations based on the customers' behavior and in those functions. And those kind of equipments and devices without the screen and many interaction are based on the voice and the actions. So the most valuable parts in those products maybe the motor and also sensor. And so we strengthened our collaboration with the customers for a long time. And if they have mass production, and this will boost our ramping up of the products. And of course, on hardware, the pricing of its hardware is different of its mobile phones because the focus of the products is not only screen or battery, it will become a motor. And this price will be much higher than the smartphones kind of considerable value. So we think in the second half of this year and next year, and this will become very good and important opportunity for us. If you compare -- for example, if they have a subscription and it's not only about several hundreds of thousands or million stats and at least it will be over 10 million. So no matter this from the volume or the value and this is also -- both of them are very considerable. And this will be reflected in the second half and next year. And this good phenomenon in the industry, AI server, and AI algorithm and AI models have been invested in the large amount with big fund and it has to return to the application scenarios return to the terminals, and we welcome this equipment and devices. And it's also a very good layout for us. Maggie Huang: Next question is from [indiscernible]. Unknown Analyst: First of all, congrats to the company's performance in 2025. I have 2 questions. The first question is about the Optics. I'd like to know about the shipment guidance of the WLG and also the revenue estimation and this is about WLG. And the second question is about modules and plastic lenses and Joyce also mentioned about this main camera periscope supply. So I'd like to know the shipment plan as well as the detail of the gross margins. Jack Duan: I'd like to answer the question. As mentioned by Ms. Guo Dan in 2025, our Optics have achieved certain results. And our gross profit is also reached more than 30%. And in 2026, in the plastic lenses and this will maintain at this level to about 35%. And in terms of the shipment volume, it will keep flat, but ASP will be increased by 5% to 10%. And in 2025, the shipment volume has exceeded 10 million units. And this is a very important milestone to us. And we also launched the use of periscopes as well as the 3-in-1 Christmas lens. And this kind of application will be continued in 2026. And other applications, for example, the application of non-smartphones like the drones applications, we also achieved some good projects. And also win some projects in overseas market, and we are very confident to the promotion and of our business in this regard. Unknown Analyst: So you talk about lenses. What about modules? Dan Guo: I may add a little here. This year, as mentioned in PPT, the overall revenue of Optics is RMB 5.7 billion and overall gross profit margin level is 11.5%. Other is about the [ G plus P lens ] and in lens and in 2026, we think the ASP in lens will be maintained the same level last year on ASP or even 10% higher P lens and we realized, as mentioned by Mr. Duan about the above 30% gross margin. And in 2026, we are very confident to improve our yields and efficiency and to the 35%. Regarding modules in 2025, we see that the gross margin is 4% to 5%. And in 2025, based on this basis, and we can achieve a stable growth. So that's my supplements. And Jack please go ahead. Maggie Huang: Next question is from Zheng Bingyi from HSBC. Bingyi Zheng: I have 2 questions. And the first question is about heat dissipation product. The growth of our shipment volume is quite amazing. So I want to ask the heat dissipation product side of a major customer in the U.S. what about the percentage in 2026 and 2027? And what's the upgrade trend of this product? And this kind of product upgrade will b expand to other categories. So if we see the next 3 years development and what kind of revenue growth will this product bring to the company? This is my first question. While the management is unmuting, let me ask my second question. The second question is about the Automotive Acoustics business after the M&A in the next 3 years and what's the development strategy? So under this development strategy, what's the long-term strategy? For example, in 2027, 2028, what's the growth expectation? Zhengmin Pan: I'd like to answer the first question. The big clients in the U.S. is always sensitive. So in terms of the heat dissipation and entire VC I'd like to give a roughly comprehensive evaluation. The figures we see of 2025 is just our recent achievements and it's just the beginning. In the future, in the next 5 years, we're thinking some high-end products with the AI function strengthening and this penetration will be improved. And on the chip size, for example, in data centers and some storage, all the memories and VCs will gradually penetrate as well. At the beginning and the growth is about double digit and we have the confidence to achieve [ 10 billion ] product lines. And this production line is continuously growing and is also ramping up in all aspects In terms of automotive business -- acoustics business. Kelvin? Kaitai Pan: Yes. I'd like to mention, as I said earlier we need to build up this complemental capability and PSG and also our launch o the Zeekr's Premium, and SUV and this prove the capability of our products. And also the capability of our whole system. And the application on the Zeekr's 9X model reflected the premium performance of our products. And many people say it could be benchmarked against RMB 50,000 audio system. So we think this is not only a success in single case, but also necessary way for the high end of Chinese brands into this business and industry. And this is a very good route for the value-added integration for our customers. So in the future, we will continue our collaboration with Naim and Zeekr's. Secondly, we can help our customers to create more value for some branded systems. You can imagine that today with the penetration of different ASP of different products in different brands and our ASP is -- can be still going up because our customers have higher requirement demand on speakers and amplifiers and sensors. So this great potential in next 3 to 5 years. Every year we can achieve a very sound double-digit growth. And with the penetration, for example, this year, we have already achieved over 10%. And in the future, there will be above 10% and higher. And the upgrade of different systems will bring the ASP's growth in the automotive business. In the next 5 to 8 years the scale will be increased from 5 billion to 7 billion, 8 billion or even tens of billions. And importantly we're owning domestic brands and in the next 3 years we will proactively expand our business in the overseas market because many overseas automotive brands are studying the Chinese supply chain and also the smart cockpit solutions, right. And our branding opportunities and also our brand system check actually has a lot of room for growth. TJ, do you want to add a little more? Tingjia Shi: And actually, I think, I quite agree with what Kelvin said, and we have a lot of brands apart from Naim, we also have the second categories. So through different company and different brands and we can achieve the revenue scale of RMB 10 billion. Maggie Huang: Due to the time constraint, we'd like to invite the last speaker. Xudong Chen: I'm from Huatai. My name is Chen Xudong. And congratulations to the company for achieving very good results. I have 2 questions, mainly about the robotics and AR -- XR business. And we visited the CES Exhibition and see that -- also saw the company's exhibition of the robotics and XR products. My first question is how do you evaluate the robotic business because it's already in the rapid development period. So do you have a detailed commercial plan? And what's your plan in some testing projects with the different companies. My second question is about XR and its business layout. I'd like to know more about the light waveguide and also know more about the direction of this technology and its contribution for the long-term revenue of the company. Kaitai Pan: Let me briefly talk about robotics. We actually regard robotics as an AI and the terminal device. And we also see, for example, this is a kind of important robotics and as well as different products. For example, the speakers and microphones and the aggregation equipment and AI devices can only interact with those devices and then communicate with people and includes a lot of high precised devices -- high performance devices, for example motors and heat dissipation. And those are important requirements and demand for robotics. And then they also need the like optical devices and those are the interaction demand for the robotics. So AAC has a great potential in those products. Last year, also this year, we have been following some leading customers in China and startup customers. And In the recent years and also -- and even half and half -- and even a year and a half, there are many versions in the iteration. And we use different devices, for example, motors or speakers, microphones and to strengthen our collaborations with different customers. So we have relatively sufficient layout in this area. Number two, at present, there is no definite models or development routes. And how to meet commercial scenarios or whether it can only being used in the industrial scenarios. Some standards are not fixed and our effort and work is to help customers in upgrading. And apart from this, we also have the capability help them in the mass product and we are experienced in the automotive business and electronics -- consumer electronics. So your question is about the revenue contribution. The fixed estimation is actually depends on our customers' hand. And they didn't have -- they haven't made a very specific plan. Therefore, we didn't have this specific guideline. And apart from this -- apart from big robotics and some smaller sized robotics and we also have the opportunities, we have been laying out optics and the motors and the microphones, and we also see it as progress. This is more visible than this Android robotics. So this is about different -- we are also preparing, for example, the high-perform products [indiscernible] and we are constantly interacting with our big customers, the top customers and some start-up companies. And we are reserving our capabilities. And I believe in the future when this market is further commercialized and we will have our core competitiveness and can deliver high-value products. In terms of AI, do you want to add something? Tingjia Shi: So after the acquisition of the light waveguide, and this help us to unleash our advantages. And in terms of the light waveguide, we have started our in-depth cooperation with head customers of Android. It is expected that by the end of this year and the beginning of next year, there will be mass production of the shipment. And apart from the Android customers, we also started our cooperation with some leading customers in the U.S. And apart from this light waveguide products, we also have the collaboration on the light engine. And after 2 years or 3 years and the mass production will be realized. So this is not only our plan in the domestic market. We also have our business plan in the overseas market, and this will be realized in A1 and X3. Maggie Huang: And next, I would like to welcome Benjamin Pan, Executive Director and CEO of AAC to give a summary. Zhengmin Pan: Thank you very much. Thank you, all the investors for participating in today's meeting. I'd like to make a brief summary here. I think the transition of the group started from 2020, and we experienced 5 years and the results and effect is obvious. And first of all, from the financial side, our current scale gradually establishing and through a definite growth of multiple product lines. And the whole group is not subject to the original mobile phone and we also secure our growth from other products. So you see we have set our target of 2026. It's about 16%. And of course, this is the effort made by the team led by Kelvin. In terms of gross profit margin, we want to maintain 22-odd-percent with a stable growth. And the average gross margin will steadily grow. In terms of the net profit, it is -- with management improvement structure and also some granular and lean management, we will achieve higher net profits and it will be higher than the gross margin. And our free operating cash flow was RMB 7.3 billion and CapEx is RMB 2.8 billion. So after deduction, we have almost RMB 4.5 billion positive cash flow. S33 we have purchased [indiscernible] in recent years as well as some other acquisition, but the operating cash flow is still positive. This is a very good position -- cash position and the positive cash flow of RMB 4.5 billion. And we never have achieved this level since 2017. This is the pickup of profitability and as a CEO, I'm very happy to see the steady growth trend in this positive cash flow momentum. In addition, I want to remind you that our revenue and other surface is company -- is mainly on the mobile phone. Acoustics and haptics through the transformation of the past few years and the changes in the external technologies. AI is actually a foundation that surely brought about the growth, of multiple product lines. Consumer electronics is also another case. And AI glasses will become the future demand as well. And we also announced today that we've acquired the Far East company and our equity share is about 55%. And the purpose is on the data center. And we want to have a quicker entry in the data center and of CDO. And apart from this, we are also doing the liquid cooling plate. And we are still seeking the M&A opportunities. We also secured some U.S. customers in the precision mechanics and this year definitely can achieve RMB 100 million to RMB 200 million sales. So with the development from the consumer electronics to data centers to the liquid cooling and we laid a very good foundation. In addition, robotics, as mentioned by Kelvin, we are developing the direction of a very positive trend. First of all, we have acoustics and optical sensors with a precise transmission and mechanics and also heat dissipation and many products layout. And we have both connections with domestic market as well as overseas. And we want to have a comprehensive competitive advantage in this direction. In the 5 to 6 product lines, we want to at least one product line to be secured with the substantive connection with our customers. At the beginning, we only doing speaker and then expanding to the wider range and to 6 products and to the robotics. So with our specialties, we also want to explore and expand on our competitiveness in other areas and build substantive cooperative relationship with a old robot companies. And with the customers demand and with our negotiation with the customers, we will gradually see the profitability from robotics in the next 5 to 8 years. I believe when the market is ramping up and our product line will be over RMB 10 billion. Of course, this is the outlook. As Kelvin said, the client and the customers have not yet established this real demand, but we want to establish a strategic layout and the plan. Once the demand arises, we can ensure our precision. Okay. And that's the summary. For me, I'm very happy to see the transformation of the company, no matter in the financial side, but also the new product lines and also technology layout. Thank you very much. Maggie Huang: Due to time constraints, the AAC Technologies 2025 annual results presentation is now concluded, and the roadshow materials have been uploaded to the company's official website. If you have any questions, please feel free to contact us. Thank you for your support. See you. [Statements in English on this transcript were spoken by an interpreter present on the live call.]
Bettina Schäfer: Hello, everybody, and welcome to our earnings call for the financial year 2025. My name is Bettina Schafer, and I'm responsible for Investor Relations at LPKF. I'm pleased to be joined today by our CEO, Klaus Fiedler, and our CFO, Peter Mummler. Klaus and Peter will walk you through the business development for 2025 and provide an outlook for the current financial year. After that, we will open the floor for your questions in a Q&A session. The conference will be recorded and published for a period of 2 weeks on our website. Before we begin, please note that today's discussion may contain forward-looking statements. These statements are based on current assumptions and are subject to risks and uncertainties that could cause actual results to differ materially. We do not undertake any obligation to update these forward-looking statements, except as required by law. With that, I would like to hand over to Klaus. Klaus Fiedler: Thank you very much, Bettina. Hello, and welcome, everybody, to our annual results 2025. I want to lead in with the key takeaways of the year. Looking at our revenue, we are at EUR 115.3 million, so down 6.2% from previous year and at the lower end of our adjusted guidance. Our EBIT improved from EUR 0.1 million to EUR 0.8 million adjusted EBIT, which basically shows that despite a decline in revenue, our cost-saving measures more and more are visible also in our bottom line. I want to quickly lead into when you look at the right-hand side, our distribution across the regions. You can see that our business distribution, North America and Asia is growing, while Europe basically now constitutes less than 1/4 of our revenue. Dominantly, our markets, our growth are shifting step-by-step outside of Europe. When we look at order intake, we are at EUR 91.6 million, significantly below previous year, which also reflects the backlog. The main impact factor that we have here in order entry also in revenue for 2025 is that we are going through a slow phase in our Solar business, which is driven by the upcoming technology shift to Perovskites, I'll come to that in a minute, that reflected also our order backlog and our order intake, which was very strong in the previous years in Solar. Looking at other business fields, despite, of course, the headwinds we had with the tariff situation, we had a moderate growth in Rapid Prototyping. We exceeded our planning and expectations in Welding, mainly driven by a large order in the consumer field coming out of China. Looking at advanced packaging, we don't make these numbers transparent yet, only for the packaging semicon sector, it's still in the low 8 figures. But from a positioning point of view, above our expectations. Looking at all the customers that are preparing for ramp-ups for glass and advanced packaging, over 80% are now qualifying with LPKF equipment, which gives us a sound basis for the upcoming ramp-ups. What we are doing, we basically treat this as an entry ticket into this market and are right now expanding our portfolio with the goal of becoming strategically relevant in the large growth field. For ARRALYZE, we took the decision to discontinue our internal activities and transfer the business to a suitable external partner. That is driven basically by the fact that our market entry is targeted at academic customers, funding for public institutions in Europe and also specifically in the U.S. is quite shaky at the moment. So we see that this would be a longer way to get into this market as anticipated. We need to focus. We need to watch cost. So here, we took the decision to basically look for an external partner to continue these activities. Peter will say more about the North Star program in the course of this presentation. We have a good start. Part of the journey is completed. Part of the savings are already realized, and we are now in a second wave to secure a double-digit profitability in a volatile market environment in 2028. And we also finished a new financing framework with our existing banking consortium to basically make sure we have the right funding for this transformation. Now a couple more details on our market situation. You know the increasing global tensions that are happening. We had the tariff impact in '25. We currently have the Iran situation. So this clearly overall creates headwinds for LPKF. There is more reluctance to invest than in a normal environment, and the investments that are happening, the deals that can be made are increasingly generated outside of Europe. We are below 25% share of sales in Europe now. The semiconductor industry transformation towards glass-based substrates is clearly beyond the point of no return. So several external sources, all the announcements of the large players, drive it. Positioning is very good, but not yet in '25 reflected in true volume sales. The qualification of the whole process chain took longer than also expected by our customers, but is driven with full force and is making the right progress. Our SMT markets were impacted because large-scale projects needed to reshuffle based on the tariff situation. This was just effect of, the demand is there, but given the tariff situation, all production chains could no longer be executed as planned. The tariffs would have destroyed the business case. So our customers needed to replan where do we do which process step in our business case. So we had delays in there, but definitely not the overall market drive going away. We see that it's only a delay and definitely not that projects are going away. What do we see in the solar market? You know in the solar market, we are active in the U.S., but also in China. What we see in the U.S. is that also the tariff situation required a complete reshuffling of the operational flows of our large key customer, which definitely weakened investment and allowed them to -- or forced them to focus their activities on setting up their production chain that it works in this tariff situation. And also in China, we see that overall investment appetite is low and where deals are to be made, there's a strong push to local-for-local, so an intensifying competition for solar scribing. Overall, and that's now a continued situation that we see, we are operating in an environment with persistent volatility, geopolitical tensions and also fragile supply chains. Looking at business development. In advanced packaging, our positioning, and we have mapped really every customer in the world that is active in the field, is working very well. We see more than 80% of customers choosing LPKF for their qualifications. We are also selling well into these qualification lines, but that's not yet the volume push we are now expecting for the future, but a very solid basis for this. We are seeing very clearly and also monitoring that many players definitely want a piece of that pie. So our IP situation and the work we put into this business in the past 10 years is now becoming very important to make sure we defend the market share we are targeting here. And as already mentioned, we know the full process chains. We know due to our contacts where also the future needs lie, we are using the opportunity to broaden our portfolio right now to become a strategically relevant partner in that field. Looking at Rapid Prototyping, we had a positive development under expectations, but positive year-over-year. Strong North America demand, the U.S. government shutdown in Q4 dampened the order entry a bit in Q4, but the overall trend and our market positioning remains positive. As mentioned, in Electronics, the tariffs delayed projects in the SMT market. We still could grow year-over-year with our cutting systems, but the over organic growth we clearly expect and which is driven by the fundamental shift away from mechanical milling to laser singulation, that was clearly dampened in '25 because a lot of production chains needed to reshuffle. In Welding, automotive continues to be weak, and that was part of our planning. But our strategic shift to other application areas, consumer and medical, definitely worked well in '25. We are significantly above plan in that area, driven by a large bulk order. And we also were able to win a substantial volume order in the smart robotics field in '25 with further orders coming in '26, which gives us a solid foundation for this transformation we are in Welding. Solar, we had a weak and significantly below-plan year in '25. Operational execution was perfect, but overall, the situation that the market is focusing on the shift to perovskites, but perovskites not yet being mature for volume ramp-up, that results in a phase of low investment demand. We consider the perspective for Solar very good with the transition to perovskites. So we definitely want to continue full force with our activities, but we had a '25, and we also expect a '26 where demand and revenue is significantly below historic figures. We are supporting all these customers with perovskites prototyping lines, of course, but that's a different revenue bracket than fitting a full high-volume factory. Looking at operations. We launched our North Star program to structurally reduce cost. Peter will tell a little bit more about that, and we have already gone a good step along the way, but are continuing with a true structural change of LPKF to be ready for a world that is in constant volatility. We are targeting through these measures, but of course, also through the measures of realizing growth, specifically in advanced packaging, a double-digit EBIT margin for '28. And we are safeguarding our innovation investments. IP is becoming more and more important for us. We are focusing our markets. Definitely, the advanced packaging is set up the way we expect it to be set up, and we see a lot of future perspective in that market. There, we do a focus in areas where we do not see the progress, be it external factors or not that we expect, we focus stronger and also discontinue where we say this will not bring the payback in the time we expected it. And as mentioned, syndicated loan agreement is redrafted, extended to '28, securing a solid financing for LPKF. Next slide, please. Just a bit of an insight, advanced packaging field, you all know very well what we are doing with glass structuring with LIDE. We are still in a positioning phase, not due to us. Our customers confirm LPKF is ready, but due to the whole production chain needing to reach volume maturity, we see the ramp-ups coming, and I'm happy to report how that reflects in our figures when we look at Q1, Q2 results. We expect ramp-up phase '27, '28; high-volume '29, 2030. We have been positioning us with two additional highly differentiated process steps in that field to immediately broaden our footprint and gain strategic relevance, that's ABF singulation and glass bonding. And we are in a market assessment phase in co-packaged optics, the logical next step where the glass is used for data transmission between the individual chips in a package. Most of you will know that 3 years ago, we started already a partnership with a large U.S. semiconductor company. So we already have a track record and the right technologies for this field. With that, I will hand over to Peter, who will walk you in more detail through the financial figures. Peter Mummler: Hello, everybody. I want to give you a little bit more insights about our financial year 2025. And it shows a little -- really a diverse picture in our world. When we go to the next page. As Klaus mentioned, that -- in the revenue, we had a challenging year. We are on our communicated guidelines on the lower end was still a raise towards Q4, but we are in the range. Klaus gave a little bit about -- feedback about this. And then later on, we showed a little bit more about our business units where the diverse picture comes from. The EBIT development is strongly hit by restructuring measures. We already mentioned that we started North Star -- and you see this on the lower end in employees where we -- on the one side, we are really reducing significant headcount, and these are special costs, restructuring costs, what we have here considered and therefore, this development of the profitability is really EUR 11 million of a hit towards previous year. When you look at our adjusted EBIT margin, there we have an improvement towards previous year. Here, you can see that we already have in the North Star, in our cost reduction measures, we have already the input. And when you look at the development of the revenue that we are 6% below, but we could improve our adjusted EBIT that there you can see that we're really hard working on the so-called breakeven point to be profitable. And we really put cost out of this during the year, and I would say this is a good situation and a really good move we did, and therefore, we could improve our adjusted EBIT towards previous year. When we're looking at our -- one of our really positive developments is, a lower element, is the free cash flow. Here, we must really say we did in our asset management, significant improvements and especially where we have a huge driver and I mentioned this in our DSO, where we really, on the one side, we're collecting much earlier the cash by the customers compared to last year, and we even made a significant improvement about collecting cash from so-called overdues receivables. There we did really a very good job, and therefore, we improved our cash -- free cash flow significant by 400%, even that we are still not growing towards previous year. The orders in hand, and you see this when you look at the order income numbers before, we are still in a book-to-bill rate below 1, that shows and is reflected in our development in the order backlog and the significant Solar business where we have so-called big orders in there that shows that we really had a hit in our order backlog by minus 47% in -- towards previous year. North Star, Klaus mentioned this, North Star is an overall profitability program we started. We see here already in the development of the employees that we are progressing here. We reduced by 6% our employees. There's still a way to go, but this is the first steps we are doing. And therefore, we have the right trend when we look at our revenue development today. Therefore, we made the first steps, and I'm really happy to show that we're developing in the right direction. Net cash follows the free cash flow, therefore. Here we are about our working capital. Next slide. Here, working capital. It shows a little bit worse. First of all, I mean, the working capital follows in the structure, the revenue development to our business development. But we have two elements where we really made good progress on top of the development is our inventory and our trade receivable. I mentioned the trade receivable already this slide before, where we really improved our DSO by 40% by the significant measures. And our inventories, even in our inventory asset management, we improved despite the development of the revenue, we had -- and you see this in our DIO, we reduced by 10% towards previous year. Overall, it's a very positive development. Our working capital improved by 34% towards previous year. This is a good step and we want to keep this level now for the future because it was a really good approach in our asset management. Overall, very positive development compared to the previous years. Next slide. Here, we see the diverse picture we mentioned. Klaus mentioned already in the beginning a little bit about the business development. But here, you can see really our diverse picture in our business units. When we look at Electronics. Electronics were short of the budget in our previous year, majorly hit by the tariff discussion about the investment, how the customer really looking at the investment, there was really a downside in our Electronic business. We're still pushing for the semi market. Therefore, the EBIT follows the reduction of the profitability a little bit more because we're still going -- investing in our semi business. Second business unit Development. I must really say development really grows even in this challenging environment -- market environment we have with the tariffs. There was a growth. It's a very good story. And we had even measurements in here that we over-proportional growth the profitability in this business by -- from EUR 0.1 million to EUR 1.3 million. This was really a good story and a good push. Welding. In Welding, Klaus mentioned this already, the growth of 30% towards previous year, majorly driven by an order out of the consumer electronics, must say we really executed this contract even very efficient. Therefore, you see the impact about the profitability, really the turnaround in the Welding business towards a positive business was really good improvement here and one of our good storylines we had in '25. Now Solar. Solar, mentioned this is our downturn in this year -- last year because we had a significant hit, 1/3 of the business has gone. And here we go. When you really look at the number that we had a significant reduction of revenue, we still made a pretty good job that it's not a one-to-one extreme hit in profitability. There were certain cost reduction measures when done that the hit we received here is still in a range where I must say, we did a good job. Therefore, it's mainly driven from the diverse business. You see Solar is kicking us very hard this year. So Klaus, I hand over to you towards the -- for growth. Klaus Fiedler: Thank you very much, Peter. So basically, given the overall situation we see in our markets, we see headwinds in our, let's say, core business. The Iran situation we factored in, is definitely not helping. On the other hand, we see that the growth drivers, especially in the semiconductor field, but also in overall Electronics are intact. So we went to a conservative guidance of EUR 105 million to EUR 120 million, that's resulting in an adjusted EBIT of minus EUR 3 million to EUR 4.5 million. What do we see happening at the moment? We clearly work strongly on both levers, the cost, but also the growth factors to work towards a double-digit EBIT in 2028. In the individual markets, what is our aspiration? What do we see? We see that the positioning in LIDE will now transfer into first ramp-ups. I'll tell you more about that when I am allowed to talk about Q1 and Q2 order entry, and we definitely take the strategic opportunity, expand the portfolio, use the deep market insight. This is the area where LPKF will be a strong and strategic player in the future. SMT and our Rapid PCB Prototyping, yes, we see solid growth prospects, stronger in SMT because the shift from mechanical routing to laser depaneling is still having a long way to go and a lot of market to grab. Rapid PCB Prototyping has a dominating market share, we'll defend that, but we'll generate cash. We see good prospects there. Solar is a hit. Solar was for many years a solidly growing and nicely contributing business. It is going through a weak phase also in '26. And this is largely driven by the fact that new investments are not happening because people need to reshuffle their production chains due to the tariff situation and people expecting perovskites to be the new technology to invest in. So we stay positioned. As you already saw in our '25 figures, we are managing the cost, despite significant movements in the revenue, but we definitely will support this business to the extent that we can grab the opportunities with perovskites when they become mature. But at least for '26, it will be a weak year for Solar, which definitely also reflects in the overall revenue of LPKF. In Welding, yes, we need to completely restructure this. The old automotive-driven model is definitely no longer working. We are in the middle of executing that, and we will also consolidate our production sites. We will go from 4 to 3 production sites in this course, but we definitely see the growth perspective in other markets. We see the orders coming in, in other markets, which definitely help and build a foundation. The robotics example was one of those. And we will make this, again, a profitable contributor to LPKF with the foundation in automotive, but with the growth coming from new technologies, A-to-A in other markets as well, consumer, medical, also robotics. And from the structural adjustments we are doing North Star, this is not just headcount reductions here and there. This is really setting up the company in a structure that a permanent situation of volatility in the macro environment we are operating in is something that LPKF is set up for and can absorb without short-term measures and, let's say, short-term cost reductions, but basically a model that is ready for outside challenges and volatility, but grabs the opportunities we have with the semicon back-end market being the dominating one. There, we will definitely stay the course and also continue what is necessary to play to win in that field. Thank you. With that, I hand over to Bettina for the Q&A. Bettina Schäfer: [Operator Instructions] And the first one comes from Apus Capital, Johannes Ries I assume. Johannes Ries: I have a couple of questions. So first one of my preferred topics, I have no word about foldable screens. There was a pushout you explained last time that the old technology was still used. But I hear, for example, that the expectation that the Apple foldable phone will be a big success and maybe push -- increase the market by 2x. Therefore, it is an interesting market. Are you still on the way maybe to come in this market? And how is the actual situation? Klaus Fiedler: Let me answer that immediately, Mr. Ries. We are definitely in this market or let's say, our customer, our partner is in that market and offering the glass technology there. But what we saw that beyond what was already invested, things are moving slower than expected. Of course, when I was in Korea, I asked them, look, guys, why is this -- why are you not getting more customer orders in? Basically, people stay a bit more on the conservative side with the technology change than expected. The fundamental of glass being used in that field, we still see as clearly intact. Actually, I'm next week in Korea to also raise that topic again. So to answer your question, this is still an attractive business opportunity, but definitely progressing on the slow side. Johannes Ries: Okay. Maybe on the more short-term interesting side, you have shown definitely interesting again, the chart about the different business areas in semiconductors could develop. But if I look at the market, the topic photonics is really heating up heavily. Could it be that this CPO topic could come a little bit earlier than you have on the chart? Klaus Fiedler: So of course, we are monitoring and also participating in co-packaged optics since many years. What we see at the moment is that a lot of different architectures are evaluated, shown at conferences, sometimes even shown in customer presentations. But having an architecture where we say this has a high probability of winning and making it into high volume, that we don't see yet. It's like VHS and Betamax. There's still a high risk that you bet your money on Betamax and then it's VHS and your investment doesn't pay off. So we are still in a market assessment phase. We are working with customers on a sampling basis, on a technology alignment basis. We do not see the point yet where we can with confidence say this technology will be a winner. This is where we invest in as LPKF. But we see that, that phase will be reached towards '27, and then we will definitely start the right activities to position ourselves with true volume offerings. Johannes Ries: Okay. The second thing I missed in your reporting was a statement you have made in the past that you expect the LIDE business maybe leads you to a low triple-digit sales. Is it -- you only talk about the margin. Is it still your expectation? Or is maybe the expectation come a little bit down? Klaus Fiedler: No, it's absolutely my expectation. You know we are very broadly networked in that market. First customers have now shared their volume demand profiles for the coming years. Some customers are still hashing it out. And what we see as numbers that are thrown on the table is absolutely in line with our previous market model, and that is also the number you were just mentioning. Johannes Ries: Super. On perovskites -- how's your visibility? Is there a good chance that this business really could start to fly in 2027? Or is it hard to say? Klaus Fiedler: My personal expectation is that it will not be ramped in '27, but in '28. Our clear goal is that we get high-volume orders for fitting the factories also already into our '27 revenue. We will have a slow year far below what we had in good years like '23, '24 and so on this year. And my -- I need my customers, my customers need me. And I will need to make very clear to them, look, guys, I can compensate maybe one very slow year like '26, even though it's in the big picture, of course, a big hit we take. But for '27, my clear goal is to have high-volume orders in the revenue. And that's what we are working towards. And it, of course, also depends on the progress our customers are making in the technology development. Johannes Ries: Very clear. Another area of Welding with the reorientation and rightsizing Welding, could -- is it possible with the new customer sectors like consumer, for example, that this business could return to the growth path, at least maybe slow growth in next year? Klaus Fiedler: Well, next year, we will focus -- or this year, let's say, we focus on finishing the transformation. And we do not go in with very high revenue expectations, but with realistic ones. For '27, yes, absolutely. We will operate this business on a far superior cost structure. We will use synergies in our production footprint, which also helps here. And yes, we see that in the markets we are now targeting, orders are to be gotten, and we have the new technology out with [ ATA ]. So yes, our -- otherwise, we wouldn't do it. If we don't believe that this can be a growing and profitable business, we would discontinue. But I absolutely see that perspective. And the foundation of nice large high-tech orders in sectors like we had in '25 in the consumer field like we have now in '26 in robotics tells me, yes, this is a viable plan. Johannes Ries: Very fast question, then I'll move out. On ARRALYZE, has the cost to downsize maybe to move out with your own activities or to reduce your own activities already included in the '25 figures or is more to come? And how far you already on the search for a partner? Klaus Fiedler: So the costs for ARRALYZE are out now with Q1. So we started this activity, decided in Q4 and immediately went to execution. Execution is now finished with Q1. So the dominating part of the cost is out with end of Q1. We are in talks right now with an external partner who has an awesome network in the biotech field now, on the right partnership, and we have the clear goal to finish also this in the course of '26. Operator: The next question comes from [ Tim Wunderlich ]. Unknown Analyst: Can you hear me now? Klaus Fiedler: We can hear you, hello. Unknown Analyst: Johannes already asked a lot of the questions I had on my mind as well. But I just wanted to get back to LIDE, and you made this interesting comment that you are going to -- will be able to tell us more about LIDE in Q1 and Q2 because there's some initial ramp going on. Could you just at least now today give us a quick introduction about what this is really about. Is it pilot production with some of the South Koreans. Is it -- what kind of volume could we see with these orders in Q1, Q2 when it comes to LIDE? And also for the full year, do you expect LIDE to show strong growth? And sorry, if you've spoken about this, my internet connection was down for a few minutes, so I may have missed something during your presentation. Klaus Fiedler: Any time, so I have to watch Bettina's face now closely because already this morning, she scolded me, look, you're not allowed to give too many details. So what are we seeing? Basically, '25, we were ready with end of Q1. We got confirmation from our customers, yes, your machine qualified, all great. But our customers took longer than they expected and already also planned, to really get the whole process chain qualified. So that held us down in '25. We had good orders, but still low 8-figure portfolio a machine here, a machine there, not what we really wanted to achieve. What I now see for '26, and I'll be in Korea, actually, I'll fly on Sunday to confirm all these plans that now customers are saying, okay, we finally figured it out. Let's go into first investments for true production purposes, but this will not be, hey, here's a PO for 100 machines. This will be, okay, we buy a little bit of a higher amount, but still single-digit machines per customers to go into a true production flow, try it out, get the yields to where they should be. And there, I see a handful of customers being ready for that now. And now I need to be quiet. Otherwise, Bettina will tell me not to say it. When we talk about Q1 and Q2 results, I will be able to also show you tangible numbers there. So this is what I'm seeing. How much we still get into '26 revenue or which ones will be top line '27, we are figuring that out, and we'll have a clearer picture on that by the middle of the year. But the overall picture in the market, I mean, you read what the OEMs are saying. They are all locked-in on glass now. And I see happening in '26, the first production start, but on a moderate volume, learn it and then go into the full investments in '27. I, of course, see, yes, we have a good positioning, but it's very rare that such a large market opens up in the laser field. So a lot of competitors want a piece of the pie, that's good because it cannot be a single source market if the people respect our IP and technology. A lot of our energy and also strategic thinking now goes into whoever wants a piece of the pie and tries to take a shortcut by copying us, we will definitely get very active in making sure this doesn't happen that we -- the key strategic goal is transfer this in the ramp-up deals into our target share now and not have a cheap copycat basically steal the pie. This is what we will be doing. And we definitely will be able to show what's happening in the order entry. I will make my picture by middle of the year what will still be operationally in revenue in '26 for what will be backlog for '27. I hope that answers your question, Tim. Unknown Analyst: Maybe a quick follow-up. Did I understand you correctly, you're talking about a handful of customers. So we're going to see not just one customer ordering machines in Q1, Q2, but we're going to see several customers? And regarding competition, I've also read a lot about this with Schmidt and Philoptics. And I think there's a bit of concern in the market that you are losing market share. So can you just confirm that this 80%, I think it was market share, at least when it comes to the customers in this early stage, can you confirm that you have kept this very high market share? Klaus Fiedler: So we have the fair now when people buy equipment for qualifying the process. That's what we see. We have a very good market overview. And yes, other players are going in. If they go in with their own technology they developed, fair, that's good. It cannot be a single source market. Again, if it's competitors copying us, there, we will be very active in avoiding it. How do I see it? We have a good overview also from our customers, how our machine performs, how competitive machines perform. My personal target is 70% market share. So I'm better than that in the positioning, but we need to be realistic. People want alternatives. The market is too big for single source. It will be slower if it would be single source. My goal is 70%. And I have to -- I need to be measured against, do I win that now in the ramp-up orders against what competition is offering or will be offering? From what I see right now, our machine is just superior in key KPIs that the customer wants. So I see nothing speaking against. On the other hand, again, we are a German company. All the action is in Asia or the U.S. So there, we have a disadvantage. And this, we need to balance smartly. Unknown Analyst: Okay. Sorry, did I miss the answer regarding the number of customers that are... Klaus Fiedler: Of course. So our total number of customers that bought from us is clearly two-figure. It's a lot of customers that bought individual machines. We are doing our internal assessment which customer we see as mature enough to really push the button on ordering first capacity expansions for true production. And there, I see a handful at the moment, but it will definitely not be one or two customers. It will be more. Unknown Analyst: So more than -- sorry for being -- for sticking with this point. So more than one or two customers that you're already going to see in the first half or that you expect to see in the first half of 2026? Klaus Fiedler: Bettina told me this morning, "Klaus, you cannot be that specific." I ask for your patience when I report Q1 and Q2, then it's a done fact, and then I will be able to speak more specifically. Bettina Schäfer: The next question comes from Bastian Brach. Bastian Brach: So my question is also on the LIDE and especially on the expanding offering in singulation, you talked about a lot and maybe co-packaged optics in the future. What is your first feedback from customers, especially your existing customers who also ordered LIDE products? And do you see the singulation ramp-up in parallel to the expected LIDE ramp-up? Or is it more like a little bit delayed or further in the future? Klaus Fiedler: So for the singulation, that's the ABF singulation, this was actually a customer pull. Our customers, we sometimes work with them for more than 5 years. They are very open where they stand and where their pain points are. And they specifically asked, for example, in ABF depaneling, look, we have a pain point. We need a mass production process for this. Are you able to do it? So there, of course, now with the sampling that is running, we create very high interest because the customer was asking, we need solutions for this process step, what can you do for us? For the glass bonding, that is -- so the ABF depaneling is parallel to the LIDE, maybe with a couple of quarters delay because people have figured out a workaround for this ABF singulation, which they don't want, but they don't want to wait with ramp until they have the final process for that, but it will be a slight delay. That's basically the same production chain where LIDE goes in. The glass welding also creates high interest, but that's one generation further in the architecture, that I would see with a certain delay and not fully parallel to the LIDE ramp-ups. Does that answer your question? Bettina Schäfer: The next question comes from Malte Schaumann. Malte Schaumann: First question is also on the perovskites side, but how many customers -- tangible customers are you speaking about perovskites technology? Klaus Fiedler: So I see two very large customers that really put very sizable investments into getting that technology to high-volume maturity. One customer in the U.S., one customer in China. And a lot, a handful of smaller customers that are investing in this technology, but I would expect them with a certain delay. They are more in the follower bracket and not in the "I push ahead and want to be first-to-market" bracket. Malte Schaumann: And do you see the large customers having or following kind of a similar time frame for the introduction of the technology? Klaus Fiedler: I need to be careful now because it's a key account business, and I'm bound to confidentiality. I see both customers having the same ambitions in terms of when do we want to ramp as soon as possible. I see one customer clearly ahead in technology. So my personal bet is that he will be the time-to-market winner. And please don't ask about the customer. Malte Schaumann: Maybe a comment on competition. How do you see, especially in the Asian markets, regional competition? Klaus Fiedler: So in Asia, it's brutal. There are a lot of companies who basically say, "Hey, I can do that. And of course, they want to buy getting into that market. We are long established for decades. Sometimes they put the equipment to the customer just for free, just to somehow get in. Our advantage is that none of them has a proven track record. Basically, you buy the PowerPoint. The disadvantage is they are brutally aggressive in pricing, and you know there is a political preference in local-for-local in China. And that is to be taken very serious. That's why we did the Allegro ESSENTIAL, to be price and cost competitive. And that is also why we need to very clearly market our KPIs that directly transfer into money for the customer, throughput dead zone. Otherwise, the locals will do everything to get their share. In the West, I feel very comfortable with the competitive situation. I don't see any viable competitor in the Western countries who is close to our offering. Malte Schaumann: Okay. Then on welding robotics, can you quantify what the market potential might be in 2 to 3 years? Do you have some visibility, the opportunity? Klaus Fiedler: Yes, I can, but I am skeptical about hockey sticks. You can take usual projections in growth for AI-driven robotics, the numbers are public and basically then scale our business exposure. For the moment, what we have is there's a credible frontrunner in that field, and he is now doing his ramp-up of production with our equipment. We are in the process flow. If this guy realizes his ambitions and LPKF is a chosen supplier, yes, it could reach a very attractive volume, which is definitely in the 8 figures. But at the moment, again, focus is here lean and mean cost structures for Welding, maximum synergies, set it up for smaller ambitions than in the heyday of automotive and then take it from there. Bettina Schäfer: Thank you. So I think we have time for two more questions in the chat that reached us. The first one refers to the Electronics segment. Could you say something more on expected order intake in Q1 and Q2 on Electronics? You already see an uptick in revenues in Electronics in Q4. What part of the financial guidance for '26 is driven by Electronics revenue? You might want to be careful again, Klaus, in answering this. Klaus Fiedler: Bettina, you already told me. So how do I answer? I see the fundamental growth driver in Electronics, and that is specifically our laser depaneling very intact. I see that the large-scale businesses, which we were expecting in '25 and which then got delayed due to the tariff mess that they are coming and that I see them in the order entry. I clearly expect growth out of this area relative to '25, and we will have headwinds again this time from the Iran situation, where the impact is not yet fully quantifiable at the moment. So please let me report my Q1 order entry figures for this sector when I have them, and Bettina will allow me to talk about them. But this is definitely something where I say overall setup, I'm bullish, but I need to be cautious about the headwinds we're going to have by whatever is now the fallout of this Iran situation. Bettina Schäfer: And the next question refers to the Solar segment. What is the expected path for Solar over the quarters in 2026? Revenue in Q4 was very low. Klaus Fiedler: Well, first and foremost, this is a large key account business. Revenue over quarters, you usually have 1 or 2 very strong quarters where you ship the large machines and then you can have a weak quarter. This is not a portfolio business where you can derive anything useful out of the sales for 1 quarter. We went in with a realistic and not too high revenue plan for '26 for Solar. So we are not hoping for, oh, a big order will come out of the blue. We are realistic here. And we absolutely see as of right now that they are in even slightly above plan, but we still -- we are not fully operating out of backlog yet. So a large part, we are already operating out of backlog against plan for Solar. We need still a couple of purchase orders for this year, and this is what we are strongly monitoring, but which we see progressing. The tenders have been opened. So it's on track, but not done yet. Bettina Schäfer: Okay. So we have reached the end of this call, and there are no further questions as far as I can see. So I would like to thank you all very much for joining this call and the next regular earnings call will take place in only 4 weeks on April 30 at the release of our Q1 report. Thank you very much, and goodbye. Klaus Fiedler: Thank you, everybody. Goodbye.
Maggie Huang: Good afternoon, investors, and welcome to the AAC Technologies 2025 Annual Results Announcement Investor Conference. I'm the host of this event, Joyce Huang, IR Director at AAC Technologies. First, on behalf of the company, thank you all for your interest in AAC. Please allow me to introduce the company management present today. Mr. Benjamin Pan, Executive Director and CEO of AAC Technologies; Mr. Kelvin Pan, Executive Vice President of AAC Technologies; Ms. Dan Guo, Chief Financial Officer of AAC Tech; Mr. Jack Duan, Chairman of AAC Optics; and Mr. Shi Tingjia, Senior Vice President of Strategy of AAC Tech. Thanks, management's attendance. Today's meeting includes 2 parts, starting with my presentation on AAC 2025 annual financial performance and business development. This will be followed by a Q&A session. The statements made at this meeting contain forward-looking information, which are based on the company's assumptions and expectations regarding market conditions and the company's current development. [Operator Instructions] Next, I would like to present the group's results for 2025. In 2025, the group's revenue was RMB 30.8 billion (sic) [ RMB 31.82 billion ] a rapid year-on-year increase of 16.4%. Acoustics [indiscernible] optics has business maintained strong performance and emerging business made huge leaps. Gross profit was RMB 7.02 billion, up 16% year-on-year. The group's GP margin was 22.1%, flat year-on-year. And the group's revenue growth rate was significantly higher than its 3 expenses. Net profit increased by 39.8% to RMB 2.51 billion, mainly due to the continued improvement in the profitability of the optics and the growth of high-margin business. By 2025, the group's revenue growth significantly outpaced the expansion of global smartphone shipments, achieving both quality and efficiency enhancement. SSE, EMD and PM optics business revenue growth 103.1%, 21.3%, and 14.1% (sic) [ 14.5% ], respectively. The group achieved rapid breakthroughs across multiple views more diversified mix. Heat dissipation business revenue surged by over 400%, while the shipments of hybrid lenses exceeded 10 million units and the co-development of co-motors AI hardware with customers. During the reporting period, the group's operating cash inflow was RMB 7.18 billion, up 38.1% year-on-year and its free cash flow was RMB 4.88 billion, up 65.1%. The CapEx was RMB 2.83 billion, an increase of 21.5%, equivalent -- cash and cash equivalents was RMB 8.61 billion, increase of 14.1% (sic) [ 14.2% ]. Net gearing ratio was 2.1% and down 1.1 (sic) [ 1.7 ] percentage points. And this will support the development and innovation of the group. Next, I would like to share with you the performance by business segment. Acoustics. In the second half of 2025, the group's Acoustics business revenue was RMB 4.83 billion, increase of 1.6%. Full year revenue was RMB 8.35 billion, up 1.7% and gross profit margin was 27.6%. The decline was mainly due to the changes in customers and product mix with more module projects. Market share among key customers remained stable with increase. And industry's first coaxial speakers delivered distinct depth and fidelity and also enable a more immersive and superior interactive experience. Automotive acoustics. In the second half of 2025, the group achieved revenue of RMB 2.3 billion, an increase of 14%. Full year revenue was RMB 4.11 billion, increase of 16% (sic) [ 16.1% ]. Gross margin was 23.8%, a decrease of 1 percentage points due to the addition of new product forms and the positive impact of high-end branded automotive audio system on profitability will be materialized by 2026. Group has become one of the leading automotive audio system supplier, second only to Harman and Bose and also acquired Hebei First Light, a leading digital microphone company forming the vertical integrated business synergy. The group has supplied industrial leading 9.2.4.8n for Naim-branded acoustic system for SUV Zeekr 9X constructing an immersive auditory 4D experience. Optics. In the second half, revenue was RMB 3.08 billion and the full year revenue was RMB 5.73 billion. And looking at the subdivided business line, first, micro lenses, the group secured multiple 7P projects and continue to optimize its product mix. Shipments of 7-element lenses, including 7P plastic lenses and 1G6P hybrid lenses reached around 15 million units, further strengthening the group's positioning in the high-end Optics segment. Secondly, module with a resolution of 32 megapixels and above accounted for over 40% and OIS module shipments nearly doubled. And while the periscope modules achieved mass shipments for the first time secure a lot of customers. Let's focus on the combined EMD and PM segment. In the second half, revenue increased by 17% (sic) [ 17.6% ] to RMB 7.14 billion. For the full year, revenue was RMB 11.77 billion, mainly due to the continued volume growth of products such as X-axis linear motors, innovative side buttons and heat dissipation we see. And the group actively expanded its market share in mobile phone motors with X-axis linear motor shipments and shipments achieving double digit year-on-year. The group's market share in mid- to high-end Android phones continue to expand. And in PM, the heat dissipation business has made rapid progress with revenue of RMB 1.67 billion, an increase of over 400% year-on-year. And the group also break the upper limit of industry manufacturing efficiency and yield through its first fully automated production line. The revenue from metalment frames for the smartphones was RMB 3.82 billion, an increase of 4.2%. And the group will continue to maintain leading market share in the flagship and foldable phones. Finally, let's take a look at the Sensor and the Semiconductor business. And in 2025, this business achieved a revenue of RMB 1.57 billion, a significant increase of 103.1%, mainly benefited from increased market share of the group's higher SNR microphones, and we have already secured mass production and delivered our products to major customers in Shenzhen. After sharing this financial performance, let's focus on the core highlights and the development of the strategy. During the reporting period, we were committed to creating the ultimate experience and leading the upgrade of smart devices and also create the various interactive experiences for end consumers. In recent years, AI hardware has flourished. Small size and ease of interaction are common characteristics for future AI hardware with diverse forms. High-value AI innovative hardware jointly developed by the group and leading global players will be shipped in large quantities. In terms of the heat dissipation business and the group empowers and upgrading to consumers these products. And you see that the group's VC heat dissipation shipments have a compound annual growth rate of nearly 90% from 2020 to 2025. And the group has sufficient production resources to meet high technical and process standards for its clients. In the future, it will continue to accelerate the introduction of heat opportunities for new product categories. And in terms of the active cooling and leveraging innovative EMS and ultraprecision and secure its first products for the cooling fans. And we also have this different CTU and liquid cooling plate and manyfold product capabilities. And we also have different customers and make breakthroughs. For example, the different customers like Baidu, Tencent, JD, Alibaba and PDD and the Chinese insurance Cathay Pacific and Haitong, et cetera. Similarly, the group's WG-related products and [indiscernible] in breakthroughs and the group helped the domestic customers upgrade 1G6P main camera and micro-prisms of high-end flagship models, leading WG's important progress in high-end optics. In terms of the plastic lens, the group will strive for more market share on 6P and 7P to expand the main camera and also the periscope lenses. In terms of modules, the group has made the main camera and breakthroughs and milestone development in high-end module and through vertical integration advantages. In 2025, the group's brand system will be implemented the luxury model Zeekr and they will be equipped with the group's full station solution and our high-end speaker brand system. And also we will achieve the full coverage and on the car brand audio system of different grades such as 20,000 to 30,000 leading the way to a full station solution for automotive acoustics. In terms of AR optics group's end-to-end vertical integration and global delivery, mobility have won the favor of leading customers, designated a number of overseas leading customers' optic energy modules and optical Waveguide projects. And we also have the ability to supply with our customers the optical and one-stop full display module solutions. For example, the optical Waveguides, light engines and the push/pull lenses and eye tracking and electrochromics. Last but not least, let's talk about the group's complete global layout. R&D centers and the production basis have spread to nearly 20 countries and regions around the world and AAC technologies will also reach the new heights and bring higher returns to shareholders and customers. The above is my introduction to the performance of the full year for 2025, and then we will enter the Q&A session. Maggie Huang: And the first question is from Everbright Overseas. Mr. [indiscernible] , you can start asking questions. Tianzi Fu: The pressure of the industry, we see that our group has still achieved a stable progress. So I have 2 questions. The first one is about the development, about the mobile phones. And the second is about the acquisition. In terms of the first question, we see that in the year 2026 and many institutes have kind of a flat description prediction on the smartphones and its shipment. So I'd like to know more about your views of the global intelligent mobile phone and also its AI's influence. So how do you see the dissipation business and its upgrade? And what's our advantage? Kaitai Pan: Okay. Let me talk about briefly. I think there have been a lot of waves in the smartphone market from the second half of last year to present, meaning the entire AI influence, which has indeed created some impact on the supply chain and it caused the memory price increase. So it's true that some of the recent turmoil in the industry has been relatively large from our point of view. And the pressure capacity is still relatively good. The high-end models can actually foreseeable. So we see this as a new opportunities for the high-end products because memory price for this high-end -- proportion of the memory in this high end is relatively not as high as that of the low end. So that's one aspect. Number two, because of the memory problems in the need-end -- or low-end smartphones and some market predictors say that intel mobile phone market will 4 -- by 10% and this 10% is about RMB 100 million. So it's kind of very difficult to survive in this environment that this kind of influence for us is very limited because our products -- or heat dissipation products and the mechanics products in the mid to high end so their choice is especially in the mid to high end and upgrading. And our observation is that our customers are choosing products with better performance. In this way, the high-end models can be able to compete in this market have a better pricing. So I think the mid- to high end ASP smartphone will be increased, and this will become the main force. And of course, the competitive landscape will become more fierce. So this is about the entire mobile phone market. In the next 3 years, we think this is a very important period, and we will have more integrated -- vertical integration of our business and we will increase the outer staying products and as well as the co-owned access for further development, continue to improve its penetration rate. And in addition, we will also, for example, upgrade the wireless charging and even the magnetic section to help our customers to do the vertical integration and let them have a better competitive price and also have a higher cost performance we increased function and with more efficient product upgrade. This is a very efficient product upgrade routes we can provide to our customers, and through our motors and mechanic towards in optics. And this is the mindset we continue to apply in our to all business. In terms of the AI specification and the vertical integration and we like to provide with our customers the best solution. If we look at 3 years AI still very important topic. We see that AI voice interaction and heat dissipation demand is ramping up and this will bring us sustained highest grade growth of the VC cooling sector. And this is very important to help our customers stop computing power and battery life problems. In addition, we also see other new categories and explorations in the industry. For example, the MWC, they launched new products and apart from the traditional functions and whether there will be new functions. And another perspective is from the brand new perspective. For example, the AR and AI glasses. And you see Meta have entered this market and based on our interaction with our top customers and there will be more and joining customers launch the products of AI and AR technologies. This is a very important development track. And this optical waveguide and the unit price will be very high because this is a different concept with the traditional products. Number three, we see the smartphones and other companies are doing an AI business and of course, some AI companies. And we are cooperating with several leading AI companies and customers from the large language models and to the large scale the new models, our microphones and our motors will be very important core technologies. And starting from next year, we believe our products and its value will be much higher than that of the regional and mobile phones in the next 3 years. Another important potential is in the Automotive Acoustics. And after the acquisition of PSS and also the PSG, we are fully equipped with the full range of the sound systems and capabilities. And last year, the corporation with Zeekr's name systems has already proved our capability and this system is still positive in the industry. In terms of its public opinion, and it's still relatively flagship level influence system. So we think our autonomous layout has gone from a series of mergers of acquisition to the current system level capabilities. And recently, our focus was on China. And in the next 2 to 5 years and our automotive system will also be expanded to the overseas market and the growth space is still very considerable. Tianzi Fu: Thank you very much. we also believe that AI continues to have a lot to offer. My second question is about the about EMD, it's about far east technologies. So how do you consider this valuation? And I remember it's in the supply chain of NVIDIA. So any synergy we can create? So this is the second question. Tingjia Shi: Thank you for your question. The acquisition of Far East and we see that the revenue for this year is estimated above RMB 200 million. And based on this, we have completed 51% in equity acquisition. So this is a very reasonable pricing. And the -- this company is very important in its cooling -- liquid cooling system in the industry and its package includes all the main domestic Internet customers. So this will help us to lay out this business in the market and to gain a fast-growing domestic market and obtain the overseas market share. Maggie Huang: Next question is from Andy Meng from Morgan Stanley. Andy Meng: And we see that the results exceeded expectation. But I may pick the bones in the egg and ask a question here. If you look at the sector of this Acoustics business, the gross margin feels slightly lower than the expectation. So may I know the reason and any improvement in 2025? And my second question is what's the guidance for the business segments? Dan Guo: Thank you very much for your question. You talked about the gross margin of Acoustics is lower than the expectations. As mentioned by Kelvin. In recent years, our group has expanded our product mix and the products layout. From the early years, maybe the focus is on the speakers of master classic levels. It's more focusing on the single box or -- and the product form. And up to now, we have actually integrated the whole concept of a large module, including some progress we see and magnetism and the increment of this [indiscernible] is relatively fast. So the overall gross profit margin has changed compared to before. And in the second half, we see the gross margin is steadily going up. And in the 2026, we will see the stable growth. And your second question is about the guidance for 2026. So apart from Acoustics and in terms of PM and in this year and the revenue growth will be about 5% to 10% and the gross margin will maintain at a very stable level. And in terms of the PM, and this will maintain a very high growth rate in 2026 and the revenue growth will be more than 30%. And the gross margin will also rise steadily on the basis of the 2025. So in terms -- so this another business is about the Optics and ASP, annual growth is about 10%. And this year, we will also see growth on the ASP and we have the confidence to see the stable growth in Optics. With regard to the gross margins, you see that in terms of our yield and efficiency and our R&D have made significantly improvement. So we will see this gross margin will be steadily growing on the basis of 11.5% of 2025. In terms of Sensors and Semiconductors and it's about double-digit growth. It's about 15% to 20%. And Kelvin also talked about the Automotive. It's an upgrading business. We have already acquired some brands and the revenue will be maintained double digits. And the gross margin is relatively stable as well despite the fluctuation of the industry, there are different growth drivers in the industry, and we have the confidence to realize the stable growth of our revenue and not lower than our 2025 revenue. And of course, the gross margins will maintain steady rising. Andy Meng: Wish the company will achieve better results in 2026. Maggie Huang: And next question is from William Yang from JPMorgan. William Yang: I'd like to know, for example, the international CSP or the new CSP, they seem to be interested in -- stepping into the hardwares, so I'd like to more about the collaboration of the group with those big CSP and what is your expectations in the next 1 or 3 years? What's the revenue contribution they will make? Kaitai Pan: Okay. I will take the question. And from the perspective of AI, we see some big international AI companies, and they have different trials in the AI terminal devices. A more typical case, is Meta, right, it has its own model and then it has collaborated with Rayban glasses and have displayed AI on them and those are some simple AI features. And we also collaborated with our enjoying customers and we help them to develop light waveguide and also the light engine. So this value is not just some simple functions. This is the light wave and the light engine cost tens of dollars, right? So if we started -- we estimate at least USD 30 to USD 50 for each and for a pair of glasses, it would be worth at least $100. So we see when it reach to the large scale and the value of this is very considerable. And some domestic companies in the industry, including, for example, some overseas top companies, they are developing AI wearables, devices like portable devices, like portable camera inside and there will be some motors embedded in the equipment. And they will also recommend -- make recommendations based on the customers' behavior and in those functions. And those kind of equipments and devices without the screen and many interaction are based on the voice and the actions. So the most valuable parts in those products maybe the motor and also sensor. And so we strengthened our collaboration with the customers for a long time. And if they have mass production, and this will boost our ramping up of the products. And of course, on hardware, the pricing of its hardware is different of its mobile phones because the focus of the products is not only screen or battery, it will become a motor. And this price will be much higher than the smartphones kind of considerable value. So we think in the second half of this year and next year, and this will become very good and important opportunity for us. If you compare -- for example, if they have a subscription and it's not only about several hundreds of thousands or million stats and at least it will be over 10 million. So no matter this from the volume or the value and this is also -- both of them are very considerable. And this will be reflected in the second half and next year. And this good phenomenon in the industry, AI server, and AI algorithm and AI models have been invested in the large amount with big fund and it has to return to the application scenarios return to the terminals, and we welcome this equipment and devices. And it's also a very good layout for us. Maggie Huang: Next question is from [indiscernible]. Unknown Analyst: First of all, congrats to the company's performance in 2025. I have 2 questions. The first question is about the Optics. I'd like to know about the shipment guidance of the WLG and also the revenue estimation and this is about WLG. And the second question is about modules and plastic lenses and Joyce also mentioned about this main camera periscope supply. So I'd like to know the shipment plan as well as the detail of the gross margins. Jack Duan: I'd like to answer the question. As mentioned by Ms. Guo Dan in 2025, our Optics have achieved certain results. And our gross profit is also reached more than 30%. And in 2026, in the plastic lenses and this will maintain at this level to about 35%. And in terms of the shipment volume, it will keep flat, but ASP will be increased by 5% to 10%. And in 2025, the shipment volume has exceeded 10 million units. And this is a very important milestone to us. And we also launched the use of periscopes as well as the 3-in-1 Christmas lens. And this kind of application will be continued in 2026. And other applications, for example, the application of non-smartphones like the drones applications, we also achieved some good projects. And also win some projects in overseas market, and we are very confident to the promotion and of our business in this regard. Unknown Analyst: So you talk about lenses. What about modules? Dan Guo: I may add a little here. This year, as mentioned in PPT, the overall revenue of Optics is RMB 5.7 billion and overall gross profit margin level is 11.5%. Other is about the [ G plus P lens ] and in lens and in 2026, we think the ASP in lens will be maintained the same level last year on ASP or even 10% higher P lens and we realized, as mentioned by Mr. Duan about the above 30% gross margin. And in 2026, we are very confident to improve our yields and efficiency and to the 35%. Regarding modules in 2025, we see that the gross margin is 4% to 5%. And in 2025, based on this basis, and we can achieve a stable growth. So that's my supplements. And Jack please go ahead. Maggie Huang: Next question is from Zheng Bingyi from HSBC. Bingyi Zheng: I have 2 questions. And the first question is about heat dissipation product. The growth of our shipment volume is quite amazing. So I want to ask the heat dissipation product side of a major customer in the U.S. what about the percentage in 2026 and 2027? And what's the upgrade trend of this product? And this kind of product upgrade will b expand to other categories. So if we see the next 3 years development and what kind of revenue growth will this product bring to the company? This is my first question. While the management is unmuting, let me ask my second question. The second question is about the Automotive Acoustics business after the M&A in the next 3 years and what's the development strategy? So under this development strategy, what's the long-term strategy? For example, in 2027, 2028, what's the growth expectation? Zhengmin Pan: I'd like to answer the first question. The big clients in the U.S. is always sensitive. So in terms of the heat dissipation and entire VC I'd like to give a roughly comprehensive evaluation. The figures we see of 2025 is just our recent achievements and it's just the beginning. In the future, in the next 5 years, we're thinking some high-end products with the AI function strengthening and this penetration will be improved. And on the chip size, for example, in data centers and some storage, all the memories and VCs will gradually penetrate as well. At the beginning and the growth is about double digit and we have the confidence to achieve [ 10 billion ] product lines. And this production line is continuously growing and is also ramping up in all aspects In terms of automotive business -- acoustics business. Kelvin? Kaitai Pan: Yes. I'd like to mention, as I said earlier we need to build up this complemental capability and PSG and also our launch o the Zeekr's Premium, and SUV and this prove the capability of our products. And also the capability of our whole system. And the application on the Zeekr's 9X model reflected the premium performance of our products. And many people say it could be benchmarked against RMB 50,000 audio system. So we think this is not only a success in single case, but also necessary way for the high end of Chinese brands into this business and industry. And this is a very good route for the value-added integration for our customers. So in the future, we will continue our collaboration with Naim and Zeekr's. Secondly, we can help our customers to create more value for some branded systems. You can imagine that today with the penetration of different ASP of different products in different brands and our ASP is -- can be still going up because our customers have higher requirement demand on speakers and amplifiers and sensors. So this great potential in next 3 to 5 years. Every year we can achieve a very sound double-digit growth. And with the penetration, for example, this year, we have already achieved over 10%. And in the future, there will be above 10% and higher. And the upgrade of different systems will bring the ASP's growth in the automotive business. In the next 5 to 8 years the scale will be increased from 5 billion to 7 billion, 8 billion or even tens of billions. And importantly we're owning domestic brands and in the next 3 years we will proactively expand our business in the overseas market because many overseas automotive brands are studying the Chinese supply chain and also the smart cockpit solutions, right. And our branding opportunities and also our brand system check actually has a lot of room for growth. TJ, do you want to add a little more? Tingjia Shi: And actually, I think, I quite agree with what Kelvin said, and we have a lot of brands apart from Naim, we also have the second categories. So through different company and different brands and we can achieve the revenue scale of RMB 10 billion. Maggie Huang: Due to the time constraint, we'd like to invite the last speaker. Xudong Chen: I'm from Huatai. My name is Chen Xudong. And congratulations to the company for achieving very good results. I have 2 questions, mainly about the robotics and AR -- XR business. And we visited the CES Exhibition and see that -- also saw the company's exhibition of the robotics and XR products. My first question is how do you evaluate the robotic business because it's already in the rapid development period. So do you have a detailed commercial plan? And what's your plan in some testing projects with the different companies. My second question is about XR and its business layout. I'd like to know more about the light waveguide and also know more about the direction of this technology and its contribution for the long-term revenue of the company. Kaitai Pan: Let me briefly talk about robotics. We actually regard robotics as an AI and the terminal device. And we also see, for example, this is a kind of important robotics and as well as different products. For example, the speakers and microphones and the aggregation equipment and AI devices can only interact with those devices and then communicate with people and includes a lot of high precised devices -- high performance devices, for example motors and heat dissipation. And those are important requirements and demand for robotics. And then they also need the like optical devices and those are the interaction demand for the robotics. So AAC has a great potential in those products. Last year, also this year, we have been following some leading customers in China and startup customers. And In the recent years and also -- and even half and half -- and even a year and a half, there are many versions in the iteration. And we use different devices, for example, motors or speakers, microphones and to strengthen our collaborations with different customers. So we have relatively sufficient layout in this area. Number two, at present, there is no definite models or development routes. And how to meet commercial scenarios or whether it can only being used in the industrial scenarios. Some standards are not fixed and our effort and work is to help customers in upgrading. And apart from this, we also have the capability help them in the mass product and we are experienced in the automotive business and electronics -- consumer electronics. So your question is about the revenue contribution. The fixed estimation is actually depends on our customers' hand. And they didn't have -- they haven't made a very specific plan. Therefore, we didn't have this specific guideline. And apart from this -- apart from big robotics and some smaller sized robotics and we also have the opportunities, we have been laying out optics and the motors and the microphones, and we also see it as progress. This is more visible than this Android robotics. So this is about different -- we are also preparing, for example, the high-perform products [indiscernible] and we are constantly interacting with our big customers, the top customers and some start-up companies. And we are reserving our capabilities. And I believe in the future when this market is further commercialized and we will have our core competitiveness and can deliver high-value products. In terms of AI, do you want to add something? Tingjia Shi: So after the acquisition of the light waveguide, and this help us to unleash our advantages. And in terms of the light waveguide, we have started our in-depth cooperation with head customers of Android. It is expected that by the end of this year and the beginning of next year, there will be mass production of the shipment. And apart from the Android customers, we also started our cooperation with some leading customers in the U.S. And apart from this light waveguide products, we also have the collaboration on the light engine. And after 2 years or 3 years and the mass production will be realized. So this is not only our plan in the domestic market. We also have our business plan in the overseas market, and this will be realized in A1 and X3. Maggie Huang: And next, I would like to welcome Benjamin Pan, Executive Director and CEO of AAC to give a summary. Zhengmin Pan: Thank you very much. Thank you, all the investors for participating in today's meeting. I'd like to make a brief summary here. I think the transition of the group started from 2020, and we experienced 5 years and the results and effect is obvious. And first of all, from the financial side, our current scale gradually establishing and through a definite growth of multiple product lines. And the whole group is not subject to the original mobile phone and we also secure our growth from other products. So you see we have set our target of 2026. It's about 16%. And of course, this is the effort made by the team led by Kelvin. In terms of gross profit margin, we want to maintain 22-odd-percent with a stable growth. And the average gross margin will steadily grow. In terms of the net profit, it is -- with management improvement structure and also some granular and lean management, we will achieve higher net profits and it will be higher than the gross margin. And our free operating cash flow was RMB 7.3 billion and CapEx is RMB 2.8 billion. So after deduction, we have almost RMB 4.5 billion positive cash flow. S33 we have purchased [indiscernible] in recent years as well as some other acquisition, but the operating cash flow is still positive. This is a very good position -- cash position and the positive cash flow of RMB 4.5 billion. And we never have achieved this level since 2017. This is the pickup of profitability and as a CEO, I'm very happy to see the steady growth trend in this positive cash flow momentum. In addition, I want to remind you that our revenue and other surface is company -- is mainly on the mobile phone. Acoustics and haptics through the transformation of the past few years and the changes in the external technologies. AI is actually a foundation that surely brought about the growth, of multiple product lines. Consumer electronics is also another case. And AI glasses will become the future demand as well. And we also announced today that we've acquired the Far East company and our equity share is about 55%. And the purpose is on the data center. And we want to have a quicker entry in the data center and of CDO. And apart from this, we are also doing the liquid cooling plate. And we are still seeking the M&A opportunities. We also secured some U.S. customers in the precision mechanics and this year definitely can achieve RMB 100 million to RMB 200 million sales. So with the development from the consumer electronics to data centers to the liquid cooling and we laid a very good foundation. In addition, robotics, as mentioned by Kelvin, we are developing the direction of a very positive trend. First of all, we have acoustics and optical sensors with a precise transmission and mechanics and also heat dissipation and many products layout. And we have both connections with domestic market as well as overseas. And we want to have a comprehensive competitive advantage in this direction. In the 5 to 6 product lines, we want to at least one product line to be secured with the substantive connection with our customers. At the beginning, we only doing speaker and then expanding to the wider range and to 6 products and to the robotics. So with our specialties, we also want to explore and expand on our competitiveness in other areas and build substantive cooperative relationship with a old robot companies. And with the customers demand and with our negotiation with the customers, we will gradually see the profitability from robotics in the next 5 to 8 years. I believe when the market is ramping up and our product line will be over RMB 10 billion. Of course, this is the outlook. As Kelvin said, the client and the customers have not yet established this real demand, but we want to establish a strategic layout and the plan. Once the demand arises, we can ensure our precision. Okay. And that's the summary. For me, I'm very happy to see the transformation of the company, no matter in the financial side, but also the new product lines and also technology layout. Thank you very much. Maggie Huang: Due to time constraints, the AAC Technologies 2025 annual results presentation is now concluded, and the roadshow materials have been uploaded to the company's official website. If you have any questions, please feel free to contact us. Thank you for your support. See you. [Statements in English on this transcript were spoken by an interpreter present on the live call.]
Peter Podesser: Good morning, ladies and gentlemen, and thank you very much, Vicki, for the kind introduction. Well, and thank you all for taking the time to join our presentation here of the audited consolidated financial results 2025. In a good tradition, we will share the presentation here between Daniel and myself and then be happy to go into a Q&A session. Well, looking back to 2025, when we did this more or less in the same format a good month ago, we have to say that 2025 was a year of particular challenges. Also some difficulties where we had to revise our original targets for the year. Daniel and I will elaborate on the main reasons once again today here later in the presentation. But I think we also took the time and the opportunity to consolidate, to reset in some areas and then also to put together a clear set of strategic priorities in 3 main areas to prepare ourselves for another growth phase, another growth stage in which we are already in now at the end of the first quarter. What are those 3 pillars here of, again, growth here for SFC Energy? Well, expanding our international footprint. Two examples for it. In Scandinavia -- in Denmark, we turned the hydrogen assets we acquired from Ballard into a profitable core business of hydrogen fuel cells for critical infrastructure and telecom. Together with this, we streamlined our hydrogen activities group-wide. We made Denmark a competence center consolidating the knowledge for this part of the business, especially in terms also of applications and specific customer needs. The second one, well, just finalized last week -- a week ago, but most of the work done back in 2025, 15% stake holding in our long-term partner, Oneberry Technologies in Singapore. At the end, creating a regional hub for the further expansion here in this populous region of the world, active region of the world, Southeast Asia. But at the same time after [ 15 ] years of partnership also stepping into a different business models, unmanned AI-based automated security solutions here in mostly a business model that is based on security-as-a-service, long-term lease and rental contracts here with governments. And now it's up to us to simply assess in which parts of our business and regions can we make use of this kind of knowledge here of a different business model, particularly also to overcome -- yes, naturally existing also CapEx hurdles we have in our mainly CapEx-based business. So really looking forward to this. I will also be happy to join the Board here of Oneberry as we speak. And yes, try to consistently grow the business. And not to forget, yes, we also linked the final close here with a significant order coming in of EUR 6.6 million size, also contributing naturally to this year's dynamic start of the business. The second area really is systematically growing our business in the defense, but also public and civilian security business. So it's naturally the military-based part of the business, the government-based part of the business, but also our civilian security business, especially with our customers in the CCTV-based security service business, coming up to about [ 15% ] of the business of the group already. Well, and on the defense part, yes, we will look into this in a minute. We saw some delays in India having an impact naturally on the overall growth, but at the same time, expanding regionally with defense forces here NATO-wide, but also outside of NATO as well as OEM programs being kicked off here in the defense business. The third element, our business is based on leading technological solutions, making sure we have dependable power that consume less energy here for our customers, power supply solutions that help to reduce the power consumptions for our customers in all our end markets. And I think looking at what we have successfully already commercialized in 2025 is worthwhile mentioning. The one is entering the defense business also with our power supply solutions for man portable and platform-mounted laser systems predominantly used as anti-drone capabilities. We have a long-term OEM partnership here that translated already into a business that is significantly above EUR 1 million in 2025. We are now expanding this as well as presenting this product to other OEMs where we see quite a positive feedback and expect further substantial scaling here. The other part for the Canadian government and with the Canadian government, we have developed what we call an Arctic power solution, our new product called EFOY Pro Shelter dependable power for border security and surveillance solutions on the Northern Canadian border, sub minus 40 degree C environment, pretty hefty requirements also in terms of autonomy, 12 to 36 months of autonomy. We expect this program to scale in '26 and '27 significantly within the Canadian framework, but the project is also presented here on a NATO-wide basis at the first feedbacks we have here from Scandinavian and also Scandinavian potential customers as well as from the Baltics is pretty positive here. So we expect this to further scale. As said, both products are already out with customers. So they are commercialized. Now looking into the development of sales, once again, we did most of it already, as I said a month ago. So let me stay at the, I'd say, consolidated level, yes, seeing a decline of the revenue by 1 percentage point to EUR 143.27 million, mostly influenced by a delay in programs follow-on programs for defense customers in India as the main impacting factor here for the top line. Just visiting India a couple of weeks ago, I think we are on good ground to expect a rebound of this business within, let's say, our fiscal year here 2026. The fiscal year in India is ending as we speak here at the end of our first quarter. So we expect, let's say, first activities starting in their first quarter, which is our second quarter. The other part where we fell short of our own expectations was the organic growth of the business in the U.S. still including currency impacts growing by 19%, almost 20% is a solid organic growth, but naturally not reaching to the levels we had historically there, and we also expect it for 2025 being at around 40%. So we promised 40%, we delivered 20%, not meeting the target at that time. And the negative currency effects in the U.S., in Canada and in India had naturally a further impact also on the top line development. Just completing the picture here on the power management side, we were particularly happy with the development in the European part of the business, but we saw one major project shifting in Canada here on the power side of the business. which we expect, by the way, to now being decided in 2026 and coming in, in 2026. But in 2025, this was the single reason why we had a decline of the power business in Canada. And so overall, consolidated sales coming in slightly below the forecast corridor of last year. Nothing I'd say that we are particularly happy with, but I think the facts are clear. And with a sensible planning for 2026 and the growth outlook for 2026, I think we are reacting to this. And with this, I would hand over to Daniel to look into the financial results, starting with the earnings part. Daniel Saxena: Good morning, ladies and gentlemen. Thank you for joining the call also from my side. Let me provide you some more information and beat to the bone with regards to costs, to the gross margin and give you some more color on why it has developed the way it developed as well as what we see for the current year. When we look at the gross profit and the gross margin specifically, we see that almost symmetrically developed with the cost. We've seen a decline in the gross profit of 1.5%. If we look at the gross margin, we see that the gross margin on group level remained nearly at the same level as in the previous years, even though the gross margin of the segments developed differently. Overall, we consider the group's gross margin to be on a level which we are not entirely satisfied in 2025. So good wheels. At the beginning of the year, we were anticipating a higher margin level. However, and we discussed that in the previous quarter calls, the economic turmoil, especially with trade politics were a challenge in -- remaining on the margin or increasing the margin level that we have. We set the targets higher. If you look at the outlook for the current year, we do expect to deliver stable gross margins. Whether we'll be able to expand the margins significantly highly depends on how the entire geopolitical landscape will develop with prices for components, with prices for energy especially with prices for the precious metals and platinum that we use in our products. So far, the way we look at it, we can manage price increases well. But of course, it depends on how high the increase of this cost may be. We had an exceptional impact on our gross profit in 2025 as we had in 2024. So in 2025, we had an exceptional income of EUR 0.6 million comparing to a net expense exceptionally of EUR 1 million in the previous years. Those expenses and incomes relate to provisions that we make a warranty to revaluation of the precious metals that we hold our stock. When it comes to 2024 with the [indiscernible] from the Ballard acquisition that was reflected in the gross profit, and will be provided some more information in our annual report. Looking at the gross margins of the segments. The gross margin of the segment Clean Energy declined to 45.4%, which is a decline of 1.2 basis points. One of the main reasons behind the slight contraction of the gross margin, main reason is the product mix, which was [ characterized ], Peter mentioned that before. By a lower share of defense revenue in 2025, we were looking at 10% of the segment's revenue being generated in the defense sector that compares to the 18% that we had in 2024 and the segment revenue that had in the segment in 2024, of course, heavily impacted by the defense revenues that we realized in India. Second huge impact on the gross margin in the segment was the unfavorable movements in the exchange rated -- rates with regards to the U.S. dollar and with regards to the Can dollar. In average, the U.S. dollar depreciated 7.3% year-on-year. That would apply to roughly 18% of the segment revenue and the Canadian dollar depreciated about 5.5% year-on-year, and that would apply that to 26% of those segment revenues. So you see a rather strong impact on this exchange rate in the revenues and then consequently also the gross margin, which has an impact on the segment gross margin. When it comes to the gross margin of the Clean Power Management segment, we have seen an increase. The gross margin increased to 30% in 2025 from 28.2% in 2024, which is a 1.8 percentage point increase. Those positive impacts result basically from a good pricing power for those products on the one hand side, but also from a higher share of value-added services and higher value-added products that we sold in that segment. That applies to the power management solution as well as the drive motor controls. Going to the operating expenses, and I would start with the key cost drivers or exceptional cost drivers that we had in 2025. Those of you who have been listening to us in the quarterly reports are already aware that there were certain developments in the cost basis that had an impact -- an exceptional impact on our margins. I would start off saying it has a negative impact on the SFC results. However, we do not consider this to have an impact on the underlying earnings power of the group, given the extraordinary character of those costs. I will start off with the extraordinary expense for the exchange rate net losses. So the net losses accounted in 2025 to EUR 3.4 million. That will translate in 2.4% impact on the EBITDA margin. I would like to stress one more time that out of those EUR 3.4 million, roughly EUR 1 million has been realized. The rest of these losses are not realized, and you can also see that reflected in the cash flow statement. Second large driver on the cost basis were the expenses for IT as well as the implementation of our ERP system. Total cost for these 2 items were about EUR 5.1 million, which translates into 3.8% impact on the EBITDA margin. And last but not least, the decrease of the capitalized R&D expenses to total R&D expenses. It decreased from 29% in 2024 to 13% in combination also with a notably higher spending for R&D. The impact on the EBITDA margin is around 1.2%. The total impact on the EBITDA on those 3 specific effects amounted to approximately EUR 10 million in 2025, of which we consider roughly between EUR 6 million and EUR 7 million not to be recurring in the midterm. Giving you some more color on those effects. So with regards to the exchange rate losses, we had income from exchange rate differences of EUR 2.6 million, which were entirely offset by the exchange rate losses of EUR 6 million in 2025. So that comes to the net effect of EUR 3.4 million and that is an effect on EBIT and EBITDA. As I mentioned, out of the exchange rate losses of EUR 6 million, approximately 85% were unrealized losses and EUR 4 million of the EUR 6 million related to intercompany position, therefore, also unrealized losses. These intercompany positions are shareholder loans, financing for our subsidiaries all over the world as well as intercompany receivables from the supply to our subsidiaries. The biggest impact with regards to the losses we had from the Indian rupee, followed by the Canadian dollar. Some color on the extraordinary costs for IT, which are reflected in the G&A expenses. So the cost relating to the SAP implementation amounted to approximately EUR 3.3 million in 2025. We would expect that this amount would also be invested and be expensed in the current year. However, we do not expect that cost to be recurring in the next year. The cost for improving of our IT system, which will also include licensing fees for new software, including the SAP software amounted to an additional EUR 1.7 million in 2025. And this portion of the cost would likely be recurring also in the next years as we will put a special focus further on IT security as well, as I mentioned before, licensing fee for our software. Lower rate of capitalized R&D expenses. So the total R&D spending in 2025 and that spending is made up of the R&D cost that you'll see expense on the P&L plus the capitalized R&D costs plus subsidies that we received amounted to EUR 11.4 million. That compares to EUR 11 million in 2024. So you see a slight increase in R&D spend of 3%. From this R&D spend in the previous years, we capitalized 29%. In the current year, we capitalized only 30% of this cost. On a like-to-like basis, this would translate an additional EUR 1.7 million of cost that could have been expensed in the P&L. However, the capitalization is an audit function and accounting function. In 2025, we focus much more on improving, making our serial products more stable, better also with more features. These development costs cannot be capitalized in the current year. We would see a higher rate of capitalization again as we are developing new products, new generation of products and these costs can be capitalized. So these are the extraordinary effects, as I mentioned before, an impact of EUR 10 million on EBIT and EBITDA. That brings us to our adjusted EBIT and adjusted EBITDA. We had an adjusted EBITDA of EUR 16.7 million in 2025, slightly above the midrange of our guidance, respectively -- slightly above the high end of the revised guidance of specific guidance we published in September. That translates in adjusted EBITDA margin of 11.6% compared to the very good 15.2% in 2024. And yes, it's a decline of 3.6 percentage points. Adjusted EBITDA excludes the nonrecurring expenses and income as we have in every year. These are -- I'm repeating myself related to the provision in addition to the capital reserves for the LTI programs, stock option programs that we have for management and senior management as well as the transaction-related expenses. The total negative impact on the EBITDA of those 2 cost items were EUR 4 million. So it compares to EUR 2.4 million in the previous year. The net expense for the LTI programs, SARs, stock options and PSP amounted to EUR 2.5 million comparing to EUR 2 million in 2024, so decently higher. And if you look at the transaction-related expenses, they amounted to EUR 1.9 million. That compares to EUR 900,000 in 2024. So you see that we had a high activity level on our M&A strategy on further driving in growth. And of course, also in these costs is reflected the transaction expenses for taking the 50% stake in Oneberry, but not also Oneberry, there are also some other activities ongoing. So as I mentioned, the adjusted EBITDA was EUR 16.6 million is 24% below 2024 EBITDA and the margin declined to 11.6%. That contraction is due mainly to those 3 effects that I mentioned before, which is the losses on exchange rate, which is the IT expense as well as the lower rate of R&D capitalized. So as I mentioned, we would not see all of this cost recurring this year. Some of them will recur this year, especially with regards to the IT expenses. Depreciation and amortization, a quick word on that one. So total depreciation and amortization were EUR 7.7 million above the EUR 6.5 million, which we saw in 2024. Almost 40% of the depreciation is related to IFRS 16, so accounting for the leases, which is a cash expense and were about EUR 3 million in 2025, above 2024 level, it has to do with the fact that we have a full lease in for our U.K. subsidiary, for our Denmark subsidiary as well as for our U.S. subsidiary. The depreciation without the IFRS 16 impact comes to EUR 5.5 million. And a larger part of this depreciation results to depreciating the capitalized R&D expenses. So out of this EUR 5.5 million, EUR 2.4 million is depreciation from capitalized R&D expenses, which also has no cash impact. That brings us to the adjusted EBIT. The adjusted EBIT reached EUR 8.9 million compared to the EUR 15.5 million in 2024, and that results in a margin of 6.2% compared to 10.7% in 2024. So a notable 4.5 percentage points below what we've seen in 2024. CapEx for the year were well below what we've seen in 2024. So total CapEx, excluding the CapEx for right of use IFRS 16 accounting was EUR 4 million at a much lower level than what we've seen in 2024, where the CapEx was EUR 9.2 million. What is the reason for the lower CapEx? Mostly, we had a lot of expansion CapEx in 2024. This expansion CapEx related to building out our Romanian site for the production of fuel cells. It relates to building out our site in the U.K. for the manufacturing for the membrane electrode assembly or the MEA. And also EUR 9.2 million is reflected the acquisition of the Ballard assets in 2024. So it was a bit of an extraordinary year in 2024. We see that CapEx has come to, what we consider, be a more normalized level in 2025. The split of CapEx between intangible assets and PP&E is about 61% to 39%. And yes, cash and cash equivalents, net debt liquidity position of the group, we are rock solid when it comes to our liquidity position. Cash freely available at the year-end was at EUR 46.6 million EUR 30.9 million lower than what we've seen in 2024, where we ended the year with EUR 16.5 million. I'll provide you with some details on that in a minute. The financial debt, it decreased to EUR 3.3 million. Financial debt has not changed in terms of what it is. It is mostly working capital lines, short-term debt for SFC Netherlands as well SFC Canada. That brings us to a net debt or in this case, specifically a net cash position of EUR 43.3 million at the end of the year, below the EUR 56.4 million in 2024. Equity decreased by EUR 0.5 million. That is due to the negative net income or net loss in this case. The net profit was minus roughly EUR 1 million, but the equity ratio remained on the level of last year at 72% compared to 71.5% at the previous year. So cash flow, why did the cash position decline? The operating cash flow in 2025 came to EUR 17.4 million comparing to EUR 21.8 million in 2024. So that is below what we generated in 2024. But given all the extraordinary costs that we've seen, still a decent level. And that also reflects, as I mentioned before, that large parts of the currency losses had no cash impact because they were not realized. So we still consider that cash to be at a solid level, even though there's room for improvement. What we, however, see is that the net working capital increased significantly in 2025, totally by EUR 20 million, where we saw a much lower increase in 2024, which was EUR 5.3 million. The working capital ratio to net sales increased to 37% in 2025. We had 25% in 2024. So what are the key drivers in the net working capital? The largest impact had an increase in accounts receivable, which were cash consuming of EUR 12.8 million. We have seen that the days of sales outstanding increased to 103 days compared to 80 days in 2024. Key reason is that really a lot of customers are using the payment terms to a maximum. We also see that especially larger customers are stretching the payment terms for a couple of days. We have not seen any defaults or any major defaults with any customers. So in spite of the fact that payment terms and days of sales outstanding have increased, any write-offs or the provisions for bad debt have not increased. And frankly speaking, we do not see this in the current year neither. Nevertheless, we are pushing hard to bring those accounts receivables down and are in constant discussions with other customers to optimize that position. Second largest impact is from the increase in inventory. We see that the inventory increased with a cash impact of EUR 6.8 million. That increase was mostly driven by stocking for fuel cell components in anticipation of higher revenues at the beginning of the year. So the stocking has taken place mostly in Germany and to some extent also in the U.S. All of this material that we purchased will be used. So we don't see any -- use correction or write-off in this inventory. That was one reason. The other reason for the increase in the inventory was initial stocking in our U.S. subsidiary also in light of the discussion of customs. We have shipped quite a lot of components, quite a lot of fuel cells to the U.S. to optimize customs impact that has an impact also on inventory levels. The days of inventories have increased to 152 from 131 in 2024. Those 2 impacts altogether, if you add them up, roughly EUR 20 million were not offset by the increase in accounts payable, which increased by EUR 1 million only, and that translates into days of payables outstanding to 69 from 66. After tax payments of EUR 2.4 million, this then results in a negative cash flow from operating activities of EUR 4.9 million. The CapEx or cash flow from investing activities came to EUR 3.7 million, much lower from what we've seen in 2024. And then it goes -- then we have the cash flow from financing activities, which is mostly lease payments came to EUR 3.6 million. That altogether that results in the change of cash of EUR 12.2 million, but still with what we consider a very solid and a good cash position. With these wonderful [indiscernible] details, I would return to Peter for an outlook and further details. Peter Podesser: Well, thank you very much, Daniel. Two things here to close out from our side. First of all, some remarks really on the let's say, geopolitical and macro situation out there and the impact on SFC Energy. Daniel already mentioned, yes, we saw some precious metal cost increase, especially with platinum peaking out last year here and naturally exchange rate impacts. We did some price increases already implemented throughout the entire offering. As always, this takes some time to trickle down, but I think on a good way. And then direct and potential impact of the war here, U.S., Israel versus Iran. I think we are fortunate that our business model is, let's say, also in terms of energy consumption, pretty light. So we see a direct impact here on methanol spiking up a good, let's say, 20% to 30% here on the substance. But the substance only being, let's say, 10% of our fuel cost as such as this is mostly, let's say, packaging safety and some logistics, we see, let's say, a single-digit percentage impact here and working on, let's say, our customer buy-in here. The other area is transportation cost. And naturally, we are in talks with key customers to see how we can share the burden here. So from this side and also on the top line, yes, naturally, some projects regionally might see a delay here. But as this region is still for us a business development region in terms of the Middle East, also here, we do not see a significant impact also on our projections. And Israel has been a constant, let's say, customer there also, I'd say, we feel our outlook not impacted from today's point of view in terms of the top line. So going to the forecast here and the outlook. We see despite the volatility in the macro environment or you see us in an optimistic mode here. We have returned back to growth in Q4 2025 already. We are predicting a range of EUR 150 million to EUR 160 million of revenue. We acknowledge also the feedback that this slide is seen as somewhat conservative by some of you. But at the same time, I think we have it as a sensible planning here. And I think a good starting scenario into the year. Where is this growth coming from regionally? Well, Asia, I mentioned Singapore already, but also Europe, a good start off here in the first 3 months, and we are expecting a really strong first half year. The other part of the growth, and I mentioned this also initially, is definitely a significant growth in our defense and public security business up to a range of 15% to 20% of group's results. And still, the underlying growth here in our industrial business is also seen as, let's say, a positive contributor. Oil and gas benefiting here from the current oil price levels. We see CapEx programs being, let's say, some of them accelerated in Canada already being there last week seeing our team, but also seeing some of our, let's say, users, yes, this has for this part of the business, obviously, a positive impact. Looking at the profitability, we see EBITDA adjusted increasing to EUR 20 million to EUR 24 million range and the EBIT adjusted between EUR 11 million and EUR 15 million range. So both indicators, both core KPIs we have on the profitability side should see, I'd say, a significant increase. Main factors, top line growth, sales growth, higher-margin business in Defense & Security as well as a good mix on the industrial side, and some operational efficiencies. We do not neglect some of the residual risks, naturally exchange rate, but also naturally the spending on ERP as well as cybersecurity. But at the same time, we feel that this is catered well from today's point of view. So again let's say, all this background, we see ourselves well placed for growth again and also increased profitability. Looking forward to your comments and questions, and thank you very much for your attention so far. Operator: [Operator Instructions] The first question is from Karsten Von Blumenthal. First Berlin Equity Research. Karsten Von Blumenthal: My first question is regarding your Oneberry acquisition. You have acquired 15% and you have concluded this recently, and you still have a 50% option to increase to 50%. What are your plans there? Peter Podesser: Peter, yes, I think we are still, I'd say, having been working together for 15 years, we are, I think, doing the right thing now stepping in with a limited risk also seeing the business developing well on their end. And I think both parties at the end of the day are operating in good faith here to assess also a majority option. While I think it is not a compulsory step here, we still can achieve our strategic targets here. And finally, you know us well enough. We are always pretty cost and price sensitive here in M&A steps. It will definitely also depend on the development of the business and then the valuation is the key factor of decision-making. But knowing each other long enough, we can operate now for a foreseeable future in this format, and we'll take it from there. Karsten Von Blumenthal: Great. That helps me. My second question is regarding your CapEx budget in 2026. Daniel said that in 2025, it normalized. So could you roughly elaborate on your budget for CapEx for PP&E and intangibles in 2026? Daniel Saxena: Yes, Karsten. So the CapEx we would see for 2026, a little bit above what we've seen in 2025, but that is mostly related to the increased capitalization of R&D. So when it comes to PP&E, we do not see any huge investments above what we've seen in 2025. Karsten Von Blumenthal: Last question. I mean, we talked just a few weeks when you published your preliminary figures. If you recall this time between the call today and some weeks ago, is there any major change you have perceived? Or have things developed in the way you said it? I mean my impression is it is developing well, but perhaps I have missed anything. So perhaps you could elaborate on that. Peter Podesser: I think we see ourselves well on track here in the -- from different perspectives. The one is we see, let's say, significantly higher dynamics in the defense part of the business. I mentioned this, we expect a rebound in India, but we also have signed initial, let's say, OEM program steps in the meantime, in Europe here and on the industrial side, a very, very good start here in the European part of the business and also a good start, especially driven also by oil and gas business in Canada. So overall, I think well on track, but still, let's say, especially the expansion on the defense side of the business, I mentioned that is contained in the outlook, still is contingent to a couple of decision points regionally, but also on the OEM level of business. But also there, I think within also expectations in terms of time line. Operator: Gentlemen, at the moment, there are no more questions. I would like to turn the conference back over to you for any closing remarks. Peter Podesser: Well, thank you very much. Thank you all again for taking the time. As always, don't hesitate to reach out to us here Suan, Daniel, myself for direct interaction and follow-up questions. With this, happy to close the call right now and wish you all a perfect day. Thank you very much.
Rolly Bustos: Welcome, everybody, to our call today. I'm just going to give it a minute here while people start to file in, and then we'll get started. All right. Then just to make sure we keep on schedule. I think we will get started with today's call. So as always, greetings, and welcome to everybody to the shareholders and stakeholders to today's Draganfly 2025 Q4 and Full Year Earnings Call. My name is Rolly Bustos, and I am the internal Investor Relations representative here at Dragonfly. We appreciate you all joining us today. We will start, as usual, with our CEO and President, Cameron Chell, recapping the fourth quarter and full year earnings highlights. Next will be a more detailed financial review with our CFO, Paul Sun. We will then conclude by addressing the pre-submitted questions that we have received. Though I know I talked to many of you often, as always, you are welcome to reach out to me with questions directly at investor.relations@draganfly.com. I remind everyone that this presentation may include forward-looking information and statements. These statements are not guarantees of future performance or financial results and undue reliance should not be placed on them. Any future events or financial results may differ from what might be discussed here. The company's results and statements are accurate as of today, March 24, 2026. We are under no obligation to update or renew these statements outside material press release disclosure going forward. The full forward-looking disclaimer can be found on Page 2 of this presentation. So Cam, if you're ready, please go ahead. Cameron Chell: Great. Thanks, Rolly. Appreciate that. Thank you, everybody, for taking the time and your consideration to be here. We appreciate you as shareholders of the company, enthusiasts and maybe even some fans. And certainly, if there are any of our team members, employees or customers here, we deeply appreciate you. First and foremost, we want to just throw out all our blessings and prayers to all of those who are fighting for our freedom today and those who are in service and away from their families. We wish them Godspeed. So Q4 and year-end highlights for 2025. So 2025 was a really solid year for us in terms of, in particular, building on top of our infrastructure in preparation for the, I'll call it, the predetermined revenue ramp that we will be experiencing throughout this year and certainly into '26. So we did have record revenues in '25. We were up 17.8% and closed off the year with $7.7 million. We had gross profit of $1.3 million on that, which we're pretty pleased with given all the R&D and all the additional work that we've been doing into our systems and trying to do our best to overservice our customers. And we ended the year with a cash balance of about $90 million. So strong balance sheet for us to continue to build on as we move into '26 and '27. A few of the operational highlights for us this year, and there were many. But in particular, Draganfly unveiled a new product line or a new product within our product line called the Outrider. And this was particularly built for the Southern Border multi-mission agenda or concept of operations. So the Southern Border sheriffs have a very, very unique situation in terms of securing the border. Now a lot of the border flow in terms of just the mass migration coming through has been stemmed. However, the human trafficking, the firearms, the drugs has actually become more intense. And so the southern border commitment that our sheriffs have down there is actually even more imperative now than it was before. So the primary challenge, we had a -- from a special operations command, we were referred into the Southern Border sheriffs and in particular to Cochise County. Now Cochise County is renowned as a Southern Border sheriff county. They secure much of the entire Arizona border and the New Mexico border with covert cameras, an incredibly built from the ground up AI system and covert camera system that they built themselves. Now when they get hit on these cameras, the challenge is they've got up to 2 hours to get to that location. Their AI system is really effective on identifying if it's human trafficking, if it's drugs. They can even have a sense of what cartel it's coming from or even -- or if it's firearms or a combination of any of those. So then they've got to deploy resources into that area. So they've been experimenting for a couple of years with drones to be able to get to that area long before personnel can get to that area, whether that's by RZR, ATV, horse or four-wheel drive. But often, it takes up to a couple of hours to get there. By the time you get there, your situational awareness and the actual theater that you're operating in has changed dramatically. So they wanted to get drones to that location. However, the majority of drones that were available to them, especially in particular, the multi-rotor drones, really only had 30 to 40 minutes of flight time, which is enough to kind of get you there maybe, doesn't leave any dwell time and certainly doesn't give you enough time to get back. Also, the smaller drones really don't give you the ability to interdict and really only provide ISR, so intelligent surveillance and reconnaissance, which is still hugely valuable. So the concept of operations that they challenged us with was how do we have a drone system that can get as a responder there quickly? How can it stay on task for a long enough time? And how can it do multi-mission? So multi-mission might be not just doing ISR, but can it interdict, actually hold people in place? Can it act as a communication hub. That particular area is famous for very challenging communications, dead spots, wild temperature swings, very large differentials in altitude, thin air, et cetera, et cetera. You're starting at about 2,000 feet above sea level and then you're going up from there. So your performance on your motors is quite a bit different. There's a lot of variable factors in there. So we spent actually a couple of months working with them. embedding what we call our ITS team, so our Integrated Tactical Solutions team. They spent time on horseback in RZRs, understanding the use cases, the concepts of operation. And then we went to work with the sheriffs designing a drone platform that would enable them to be able to execute on all the missions, which isn't just interdiction and law enforcement, it's often search and rescue or personnel support. So what we designed for them was a drone system or with them, excuse me, was a drone system that could do everything a fixed wing drone could do, meaning it could stay up for multiple hours and it could do everything the multi-rotor could do, which means it could actually carry things into place because a fixed-wing drone doesn't really have a lot of payload capacity. It also takes up a lot more room to operate and generally can't work in as adverse weather conditions, which are quite variant in that particular area. So what we designed for them was the Outrider drone. Now this is a drone that can stay aloft for 7 hours, and it can carry up to 100 pounds. It can be a communication hub, can be an introduction device, it can be a search and rescue device. It can be a resupply device and certainly can act as a very sophisticated ISR device. So they've got the best of all worlds when they did this. Now the reason that we were able to deploy this very quickly is because Draganfly is one of only a very few companies, maybe arguably 2 that have an entire product lineup. So everything from small FPV attritable one-way drones, suicide drones or sometimes called that can be as small as 5 inches, right up to something as big as the Outrider, which is 9 feet across. And so we took our heavy lift drone, which was an all-electric drone, and we actually built on top of that platform 2 diesel engine,s, a number of other modifications that gave it the capability to stay up for that amount of time and have that payload capacity. It also is interoperable with all the rest of our drone platforms. So when the sheriffs are training on one platform, they have the capability to actually fly the other platforms as well. Often, you don't need a 9-foot drone that can carry 100 pounds if you've got an AI camera hit something that's closer or if you've got a unit that just happens to be on the seat beside you in the truck, you just want to grab it, throw it and get eyes on the situation. You might only need 40 minutes of flight time in that case. But all of these things are connected. They all provide multiple views to multiple different command centers. It might be search and rescue. It might be the sheriffs, it might be the local PD, whoever the case may be. It might be border management or border control. They've all got eyes on this as well. So this particular project has been extremely successful for us. We're really, really proud of the work that we did there, and we're very, very grateful to the sheriffs for trusting us in doing this work with us. Now the nice thing that's come out of this is we now have a border solution. We have a very unique solution that's just not an eloquent excuse me, piece of equipment that's integrated into law enforcement, but it's also a piece of equipment that was designed with the concept of operations in mind. So we've got the experience working with the sheriffs in order to understand what are those operational requirements. That is expertise that we're now able to take into several border opportunities in multiple countries, multiple jurisdictions around the world. And it's really become an area of expertise for us. The next thing that I wanted to mention is that we continue to resource up the company. So we're very, very fortunate to bring on Victor Meyers and Keith Kimmel. Victor is a former Navy SEAL, Keith is a former TOPGUN, both with incredible careers, highly educated, also very strong capital markets and sales backgrounds. And they are leading our military Board of Advisers, which effectively is they're leading our sales efforts within the military right now. And what we have seen is them bringing an incredible amount of expertise. Again, not that they didn't have great drone expertise, but what they really had was operational expertise and contacts that trusted them, and we are learning so much from them and the organization that they're building within Dragonfly that allows us to deliver solutions as opposed to just hardware or software. A really hot topic, as many of you know, over the last maybe a week or 2 has been swarming. Now swarming is a really important part of the drone ecosystem. In particular, it's had some attention over the last couple of weeks. we've been doing swarming work. In fact, we've been building FPVs within our company for over 15 years. An important story that a lot of people don't really know is that it was the U.S. Marines that developed FPVs. And they introduced them into Ukraine in 2022. Of course, the Ukrainian has taken it to an entire new level. But it was the U.S. Marines that designed FPVs into battle plans. And in fact, two of the folks that did all that original training work and much of the initial design work are now part of Draganfly. And so this swarming has always been an important component of what's going on. We're very fortunate to partner with multiple different swarming technologies. But in particular, we're really excited about what Palladyne is doing. They've got a very sophisticated swarming system. They've won some recent contracts, which we also made some more recent announcements with just in the last week, talking about who we're servicing with those contracts, their military contracts and how those are being integrated into the Draganfly line. Now our view of swarming in some AI software is we view it very much like a payload. So one of the things about the Draganfly line is it has dozens and dozens of integrations. So often, what happens is a customer shows up and they're like, "Hey, we need this particular surveillance camera or we need this particular AI system for whatever concept of operations that they're working on. And what works really well with the Draganfly system is that as we have all these different integrations, we have a platform that's multi-mission that can service that particular customer with the exact requirement. And so Palladyne is a very important part of that, and we're really enthusiastic about the software and the work that they do and the contracts that they're winning and that we are all -- that we are winning together. We did advance -- we did showcase at the Advanced Drone System at AUSA. That was a really big show for us. We did have a large Ukrainian contingent of military folks come over, participate, speak, workshop, and we had a number of dignitaries from the DOW there as well. We performed a meaningful strategic planning session there, and we've seen a tremendous amount of things unfold since that show. The Draganfly announced a strategic partnership with Defense Prime Global Ordnance. Now Global Ordnance is one of the largest DLA defense primes out there. Now they're really well known for their ordnance work. They provide about 80% plus of the ordnance into Ukraine. They have an incredibly strong push into drones. They understand that in many, many cases, the drone is the ordnance, not just in small FPV, but in larger formats, in swarming formats, in fixed wing formats. And I believe that they are going to be one of the dominant DLAs in the drone space. We have a very strong partnership with them. We're integrating deeply with them and are working hard to ensure that collectively that they are a DLA featuring Draganfly product capabilities, Draganfly's technology into their ecosystem as one of, if not the largest ordnance provider in the market today. Draganfly, we also deployed with Autonome a landline clearing mechanism. So they have a carpet that lays out and then has a number of explosives on it and very, very quickly clears the land mine -- clears land mines and creates a path or a road. So we integrated with them on our heavy lift drone where the heavy lift drone actually takes the carpet, lays it down, rolls it out, right, backs off, carpet explodes, takes out all the land mines and then we lay the next one on top of it and so on and so forth, and then it collects all the actual Autonome landmine carpets. We've had some great, great success with it. They're getting some significant traction in many areas of the world, and that's an exclusive integration that they did with the heavy lift. Look, one of the advantages that Draganfly or one of the differentiators, excuse me, that Draganfly has because of our 27 years of experience, we really focus on those integrations. So again, whether it's camera systems, whether it's radio systems, whether it's having partners like Autonome Labs or Palladyne work with them, they're all looking for ways to deploy their technology. I would say that we are certainly really strong in our ability to integrate those technologies so that the Draganfly product line has as many options as possible. In addition, those partners of ours become a channel reseller for the Draganfly line. So we're going to continue to -- you'll continue to see from us lots of integrations, primarily in the public safety and in the military space. But also in the commercial space, we have multiple energy projects on the go right now where we're integrating very, very specialized either sensors or tools in the energy space on that Draganfly line. And again, the reason that we typically are winning those types of integrations is because we've got a product lineup that one can carry those types of tools. It's big enough drones. It's not all just these small ISR drones, but there's also multiple sizes of them. So sometimes you need 2 types of tools, but you don't need a 9-foot drone carrying a smaller tool. You might need our Commander 3XL, which can carry 22 pounds to go up and do some of the tooling for the equipment that's on a power line or a windmill or on a pipeline. So to that measure, we had a Fortune 50 company, which happened to be a telecom company, purchased our heavy lift drones, in fact, standardize on our heavy lift drones, in particular, for standing up cell towers post disaster. So this particular company, which is a household name, is now standardized on Draganfly. We're deploying drones with them on our heavy lift and on our Outrider, both tethered and untethered in order to stand up cell phone towers, and now there's multiple other applications that they're looking at doing as well. Once we got the initial orders from the Southern Border sheriffs, we actually launched a significant demonstration for multiple agencies down on the Cochise border. We showed, demonstrated the concept of operations. We actually demonstrated 3 or 4 different concepts of operations. And it was that particular event that's now led to multiple jurisdictions, both national and international that are looking at and/or engaging with the Outrider drone as their border protection standard. So again, it's a brand-new greenfield opportunity that we created with our partners because we're willing to take the time and we're really strong at being able to go out and do that integration type work. But first of all, understanding what the customer is looking for. We have secured a number of military orders as well from the Department of War. And so this strategic international military order for Commander 3XL would commensurate with that as well. So we're seeing uptake not just from the DOW and also from the DND or the Canadian Armed Forces, CAF, but multiple military forces around the world. But they look to, in particular, as you would expect, what is the U.S. doing? What is the U.S. adopting? And so the credibility that we've been very fortunate enough to build within highly specialized special operations units, which you've seen by some of our press releases in this last quarter are really lending to our credibility to be able to sell internationally as well, which has actually been a really pleasant surprise for us. We are -- to that note, we do have some significant partnerships in the Asia Pacific region. So as we look at the different areas in the world where drone adoption is either in place or where the next place is that they are really going to be adopted quickly, we have been pulled into many opportunities in Asia and Southeast Asia, probably with countries that you would expect, but also many other adjacent countries who are looking at the asymmetric situation in terms of combat theater of warfare and understanding quickly that they've got to try to catch up with this curve that's happening of every military in the world right now is rearming and they're rearming with asymmetric capabilities in mind. Asymmetric in terms of cost to build, cost to deploy and maximum effect for dollars spent. Not only that, but the actual strategy and tactics that these new asymmetric tools on [ en masse ] are bringing to the table are actually providing them with an advantage. Now just because everybody else is doing it, it's kind of like everybody else has to be doing it as well. And so -- which I'll talk a little bit about in a minute as we talk about the Middle East. We also did receive another meaningful, very significant order win for us of FPV drones from the U.S. Army. We'll continue to see many of these from individual units and brigades and special operations commands as they get more and more exposure to the Draganfly product, the Draganfly team and the work that we get to do with them in order to purpose-build on en masse equipment that is very specific for their needs. And then, of course, a subsequent event that happened, which we're very grateful for, is we closed a $50 million registered direct offering, which was a no-warrant straight common deal. Just for a super quick review. Our product lineup does not have the Outrider on here. Just haven't updated the deck, my apologies. But it goes everything from the Flex FPV, which is a very, very unique FPV that was designed in Ukraine from our experience over there. We've been boots on the ground since 2022 in Ukraine. And this particular drone is winning a ton of business with folks that get time on the stick because they understand the different capabilities that it has as opposed to just a typical drone. It does work extremely well as an ISR drone as well. It's got multiple capabilities in terms of if you can change the blade and arm sizes on it. So this particular drone can carry anything from 1 pound up to 6 kilograms, anywhere from 1 kilometer up to 10 kilometers. And of course, if you put fiber on it, we could go further. The Apex drone is a drone that would be a replacement for any of you the drone nerds out there for the M30 drone. And the M30 is the DJI drone that's the second best seller that they've got or the M30 or the M350 series. The Mavic, the small ISR, is their best one. And you will see an announcement from us on that very shortly. That's relatively -- that is public news. I'm not telling anybody that isn't out there already. We're not displaying it here yet. There will be a product announcement on that coming, which we're really excited about. But this particular drone here can carry 6 kilograms, can fly for about 40 minutes, can carry multiple payloads and again, fits into that multi-mission mode. What we've learned from 27 years of experience is it's great to have a single-purpose drone, which could potentially be something like the Flex, but even that does ISR or something like a DJI Mavic or some of the other great ones out there like the Teal or the X10. But again, even with the one that we have coming out, it does multi-mission. The more experience that drone teams get with these, the more that they want to have them be able to do more than just one thing. It's extra weight they're carrying. It's extra things they have to worry about. It's cognitive load. And so they want to have one platform. Typically, the more experience they get, they can do more than one thing. The Commander 3XL is a 22-pound drone. It can carry about 22 pounds. Actually, it can do a much more than that, but we keep it under the 55-pound weight limit so that it's easy to qualify on a 107 license. But this is a drone that's the workhorse of the unit. This thing can -- there's really not much it can't do in terms of missions. It's great for dropping FPVs from it. It's great from dropping ordnance. It's fantastic for doing logistics. It's got -- it's just a big flying battery. So it's got terrific sensor capability, unbelievable ISR capabilities. And we're just seeing a ton of success with it. The heavy lift drone, this is a 9-foot drone flies for about 40 minutes, can carry 67 pounds. It's variant with 2 diesel engines on it. Actually, the Commander 3XL can come with the diesel engine variant as well. So it can stay aloft for up to 3 hours. But the heavy lift drone with a diesel engine variant on it can stay up for 7 hours and carry up to 100 pounds. So some really great capabilities. So when a particular unit, whether it's public safety or whether it's military, looks at the drone lineup, they come to realize, hey, wait a minute, we can solve all of our concepts of operations that we need, and we can come up with other ones as well because we've got variability in what we do. Now why this is really unique is that it takes a couple of years at least to actually field a new drone system. So while some other fantastic companies out there have been able to field a great small ISR drone and they stayed focused in that area for the most part, for them to build an entire lineup of drones regardless of the amount of money that you've got, it just takes time. And because we've been around for 27 years, that's why we've got the full lineup. So this is nothing new that anybody hasn't heard before, but certainly, there's been some events recently that have probably significantly grown the global market. So the amount of inbounds, and I'm sure you've heard this from other drone companies as well, the amount of inbounds that are now coming in from the Middle Eastern area because of, obviously, the unfortunate war in the region is enormous. And what's really unique about this is that each of these jurisdictions over there, they want their own capabilities. So much like the allied forces, the U.S. in particular, has taken a posture of we need to manage our own supply chain. We can't be at risk from global supply chains. We have to have our own technology. All these other jurisdictions are adopting that same posture. Now previously, for most defensive type of equipment, most jurisdictions cannot adopt that posture because they can't afford to build it themselves. They can't afford to research it. They can't afford to test it. They can't afford to build the expensive facilities required for these very elegant precision weapons or equipment out there. But what we've done now is we've entered into a realm of mass precision and that mass can be built very inexpensively. And so you've got all of these jurisdictions out there now saying, well, we want to build them ourselves so that we can afford ourselves that same protection through the supply chain, but also maybe have our own unique capabilities as well, which might be regionalized or might be nationalized for their own particular reasons. And so for that, I think what you've seen is, in particular, the North American drone companies have seen a swell of demand from that region over there in terms of, "Hey, how can you bring not just your device technology to the table, but your manufacturing technology, your experience in the field, et cetera, et cetera?". So again, this drone market continues to shock me in terms of how big it is. And every time it gets a little bit bigger, I kind of -- it's like the Internet. Once you've got one use for it, then you realize there's 2 or 3 other uses or other people can. And the more it propagates, the less expensive it gets for other people to propagate. So we're in a 10-year super cycle around drones, which is, in my opinion, a subset of autonomy and it's really being driven by policy by every national government and every military in the world right now, unprecedented. At this point, what I'd like to do is I'd like to turn it over to our CFO, Paul Sun, to run through our financial highlights. Paul? Paul Sun: Yes. Sounds good. Thanks, Cam, and thanks, everyone, for joining the call. Appreciate it. Yes. So just looking at this brief income statement here, I'll take you through year-over-year changes. So as Cam mentioned at the outset, revenue for the year was up 17.8% from 2024. Full year revenue comprised of the $6.86 million from product sales was $861,000 coming from drone services. Gross profit was $1.32 million for the year compared to $1.39 million from last year. This year's gross profit included a onetime noncash write-down of inventory of $259,000, while last year's gross profit included a noncash adjustment of $627,000 related to inventory. Exing out these adjustments, gross profit decreased by $444,000 year-over-year. As a percentage of sales, adjusted gross margin decreased from the 30.9% in 2024 to 20.4% this year, and sales mix was the main driver here. Total comprehensive loss for the year, including all noncash items, was $22.9 million compared to a loss of $14.06 million last year. The comprehensive loss for the year ended December 31, '25 included noncash changes comprised of a loss in fair value of derivative liability of $2.64 million. As a quick reminder, that's legacy back to a financing we did that is in a different currency than our reporting currency. So we have to report it as a liability. And we had a recovery of an impairment of notes receivable of $69,000 and that write-down of inventory of $259,000. So otherwise, would have had a comprehensive loss of $20.1 million versus last year's $15.3 million, excluding that year's noncash items. The largest contributor to the year-over-year change was an increase in office and miscellaneous wages and travel as we scale up the business. Following that, adjusted comprehensive loss per share this year would be $1.28 versus $1.46 that you see here compared to the adjusted loss per share of $4.85 versus $4.45 last year, respectively, again, as shown here. And Cam, if we could just move to the next slide, please. I'll do a quick snapshot of Q4 '25 doing a year-over-year comparison to Q4 of last year. So here, revenue for the fourth quarter was up 18.5% to $1.91 million, up from the $1.61 million in the fourth quarter of '24. Fourth quarter revenue comprised of $1.8 million from product sales with $108,000 coming from drone services. Gross profit was $85,700 compared to $215,700 in Q4 of last year. And Q4 this year had a onetime noncash write-down of inventory of $244,000 and otherwise would have been a gross profit of $329,700 compared to the same period last year where there was a onetime inventory write-down of $167,000, making the adjusted gross profit there $383,200. Adjusted gross margin for Q4 was 17.2% compared to last year's 23.7%. And this was a result of products and services mix comparing the 2 quarters. Total comprehensive loss for the quarter, $9.3 million compared to a loss of $4.7 million in the same period last year. This quarter includes noncash changes comprised of a fair value of derivative liability for the quarter of $788,000 and a onetime inventory write-down of $244,000 and would otherwise be a comprehensive loss for the quarter of $8.3 million versus an adjusted loss of $3.6 million in the same quarter for last year. The increase in loss primarily due to the higher office and miscellaneous costs and wages. And we'll stay on this page, and we'll this time do -- since we just did a year-over-year comparison for Q4, we'll now do a quarter-over-quarter look at Q4 this year versus Q3 of this year. So revenue for Q4 decreased 11.3% to $1.9 million compared to $2.15 million for Q3 of this year, mainly due to lower product sales. Gross margin for Q4 was 4.5% compared to 19.5% in Q3. However, if we back out that onetime inventory write-down that we mentioned earlier, gross margin again for Q4 this year, 17.2% compared to 21.5% adjusting for noncash items in the previous quarter. Total comprehensive loss Q4, again, $9.3 million compared to a comprehensive loss of $5.43 million in Q3 of '25. And again, please recall, we had that fair value of derivative of $788 million, the write-down of inventory. So Q4 '25 comprehensive loss would have been $8.3 million versus a loss of $3.54 million, excluding noncash adjustments in Q3 of '25. Again, increase in loss and primarily due to higher office miscellaneous costs and wage costs as we continue to scale the business. I think the last slide here, Cam, is going to be a quick shot of the -- some items on the balance sheet. Yes, great. So you can see total assets here increased from $10.2 million to $101.3 million year-over-year, which is largely due to the increase in cash. The working capital surplus at December 31, '25, is $95.2 million versus $3.8 million from 2024. So quite strong. However, working capital would have been a surplus of $95.7 million and shareholders' equity would have been $97.18 million if we -- versus that $96.5 million shown here if we ex out the noncash fair value of derivative liability of $492,000. Last year's adjusted working capital would have been $6.04 million and shareholders' equity would have been $6.81 million. So again, up strong year-over-year. And you can see we continue to have minimal debt. As Cam mentioned at the outset, cash at the end of the year was $90.1 million compared to $6.2 million at the end of last year, '24. And of course, our current cash balance is higher even still following the USD 50 million raise that Cam spoke about earlier. And with that, Cam, I'll pass it back to you. Cameron Chell: Great. Thanks, Paul. Great job, as always. So what I'm going to do is I'm going to turn it over to -- or I'm going to go next into a bunch of questions that just I'll stop sharing there, if that's okay with you guys. Cameron Chell: So let me jump into a bunch of questions that have come in. So the first question that came in is you've had a lot of meetings with the government and military of Canada. Do you see meaningful contracts coming from that? Well, we're sure hopeful. The Canadian Defense Industrial Strategy is a paramount and monumental document put out by the Canadian government that outlines the Defense Industrial Strategy and the $78 billion, I believe, maybe it's even higher than that $1 billion spend over the next 5 years that the Canadian government is doing as it relates to defense. A very large portion of that is scheduled to go into drones, in particular, into Class I and Class II drones. There's 2 manufacturers of drones in Canada in that category. Neither of our product lines cross over with each other. We have been very, very active with the Canadian government over the last year. And in fact, 2 weeks ago, we completed an exclusive Draganfly only Capabilities Day organized by the Canadian or helped to be organized by the Canadian Armed Forces, which demonstrated the 5 vignettes or concepts of operation that they plan to put into immediate use, immediate being over the course of the next 18 months using Category 1 and Category 2 drones. Within 2 weeks of that announcement, we were able to display successfully all 5 of those vignettes or concepts of operation, I would say, flawlessly and in a ice storm. So that -- so there was 4 concepts of operation that we planned on displaying. The fifth was an Arctic one, which we did not plan on displaying, but weather wasn't our friend that day or maybe actually it was our friend because we did move ahead with the Capabilities Day regardless of the ice storm and it went off very well. So there's a lot of activity happening there. I'm meeting with government at all levels, including Senate hearings. And I think we're well positioned up there. We'll continue to pragmatically move forward with the Canadian government. We are going to have to earn the business just because we're Canadian, doesn't mean anybody gets it automatically, but it sure is a big advantage. And certainly, I think we have the capabilities, and we're building that trust. The other question is, why do we think we didn't make it past Gauntlet I in Drone Dominance? And do you think we'll reapply for Gauntlet II? Gauntlet I was an incredible experience for us. We actually didn't get notice that we were in Gauntlet I until 36 hours before, where most other companies had a couple of weeks to prepare for it. We did show up. We did perform quite well. There was one mission set that did involve live ordnance that because of the time frame, we couldn't perform. And we think that's primarily the reason why we just didn't score on those particular points. We did score well on the other 2 categories. And we think primarily, that's why we didn't. We did learn a lot. There's some definitely some things we could have done better. We are very aggressive about Gauntlet II. We've seen the capabilities out there. They're great companies. There's fantastic industrial capacity that's being built in the United States because of this incredible unique and brilliant format that they put together, but we can more than compete with anybody there. And you'll see us in Gauntlet II, and we expect to be doing very, very well in it. So the -- Canada says there's really -- they're really focusing on drones. Do you think that Draganfly is in a good position there? Well, I think I addressed that already, so I'll just move on. But the answer is yes, I think we're in a really good position there, but we're not taking anything for granted. And we'll continue to understand that we've got to earn that business, and it's a very discerning customer. So there seems to be a lot more drone companies now than before. What are our competitive advantages to them? So for sure, there's a lot more drone companies and a lot more drone companies are going to figure out that it takes a lot more than ordering parts off Amazon and putting a toy up in the air to actually be able to service a public safety, commercial or military client. You're fielding -- we're fielding aircraft here, highly regulated, incredible demands in terms of the expectation and the performance requirements to actually be a commercial public safety or military unit or a military device. As mentioned earlier in the presentation, it takes up to 2 years to actually put a real commercial military or public safety unit up in the air. And so while you can kind of -- I kind of feel as like snowboarding. You can get really good the first day, but then you're going to spend 2 years being able to actually become a decent snowboarder, if you will. So I think -- and there's lots of great innovation out there. I do think that the more successful start-ups are probably likely acquisition targets for some of the more established public players out there. Our primary competitive advantage is the amount of time that we've been doing this and that we have a full product lineup that is completely integrated. I would hazard to say that there's really only 2 companies in the world that have that, and that would be DJI and the other would be Draganfly. And we've been working on other product variants or not product variants, product lines that come in and fill out that product line even more that you'll see come out this year. And when we come out with a product line, it's gone through the testing. It's been in customers' hands, and it's designed specifically for concepts of operations and missions that we were asked to build for. So because of that long-standing reputation, capability, our infrastructure is built out. The other thing a lot of these newer start-ups you're going to find out that it doesn't matter if you have the greatest whizbang. If you can't build 10,000 of them in a month or 100,000 of them or have like some ridiculous demands that you can scale on, which -- and scaling a drone is a whole bunch different than building 10 that work really well. You build 10,000 that work really well and have to have all the variants for the changes in potential operations. That in itself is an entire manufacturing process, an entire workflow that goes so far beyond the understanding of how to put 1 or 2 or 10 elegant machines together at a low cost. I think access to capital right now seems quite liberal. However, that is not going to be the case necessarily going forward as more and more winners are picked and customers become more and more discerning around knowing that they need to get a device and a company that they can rely on. So I think we have a lot of competitive advantages. It doesn't mean that there's not going to be great competitors out there. I've been watching these cycles for 25 years. Up until 7 years ago, every North American drone company has gone out of business except for Draganfly. So more competition doesn't scare us. I think it's all floats all boats rise right now. And the more innovation, the better. And the fact of the matter is that there could be 10 Draganfly or Red Cats or Audaces or whoever out there, it still isn't going to meet the demand that's coming down the pipe. So kind of the last thing we're worried about right now is competition. We kind of revel in it because we like to see the innovation, and it gives us a great insight into what might be coming as we're focused on other parts of scaling. So fifth question is, do you see yourself doing any acquisitions? It seems like lots of the other drone companies are. Yes, for sure, we do. I think we are somewhat fundamentally different, though. We are pretty organically focused. We have great capability internally. I think that we spend a lot of time refining our product with our customers, not that others don't, but I do think the operational history pushes us that way a bit more. That's -- so we're very focused in our acquisition strategy. We do have a number of acquisitions that are in the pipeline. However, they're not necessarily that they're not -- not that they don't come with significant revenue. That's not the driving force for us. Fitting particular technologies that actually have a maturity of manufacturing in them or the design theory that's on them has a particular amount of experience that's been put into it that can allow it to be mass produced and fit within all of our partners, multi-mission focused, et cetera, those are things that are really important to us. So yes, you'll see us do some acquisitions. They will not come across, in my opinion, as haphazard at all. They will be very, very strategic. And again, we're playing for the next 25 years. We believe that Draganfly in 10 years from now, for sure, will be a drone company. But really drone companies will be super intelligence companies. Nothing collects data better than a drone, nothing delivers anything better than a drone. And when you combine those 2 things in an autonomous world, the possibilities of drones are far beyond what the device is. And so we keep that end in mind when we're thinking about what Draganfly will become and where our real leverage is. We tend to announce many partnerships and pilot projects. Are they translating into meaningful orders as your competitors? The answer is, yes, they are. But again, I believe that our approach is somewhat much more organic and blue ocean. So if we think about the example I gave earlier around Cochise County, that's been now a year-long project that's turning into revenue and has created a blue ocean opportunity for us around border management. We don't see anybody approaching drones as border management. Now do we see people putting drones on borders? Yes. But do people have border management experience in terms of running, managing operations, designing, building, integrating information, super intelligence, autonomy, AI around a total solution that we can work with on our partners. That's really the difference. And that's why I think maybe our partnerships are perceived to take a little bit longer. We can go by revenue, but then we got to integrate revenue. And you got to write down all the costs around it. And it's just -- I believe, anyway, at least where our skill set lies is our customer deserves better than us just jamming a bunch of stuff on the top line. We are very capital markets focused. Please don't misunderstand me. But we are an employee first, customer second, shareholder third organization. And if our employees are really satisfied about what they're doing, they'll win customers. If we're winning customers, we'll win shareholders. And that's a philosophy that has allowed us to survive. Yes, we've stayed small but we survived for 27 years. Now we're really moving into a thrive mode, but I don't think we'll be anytime soon be moving away from the core principles that have established us with some great product line and some fantastic people in the organization. Can you expand on your integration with Palladyne AI software stack and how it expands your total addressable market and potential new revenue? So I think I addressed this a bit earlier, but the reality is Palladyne has got a fantastic system, and their swarming technology is very advanced compared to many others that are new and coming out and et cetera, out there. We ourselves do have our own -- some of our own proprietary swarming capabilities. However, we do not want to compete with what the customer wants. We don't want to tell the customer or have to convince the customer what they're looking for. Palladyne has got an incredible capability and a customer set that is really looking for their very specific capability. What we provide is a unique and really professional integration onto not just a drone, but a platform of drones that can now be utilized for all of that swarming technology. So imagine, if you will, you build a swarming technology for an FPV drone. That's a pretty cool capability. But now imagine if you can build a swarming technology for a set of fixed wings, a heavy lift, a Commander 3XL that can drop FPVs, you can have an Apex drone coming in and doing targeting acquisition. Your capabilities now are much more different than somebody who has a cool swarming technology on FPVs. Not that that's not important, but impressive in all the rest of it. But again, it's really trying to hone in on what is it that the customer is -- needs now and is going to need and what are they learning that they actually need out there. And I think that's what we're trying to address. So while Palladyne is a really important customer and an exquisite builder of swarming technology, there are other swarming and AI-type technologies that will be incorporated into the platform. We want to be known as that platform that can do multi-mission, right, and address as many concepts of operation with as little cognitive load as possible. You don't want to have to relearn a drone system, have different parts, have different supply chain, all the rest of it. So if we can incorporate all that complexity of logistics to the battlefield, right? So people don't have to buy different drones to get different swarming capabilities as an example, or buy different drones to get different ISR capabilities, they can buy one system that can provide them likely the most fundamentally important thing, which is capacity, logistics and supply where it's needed, when it's needed, then that's what we believe. And that's what our customers have told us that they believe is going to be a winning combination. So that was the end of the questions that Rolly forwarded off to me. So in closing, first and foremost, again, just blessings out to all the folks and the men and women who are fighting for our freedom today. Second of all, thank you very much to our shareholders. We absolutely wouldn't be here without you. Our customers, we appreciate the opportunity to be of service and in particular, our employees, thanks for your belief in what we're all doing together. On that note, I hope you all have a blessed day.
Thomas Pevenage: Hello, everyone, and welcome to the presentation of IBA's 2025 Full Year Results. I'm Thomas Pevenage from Investor Relations. As usual, you will find this presentation on the Investor Relations page of our website. A Q&A session will follow the formal presentation. Moving to next page. Let me draw your attention to the company's disclaimer for forward-looking statements, which, as you know, are based on our current assumptions and beliefs and subject to risks and uncertainties. Today's speakers are Olivier Legrain, our Chief Executive Officer and IBA Clinical Lead; Henri de Romree, our Deputy Chief Executive Officer and IBA Technologies Lead; and Catherine Vandenborre, our Chief Financial Officer and IBA Corporate Lead. Here is the agenda for today's presentation. We will start with our highlights for the period, followed by a business review, where we will discuss the strategic progress and the financials of each business unit. Finally, we will cover our financial performance in more detail and give you an update on our guidance and outlook before opening the Q&A session. Olivier Legrain: Thank you, Thomas. I'm Olivier. Good afternoon, everybody. Let me start by sharing our key messages for today. Full year '25 was a strong year for IBA. We delivered on our commitments. Our guidance has been met and we progressed as planned on the execution of our strategy while the group continues its transformation. This dynamic is reflected in our full year '25 performance, record revenue exceeding EUR 620 million; adjusted EBIT, formerly known as REBIT of EUR 27.4 million and a return to profitability in Proton Therapy. Our growth engine has also strengthened with a record backlog of EUR 1.6 billion, supported in particular by the scaling of service in Nuclear Medicine and a strong Proton Therapy order intake. Beyond this annual performance, 2025 marks the inflection point from a historically cyclical project-driven model towards a more consistently profitable platform. The '24-'28 financial outlook is confirmed, and we are providing a full year '26 guidance being an adjusted EBIT of at least EUR 32 million. Let me now have a closer look at our commercial momentum. In full year '25, IBA recorded a very strong growth in order intake, bringing our backlog at an all-time high of EUR 1.6 billion and providing increased visibility for the future. Service backlog grew particularly strong, up 16% year-on-year, reflecting the continued expansion of our Proton Therapy installed base, but also a strong contribution of Technologies. On the equipment side, we posted an historic equipment order intake of EUR 452 million, representing an increase of around 40%. Looking at our business unit, in Proton Therapy, we sold 12 rooms during the year, our second best year ever, reflecting strong commercial traction, particularly in the U.S. and in Asia. In IBA Technologies, 37 systems were sold compared with 33 driven by strong demand in RadioPharma, while Industrial Solutions normalized following record high years. As a result, the 2-year rolling book-to-bill ratio reached 1.0 as Equipment order intake grew broadly in line with revenue recognized over the period at group level. I will now move to our key financial metrics. In full year '25, group revenue reached a record level of EUR 620 million, an increase of EUR 122 million compared with full year '24, thanks to well-executed backlog conversion and the growth in service activities. Adjusted EBIT amounted to EUR 27.4 million, exceeding our guidance, a profitability improvement of EUR 10 million year-on-year. The adjusted EBIT margin increased to 4.4% compared with 3.5% in '24 despite a decrease in gross margin driven by a temporarily less favorable equipment profitability mix. Net debt stood at EUR 58 million as of December 31 as working capital continued to be impacted by the delivery of large Proton Therapy projects. On a like-for-like basis, excluding the ORA acquisition, net debt would have been EUR 41 million. Our net leverage ratio at 0.83x adjusted EBITDA remains healthy. Building on strong execution delivered in '25 and the momentum across our businesses, we are setting full year '26 guidance at a group adjusted EBIT of at least EUR 32 million. Let's now move on to the review of our business performance. I will start with the progress of IBA Clinical. In '25, our clinical entity benefited from a strong commercial momentum, continued technological innovation and a very significant improvement in Proton Therapy profitability. The year marks a clear turnaround for the business supported by disciplined execution and a more favorable project mix. The year was marked by several important milestones in Proton Therapy. MD Anderson published the first ever Level 1 clinical evidence from a Phase III randomized trial confirming proton therapy as a standard of care. We also launched a minimum viable product of DynamicARC and obtained the Medical Device Regulation certificate for Proteus 235 reinforcing the robustness and the regulatory maturity of our Proteus platform. In Dosimetry, we continue to innovate with the launch of the QUASAR Phantom for MR Simulation in the radiotherapy market and the release of myQA Blue Phantom. We further strengthened our product portfolio positioning through the acquisition of PhantomX, enabling AI-based quality assurance. Turning now to our global footprint in proton therapy. At the end of the year, IBA had 45 operational sites, well distributed across regions with strong visibility on future expansion as 43 systems are in production and installation. At year-end, we had 8 sites under installation and reached a peak of 10 installations running simultaneously in '25, a new high that demonstrates our execution capability. This include the ongoing installation of the first Proteus ONE in Spain as part of the 10 system order. The installation of 3 additional projects is expected to start in '26, subject to building construction time lines. In China, we made strong progress on major Proteus PLUS installations with the first live treatment rooms in Chengdu and Shenzhen and final acceptance expected by year-end '26. '25 also allowed us to further consolidate our market leadership in proton therapy. Thanks to the 12 rooms sold, we accounted for 63% of the total sold globally during the year. IBA continues to have the largest installed base in the market, which provides significant operational leverage and represents a robust platform to further promote proton therapy in close collaboration with our clinical partners. Increasing clinical evidence continues to be a key driver of Proton Therapy sustained momentum. In December '25, the Lancet published the first ever Level 1 clinical evidence, the most robust level of clinical data for a Phase III randomized trial led by MD Anderson. This study establishes Proton therapy as a new standard of care in head and neck cancer, demonstrating superior overall survival rates and significantly reduced side effect compared with conventional radiation therapy. In addition, early results from the RadCom Phase III Breast Cancer Trial presented at ASCO showed significantly improved patient reported quality of life with proton therapy in breast cancer, one of the most prevalent cancer types. Lastly, new studies have been recently added to pipeline of upcoming clinical evidence. We will continue to report on results. Despite an accelerated conversion into revenue, IBA Clinical continued to build backlog solidly in '25. Equipment backlog reached EUR 564 million, while the 2-year equipment book-to-bill ratio stood at 1.1, providing a sound platform for the future. Service backlog grew even faster now exceeding EUR 800 million. Zooming in on Proton Therapy Services, the increase in service backlog was supported by new orders and 7 renewed contracts while with existing customers. These contracts more than offset the amount of service revenue converted into P&L during '25. As a result, Proton Therapy Services continue to strengthen visibility, recurrence and long-term value creation within IBA Clinical. Let me now focus on Proton Therapy's performance and profitability turnaround. In '25, Proton Therapy returned to profitability, delivering a positive adjusted EBIT contribution of EUR 10.2 million compared with a negative contribution of EUR 12 million in '24. This improvement was driven by, firstly, top line growth as equipment sales more than doubled and service expanded. Secondly, profitability improvement with the scaling of our installed base. At adjusted EBIT level, this improvement was partially offset by continued investment in critical product innovations, including DynamicARC and FLASH and by the prudent application of our internal credit risk management policy with a recognition of EUR 8.7 million in bad debt within G&A. These are isolated problematic situations that we were willing to reflect while the overall quality of our credit exposure remains sound. Turning to Dosimetry in '25. Dosimetry delivered a stable top line in a challenging environment as already communicated throughout our trading updates. However, profitability continued to be negatively impacted by this competitive and regional dynamics in the U.S. and China. This effect was further amplified by the absence of last year's one-off subsidy grant of EUR 800,000, which overall contributed to a decrease in adjusted EBIT. These market dynamics also impacted commercial activity with order intake decreasing by 9%. As a result, cost optimization measures have been defined and will be rolled out in '26, ensuring a sharper focus on core activities and a realignment of the cost base with current market condition. I will now hand over to Henri to comment on the performance of IBA Technologies. Henri Romree: Thank you, Olivier, and hello, everyone. Let me walk you through the strategic progress achieved in IBA Technologies, starting with Industrial and then going to RadioPharma solutions. Industrial Solutions continued to progress along its road map, advancing accelerator-based sterilization and advanced irradiation solution. Ongoing market dynamics continue to support the long-term shift towards, X-Ray and E-Beam technologies as regulatory and environmental pressure on ethylene oxide increases. At the same time, the sterilization market is somewhat digesting temporary overcapacity after a peak in order intake in early 2020, partly linked to the COVID-driven investments. We remain very confident in the underlying market that is growing steadily and expect industrial order intake to normalize as utilization catches up with the installed capacity. In China, despite slower pipeline conversion with some project shifting in the coming years, we made substantial headway last year signing 2 additional high-power [ x-ray ] contracts, tripling the current local capacity. In terms of new application, we advanced our PFAS project progressing through technical trials and studies. And in polymers, another area with promising long-term potential, research continues to show potential with pilot progress remaining on track. Turning to RadioPharma solutions. We saw solid commercial traction with the highest order intake to date, supported by deeper penetration in our core markets and an expansion into high potential geographies. This was illustrated by the sale of a high-energy Cyclone IKON contract to PET Pharm Bio to install a PET and SPECT isotope production center in Taiwan. More recently, post period close, we also signed 2 strategic multisite contracts in the U.S., one with SpectronRX and another one with RLS/Telix. Finally, we continued significant efforts to expand our position in the radiopharmaceutical value chain, which I will detail on the next slide. As you know, IBA strategy in nuclear medicine is leveraging on our accelerator technology leadership to expand along the value chain and build a next-generation oncology platform. A key building block of this platform is ORA, a recognized trailblazer in radiochemistry, which we acquired in December. Another element in Theranostics, where we are making good progress. I will now cover these strategic initiatives in more detail. Let me first come back to the ORA acquisition, which represents an important strategic step for IBA in nuclear medicine. Completed at the end of 2025, the acquisition of ORA brings into IBA, a Belgium-based radiochemistry company with a highly skilled team of around 15 employees, including senior radiochemists, a strong record in automated PET radiopharmaceutical synthetizers and established relationship with leading pharmaceutical partners. By combining IBA's leadership in cytotron technologies with our cutting-edge expertise in radiopharmaceutical synthetizers, we are creating one of the most competitive integrated solution available for hospital and global radiopharmacy networks. This new integrated offering addresses the full radiopharmacy workflow from isotope production to purification, labeling and delivery and is designed to support customers seeking higher productivity and access to advanced radio isotopes. Importantly, the ORA acquisition is immediately accepted to IBA Technologies revenues and profits. And now moving to Theranostics, which is, as you know, a strategic pillar for RadioPharma solutions. It is indeed a fast-growing segment with a nuclear medicine [ serving ] with a projected market size of USD 20 billion by 2030 based on a 35% growth rate on a yearly basis as presented in our last Capital Markets Day. As you can read on the slide, several isotopes are emerging in this field out of which we are highlighting the most mature ones. Within this landscape, IBA decided to focus on actinium-225 and astatine-211 as strategic place based on clinical development as well as our technological and industrial edge. You already know our subsidiary, PanTera, paving the way to making actinium-225 treatment widely accessible. Catherine will update you on their progress in the corporate section of this presentation. Besides, we are increasing momentum for astatine-211. We are positioning ourselves on this emerging market. Firstly, on the technology front, we are developing a dedicated high-throughput cyclotron. Secondly, on the clinical side, we are one of the co-leader of the accelerate.eu program funded by the European Union. This ambitious platform combines industrial clinical and pharma players around a bench-to-bedside ecosystem to accelerate astatine-211 translation into a clinical setting. Lastly, with respect to production infrastructure, we continue to make good progress with a partner, Framatome, on our joint ambition to enable the astatine-211 market through the deployment of a full-fledged production network across Europe and the U.S. Turning now to the technologies backlog, you will notice a decrease over the period, reflecting stronger conversion into revenues. Industrial Solutions order intake has not yet picked up as market absorbs the temporary overcapacity as this was not fully compensated by the strong market momentum in RadioPharma. It led to a 2-year equipment book-to-bill ratio of 0.8 below reconstitution level. As far as service are concerned, backlog now includes upgrades. Nevertheless, IBA Technologies' contribution remains limited as our scope mostly relates to short-term 1-year maintenance contract with no permanent presence of an IBA [indiscernible]. Finally, looking at the financial results, net sales remained stable at EUR 225 million, representing more than 35% of total group sales. This is a solid achievement following 2024 strong growth. Adjusted EBIT contribution eased compared to prior record year. This is driven by 2 elements: first, a less favorable project mix, most notably a higher share of RadioPharma integrated projects where we collect lower margin on our third-party equipment; and two, intensified R&D investment in the radiochemistry and radioligand therapies within RadioPharma as well as in PFAS and polymers within Industrial. Nevertheless, EBIT margin landed at 8.9%. Let's move onto IBA gross profit. I will now give the floor to Catherine who will walk us through the corporate activities besides our group CFO. Catherine Vandenborre: Thank you, Henri. And let's start with an update of our new ventures beginning with PanTera, our joint venture launched with the Belgium Nuclear Research Center. In June, PanTera started the production and the supply of actinium-225 for clinical trials and compassionate use reaching full-scale weekly production in October. The year 2025 also saw the start of the construction of a large production plant located in Northern Belgium. Of course, all required permits were obtained ahead of the start of the construction. Operations are expected to start in '28 with first commercial scale supply targeted for '29. Finally, it is worth noting that PanTera continues to build strong commercial traction with more than 20 active customers across the value chain, including pharma and biotech players as well as key reference hospitals and research institutes. Multiple clinical trials are ongoing spread across different phases with first results expected from 2028. We will keep you posted on further developments. From a financial standpoint, PanTera generated EUR 13 million of revenues in '25 and became EBIT positive in Q4. In terms of funding, PanTera called the third tranche of its Series A for IBA. This resulted in a EUR 7.2 million revaluation gain and dilution to around 35%. A fourth and final capital increase tranche is expected in the first semester 2026, which will further dilute IBA shareholding to 31% while generating an expected revaluation gain of EUR 5.5 million. We remind you that PanTera was valued at about EUR 290 million post money in September '24. Let's now have a look at our other new ventures. First mi2-factory in the field of semiconductors achieved a very important milestone with the finalization of the demo system specifications for its first machine based on updated market requirements. Post period, an equipment development and purchase contract was executed with IBA for a value of EUR 15 million covering the accelerator component of mi-2's end-to-end solution. Second, NHa, our HadronTherapy project launched in collaboration with Normandy region, reached an important derisking milestone with the installation of the [ superconducting coil ] on site. Cooling activities are in progress and generation of the first magnetic field is expected over the summer. In parallel, efforts are ongoing to secure short-term and long-term financing. Post closing, NHa secured the first tranches of the anticipated bridge funding from its funders and other reference shareholders. Turning to our sustainability agenda, '25 delivered concrete progress that reinforces our ability to deliver sustainable growth and long-term value creation. We maintained strong momentum on decarbonization, remaining on track towards our Scope 1 and 2 reduction targets. More than 90% of our electricity now comes from renewable sources, supported by the continued rollout of our low-impact mobility policy. We also advanced the sustainability of our installed base. In the U.S., the full system restoration at MGH is underway, upgrading the proton therapy system to modern standards while avoiding a carbon-intensive decommissioning and rebuild. Beyond environmental actions, we expanded our contribution to patient support. Through the Oncia community, patients across Belgium, Spain and France benefited from human-centered supportive care. Governance and value chain initiatives also progress. We are proud to see our B Corp score increasing to 118 from 114 in 2024 and we published our first CSRD report. Let's now close the business review section and move to the financials in more detail, and let's start with the commercial traction behind our performance in '25. As mentioned earlier, we saw strong growth in equipment order intake, mainly driven by Proton Therapy with order intake up 137%, achieving the second best year ever in terms of rooms sold. From a regional perspective, overall commercial traction in '25 was mainly driven by the APAC region, including 7 out of the 12 PT rooms sold over the year. This contrasts with '22, where growth was mainly driven by EMEA, boosted by the Spanish PT project. The Americas have remained a solid core market for IBA across the years. Turning now to profitability. '25 is driven by a record high top line, up 44% year-on-year, partially offset by a reduction in gross margin down to 32.2%, mainly due product and project mix. This resulted in a combined effect of additional EUR 31.5 million in gross margin. Operating expenses increased in nominal terms, but progressed less than proportionately to revenue at 28% of sales compared with 30% in '24. Within OpEx, the increase in G&A reflects selected investments to support business growth, including digital and organizational initiatives, but also the one-off impact of higher bad debt in IBA Clinical at around EUR 9 million, following a prudent application of our risk policy. Finally, R&D increased as we progress on key projects, strengthening IBA's growth platform, including Proton Therapy imaging, DynamicARC, radiochemistry and [indiscernible] PFAS destruction. Let me now comment on the main items below adjusted EBIT. They were mainly impacted by a project to migrate to [ S/4HANA ], which is expected to be completed in the first semester of '26 and by a foreign exchange loss due to unfavorable currency fluctuations, in particular, the U.S. dollar, which is largely noncash. In addition, hyperinflation in Argentina continued to negatively impact our Proton Therapy project in Buenos Aires for EUR 1.9 million in '25. Impact was, however, reduced versus '24 and will wane in '26 as the project nears completion. Turning to PanTera. You will note a negative contribution under the equity method linked to negative result and a EUR 7.2 million revaluation gain, as already mentioned. If we turn to cash evolution, you can see that operating cash flows were negative over '25 due to cyclical working capital movements. While inventories decreased compared to '24, contract in progress increased substantially, reflecting the high volume of project activity in '25 with cost and revenue recognition progressing ahead of invoicing and cash collection. This trend is expected to start improving over the second semester of '26, partly thanks to the delivery of proton therapy projects in Spain and China as outlines by Olivier before accelerating in '27. Investing cash flows include the ORA acquisition. As already announced in our Q3 '25 trading update, we closed EUR 135 million refinancing package in November to strengthen our balance sheet structure and capture strategic opportunities. We have indeed, in December, partially financed the [indiscernible] ORA acquisition by drawing entirely of EUR 50 million acquisition term loan. Building on the strong execution in '25, we provide 1-year guidance for '26 of at least EUR 32 million of group adjusted EBIT. With backlog at an all-time high and services contributing to growing recurring income, we reiterate our confidence in IBS profitability trajectory while being mindful of the current macro and geopolitical environment. As a result, we reiterate the '24-'28 outlook announced at last year's Capital Market Day. I will now hand over to Olivier for his concluding remarks. Olivier Legrain: Thank you very much, Catherine. To conclude, I would say that '25 represents a key milestone for IBA. We delivered record high revenue and strong order intake, clearly reflecting the robustness of our commercial momentum across our businesses. Profitability improved meaningfully, supported in particular by the scale-up of Proton Therapy, driving the turnaround of our largest business unit back to profitability. At the same time, we continue to make disciplined and targeted strategic investments to support IBA's long-term growth. Throughout the year, we also actively managed our financial position and funding, strengthening the group resilience in a volatile environment. Finally, full year '25 guidance has been delivered, confirming the execution capabilities of our teams and the solid foundation of our transformation. With a strong backlog, clear growth drivers and improved visibility, we enter '26 with confidence and a clear trajectory ahead. Thomas Pevenage: Thank you very much to the audience for listening to our results presentation. For information, you will find on this presentation the key dates from our financial calendar. We will now move on to the Q&A session. [Operator Instructions]. We will start with Frank Claassen. So you should be able to speak, Frank. Frank, we cannot hear you, or maybe we can start with David. He was the second in line. Frank Claassen: Hello, this is Frank Claassen speaking. Can you hear me? Thomas Pevenage: Yes, we can. Frank Claassen: Okay. I had a bit of trouble here. This is Frank Claassen of Degroof Petercam. I have 2 questions. First of all, on your gross margin, it declined in '25 because of the low-margin legacy contracts. What can we expect in '26? Is that -- the legacy contracts, will that roll off? And hence, can we expect some gross margin improvement in '26? That's my first question. And then secondly, on the symmetry, you're taking cost measures here. Can you elaborate what kind of cost measures? And will we already see the benefits in '26? Hence, can we see margin improvement in '26 already? Catherine Vandenborre: So I will take your first question and leave for Olivier, the second question that you raised. So maybe to give a little bit more of color on the '25 gross margin. I would start by saying that indeed, it was impacted, like we said in the past by project in Proton Therapy where margins were lower than the typically targeted margin. But it was also impacted by an unfavorable project mix in RadioPharma. And so compared to, let's say, other years, we had those 2 effects. Dosimetry declined a little bit as well, but Industrial Solution improved. And Proton Therapy, and that's quite interesting, even if it's still impacted by those contracts that we signed with low margin, Proton Therapy improved compared to 2024. And that's also a way to signal the trends over 2026. We expect indeed an improvement of gross margin in '26 compared to 2025. And this is led by 3 major trends. The first one is a kind of more healthy competitive dynamics in the proton therapy market. And of course, it will take time before those contracts signed, especially in '22 will be fully realized, but the more we progress, the less important is the relative share of those contracts. Second element that we already mentioned is the scaling effect in Proton Therapy services where we really improve general margin, thanks to different efficiency measures that we implement. And the last one is a more favorable mix in RadioPharma with high-end applications. Olivier Legrain: When it comes to Dosimetry, we took -- we have implemented actually a number of cost reduction measures, productivity measure to adjust to the vision we had on the market development while preserving the sustainability through continued R&D investment. And the short answer to your question is yes, we can expect to see profitability improvement in Dosimetry already in 2026. Thomas Pevenage: We can move to David. David Vagman: First, a little bit on the question of Frank. So -- but on the 2026 guidance, so I heard you comment on the gross margin. Can you also comment on the top line and the OpEx growth or additional OpEx investments that you're planning for 2026? And then also related to 2026, could you explain us what could be the impact of FX moves on the top line and also the gross margin, if that plays a role? Then my third question on the bad debt. So you've mentioned in the press release that risk management played a role. So could you explain how you've changed your credit risk analysis? Catherine Vandenborre: Okay. So I will take your question on the evolution of the top line, OpEx and I think guidance overall in 2026. So first, in terms of top line, you might remember that we realized a growth of the top line of 7% in '24. We have now 24% in '25. And we mentioned in the Capital Market Day last year that we expected front-loaded growth. In total on '24-'28 trajectory that was announced with the range, 5% to 7% growth per annum overall. And what we can say is that we confirm the range, but we expect also to land at the high end of this range. We need to have in mind that '25 was particularly strong in terms of revenue. So each year over the period may not be as solid top line-wise. But of course, what we will focus on is to improve the profitability overall versus a very aggressive top line growth. And so it brings me to your question more generally on the guidance, gross margin and OpEx. So like already stated, we can expect an improvement of the gross margin in '26 versus '25. OpEx are expected to grow a little bit as well, but quite reasonably. You might remember that in terms of OpEx, we took the commitment to maintain them at maximum 30% of the sales. And that's the reason why if you have in mind the 28% of this year, it will remain relatively moderate as a growth. In terms of overall guidance, I think that we can say that we have been at this stage relatively cautious for 2026. The guidance that we gave is like in 2025, when to beat and not necessarily to meet. I think we need to have in mind that the macroeconomic environment is uncertain. And in this context, we remain cautious at this stage and give a guidance that underwrites those uncertainties. But as we continue to progress in execution over the year, we might update the guidance. And all in all, '26 guidance is on track to achieve an EBIT margin of around 10% in 2028. Regarding the bad debt, which was your other question. So in terms of management of the bad debt, the first element I would like to stress is that we -- of course, we have a policy based on which we try to secure payment through a number of elements like letters of credit, credit risk insurance, bank payments, guarantees and other instruments. But in 2025, we booked close to EUR 9 million, EUR 8.7 million, a little bit in an exceptional way. It's primarily linked to 2 PT customers in China or in the U.S. We are still in discussion with those customers. So we don't exclude to recover part of the amount later. But we believe at this stage, it was more cautious to book those bad debts. David Vagman: And a follow-up on my question on FX or it could be [indiscernible] in gross margin? Catherine Vandenborre: Yes. FX is, of course, quite difficult to predict the evolution. So we have -- you know that we have a hedging policy, which tends to hedge the cash exposure and not the P&L exposure. So we might remain exposed to fluctuation, especially versus the dollar, which are, of course, quite difficult to predict. David Vagman: Is it more of a negative with your cost in euro and your revenues in dollar? Or is it? Catherine Vandenborre: So it depends on the type of activities we have. If you look at the services taking into account that the vast majority of the activities are local, there we have a kind of natural hedge between the cost and the revenues. For equipment there, we still have a base of supplier, which is in Europe and in Belgium. So we tend to do our acquisition or purchase in euro. And then we sell in different currencies. In our negotiation with the customers, we always try to sell in euros, but you can imagine that sometimes it's not accepted by the customer and there, we hedge the position from a cash perspective. Thomas Pevenage: There are currently no more questions. No one else raising his hands. David Vagman: Otherwise, I have another question. On the net debt evolution, so if you could comment and also -- okay, on 2026, but also maybe give us some perspective on 2028? Catherine Vandenborre: Yes. So on the net debt evolution, so first, you saw the figures on '25. I will repeat them for the sake of clarity. So we ended at financial net debt position of EUR 58 million, but like-for-like, it would have been EUR 41 million if we don't take into account the acquisition of ORA, which was, of course, executed at the end of '25 and fully funded with debt. Now going forward, that was your question. '26 will still be impacted by the low-margin contract that we have signed mainly in '22. What we expect is that as from the second semester of '26, mainly the second semester with more devices shipped and expected payments linked to the shipment of those device, the cash situation is expected to improve over the second semester compared to the situation at the end of 2025, but still remaining negative in the sense of net financial debt position at the end of 2026. We will need to wait '27 to see an improvement with, let's say, reversal in our working capital cycle and end the year on a positive situation rather than a net financial debt. And the trend -- this positive trend is expected to continue in 2028. Of course, all this is based on the assumption that we have payment from the customers like we had in the past, so based on historical type of payments. Thomas Pevenage: Time to raise your hands if you want to ask the last questions. So [indiscernible], you should have the floor open. I think you have to click on unmute to make sure we can hear you. Okay, I think he was having a technical issue. [indiscernible]. Unknown Analyst: Just on Dosimetry, I thought -- I don't know if I heard from someone that you would be thinking about exiting this business again? Or was that the false rumor profitability there is really, really disappointing. What's the future of this division? Olivier Legrain: So for Dosimetry, we confirm that we continue to see it as a valuable activities, well anchored into IBA's portfolio of activities and notably with a very strong connection to the proton therapy market. So yes, it was a fake news that you've heard. Unknown Analyst: Maybe an additional question from my side. I saw that there were 3 PT contracts for which the services contract were discontinued. So 3 PT rooms for which the contracts were discontinued on the services side, do you see more of your portfolio of existing PT system at risk of where the maintenance could not be -- could be discontinued? Olivier Legrain: So I think one of them is one in Russia. So we don't have any additional site in Russia. So we had to indeed discontinue service in Russia, even though the site is still operating. The other one was one of the first sites that we have installed. It was in China, and we proposed the customer to either upgrade the site like MGH did or we could not ensure regulatory compliance anymore, and we had to discontinue. So back to your question, no, I don't expect more of this kind of situation. Catherine Vandenborre: And the third one to be very precise, is MGH. So we temporarily stopped because we are doing the refurbishment of the site there. But of course, we expect to renew the contract once the refurbishment is done. Olivier Legrain: Exactly. Thomas Pevenage: [indiscernible], I think you have another question? Unknown Analyst: Yes. On proton therapy, since you have around 65% of new market share, can you comment on your pricing power? Do you use your strength to have, yes, better pricing and margins, et cetera, because there's still a long way to go, I guess. Olivier Legrain: Well, I think on new contracts, we are where we want to be in terms of pricing. All of them remain competitive. So there is not one single deal where we are alone or so we need to remain within the industry benchmark. But in all new contracts, we are on industry benchmark. So we are back to where we want to be in terms of gross margin. Unknown Analyst: Yes. Well, for us, it's a bit hard to understand if you have such a high market share, why you say that you have to remain within industry benchmark. That seems -- or that's hard to understand for me as an outsider, one would think that you would have stronger pricing power than -- if you have -- if the market is so competitive, then it means that you're not so unique or maybe I understand wrongly? Olivier Legrain: I think it says it all. We have a dominant market share, but market is competitive. So I think we have a genuine competitive advantage that makes us win and not win on price, but there's a limit to that. And once again, it's not that we don't have competitors. We have competitors and they are credible enough, let's say, but we are more credible to win more deals with some kind of -- not on price, but on genuine value of our portfolio. Unknown Analyst: Okay. Now I understand. Just one other -- another rumor I heard was that the PFAS project wasn't going that well, but Catherine explained it. It seems to be progressing. Perhaps could you say a little bit more on the prospects of the PFAS project? Olivier Legrain: Maybe you should tell us where all these rumors are coming from. Catherine Vandenborre: Well, it comes from a discussion I had. So in terms of PFAS, there are different applications or solutions that we were looking for in water, but also in, let's say, solid elements on solid elements. On solid elements, I think from a scientific point, we didn't see a solution that would lead to a satisfactory business case. On water, the tests are positive from a scientific point of view, and we are now working on the positive business case together with partner. Unknown Analyst: That's why rumors are good. Now I understand this is precisely the right context. Thomas Pevenage: Anyone else or follow-on questions? Okay. It seems we have answered all questions that were raised. So many thanks again for attending the call and supporting IBA throughout our journey. We wish you a good end of day or start of day depending on where you are, and happy to maintain the dialogue going forward. Many thanks. Olivier Legrain: Thank you very much. Thank you. Bye-bye. Catherine Vandenborre: Thank you.
Unknown Executive: Good afternoon, ladies and gentlemen, a very warm welcome at the conference at which we will present the results of KGHM Group for 2025. Remigiusz Paszkiewicz, CEO; Anna Sobieraj-Kozakiewicz, Vice President of Foreign Assets; Zbigniew Bryja, Vice President for Development; Piotr Krzyzewski, Vice President for Finance; and Miroslaw Laskowski, Vice President for Production. We also have Janusz Krystosiak, Director of Investor Relationships Department at KGHM. I would like to inform you that our conference is broadcast online. In the second part, you will have a Q&A session. And the questions can be asked both here in the room or by e-mail. All answers will be published on our website in the Results section. Now over to the CEO. Remigiusz Paszkiewicz: Good afternoon, ladies and gentlemen. Once again, a very warm welcome at the annual conference summing up the results and above all, the efforts of the entire KGHM Group throughout 2025. If I were to summarize the year 2025, I could say that it was a good year for the entire group. I'm talking not only about KGHM Polska Miedz S.A., but I would also like to focus on the Polish group and its foreign assets, which contributed very significantly to excellent results achieved by the group globally, both in production, processing and first of all, sales which translated finally into financial results, which again translated into a significant increase in the value of the entire group at the end of 2025. The company and the group had excellent results, thanks to a number of factors, which we will talk you through in a moment. I would like to say that these good results were achieved against the background and under the pressure of changing macroeconomic environment last year as well as in the context of additional factors, which are more global geopolitical. When we talk about stability with regard to mining output, in particular in Poland, which was a major achievement and brought excellent results, I would like to mention something that was not noted by everyone last year. It was somewhere on the margin, while, in fact, it very much helped us in defining the future of mining in Poland, namely minimizing the risk of mine flooding in Poland. I would like to emphasize that under a longer period of omissions or even negligence, if I can put it bluntly, the Management Board of KGHM and the entire group of employees engaged in projects which minimized virtually to 0, the risk of mining waters destroying the mines. And those projects were finalized in 2025 as a result of which we can now look at mining output in Poland without this risk. But coming back to this broader context, which we operate in 2025, the macroeconomic volatility was characterized mainly by the impact of a greater demand, which was reflected in the quotation of our core products. Let me remind you that at the beginning of 2025, for example, the quotations of copper $8,500. And at the end of year on the 30th of December, that was already $12,500. And this stable high level of increased quotations continues, meaning that we are in the conditions of higher than last year quotations for both copper and silver. As you can see in the annual report and financial statements published yesterday that also contributed to an excellent result for the entire group for last year. As for more geopolitical environment, I think for the first time in many years, we had experienced deep destabilization of tariff policy. And it is not only about the U.S. or response to the U.S. actions in key markets in which we are active, those countries in response to the developments in the U.S. modified or changed completely the tariff policies. In spite of that, KGHM responded very well. And the major reaction was the diversification of sales markets, somewhat deeper diversification than in the previous years. But also, I would like to mention not sales, but also the production that makes sure that we have to sell and what the trade in. As for production results in mining and metallurgy in Poland, we had very good results, and I will allow Mr. Krzyzewski to discuss specific numbers. But you can see them in the slides, and you probably had an opportunity to get acquainted with them. We also faced turbulences on the part of our competitors. There were some industrial accidents. There were some weather issues in certain parts of the world, which decreased the supply of raw materials, including copper concentrate with high utilization of the copper concentrate by China. As you know, China concentrates a large part of copper production. But we returned with a better margin to some customers on copper concentrate. After a certain break in trading with customers, we were able to return to them offering better margins. So the global situation in the market helped us. That was also driven by changes in the policies of key countries worldwide. We were also helped -- apart from the increase in quotations, we were helped by major demand for gold, maybe it is not a major or the most important item in our production, but we know what happened with gold reserves and what policy was pursued, not only by the National Bank of Poland, but also by other Central Banks and private investors worldwide. We also experienced volatility in foreign currencies market. Dollar and PLN prices changed, PLN grew in value versus the U.S. dollar. And thanks to our stable policy of hedging prices of core products as well as ForEx hedging and securing our energy raw materials, including fuels, all that had a positive impact on our operations because we were able to avoid turbulences or negative impact of those factors in 2025. I mentioned 3 parts of our group. All this division into KGHM Polska Miedz, capital group in Poland and foreign assets. And I would like to stress now that for the first time in the history of the group, foreign assets, our foreign companies became financially independent. It is also worth adding here that we saw the first major repayment of loans to the mother company, Polska Miedz, from those foreign asset businesses. And that came from U.S. and Chilean assets. At the end of the year, we revalued Sierra Gorda assets. And after the test, the result was positive [ $504 million. ] That's an important aspect because there was a check at history of that part of operations over the past years, even in the past decade, there were varied opinions about the value of those investments, their exposure the -- now, we can say, however, at this stage is over. Foreign assets started generating appropriate profits. And I would also like to stress here that in the near future, we would like to utilize those profits in the investment program that we plan for the future, for the upcoming years, starting already in 2026. Also, we do not forget about building the foundation that will consolidated position of KGHM worldwide. That is the base of our results. Of course, at the time when the quotation of our resources, metals are high, this building of the base is difficult because there are a few opportunities to do so. There are a few well-developed investments with regard to the mining of copper or metals that we deal with on a regular basis. That is why this is a very cautious, very prudent search, not so much opportunities as for things that can help us develop and increase value of the entire group. We also have the Victoria project in Canada. 2025 was a year of intense investing and development of this project, and our drilling went down to 1,400 meters. Now we are starting lateral drilling, which will allow us to operationalize not only the deposit, but also its surroundings. We want to operate it in a foreseeable period, which is now longer according to our estimates than initially expected in the project, and that has a very positive impact on the projections here. Among the factors that I would also like to mention as the ones that contributed to the 2025 results, I would like to say that in the context of our foreign assets, I talked to our -- to the CEO of our Chilean partner. It's a very good relationship, the partnership based on last year's experiences is going to be developed. We will increase our efforts with regard to looking for opportunities abroad. And also, we made some decisions regarding the development of Sierra Gorda itself, that is the fourth line of processing and preparation of the concentrate. Ms. Sobieraj-Kozakiewicz, I do apologize, Madam President, that's because of my -- today's presentation, the stage fright made me confused, and I do apologize. Stable hedging policy. That's something I have already mentioned. The beginning of this year was marked by turbulences in the market of gas and fuels, but thanks to those previously prepared and proven solutions, we were able to go through this difficult situation, maybe not completely unharmed but we've had better than those who are more heavily dependent on fuel prices. I think maybe I should mention some extra things. The first view of what we would like to do this year and the following years, building on what was achieved in 2025. We would like to focus on preparing the entire capital group, strengthening some key companies in Poland so that they can develop, so that we can benefit from the potential even more. We would like to enhance their capacity to be able to better use capacity and potential of those companies in Poland. This already was reflected in 2025 and was true in early 2026. That is the cooperation and mutual respect with the social actors involved. And towards the end of my preliminary remarks, let me extend my gratitude to a large group of over 34,000 people who work throughout the world for our group. This is an effort of all of them, all of our colleagues across the group, not just in Poland, let me reiterate that. So they are the ones that have done it. So once again, many thanks for that. We're hoping to continue our great successful cooperation, not just in the current year, but also going forward because I want to announce that towards the end of quarter 2, we will be announcing our strategy, work has been completed. There are some pathways that we want to emphasize again that have been addressed already adequately, and I think that the ending of quarter 2 will be a good time for us to announce the strategy. The baseline also will be the experience from early 2025 and early this year. And I think that will be the baseline for the final touches to the strategy. And now over to Mr. Laskowski for the production part, that's the baseline and the core operations. Miroslaw Laskowski: Indeed, you spoke about the water risk. Let me just perhaps bring you closer to what has been done over the last 2 years in KGHM to mitigate this natural threat. First of all, extending the [indiscernible] water draining system injections to the leak site. And those injections have allowed us to stabilize the water flow to the mining fields on at the pace of 36 cubic meters per minute. And then the Lubin mine dedicated for not so -- low mineralized water from the Rudna mine, and what was our biggest concern was the water management on the Zelazny Most retention. And we started work there on 2024, the capacity of this container was 14 million cubic meters. Right now the latest measurement show us that there's only just over 5 million cubic meters of water in this location. So a lot of work there. And a lot of work has been done. We managed to get -- we managed to get a permit to extend this location, which will allow us to stock floating deposits in this tank. And before I describe our results for 2025. Let me just say that we have managed to perform all our production goals in all our production segments, starting from mining, but also copper processing. This is not mentioned in my presentation. However, it's important to say that our budgets have been fulfilled and exceeded. So now regarding the results that you can see on the screen here. Let me just comment on 2025 from the point of view of our production schedule. It was not quite so favorable to us compared to 2024. 2025 is just 28 working days in February compared to 29 the year before 2024, and also an additional day off, which is Christmas Eve, and that was the first historically in our country. This is specifically meaningful for mining production because our crew and ourselves, we do not systemically work on public holidays. So this is based on a voluntary basis. Despite the unfavorable calendar, let's look at the bars here comparing 2025 to 2024 You can see that the output was quite similar or even better. So let me go back to what I said initially. This will allow me to comment the production results of 2025 in 3 words, stable, solid and good. And now going to details, the output, the first mining segment, over 30 million tonnes, but that perhaps might not be quite as important as the fact that we have already been able to get 1.49% of copper in the output and silver is 51 grams. And that directly translates to producing copper and concentrate, which was higher in 2025 than 2024 by about 1,000 tonnes, and it attained a level of 401,000 tonnes, and the Cu in concentrate is 22.6%. The production of silver is stable over 1,300 tonnes in total, together with the silver in our overseas assets allows us to keep in the top 3 silver producers in the world. And the electrolytic copper production, you can see a slight decrease vis-a-vis 2024, but we already communicated that on multiple occasions throughout the first semester of 2025. We were conducting some refurbishment work in electrorefinery hall in Glogow II. But already in quarter 3 and quarter 4, the work showed us that the capacity was being used to its maximum extent. And the production of the electrolytic copper was over 50,000 tonnes per quarter. I also would like to say a few words about copper processing. In 2025, we produced over 262,000 tonnes in Cedynia copper mine, and then [ 17,836,000 ], why am I saying that -- of wire. Why am I saying that? Because this is the biggest figure in our over 45 years history of the copper plant in Cedynia. Now early this year, this was a very good results. We already announced them for 2 months, and they are also over -- the budget over the assumed budget and the production in our national assets, stable, solid and good. Again, the same 3 words applied. Ladies and gentlemen, let's move on to the production results of our overseas assets. Now regarding Sierra Gorda, 55% of the share that we have in this enterprise. The production results for the extraction of copper were very good, and they went according to the budget, and that was [ 868,000 tonnes ] of payable copper, and that's 8% higher year-on-year. We were able to obtain that, thanks to a higher copper content in the ore, but also a higher output despite lower volume of the ore extracted processed. Now for silver production, we also see a 3% growth year-on-year. For silver production, we were able to produce 24 tonnes. And for gold, we can see a 15% decrease year-on-year. But you must remember that silver and precious metals only account for 11% of the revenue of Sierra Gorda, and these -- this is mostly due to the metal content in the ore. Now we can, however, proudly say that we had a very good year for molybdenum. The value of the production was 5 million pounds, and that's a 52% growth year-on-year, which also results from higher content of this metal in the extracted ore and a higher output despite a lower volume. Now to comment in just a few words about Sierra Gorda. Last year, we managed to stabilize the copper production on the processing plant, and we managed to maintain a high cost discipline. Thanks to that, of course, thanks to the support from metal prices and other macroeconomic indicators, Sierra Gorda may actually close -- was able to close the year with very good financial results. This was a historically good year for Sierra Gorda in terms of production, but I will talk about it further on. Now for the international segment. Let me initially remark that because we disposed of Sudbury -- of the assets in Sudbury in Canada, in March, early March, we stopped actually commenting on the production of copper, gold and silver, which lowered the balance of these metals in KGHM International. We are remarking here that there is a decrease by 14% of paid copper year-on-year to the level of [ 525,000 ] lower copper content despite higher output, but there is a slightly higher production of copper in the mine, but due to very low volumes, this is the Carlota mine, of course. But due to low volumes and copper production, this is not really meaningful for the whole segment and this asset's financial results. For silver production, we're also remarking that there is a drop, 87%, similarly to gold, 19%. But like I said, it is mostly due to, first of all, disposing off the assets in the Sudbury, but also lower content of precious metals in [ Nevada ] in the Robinson mine. Robinson mine is our main asset in the United States in the KGHM International segment. But ladies and gentlemen, we may also say that molybdenum is increasing up to 43%, thanks to higher content of this metal in [ Nevada ]. Now a brief comment. Let me go back to the fact that we were able to complete a lot of work in terms of optimizing the costs. We also need to be clear about the fact that last year, we had very good conditions in our mines in Chile and in Robinson. The metal content in the ore extracted was very high. And thanks to that also, we were able to use the favorable macroeconomic conditions and the TCRC premiums, our overseas assets positively contributed to the whole capital group EBITDAs. And they, in total, accounted for 48% of the adjusted EBITDA of the whole capital group. So from that point of view, this was a record year. And I think that we can perhaps cover potential development plans further on. And to sum up, last year, overseas assets paid into the budget of the group $379.7 million, Sierra Gorda over $300 million of that. In total, Sierra Gorda has repaid over $1 billion to Polish copper. Thank you. Unknown Executive: Thank you very much. And now let's hear about our development initiatives, Mr. Zbigniew Bryja. Zbigniew Bryja: Good afternoon again. Rational and responsible investment program, this is a slogan that best illustrates what we are trying to do for CapEx for 2 years now in our company. On the one hand, we need to sustain the production. We need to replace the machinery part, which is naturally getting old and, well, is devalued every year. But we need to think about the future, look forward, not just maintaining the volume, but we need to think ahead of what we are going to do in 10, 15 or 20 years or even perhaps further from that. We have adopted an investment plan for this year in CapEx on the level of PLN 3.8 billion, PLN 126 million of reserve, PLN 3.563 billion was actually performed, adding on top of that external financing. On the right-hand side, you'll see PLN 3.829 billion, plus leasing, PLN 3.926 billion (sic) [ PLN 3.928 billion]. Now what has been in the books is 96% of that. The slight difference results from the fact that many of our investments are still in the pipeline due to some delayed contracting processes, a very good results, a large discipline, and you must say that all our services have really done their job excellently. As this circle on the right-hand side, the analytical categories, we generally have 3 areas: recovery, maintenance. Recovery is this replacement of machine part. Development is everything that stands for the future, which is slightly more distant here, year-by-year. And last year, we started development of 3 shafts in KGHM area, those 3 shafts in the future are supposed to pump in additional to the mines. This production will grow. Now we're in a very early stage, but very soon, the proportions will change significantly. Annually, we have about 500 investment projects of smaller and bigger size. So the discipline in spending CapEx here is very important to us. Here, in this amount of PLN 3.014 billion, we are looking at the split of funds for mining. Both here and at other conferences, I mentioned that mining is the kind of enterprise, whatever name you give to it, it's an enterprise that every day consumes part of its resources and every day has to prepare another portion. Hence, expenditures stand for 70%. That's nothing out of the ordinary, that's a natural way of investing. Out of those PLN 3.014 billion, 17% goes to maintenance of mine carriers. They were partially handed over for an operation, but they need some fine-tuning like extension of conveyor belts and minor improvements that guarantee our ability to keep production at a high level. Another big area of expenses is replacement of machine. We bought new machinery, and this is the level which we also kept in previous years. We want closely the lifetime of our machinery. Maybe in the future, we will readjust the number of machines. Now this is the minimum necessary for our operation in mines. Another area is water removal -- water drainage in mines. Mr. Laskowski mentioned this task that we dealt with 2 years ago when we found the company, maybe not in a disastrous situation, but in a difficult one. The Zelazny Most tank, which is our tank for retention of our technological water was practically completely failed. The condition of pipelines, retention of water in underground corridors did not give us the peace of mind necessary for regular operations, in particular in the context of the other flying. So we had to apply for repairs, development of -- return them to pipelines and all activities needed water drainage, both up and down. So this explains this high item in expenditures. Then extension of the Zelazny Most tank, elevation of the embankment and we started intense work here at the end of 2024. Then in 2025, we continue this work. We changed the parameters of the land around the mine to change the hydrostatic pressure conditions. The recovery of mines and hydrotechnical plant. We had shaft relocators. This was not really maintenance but a recovery of obsolete machinery park. Then the next item, exploration. This is output from the deposit that we are only going to operate. Thanks to good planning, we are able to carry out our operations in the right way. And there is a dual mode of performing this exploration. Here, the trend is constant. We are ahead of time so that our geological knowledge about the relevant sections of the deposit is up to date. Then the next item, maintenance of the shaft. Now this is mainly SW-4 shaft, which has no casing. And now the plan is that 116 meters of salt section will be cleaned salt regularly. PLN 73 million out of PLN 170 million was spent on this task. And the next item, the program of making the deposit available for operations. In fact, I should have started with that. This is the largest portion because out of the PLN 3.14 billion, PLN 1.3 billion goes to this program. That is preparation of deposits for future operations, future shafts, identifying subsequent sections that will be handed over for operation, but it is also the construction of shafts. In a moment, I will go to the slide that will show you the GG-1 shaft works. And we will be soon starting the construction of one more shaft. We were 300 meters short to get PLN 800 million, which is a very significant amount. What contributed to this PLN 1 billion result in the program of deposit availability program. In this slide, you can see our favorite image showing the areas on which we have licenses, where we work. This dark circle, the GG-1 shaft Glogow, the deepest shaft in Poland at the moment, definitely, our deepest shaft, 1,348 then of course, Retkow GG-1 and Gaworzyce shaft. In June last year, they were identified in the field, geological study started. In the Retkow, we had 3 drills done, including 1 down to 1,370 meters. Gaworzyce is where we are now drilling, and we are able to start drilling in GG-2. Let me remind you that GG-2 is where we started drilling, but the previous location was not fortunate. We had to change it. It took us 1.5 years. Unfortunately, the planning procedures, finalization of the plot purchase and so on. In GG-1, we started utility connection. And now we are eliminating the structures from the transition part. When we were just building the shaft, now we are getting ready to hand over the infrastructure with all necessary installations at the moment of handing over the shaft for the operation is September 2029. But as regards to shaft, I would like to draw attention to the bars at the top. The ones that we showed previously show very significant differences. Now GG-1, the one marked in black circle that was joined with underground areas. Now or crew is working regularly there. Last year, we had ups and downs at 38%, 40%. That shows how very important. It is something extremely relevant to us. And then the next slide, PLN 3.014 billion was mining. Now we move on to foundries. This is mainly recovery investments or maintenance investments, but also to some extent, development. If we go from the top components and significant renovations. These are renovations with Glogow and Legnica foundries, electrolizers, convertors, anode furnaces. Then we have grinders that are renovated. The next major item is the recovery of the foundry, again 34% of CapEx. That is the money that was spent on preparatory works, mainly purchases and preparation of some elements that will be necessary to renovate Glogow II foundry. At the end of June, we will start a major renovation program of Glogow II. We wouldn't be able to buy everything this year. Hence, we started expenditures already last year as part of this project. Then we have this major furnace recovery that is dispatch purchases of new mills classifiers and new type of engines with permanent magnets. That is an element that contributes to environment protection and cost reduction. Then the alignment of the functioning and the operation of the foundry with current regulations. We have storage boxes, modernization of ventilation in the Lead hall Glogow. That accounts for about 8% of CapEx spend on foundries. Then we have modernization of those furnaces in Legnica, change of the refinement methodology. The project has been running for the third year now. We believe that this year, it is likely to see the completion of a major part and preparation of anodes for Glogow II and development of machine park for Form and Caissons in Glogow III. This year, we spent PLN 3.8 million on documentation of a new [indiscernible] line for Cedynia. And that's it from me. Thank you. Unknown Executive: Thank you so much. Now the financial part of our presentation, Vice President for Finance, Piotr Krzyzewski. Piotr Krzyzewski: Good afternoon, ladies and gentlemen. It's good to be the last one making the presentation, so I will be able to refer to what my colleagues have said. Undoubtedly 2025 and almost the entire first quarter of 2026 have one common denominator, namely high volatility in the raw materials industry, which we represent. This volatility is even greater. So our major objective, something very clear to us is focus on efficient production, which we are able to translate into sales and that can translate into cash while cash translates into investments, all that building value for shareholders. If you look at production on its own, major facts about 2025 have already been stated. I would like to stress some elements relevant to 2026 that you might have inferred from your reading of the report. I would like to draw your attention to silver. [ Mirek ], I extend great thanks to you and your team for the fact that you were able to produce more silver than planned and was I was then able to sell this. And it was excellent placing because the silver prices in January and February were very high. So that was our very intentional action and informed decision. We left more silver in storage for the end of the year, and then we were able to sell that in the first quarter. This is not random. This is based on our informed decisions. And as you can see, the actions from 2026 translate into our actions at prices at which we sell this year. I think this is the right moment now to thank our entire sales team, both in Poland and Toronto, Santiago and Shanghai. Just to remind you, 2025, 2nd April, Liberation Day, we had breakage and part of our standard connections between China and the U.S. The U.S. and Canada also faced some challenges. Europe, U.S. also faced some difficulties with delivering our products. Nevertheless, the CEO said diversification, diversification and change of directions. We also needed to recognize higher prices ultimately. It's very difficult probably for all of us to say what's going -- tomorrow is going to bring. But we have built our organizational resilience. We are prepared to find our way through this volatility. However, we will probably much prefer for it to be more stable and calm. It's something that everyone needs to be able to better plan investments. Also, what has already been said, let me remark what has been said about South. We are 100% responsible for Sierra Gorda sales, but the decision that's taken there and then is something that we sometimes agree and sometimes disagree with. So I'd like to thank our partners for that because this creative discussion, which is sometimes quite powerful that we have with them always allows us to develop a common ground and its optimal from the point of view of the output in results. Going to cash flow, what you're seeing in the -- in our equity and cash flow. We have put some of the copper and some of the silver into the inventory, 36,000 tonnes, I understand, of anodes, 38,000 actually. Why we do that? The goal is simple, but also very ambitious, 90 days of interruption for the Glogow plant, but we want to have a higher production than last year, higher by 20,000 tonnes exactly. So this seems logically not an easy thing to do. It will not be simple, but we know how to go ahead to do it. So the anodes will be growing. And I note that the use -- we will get to 50,000 tonnes probably in anodes, but that's only so that in quarter 3 and 4 we can strengthen the production. There will be a lot of cash there. We don't know what the macro will be like. But I can say that the end of the year, we'll be very aggressive on our side from -- in terms of production and sales, which is something that we are prepared for. Now referring to what Mr. Bryja has said about the shafts since they are a priority. But again, this is our ambition, and I think we will attain it. It's not easy to add the CapEx of the shaft and to produce the total CapEx. No, that is our ambition for the total CapEx to be smaller, of course, it will be slightly larger than now, but it won't be 1 plus 1 equals 2. We want it to be 1.5. It's not going to be simple, but seeing that we managed to do that when we try to optimize costs. I will show you the details soon. I think that this is also something that we can do. And the last component for building value and flows. It's a very important asset for you is the dividend. It is too early yet to say -- to talk about its value, but we can see grounds to be able to pay the dividend. So from that point of view, I think it's a component that's worth discussing. And we will be making that recommendation to the shareholders meeting. Now with reference to 2 components that are a day-to-day item right now is energy and gas. In the point of view of energy, we are the biggest consumer, industrial consumer of energy in Poland. Now for gas, 2, 2.5 terawatt hours, one of the big ones as well. What we have done and what the CEO has mentioned is focus on our basic goals where -- whenever we have some unknown data, we are trying to make sure that we have informed risk management processes in place. We are secured for gas supplies, 50% at least for this year. It's not a coincidence. It's an informed choice we made. Looking at our toolbox here in Poland and seeing that gas is being delivered by Orlen, we have been actually contracting deals with Orlen. We have hedged some of our exposure in gas. TTF listed in Amsterdam so we can manage this exposure to make sure that it's beneficial at the end of the day for our shareholders. Now for gas, one more point here. As you will know, we have gas and steam engines as one of our production equipment. This is also arbitrarily launched. Sometimes we reduced the power but we have also launched carbon units as well. And they are going to support us slightly, but also from a point of view of purchasing energy and gas. And one more thing about energy is the transaction from BGK, 94 megawatts of photovoltaic installations. These will be something powering our units directly. There is a subsidy included in there. But to illustrate that to you, the ultimate cost of producing this energy should be even below PLN 200. So this project will be supporting us. We will have our own sources. We will be more resilient, but also the purchasing cost of this energy will positively contribute to our EBITDA. And the last topic, managing risk from the point of view of revenue, as you can see in our financial statement, we are well secured from copper 20%, silver 32%. And that's an informed choice and a strategy of ours. We put in more building blocks, which you cannot yet see, we will show you after quarter 1. We have added some components here, small ones. Well, if I were to say what transaction they are, they are mostly silver and copper with higher exchange rates, and they will contribute a few hundred million zlotys to our results. But that's not the way we look at it. We implement some strategies step by step focusing on the elements that I mentioned earlier. Now let me move on to our presentation to sum up the key components on the side of the revenues, as you can well see, 3% increase in the capital growth. A lot of attention attributed to costs, I will show you that. But you can see the outcome here on the slide from the point of view of the EBITDA. All of these segments, both Poland, KGHM International and Sierra Gorda have a positive contribution to our EBITDA. Let me just remind you that already last year, when we were looking at '23, '24, the growth of EBITDA was 58%, 28% this year, 2023 was 5-something. So we tripled over the last 2 years. We have had some favorable contributions from the macroeconomic circumstances, but it's not just that, that did the job. There was a lot of work put into that, but a lot of work is still ahead of us. Now from the point of view of revenues, one thing is the volume that negatively impacted that electro refinery and some of the refurbishment in Robinson that was according to the plan. We got some support from the market. The dollar to zloty rate and the negative valuation impacted our revenue, the adjustment from the derivative instruments, PLN 678 million this year. Well, we have the securities in various places. But when we take into account all of them from 2025 was more than PLN 250 million and plus that we actually got as a company. Now in-kind costs, 8% about. But if we were to list 2, third-party input is one of the impacts, one of the factors. We bought more of the third-party input and something that's also outside of our control is the copper tax. And there's been a large increase, 21%. If we were to cut off those 2 elements, you could say that those in-kind costs year-on-year grew by about 4%. But also third-party services, in fact, their costs decreased year-on-year. We spoke about it last year. This was something that we put a lot of attention to, and we continue doing so, and you can see the outcome. Please look at quarter 2 of 2024 and compare it to quarter 4 of 2025. The quarter-to-quarter increase is just over 3%. So we're trying to lower that just to the inflation level. So the cost discipline is definitely being applied. And the outcome is from the point of view of C1, it dropped by 3% throughout the group. But the tax contributes to quite a large component of that. If we were to exclude tax and look at C1 then the drop would have been minus 17% year-on-year. If we look at specific segments, KGHM S.A. has an increase of 3%, I could say. But on the other hand, it was determined by the tax that grew by 27%. Without that, we would see minus 10% on C1 in Poland. And the operational leverage is well performing. And the cost discipline has made it possible for KGHM International to attain minus 32% and Sierra Gorda minus 46%, plus the accompanying metals, TCRC, which you are, I'm sure, observing. This has positively supported us as has the very good sales we have attained. So to sum up the results of the capital group, we've had the positive contribution of that, of the EBITDA vis-a-vis 2024. The exchange rate differences were quite significant because the dollar to zloty got stronger. And the outcome of our involvement in the joint enterprises according to international accounting standards, that was Sierra Gorda mostly, perhaps a few words of explanation. In 2025, Sierra Gorda accounted a loss that we have been settling. So this was the first trigger, and we then saw an improved performance. And that's so good in Sierra Gorda that the asset after tax represents a value in our books because before that, the value was 0, let me remind you. So we are reconstructing its value, but that's not yet the end for Sierra Gorda. If it continues to perform so well in the subsequent periods, we will probably be talking to you about its impact from the point of view of presenting it in our accounts in our books. And the last thing, key, I think, actually, financial flows, but we are trying to make sure that we do it by the book. So the operations will finance investment, and that's done, that's attained. But to a large extent, what Madam President has said for the investment activity, we have had quite a lot of support from the repayment of debt from Sierra Gorda, that's over PLN 1 billion that has positively impacted the financial flows in the group. As you can see, we are landing -- we are dropping our indebtedness, which I'm sure you will see that in the following periods. We will try to positively surprise you to make sure that our -- the cost of the debt servicing is as low as possible. Thank you very much. Unknown Executive: Thank you for presenting the results and now the Q&A session, which will be moderated by Mr. Krystosiak. Janusz Krystosiak: I open the floor for questions. Please introduce yourself. Unknown Analyst: [indiscernible] Congratulations on the excellent results. About the dividend, the cap is [ PLN 3.24 ] if we take into account the strategy that you listed. Can we expect about PLN 2, PLN 2.5? What is the outlook? And the second is on your working capital. The second question. On what level can we expect the increase of the working capital in the subsequent period of 2026, that's quarter 1 and quarter 2? And I wanted to ask you about Morocco. Can we get any further information about it? Analysis indicate that Morocco also has 12% of the world resources of rare minerals. So the question is whether KGHM will want to also follow that or focus on copper and silver instead? Thank you very much. Unknown Executive: Okay. So we will take it right now. As for the dividend or some potential in this regard. We do not want to -- and we will not depart from our to date dividend policy, which means that although the company did not pay out or the group did not pay out dividend last year, which was linked above all to the need to secure for ourselves the visibility for CapEx talks and tax reduction. We obtained this, and we want to use all funds that were not distributed as our CapEx. And that means that we can return to the dividend policy. As you know perfectly well, it can be said that this is not going to be over 30% of net profit. The decision about the amount to be distributed will be made in about a month. And we want to make the distribution as part of our overall dividend policy. So Morocco, Madam President. Unknown Executive: As for Morocco, more broadly, the development of our resource basis of the group, we operate following a long-term plan of developing our base of resources in foreign assets with policy envisages development of assets at various levels of advancement from greenfield stage where we are only seeking to obtain exploration licenses through development projects to already and operational mines based on the benchmarks with which we stick that is stable legislation, a stable deposit expected and predictable annual output and lifetime of the mine. Based on those parameters, we developed a map of future development. As for Morocco, indeed, we did sign an agreement with 2 public entities operating in that market. One of them is a company that seeks exploration licenses. The other is a company that extract copper as well as other metals. I would like to say this is an open agreement at this stage yet, which allows us to explore those projects very broadly, also including noncorporate products. Our main priority is and will be copper and its accompanying metals. Nevertheless, we have a broad view of the market, which we follow quite closely, and we're interested in developing our competencies with regard to other metals. I hope that in the near future, we will be able to communicate something more specific to you. At this stage, it is just a memorandum which is nonbinding yet and which opens out potential field for cooperation. Unknown Executive: Let me add that as regards expansion of the company based on foreign assets, potential foreign assets. We will give you more details about our prudent exploration when we get to the presentation of our strategy. As for working capital, over to the colleague. As you know, there are a lot of variables in this equation of working capital. If I isolate only the anodes, that will be an extra PLN 1 billion. But also, we are going to reduce our stocks of a large part of ready-made products. Maybe I should also make some comments on January and February production results, mainly in copper. The lower sales was driven by a few factors. January was difficult in ports and harbors from the perspective of their availability, and that concerns not only us but also other industries almost does not affect us directly, the Hormuz Strait does not affect us directly, but indirectly, it does because the loading of containers takes an increased amount of time and that can have some impact on working capital. But if I were to make some predictions, we will probably grow until June, then probably there will be some growth in September, a very strong flows in the fourth quarter, positive ones. We will focus on the strategy to make sure that the working capital is optimized. Pawel Puchalski: Pawel Puchalski, Santander. I have two sets of questions, one set concerns the volume, the other CapEx. As for the volume, in the second half 2025, you had very high levels of copper and silver in both group and parent company. Was it an exceptional semester and the following quarters will reduce those levels? And talking of volumes, I would also like to mention KGHM International because we can see the first 2 months were very weak in production. So I would like to find out whether this is only a minor glitch that will soon be overcome? Or should we expect a reduction of guidance for this project? That was in volumes. Unknown Executive: As for volumes, the figures concerning copper content in the deposit and silver content in the deposit remain at a similar level that is the third decimal point in the budget for 2026, we plan similar numbers to the actuals for 2025. As for volumes in KGHM International, you should bear in mind that we make reference to the previous year where copper was produced from 5 West, which had better deposit parameters. Now we are operating all from Liberty deposit, which has much worse parameters. We also have stripping from veteran deposit. And you can see the difference, if you make comparison year-on-year in the budget, but we strive to make sure that budget items for production are achieved as planned. Let me note that the volumes in International are worse not only year-on-year, but also worse compared to your budget. I do not make comparisons between years, I make comparison to your budget. Indeed, there are some challenges of geological nature and technological nature that we are grappling with. But we are not commenting our forecast. We are analyzing the reasons that we will strive to achieve our budgeted numbers. Pawel Puchalski: And the second set of questions regarding CapEx. I wonder when and if at all, KGHM will start a new investment, KGHM 2.0 that is building a new mine across the other. And the second question from this set, you mentioned talks about the fourth production line in Sierra Gorda. I would like to understand the economic rationale of building the fourth line because from my perspective, it's difficult to find such a rationale, but maybe there is one. So I would like to discover what it is. Unknown Executive: Let me start with the second question that is also about bringing us to the same page with our partners. We are now together analyzing what we are going to communicate as for our decisions. And the directional announcement of the decision whether we are going into this project or not, that will come at the end of the first semester. Maybe the production will increase even up to 20%, thanks to the fourth line. But this is still conditional on at least 2 factors. First of all, we accelerated exploration works that is drilling in further part of the Sierra Gorda deposit. That's the first thing, which will also affect the decision on the fourth line. We are also waiting for a report on the matter, which we are to receive in the upcoming weeks so as to be able to prepare the overall calculations for the project by midyear. Another thing is talks about additional processing from neighboring mines. This is as much as I can tell you right now answering your question. And Madam President? Unknown Executive: To add to what you have said, the fourth line assumes increase in the processing plant by about 20%. While maintaining the output that we have right now, we can expect an increase in production by about 20%. We are now at the stage of analyzing the project, not only financially, but also technically to make sure whether the fourth grinding line will meet our expectations, or maybe there are alternate ways to invest in this mine. We are talking with our partner in South32. And also importantly, Sierra is preparing a strategy for its mine development that relies on additional drillings of deposits in the surrounding area around Sierra Gorda pit. And the financial decision, which is to be made by midyear regarding the extension of the mine will be the result of all those studies, not just technological analysis but above all, a combination of technical, financial and the strategy with accepted by owners council with regard to the strategy of developments for Sierra Gorda. As for CapEx, you know more or less what CapEx would be involved. This has already been mentioned. We expect it to be about USD 700 million. Sierra Gorda has this financial capacity to rely on debt funding and finance extension of the company. Final decision in this regard will be communicated in the formal way. Unknown Executive: Coming back to KGHM 2.0. Let me just add one thing. I think I know Mr. Puchalski's point about the model of the transaction. We shorten LoM, we discount our flows. That is the major purpose of the fourth line. So by shortening LoM, we will shorten the cost, we will discount our flows faster. That is the whole point underlying the fourth line. Unknown Executive: I'll add some comment. This is an exceedingly interesting point. The fourth line will shorten LoM. But this is why we discuss details of strategy expansion including the operation of neighboring deposits to minimize the risk of shorter LoM. Back to KGHM 2.0, as for the exploration license on the licensed area, Bytom Odrzanski granted many years ago was appealed against to the international arbitration. No geological works were carried out there that could be used for the future operations. We did not carry out exploration across the other because we were unsure of the settlement. The situation now is that the license is maintained. We ask for its extension until 2036. Bytom Odrzanski deposit till the other well be operated based on the existing licenses of our company. And this year, we will start a major exploration of 12 drills at least across the other to confirm the parameters of the deposit. Additionally, we are drilling in Kulów-Luboszyce so just neighboring area. We have information from Glogów that geological information will allow us to design the whole thing. In a nutshell, in over a decade, we will be able to start building at least 2 shafts because that is the beginning that we plan. So you need to wait a few years more, although we can't very much on this development. When we talk about KGHM 2.0, we have to realize that we're operating on 3 mines. And there will be one huge area, and there will be one other. So this is also something that you have to bear in mind. Going back to your question, specifically in at least 10 years, we will start work in the field. Janusz Krystosiak: Okay, very briefly now. A question from our mailbox, Jason Fairclough, Bank of America. Could the new CEO take us through his priorities, please? And how is he going to manage the company? Could we have a comment on that? Remigiusz Paszkiewicz: First of all, ladies and gentlemen, this is a team effort, especially for a public company that has quite a big range in terms of functioning many areas of activity, et cetera, et cetera. And there's one priority, basic priority, and that's not just an empty slogan. The development of KGHM building its value through a few of the components that we have already touched upon. First of all is to raise the production effectiveness and an optimization of cost program has been established, especially for the acquisition policy that we want to improve, but also effectiveness in terms of technology searching for solutions, et cetera. And add on top of that is what Mr. Krzyzewski has mentioned that some of the strategy has to be devoted to obtaining cheaper energy because the scope of production and of the industry that we are operating in means that we are individually one of the bigger energy and gas consumers, industrial consumers so we want to improve and prepare a program so that we can be far lower than what it is now. What we have now in terms of energy prices, especially the contracts with -- from offshore wind energy or the predicted energy prices for nuclear. So we are looking for the golden means, and we might not be able to find an individual one, but that's one of the basic cost elements that we're looking at. On top of that, what I mentioned before, a big emphasis on improving the capital group functioning by deepening our actions for better corporate governance, but also putting emphasis on better use for the group for the whole company. That includes part of what we define as local content. So sometimes reaching out for more expensive solutions from outside. We have small companies with a lot of potential that can ensure that especially for the CapEx programs that we have -- can ensure better use of the already existing resources, and this is what we want to do, and we want to do it even cheaper. So we want to also deepen further our diversification in terms of sales and what Madam President has also mentioned, this is one of my personal priorities but it's never a one-person effort. We also have set a priority for the research of further resources in order to reinforce and build further value for potentially overseas assets, whether it's Morocco or any other deposits. We're looking high, low. There are no bargains right now available. We don't want to just look at things that are more expensive. We're looking at smaller but high in potential, the assets that are higher in potential. Janusz Krystosiak: Okay, from Jason. Melting copper on the market is not perceived as good investments. It does not generate a good return on capital. Have you spoken about -- that's not really a question, about building a plant in the U.S. Is that an actual consideration of yours? Unknown Executive: It might have been my fault in one of my interventions a few weeks back, I might have mentioned about this potential idea of building a copper smelter plant in the U.S. This is not just a slogan, although this notion for me is -- let me explain what it is to me. We are considering our potential participation in the value chain for copper production globally. What we have here in Poland, metallurgy is half of the European potential in copper metallurgy. We want to be stable. We want to at least maintain that. We want to use the green policy. We can see that in Legnica, there's a potential for waste copper smelter plant. Now for foreign investments, potentially a plant in the U.S., we can see how Polish companies are developing and investing in the value chain that's based predominantly on copper in the United States. That's a growing market. There's a lot of potential still to tap on and to grab on the market. And we have already -- for old copper, rolled copper, we are also considering our participation perhaps up to a final product. Okay. Ladies and gentlemen, if we were asked right now whether it is profitable right now to open a copper smelter right now anywhere geographical with the current [ TCRC ], perhaps not so much but we may not reveal, we are able to reveal exact destinations. But the last copper smelter other than the Chinese technology built was in [ Glogow. ] So we have some know-how right now. And various countries, are wondering whether to direct such an installation. It's too early to say. We cannot really reveal any details at this point, but we are really touching on the geopolitical aspects rather than financials because if any country wants to construct one in order to become more independent in the supply chain and to have an asset like this, this asset could be built. Potentially, we can design, construct one so we are party to various talks, but that's very sensitive information at this point, and it's also too early to disclose anything in particular. So yes, we are active in various market with various services, not necessarily good, but also services and the know-how that we have in our capital group. Unknown Analyst: Noble Securities. The work of analysis and research in Morocco, what kind of expenditure could this entail in 2026 to 2027, please? Unknown Executive: Ladies and gentlemen, like I said earlier, at this stage, we have signed a memorandum of understanding. It's a nonbinding document. It does not trigger any expenditure in the outlay. And this is where I will stop. We are not going to talk about the future. We're not aware yet of what the consequences will be of this MOU. We are analyzing the data. And at this stage, we can't reveal any further information about potential CapEx or expenditures. Unknown Analyst: One question about the sulfuric acid. There is a problem here in various mines. You are well secured that you have your own production, the 600,000 tonnes annually in Poland. If you could say anything else about the product or the process. Could you sell more of it if you are producing 600,000 tonnes? How much can you sell to the regional customers? And another question is whether Sierra Gorda and Robinson are using this product? And are they not experiencing any problems with the availability of this resource? Unknown Executive: Like you said, yes, we are producing about 600,000 tonnes. This is an important product for us also from a point of view of security because, as you know, we do not have a lot of retention, a lot of tanks. So the product needs to have -- needs to be sold quite quickly. So it's natural that geography plays a big role here, a big proportion of that remains in the country, and we will not be changing that. The prices perhaps are not quite as what you are saying. Let me just tell you why producers cannot -- producers of sulfur cannot get net prices that they wish around the world, but the experts that we have in sulfuric acid is quite significant in various destinations. But let me tell you why $150 or $200 cannot be attained because freight has become a lot more expensive. So availability of tanker ships is quite scarce. So when we ship through [indiscernible], only few large vessels can actually enter the harbor. So also in terms of railway transportation, [indiscernible]. However, this is a product that has been playing an important role for the last 2 years because so far, prices were even down to 0 on sulfuric acid, but we are now making money selling this product, quite a lot of money, but it is quite an exceptional product looking at our portfolio. Now the other question. We sell concentrate. We do not use this product in Sierra Gorda or in Robinson. We will probably be doing -- meaning this in the future. If we start leaching it, the importance of the substance is mainly for fertilizing industry. Our main partner is [indiscernible], and the Azoty groups or the [ nitrate ] group here domestically, it has slightly slowed down its production, I must say, to cut expenditure. So we will, I'm assuming, have more sulfuric acid for sale outside. Janusz Krystosiak: Any other questions in the room? Unknown Analyst: My name is [indiscernible]. I wanted to ask you about the shaft construction in '29. You said the shaft, GG-1 is going to be just for the staff. What about the others? What are you planning this year in terms of that initiative? Unknown Executive: Are you asking about the GG-1 shaft? Right now, we are reinforcing -- the reinforcement of the main shaft has been completed. We want to increase the capacity from 34 megawatts to 40 megawatts. And then following from that, we will be eliminating the temporary units and constructing the permanent ones. We have a contract with our engineers. This is PeBeKa company that's ours. So it remains in the group. The supervision will be carried out by BIPROMET, also a company that's owned by us. Other than the climate station with high technology devices, all of that, it will be local content other than just the technological solutions. Janusz Krystosiak: Okay. And again, from our main box, Morgan Stanley. What are the securities indicators for natural gas and electricity for 2026? Unknown Executive: Like I said, 2026, especially the first semester is over 50% on gas and more or less this 50% electricity. If I were to illustrate that it is our ambition to -- well, despite the fact that electricity was a lot expensive, a little more expensive in January. Now gas is a lot more expensive. We would like to wrap up inside the [indiscernible] the same budget as last year. From the point of view of the cost curve, we want -- we don't want the energy prices to increase vis-a-vis last year. But it is highly unpredictable whether we can do that. We will be monitoring this on an ongoing basis. Unknown Analyst: A technical question, perhaps a follow-up. Are the securities on copper and silver, are they going to be encumbered in advance? Or are they going to be -- or is this going to be distributed over the next 3 years? Unknown Executive: According to the accountancy, the transaction, first of all, needs to be effective. If it is effective, we will put it in operations, but they are settled once sold. So you will see in our note what the dates are. So I'm sure looking at the Annex, you can trace the details. So this will be -- this will take a year or 2, depending on which specific hedging transaction you are talking about. Janusz Krystosiak: Any other questions in the room, please? No, none? Okay. Let me use this moment. A question from the Internet from our mailbox. Can we -- that's a question from [ ESM. ] Can we say how we are going to distribute our capital between expansion in Europe, 3 new shafts and international expansion? So capital allocation. Unknown Executive: Let me briefly comment on the backstage of it. Each project is evaluated on an individual basis. At the end of this analysis, one by one, we build a list of projects, which meet certain parameters. One of these parameters is a risk development increase, decrease of maintenance. And then we make our strategic decisions based on risk diversification. This is a structured process, and it is not the case that we consider one project that's worse than another, just like that. We have specific metrics that's defined with a given project fits into strategy or not. So as a rule, it is a very structured process. The investment in 3 shafts is necessary for maintaining our production. Now it is designed in a manner that will allow us not to exceed certain CapEx thresholds throughout the investment process. There are all calculations supporting this project. We can also use some of those studies to use, for example, the funds as leverage of the obtained capital. Globally, the company is not excessively burdened with debt. So we have a few opportunities. If we have a good, reasonable and one that gives hopes for profits project, we can do that. Janusz Krystosiak: I can see no further questions here in the room. There are more questions in the mailbox, but they concern the aspects that have already been covered. So we will answer all those individual questions, specifically adding additional information. And that brings us to the end of the question. So is the CEO going to sum up? Remigiusz Paszkiewicz: No, I will not really wrap up the whole presentation. I just want to thank you for presence here and for your attention, your interest in our results for 2025 and your questions regarding our near and more distant plans. I would like to say also that with the macroeconomic background, we continue to see great uncertainty and volatility. It's enough to have a look at the prices of energy, each development brings changes, sometimes downward, sometimes upward. We have an in-company mechanism that is in place that triggers certain hedging solutions. We do our best to operate in a prudent, reasonable manner that balances our activities in the context of our objective of increasing the company value, and keeping that in equilibrium with expenditures. We also do our best to strike the right balance between securing the resources and output to sell. We will stick to our diversification plans. For sure, we will not make any sudden changes unless the macroeconomic environment gives us an extremely powerful blow. For the time being, in terms of hedging responses to market developments and geopolitical situation, we stick to the manner of operating that was presented to you earlier, and that was reflected in our results for 2025. We want to continue along those lines so as to be able to share with you mostly good news. Thank you very much for today's meeting. Please follow us regarding our plans to present the strategy. The strategy will be presented after the results of the first quarter this year. And I also invite you to track our plans in this regard. Thank you very much, and have a nice afternoon. [Statements in English on this transcript were spoken by an interpreter present on the live call.]
Michael Roney: Good morning to everybody. Before I hand it over to Simon, just a few comments. Two long-serving Board members, Jane Shields and Jonathan Bewes will be stepping down from our Board of Directors in May. Jane has worked for NEXT more than 40 years. You don't see that much anymore, do you? More than 40 years and been on the Board of Directors since 2013. Jane's contribution to the success of the company has been substantial, both at the operational level and certainly at the Board level. And I would just say, I think Jane represents the best qualities of what we have at NEXT plc. Jonathan Bewes has been a Board member for 9.5 years, and he has been Senior Independent Director and Chairman of the Audit Committee, and he's made significant contribution. So I'd say, Jonathan, many thanks for your work and your service on the Board. I would like to welcome two new Board members, Annette Court and Jeni Mundy, who will be joining the Board. Annette started on March 1, and Jeni will be starting on April 1, and both will stand for election at the May AGM. As you've seen, the results for the year ended 2026 are very good, and it certainly reflects the broad strength of the group as we outperform in all areas, be it retail or online U.K. and certainly in the international markets. Before I turn over to Simon, I would like to recognize and thank our more than 40,000 employees globally for their daily decision-making and basically making things happen for NEXT throughout the world. Simon? Simon Wolfson: Thank you very much, Chairman. All right. Good morning, everybody. Slight change of order to things today because I know some people like to slip away early, so I'm going to give you the punchline at the beginning. Punchline is about next year rather than all the stuff that last year. And in terms of next year, the big news today was that there was no news. We've held our targets. And you could look at that 4.5%. In fact, I think most people did look at it in January and think that it was pessimistic. And if you had only looked at our U.K. sales in the 8 weeks in the run-up to our announcement, then you would definitely agree that, that was a pessimistic assessment. However, if you were to look at what's going on in the Middle East and the potential knock-on effects in the U.K., you could argue that it was optimistic. And just in terms of the Middle East, I suppose first thing to say in terms of the U.K., the numbers, we had -- those first 8 weeks did not include the really big numbers we hit as the weather improved this time last year. We got some significant benefit from an early summer, and we're just about to hit those numbers now. In terms of the Middle East, it represents 6% of our total sales. We lost -- for the first week of the conflict, we lost virtually all the sales because it was our operations stopped working. We are now serving all of the territories in the Middle East. A few of them are on slightly longer lead times. But because we've got a hub in the Middle East, we are able to service them directly from stock based in the Middle East, which means we're not dependent on airfreight for anything other than replenishment. And we are shipping stock to the Middle East and replenishment runs at the moment, but that comes at a cost. And in terms of the cost of the conflict, we have quantified that at GBP 15 million, and that's GBP 15 million for 3 months, assuming the current levels of surcharges, disruption oil prices last for 3 months. That could be wildly optimistic or it could be pessimistic. We don't know. In terms of the breakdown of that cost, GBP 8 million of it comes from the outbound stock from the U.K. to our customers overseas. Of the GBP 8 million, GBP 5 million of it is Middle East costs. The rest of air freight surcharges to the rest of the world. We then got inbound costs. This is mainly the surcharge on container rates as a result of fuel price increases. That's around GBP 4 million. And then U.K. energy costs we anticipate incurring additional costs of around GBP 3 million. And what I should stress is that those numbers are very volatile, first of all. They're just throwing forward the costs we have today. And the second thing I should say is that we've offset all of them by cost savings or margin gains that we've identified since January, around GBP 8 million to GBP 9 million from margin gains and the balance from lower revenue expenditure, mainly systems. The biggest difference between now and January is that we brought our systems budget down by around GBP 6 million. In terms of -- don't take that number and multiply it by 3 to get to the cost for the rest of the year because if it looks like this is going to persist, we will begin to pass through those costs to consumers, specifically in the affected regions, but also in the U.K. In terms of U.K. prices, that would mean prices going up between 1% and 2% from where they are today in probably June, July if things persist. The much bigger worry, if you want things to worry about, which obviously you do, is the cost of goods because things like polyester and energy costs are a huge percentage. Energy costs are a big percentage of fabric as is obviously polyester. So I think you could see significantly larger increases in cost of goods coming through probably October, November is when those will begin to hit down again if the conflict persists. So that's sort of business affected costs and the potential impact on selling prices covered. The one thing I should say about that 4.5% is just a reminder that at this time last year, we were -- our guidance was at 5%. So the 4.5% guidance does not limit our ability to outperform that number. Now I think with things in the world as they are, I think that's unlikely. But what I want to stress is a cautious approach to a sales budget because we always buy markdown stock and we can eat into it. A cautious approach to sales budget always leaves us with the potential to beat budget if the demand is there. Moving on to last year and starting with the P&L. And just to remind you, this is all on a 52-week basis and not consolidated. Total group sales up 10.8%. Total full price net sales up 10.9%. In terms of the breakdown, retail stores up 3.5%. In many ways, that's the most remarkable number here. And we think that number is the one that is most flattered by the good weather in summer and the disruption to a major competitor. And we'll talk about each one of those as we go through. In terms of profit, profit up 13.9%. And the vast majority of the difference between the growth in sales and the growth in profit is about leverage over fixed overheads and some margin gains as a result of improved clearance of upstock through directory online. Profit before tax, up 14.5%. The drop in interest charge here is all about the fact that we didn't buy back shares during the year. So the cash that we accumulated during the year had interest on it that came to around GBP 8 million. So that reverses out in the year ahead. And obviously, you get back in earnings enhancement what you lose by way of P&L more than what you lose from the P&L cost. In terms of the quality of earnings, good quality of earnings. There was a very big noncash gain from GBP 20 million release of bad debt provision. That meant that our finance department worked even harder than usual to find looking every little nook and cranny of the business to check that all of our provisions were where they should be and that we had enough impairments for our small businesses. And we've -- so we've taken another GBP 14 million of impairment costs there to offset that GBP 20 million has offset it, not to offset it, obviously. And then some foreign exchange gains just on the instruments that carry over from one side of the year to the other. Earnings per share up 17%. The main difference between last year's profit before tax and EPS is the boost from the previous year's share buybacks. We didn't buy many shares back last year. Ordinary dividend up by 15%. That gets us back to cover of around 2.8x, which is where we want to be and GBP 3.60 return to shareholders by way of capital by B share scheme, and that is in place of the buyback because we were out of the market. We're now back in the market. Thank you very much for your help with that. And all of the numbers that we'll tell you today will be on the basis that we can continue to buy shares throughout the year. In terms of the cash flow on a consolidated basis, and this is looking at a 53-week year, GBP 147 million from profits, another GBP 24 million from the 53rd week of cash. In terms -- not much change in depreciation, that's gone up much less than sales. CapEx up by GBP 17 million, slightly less than the forecast in the half year, and that's all about the timing of store CapEx. So GBP 168 million last year. The really interesting number is the number this year because we've gone back and we've significantly increased our estimate of what we'll spend this year. And all of the increase is in warehousing. So I think we'll spend GBP 237 million this year. It's all about our Elmsall 3 warehouse. I'm going to go into a lot of detail later on, which is something to look forward to. But just to say this is a good thing. This is because we're growing our sales faster than we expected. In terms of throwing that forward because this is a sort of 3-year investment program in warehousing, we're looking at CapEx at around the GBP 250 million level for the next 3 years, we think. You might look at that and worry that NEXT has become fundamentally more capital consumptive. The business is entering a phase of strong capital consumption. Actually, this is our history of CapEx over the last 20 years. If you look at CapEx as a percentage of profit, which is the right measure, what you can see is that the 19.6% we're at this year is just below the last 20-year average. So fundamentally, the business is not more capital consumptive. It's just that in periods of strong growth, you have to invest more. In the periods fellow years, you invest less. And I think the other really important thing that this graph demonstrates is that if you look at the data for long enough and hard enough, you can always find the number you want. Working capital up GBP 46 million. The real difference here is the GBP 19 million increase that our aggregator partners owe us. That is all as a result of our sales increasing on their website. They keep -- they take the sales, take their commission hand on a month later the sales. So there is a debt there. The faster that grows, the bigger that debt grows. All the other movements in working capital were one-off. There was a one-off movement in the timing of aggregator payments. We got a benefit last year from that. We get this benefit this year. Cash in transit, this is a new accounting standard that we have rushed to embrace, and it's actually very sensible. It means in previous accounts, we had accounted for credit card sales as if they were cash and not accounted for 3 days that the credit card companies take to pay us. So this accounts for that conforms with new accounting standards. And also, I think for me, in the last 25 years, a bit of a landmark moment as well because this is the first change in accounting standards that I really agree with. In terms of surplus cash, GBP 129 million of surplus cash distribution to shareholders, GBP 221 million. The difference between that, the GBP 93 million difference is that last year or previous -- year before last, we were accumulating cash on the balance sheet, GBP 40 million of cash accumulation in anticipation of paying down the bond. This year, we got the bond away, and we've returned our leverage to its historic norms at around 0.63. And so there is a cash about GBP 53 million more of debt funding that difference. In terms of stock, stock up 8.8%. The NEXT stock as at week 52 was up 7%, so broadly in line with our sales increase. You'll note for the last, I think, 3 or 4 sets of results, we've shown stock increases much greater than sales. And what you can see from this is that those increases have stopped, but we haven't reversed them out. We're going to keep a little bit of extra cover in the business in anticipation of the sort of disruptions that we've seen over the last few years potentially happening again. We think it's better to have a little bit more cover, we didn't suffer from it last year. In terms of customer receivables, customer receivables up 2%. You would expect those to be up much more than 2% given the growth in our credit sales at 5.8%. The reason that we haven't got that growth is because our debtor days continue to reduce. They reduced by about 3.6%, which accounts for the difference in those 2 numbers. The reduction in debtor days is reflected in much lower rates of default. And what you can see, if you take a sort of pre-COVID to now view, you can see that our default rates have dropped to 2.2%. That is lower than the company ever has certainly as long as I worked for the business. We've never seen default rates that low. That 51% reduction is a little bit deceptive. It's not because 51% fewer customers are defaulting. Actually, the numbers of customers defaulting is around 8%. The -- what's the big difference is the balance they're defaulting at and this is the result of much tighter and better credit controls that we've implemented over the last few years. And one of the sort of advantages of some of the machine learning algorithms we've had and just greater vigilance. In terms of provisions, we're still comfortably but not over provided 6.9% as against default rate of 2.2%. So we've still got room for that to move the other way if it does. In terms of other debtors, I've talked about international aggregators, talked about cash in transit. The GBP 20 million of interest-free credit is because last year, we switched to funding our own interest-free credit for furniture in stores. That hadn't -- for the previous year, that didn't fully annualize until last year. So the tail end of that cash outflow is what you're seeing in that GBP 20 million. In terms of creditors, up 9%, broadly in line with sales, what you'd expect. In terms of net debt, net debt up 8%, I'm going to talk in a lot more detail about that in a moment. And then in terms of net assets, increase of GBP 26 million. It's only GBP 26 million, and that's what you'd expect because the vast majority of surplus cash we have rightly given back to shareholders. In terms of debt, the GBP 713 million was lower than where we targeted year-end debt. That's all about timing of payments. So we targeted GBP 739 million of year-end debt and leverage of 0.63, which is where we think is a good place for a retailer of our type to be. In terms of inflows in the year, we expect GBP 978 million of cash inflow, CapEx and dividends of GBP 237 million, GBP 300 million, respectively, GBP 500 million returned to shareholders through buybacks or other means. And that would get us back to the 0.63 leverage of GBP 790 million. In terms of buybacks, we've bought GBP 196 million to date, and our plan is to continue that evenly through the rest of the year. In terms of funding, started the year with GBP 1.2 billion of funding. This year, GBP 114 million of 2026 bond is repaid. That leaves us at peak with GBP 205 million of headroom. We think that's sufficient for the business. But if market conditions are right, which they're not at the moment, but if market conditions are right, we will almost certainly issue another bond between GBP 200 million and GBP 300 million or look to increase our RCF to give us a little bit more headroom. Moving on to retail. We had a good year. Total sales up 2.4%, full price sales up 3.5%. The difference was the fact that we pushed more of our clearance sales through online and out of retail. New space gave us 1.2% underlying like-for-likes of 2.3% up, which is in the context of the last 10 years, a very good number. Profit down 5%, which is given how strong the sales were a very disappointing number. When you look at the change in margin of 0.8%, that all is down to one factor and one factor alone. if you look at the cost of national insurance and the increase in national living wage and the numbers of the young people who moved on to the higher rate, the total cost of that was 1.4%. So had wages risen in line with sales, then we would have seen flat margins, positive margins actually. In terms of new space, and there's a little bit of a story here. I softened you up for this 6 months ago. So this should be no surprise. We missed our sales targets on the stores that we opened by 12%. And this is not because we had one big store that missed it. This was, I think, 12 out of 15 stores missed their target. What that meant was that although we were comfortably within our profitability target, we weren't, we missed our payback target. I don't think the miss in target and the 24 -- the missing 24 months are entirely unrelated. I think in reality, our sales team who put the estimates on the stores pushed the sales as far as they felt comfortable in order to hit those criteria to get the shops open. And in hindsight, that was a mistake. But as it turns out, it was a very profitable mistake because if we look at the amount of profit those stores are making, it's GBP 6 million of profit. over 30% internal rate of return. And if the landlords came back to us and said, I'll tell you what, you can have the shops back and we'll give you all your capital back, do you want it? My answer to that would be, no. So I think we've come to a bit of a big decision is that either we say, look, we're just in an environment where like-for-likes per square foot over the last 10 years down 30% and shop costs up 70%. We either have to say we won't take advantage of any opportunities to open new space or we'll change our criteria. And we've opted to move the goalposts. We don't think these are crazy levels of risk. We said internal rates of return at 27%, which equates to a payback around 30 months. And we think that's enough to be -- to get the sort of returns you need from stores to pay for the risk, but not so much to prevent us opening any shops going forward. In terms of the year ahead, we're expecting the one-off gain that we got in stores from a very good summer and competitive disruption to reverse out in the first half. We're expecting so total retail sales to be down 1.5% with 1.5% coming from space. Profit down 6%, that's around GBP 12 million hit to profit margins at 9.7%. So still comfortable retail margins. In terms of U.K. online, and just to remind you, I'm going to show you our U.K. online sales separately from international sales because the dynamics of the business are very different. In terms of U.K. sales, total sales were up 10.2% full price sales were up 8.7%. The difference was all driven by the increased warehouse capacity. Because we had more warehouse capacity, we were able to put more of our clearance stock online, both in the U.K. and overseas. That was more profitable than putting it through the retail stores, but that's what accounts for the difference. In terms of the balance of trade, just over half our business online is now NEXT brands and wholly owned brands, which are a full margin at another 9% and then third parties around 1/3. In terms of the growth of those areas, what you can see is wholly owned brands and licenses had an exceptional year. I'm going to talk a lot more about that later. I think the exciting thing for us was the fact that the NEXT brand, despite the increased competition from brands that we own, the NEXT brand still managed to move forward, which for us is confirmation to some degree that we're not just competing with ourselves as we add new brands to the website. In terms of margin, margin moved forward to 18.2%. In terms of where the margin gain was made, what these lines show is the difference between what's happened to the NEXT brand margin and the non-NEXT brand margin. You can see pretty much all the gain has come in the non-NEXT brands. So doing mental gymnastics where we sort of changed the axis and just walk forward the U.K. online NEXT brand profitability. You can see there's a no score draw on gross margin. Warehouse and distribution is flat, but there are a lot of things going on there. Wage inflation eroded and would have eroded margin by 0.8%, but leverage over fixed overheads and some of the efficiencies that we're seeing from the new warehouse pay for that. And then marketing and technology, slight leverage here. Technology, we're now beginning to get to the point where our sales -- our costs are not rising anything like as fast as sales. That's good news. And marketing is a surprise there. We have significantly increased our marketing budget, but not by as much as sales. In terms of the non-NEXT brands, two things, a gain of 0.5% on gross margin, two things going on there. The elimination of unprofitable brands where the commission rate was too low and weeding out some of the less profitable lines. And there, we said to our partners, basically the choice, either we can't sell a product or we might have to put commission up a bit. On the whole, they opt for the latter. And then because our wholly owned brands are growing much faster than third-party brands and we make more margin on them, that pushes the mix, the margin mix up. Big gain on warehousing and distribution here. And that's because wage inflation loss is lower on the branded goods because they're more expensive, so the labor content is lower. They're growing faster, so leverage over fixed overheads and the efficiencies are higher. And because we've weeded out some of the high returning low average selling price items, as a result of that, we see another 0.4% improvement in margin. So non-NEXT brand is still a long way behind NEXT brand in terms of profitability, but they have moved forward significantly. In terms of the year ahead, we expect U.K. online growth to be 4.6%. Margin nudge forward to 18.8%. That's mainly about reversing out large staff incentive payments for this year as a result of having such a good year. So it's not an operational saving. In terms of international business, international sales up 35% at full price, 39% in total. Again, that's a reflection of increased capacity to sell markdown through the online channel. I'm going to do a bit of a Grand Old Duke of York story here and talk you up the hill and then back down. So what I would have said before the Middle East conflict is be aware of the first half numbers because the first half numbers are likely to be much better than the second half in the year ahead because last year, we dramatically increased the amount of particularly wobble brands we were selling on our overseas websites. And we got a big step change increase in sales through Zalando as a result of consolidating our warehouse there. That reverses out, that annualizes in the second half. So all things being equal, you would expect the first half to be stronger than the second, but obviously, we've been hit by Middle East disruption just before ED, so that pretty much wipes that out, which you'll see later. In terms of third-party versus NEXT websites, third party is around 1/3 of the business. In terms of the growth, on the NEXT direct business, that was 29%, of which we estimate 22% was driven by increased marketing. Third-party aggregation, up 46%, of which 10% came from the addition of new aggregators and existing aggregator business boosted by the consolidation in Zalando. In terms of distribution of the business across the world, Middle East still around 28%. That distribution hasn't changed dramatically. What is encouraging is that pre-conflict, we were growing pretty much in every territory. In terms of profit, dramatic increase in profit, partly driven by the sales and also an improvement in margin. In terms of bought-in margin, the increase here is about product mix and duty savings. Surprisingly, although we put a lot more markdown on our website, we actually improved the rate at which we cleared it. But I think that is testament to the improvement that we've made in our online operations in terms of how we handle the clearance sites and the number of countries that we have pushed clearance stock to. A lot going on in warehousing, the same erosion of margin from wage inflation, although because overseas selling prices are on average higher than the U.K., not as much as the 0.8% erosion we saw in the U.K. Then we get leverage over fixed overheads from sales growth, a slight increase in handling charge income, where in some countries where we weren't making enough margin, we pushed that handling charge up a little bit. And the same benefit on average selling price and returns rate through sort of forensically going through and removing high returning low average selling price items. Marketing, a big adverse movement here, but that is kind of the whole point. And then leverage over technology, cost centers and central overheads. The central overhead gain is a little bit of a one-off. It's not a one-off this year. It was a one-off cost last year, and that was the cost of closing the German hubs. I think the exciting thing about the margin walk forward is the fact that the significant increase in marketing has been paid for by the cost savings we've achieved elsewhere. In terms of the year ahead, we're anticipating sales of 14.3% on a marketing spend increase of 25%. Margin forecast, broadly flat. In terms of customer analysis, and this is across all of our channels, U.K. and overseas, U.K. credit customers were up 6%. That number should be a surprise because that number has for the last 10, 15 years, been 1% or 2%. The big difference here has been the growth in the uptake of our Pay in 3 offer. Pay in 3 is where, it's a credit type offer where if you pay off all of the balance in 3 installments, you pay no interest. If you don't pay it off and you choose to extend it, then you pay a higher interest than you would have done on a revolving credit. That means the credit is growing much faster. It's not as profitable in terms of interest income as a traditional credit account, but it does significantly improve the amount of sales that we can make for those customers. So that's more of a sales benefit. That's rather more of a sales benefit than it is a credit income benefit. U.K. cash up 10% and then overseas, 31%. I should say that this doesn't include any customers that we get from aggregator businesses because obviously, we don't have visibility of that. I think the other surprising number here is the growth in the average sales per customer overseas. You would normally expect with so many new customers coming in, you would expect that number to move backwards. That's what we expected at the beginning of the year. It hasn't. Largely, we think, as a result of the improvements we've made on our website in terms of improving conversion and average order value, which I'll come on to later. In terms of total platform and equity partners, total profit, GBP 90 million, up GBP 13 million on last year. At the beginning of the year, I think we estimated that would be GBP 5 million or GBP 6 million. So we have done significantly better in pretty much all the partner businesses than we were expecting. Equity profit up GBP 9 million, service profit up GBP 4 million. The big increase in service profit comes from the fact that the previous year, we hadn't fully annualized the onboarding of FatFace from whom we get a big service income. In terms of that service income from Total Platform, very healthy margins, just around 20% profit on what we charge the clients and around 6% profit on their sales and their online sales, which is kind of where we set out to be. And although Total Platform is looking very exciting at the moment in terms of its numbers, you shouldn't expect any big acquisitions or transactions this year for simple reason we haven't got the warehouse space to accommodate a big transaction this year, which I'll talk about later. In terms of return on capital, very healthy return on capital, move forward from 17% to 23%, largely there is a result of the return to profitability of Joules and growth elsewhere. So Tom Joule, there in the audience, so thank you, Tom, for that. GBP 94 million profit -- GBP 95 million profit forecast for the year ahead, an increase of GBP 5 million. Moving on to guidance for the full year. We've already talked about the 4.5%. I won't talk more about that. Retail sales, we're expecting all the pain in the first half because that was the period where we had the exceptional weather and gained the most from competitive disruption. U.K. online, we think will be a more even performance throughout the year. That's largely as a result of the performance. The reason we are as confident on the H1 number is because of the sales we've seen to date online in the U.K. In terms of total U.K., 1.3% in the first half, 2.9% in the second. International, 14.7% in the first half, 14% in the second. If we look at the 2-year growth, which removes any distortion from the timing of the Zalando transaction and the increase in wobble brands on the website, what you can see there is that we're anticipating 47% in the first half, and that is a reflection of the significant disruption we're getting in our Middle Eastern trade and then a return to more normality in the second half. Obviously, a big health warning there. If the war carries on at its current rate, we won't see the recovery in those sales that we're -- in the Middle East that we're expecting. So total full price sales up 4.5%. In terms of what that means for profit in the year ahead, online profit driving GBP 76 million of profit increase, GBP 11 million decline in retail profit as a result of negative like-for-likes. Total platform and partners adding GBP 5 million. Cost increases. Wage inflation is still the biggest cost increase here, but around 2/3 of what it was this time last year. The reason that is quite as high as these actually, it would be around -- if it was just wage inflation, it would be nearer GBP 35 million. There's still 2 months of the NIC that haven't annualized in the current year. Middle East conflict, GBP 15 million of costs coming in there. Higher interest costs, which I mentioned earlier, that's all about the accumulation of cash last year in lieu of share buybacks, and we're anticipating that our marketing spend grows GBP 8 million faster than sales. In terms of cost savings, employee incentives, that's reversing out of large incentive payment this year for a great year. And then the margin gains are where we have already in our -- in the costings we've got, we already can see around 0.2% gain in margin for both spring/summer and autumn/winter. Normally, we'd give that back and reinvest it, but given the circumstances, we're not going to do that. So that would be GBP 10 million. And then versus last year, the difference of GBP 8 million is warehousing and distribution efficiencies and stores versus our January estimate, the GBP 7 million, GBP 8 million is technology. That's what it is. That gives us GBP 1.2 million of profit at year-end. In terms of earnings per share, we're expecting a smaller enhancement than last year, dividend yield of 2.2%. If you compare this year's expectations to last year's expectations, whilst the biggest difference is the delta in profit, you can see that the enhancement is significantly lower. The enhancement from dividends and buybacks is significant this year than last year. And that's because last year, in effect, we got a double benefit. The shares that we would have bought back last year would have enhanced earnings this year. We didn't buy back shares and we gave all the money back last year. So actually, dividends and share buybacks together, we would expect to be to give returns of around 5% to 5.5% in a normal year. And that's what we expect it to be sort of going forward next year and beyond. So that's all to say on the sort of the numbers and guidance. In terms of the business itself, it's difficult to keep a handle on this because with everything going on in the world, everyone is worried about more and worried about Middle East than they are about the business. But when you look at the business itself, it's actually very exciting because all the avenues of growth we had last year, we think are still there for the year ahead. There's more to do. And if we look at the GBP 550 million of growth and divide it U.K. overseas, what you can see is that actually, despite all the excitement coming from overseas, the U.K. delivered not a lot less in terms of actual growth. Same is true between NEXT products and non-NEXT branded products. You can see there exactly the same pattern in reverse is that NEXT, although the growth percentages are very exciting on non-NEXT brands, the NEXT brand still delivered the lion's share of growth. And if you divide that into sort of 4 different businesses, NEXT, non-NEXT, U.K. and overseas, you can see that those numbers are remarkably similar. And I think the message here is that the low growth in the big established businesses is delivering pretty much the same amount of growth as the very dramatic growth, 79% in our smallest non-NEXT brands overseas. We think that each one of those quadrants will be positive in the year ahead, and there's more to do. And in terms of what's driving that growth, it comes down to two things. Overseas, it's about improved functionality, services and most importantly, marketing. And across the whole business, non-NEXT and NEXT, it's about better product ranges and broader product ranges. I'm going to start by talking about what we're doing to improve the most important part of the business, which is the NEXT brand. And that comes down to what I've mentioned before in terms of newness, quality and choice. And this is a drive that we've talked to you about, I think, now for 2 years. And it's one of those things that I'm reluctant to talk to analysts about because there are no numbers and graphs that I can give you percentage newness and all that stuff because if I ask the product teams for what percentage of their age is new, they will give me whatever percentage I ask for because who's to say what's really new and what's not. But I think the key here is that where the buying teams have scoured the world, found the best trends and then most importantly, back to those trends with conviction and in depth, that is where we've seen by far the biggest sales growth. And where we haven't done that, where we led on last year's best sellers, a little bit of a tweak here and there, change the neck line, change the color. Those areas are the ones that have done worse. And that's pretty much universally true across not just the NEXT brand, but other brands as well. The customer wants newness and gone are the days where you can say, we'll trial this new style this year. And then next year, we might do it in 3 colorways and really maximize the opportunity. If you wait and see, you've waited too long, you're dead in the water. So that's sort of newness. In terms of quality, there's a lot going on here. And the big thrust on quality is about fabric. That is the thing that in terms of customer perception, actually upgrading of the fabric and the base materials, the yarns in knitwear, that is where we've had the most success in putting -- increasing our fabric. And this is a -- represents a change in the way we work. in the -- not all areas, but more and more of the areas at NEXT are now pushing further upstream and talking to mills, spinners, wash houses and developing yarns and techniques and fabrics long before they decide which garments they go into and what those garments will look like. And that process of pushing further upstream, I think it's got a long way to go at NEXT. I think it's very exciting for us. Other retailers too do it. It's not rocket science, but I think it's exciting for us. I think the other sort of unintended benefit of this is that, obviously, the mills have to see the fashion trends first because if they don't produce the fabric, you can't produce the trend. So the mills and the print houses are often also a good indicator of which trends are coming and which ones are going to be strongest. I think this is also a very good time for us to be investing in quality because we can see a distinct trend over the last 3 years, and this is a gradual thing. It's not dramatic of customers buying slightly fewer, slightly better things. It's not that they're spending more on clothing. It's that they are choosing to spend that money on better products. And this bit, I can give you some numbers. So this is analyst delight here. What the numbers -- what these numbers show is the underlying inflation in like-for-like goods. So if you produce the same T-shirt last year as this year. And obviously, we're doing less of that because of all about units. But if you look at those garments, then the price inflation we've seen over the last 3 years is negative or very modest. If you look at the sold mix, the total amount of cash we've taken versus the units that we've sold, the sold mix actually has moved forward. And we think that the difference represents the shift in consumer preference. And if you -- any 1 year, that doesn't look like very much. And I should say that the estimate for the year ahead is based on what we've bought, obviously, not what we sold because we haven't sold it yet. But if you add those all together, you get to numbers that do show a meaningful shift. And there are two things I should stress here. This isn't about just adding more expensive product to our ranges, although we have increased -- we have looked to stretch our price architecture and to sell some more expensive garments. But this is -- that's not been the main driver on this. And in fact, the biggest success we've had on improved quality is where we've significantly upgraded entry-level products to make them much better yarns or fabrics, and that's where we've had the most success without increasing price or by increasing price, just a modest amount. In terms of non-NEXT product, first of all, same messages about newness, choice, quality are coming through in all the brands that we can see that coming through in all the brands that we manage. The bigger increase was the less exciting percentage. Our third-party branded profit was up, and that is all about one thing, which is better ranges of our best brands. This is not about adding brands to the website. It's about getting much better selection and better depth on bestsellers from the top 20 or 30 brands that we sell. In terms of the wholly owned brands and licenses, very exciting numbers at nearly 50% growth in the year. And I think there are a number of encouraging things that I kind of would like to share with you today about this relatively new business. What this shows, this bar shows is the brands that we were already trading, the wholly owned brands that we had in 2022, '23. It's about GBP 177 million at that point. If we look at just those brands today, they are 53% up. That is an encouraging number in itself. But the really encouraging number is the fact that last year, those brands, those existing brands that we've owned for more than 5 years grew by 24%. And I think they'll grow again in the year ahead. And for us, this was the acid test because relatively easy to come up with a new label and stick it in a clothing and give it a bit of marketing, but actually having brands that are not flashes in the pan that can be developed and continue to grow in the long term is kind of what we're trying to achieve. And that looks like what we've delivered. And that number, in a way, is all the more impressive when you bear in mind that over the last 5 years, we've added another 29 wholly owned brands and licenses, which have themselves last year delivered GBP 116 million of margin on top. Again, the fact that those are growing in parallel with the NEXT brand, evidence, we think that the brands we are providing are genuinely giving our customers something different and new. We're estimating that the wholly owned brands and licensed business grows by 22% in the year ahead. And what this all comes down to is -- apologies for the cheesy analogy. We use these slides for staff later as well, so it's multipurpose. But we really think that NEXT is an amazing place to start a new brand or to take an old brand and relaunch it because when you look at it, what you need to start a new brand on NEXT is very different from what you needed to start new brands 20, 30, even 10 years ago in terms of resources. What you need is a great product team, a good idea and a sourcing base. And the investment, the total cost that you need to invest to launch a brand is around GBP 3 million, and that's the cost of the people and the stock that you have to buy before you put anything on sale. So the sort of money at risk is around GBP 3 million. And the reason that, that is so low is because those brands can straightaway take advantage of the billions of pounds that we've invested over the last 20 or 30 years in building 16 million customer base that those brands have instant access to all the websites, technology, data security, product systems, warehousing, contact centers and relatively inexpensive funding. So in terms of an environment in which we can begin to develop new fashion brands, we think this is very exciting. All the more exciting if we can sell those brands overseas. And what you can see from the international numbers is that we are getting good traction now with those brands overseas. We're launching 3 new brands. I say new Russell & Bromley, obviously isn't a new brand, but it's new to us. Bhoem, which is more of a sort of continental style of brand, and we'll be launching another womenswear brand, top-end womenswear brand towards the end of the year. In terms of overseas, 35% growth. And the driver here is functionality and marketing. I start with functionality. Now there's a detailed table with lots of complex numbers that are hard to understand, so you can read through that at your leisure. But the overall message is that we have significantly improved pretty much every part of the customer experience, both on the website when they pay and delivery and returns in most of the areas. There's still more to do. And the results, again, here, we've got some numbers. If you look at the organic conversion rate, that's the conversion rate of non -- of customers coming to the website, not through marketing. The average order value and the frequency of orders, those numbers have significantly increased year-on-year last year, and we think that's as a result of the improvements that we're making. The nice thing about those numbers is that they are cumulative that if you get -- if every person lands on the website, if 9% more of them order, they each order 3% more in that order and they then visit you 17% more times, the individual value of that customer visit significantly increases. And that is what has driven the growth in marketing. The fact that these two things work hand in hand. It's not just about spending more money, but the more effective you can make your website, the more effective your marketing becomes. And one of the things that has driven the marketing and one of the things that has allowed our returns to remain constant despite the dramatic increase in the amount we're spending is the fact that the website and services are so much better. And just to sort of dwell on those numbers a little bit, the return that we measure here, and just to be clear, we don't talk about growth, this is not sales, this is profit. This is the incremental profit on the incremental sales that we think we deliver from each and every campaign. They have to hit at least GBP 1.50. And you can see the returns last year actually, despite the enormous increase in spend, were slightly higher than the previous year. That's not just about functionality and services. It's also about the improvements we've made to our marketing and we continue to make to the marketing. And there's a long list, and you can read it in the report. But we have invested a lot of time, money and people in improving the way in which we market, and we can see that paying dividends. Next year, I've mentioned already, we plan to grow marketing overseas by 25%. Now you might look at that number at GBP 1.50 and say, well, why do they need to be next to being very greedy, 50% return. And you'd be right, if we believe that number, we would being greedy. But there are two reasons to be cautious about it. The first is that it is based on incrementality, the incremental sales, and that requires an estimate. We've got to estimate how many of the customers who saw the advert who then bought actually were stimulated by the advert and wouldn't have bought anyway. And what you'll find when you look at these incrementality tests that we do is that the incrementality is surprisingly low. So it's a very important thing that we're unsure of. We think we need fat margins to absorb that risk. The second and more important reason is that the profit we're talking about here is the marginal profit, we assume that if we spend the marketing that the increase in sales doesn't result in any increase in HR costs, finance costs, product costs, it all goes into profit. If you said, well, actually, our fixed overheads are going to grow as fast as sales, that GBP 1.50 drops to GBP 1.01. And I think what this does is it brings home a fundamental truth about -- which will affect our growth going forward. And that is our ability to control our costs and our fixed costs to make sure that they don't rise that they actually fall as a percentage of sales. It doesn't fall in absolute terms, but they fall as a percentage of sales. Our ability to control those costs will drive our ability to do marketing, which will drive growth. And that actually, as a message for people in the business is very positive. Normally, cost control is seen as a bit of a side. Cost control meeting that we have with all of our directors once every quarter is not their favorite meeting. But because people think it's all just about squeezing more out of the sponge. But once people see that, actually, this is not just about squeezing more profit out of the business. This is about driving growth. It's much easier to get that message across because people are more excited about growth than they are about cost saving. And the assumption that you might make about fixed overheads, by the way, being fixed is not necessarily correct. I do -- I remember my dad saying to me years and years and years ago that fixed cost to only have a fixed on the way down. And there's a little bit of truth there. If you look at technology, product, finance, legal, HR, add them all together as a percentage of sales in 2006, and look at them today, not only have they not declined as a percentage of sales, they've actually overperformed. They have grown faster than sales. Now don't panic about that. The overall business, the margins of the business have moved forward by 2% in that time. So -- and there is none of that investment, I say investment spending, none of that spending that I would regret. If we hadn't spent much more on technology, we wouldn't have websites, call centers, marketing campaigns. Our technology spend meant that we could stop producing GBP 65 million worth of catalog every year if we're going to grow our product ranges. And next, in terms of the ranges we offer online today, they're probably about 5 or 6x the size of the ranges we offer just in stores. You need more product people for that. We're going to have new wobble. We need new people. We're going to have extra third-party brands to need someone to manage those relationships. So it's not that those investments were wrong. It's that going forward, we need to grow them by less than sales if our marketing is going to be successful. And fortunately, we are at, I think, the perfect time for saving money in those areas because the combination of the fact that we've modernized pretty much all of our software platforms with the exception of finance over the last 6 years. The fact that we have transformed the way the company handles data, we've made sure that it's sort of universally accessible across the group, that it's consistent across the group. So the combination of modern software, high-quality data means that we are well placed to adopt AI. And I know that there's going to be a grown. I can't actually hear it, but a grown when chief executives start talking about AI because -- so I'm going to apologize in advance, but I am going to talk about AI a little bit and our approach to what we're doing with AI. And I think the first thing to say is that the degree of adoption that we're getting across the business is very different. The areas that have adopted it the most aggressively are technology, contact centers and e-commerce. Product on the sort of use of AI to envisage product and forecasting has made some progress. And the other areas really, I put a little blue bar here, but that blue bar could be smaller if I wasn't so generous. Where we have invested, we are definitely seeing AI resulting in productivity gains that is translating directly into not just better software and better service in the call centers, but also lower costs. And these are -- what they show -- this graph shows is the percentage of sales represented by technology and call centers. And I think in both these areas, there's further to go, and I've written about that. In terms of our approach to AI, I think I thought it would be useful to share a little bit as to how we're approaching the whole issue of AI. And I think the most important thing for us is what we're not doing. We don't have a central AI department or a Chief AI Officer, a CAIO, I think it would be called. It sounds like goodbye and Italian. We don't have that. And the reason we don't have that is because the nature of what we do across the different functions of the business is so different that to have one department trying to service all of those would be extremely unproductive because ultimately, the value of AI is not in the technology, it's in the applications it supports. And the design of those applications, what it does for the business can only be understood by the people who are running the business, not people who have access to the technology. And the best comparison I've heard is that it will be like having a central spreadsheet department. And Chief Spreadsheet Officer. Spreadsheets are used by everyone in very different ways across the business. Same with AI. It's got to be application led. That's not to say we're doing nothing centrally. We do talk a lot about it. We encourage people help them. Our IT department provides access to technologies. It ensures that the technologies we use are secure, most importantly. And it also monitors the cost of the AI tools that various departments are adopting. But we haven't adopted a one-size-fits-all approach to this. And each director is very much going to have to be their own Chief AI Officer if they want their part of the business to succeed. What I wouldn't underestimate here is the power of collaboration. And it's just the way that NEXT works is that all -- pretty much all of our directors see each other every week at our trading meeting, at least once a week, if not more. And the people who -- the directors who are most advanced are actively working not just in their department, but to help the other departments and show them the sort of things that AI can do for them and share people and technology providers with them. In terms of how far ahead we are in this, that graph looked quite impressive. But even in the areas that we are the furthest ahead, my guess is that we haven't, we're scratching the surface. There is so much more to go at, not just in terms of cost effectiveness, but also productivity in terms of what people can do. So I think this is a huge opportunity. In terms of the areas that really haven't move forward much. I'm not singing out warehouse because they've done anything wrong and all because AI isn't applicable to warehousing. Actually, I think AI could be brilliant to warehousing in terms of handling all the operational management of the warehouse, reforecasting, scenario planning, optimization, lots of variables that AI could really turbocharge the management of our warehouses. But they haven't had time quite rightly to worry about AI because the thing they'd be most worried about is ensuring that we've got the capacity in warehousing that we need to grow. And that provides a slightly artificial but neat segue into the next subject, which is the last subject you'll be pleased to hear, the investments in our warehousing. This is where we were 2 years ago when we started to invest in Elmsall 3. We were at 94% full in our old warehouses in 2023, where we thought we would be on 5% compound growth in sales was 80% full of the new extended complex. Sales have actually grown by, sorry, 28%. we're expecting 10%. We've actually grown at 28%. In addition to that, we've put more clearance into our online operation, and we've increased our cover. That pushes up the stock in peak week, and he was only talking peak weeks here to 84%. And we've decommissioned some of the oldest picking that actually turned out when we decommissioned it, we realized just how inaccurate and expensive it was. So we don't want to recommission it. We've had a slight drop in box drop, which means that last year, we got to 87% full. If we look at this year, with the 8% planned growth in online business overall, we'll be at 94%. Now 94% sounds okay, it's not. 94% at 94%, you begin to get a lot of congestion, things slow down. One small breakage, conveyor belt breaking can hold up the whole operation. So that's uncomfortable. We're going to manage this year by taking some of our reserve stock. This is the high bay stock that can't be picked out of high bay and Elmsall 3 and move it into other warehouses owned by the groups. That will be replenished in day, so it shouldn't affect stock availability for customers. There will be a slight increase in costs as a result of that, but that will be more than offset by leverage over the fixed overheads from using so much of the capacity. In terms of the year after, that's where we really get into trouble. If we grow at another 8% next year online, then we wouldn't have the capacity to do that. So we need to invest and we need to start investing now. In terms of what we're doing, those of you who've been to the warehouse, you remember that we only occupy half of the new Elmsall 3 complex, Chamber 1, and we don't occupy all of it -- all of Chamber 1. There's a little bit left. So Phase 1, which will be on stream in 2027, will give us 10% more capacity at a cost of GBP 48 million. Phase 2, which is the first half of the second chamber, that's more expensive because that chamber is a shell. So it's more expensive per percentage of capacity. It's GBP 134 million. And the final chamber, which will come on the following year, 2029, is another 17% capacity at GBP 125 million. In terms of the P&L impact to that, you could look at that and begin to worry about is are we going to see a big P&L impact as all this CapEx goes through? And the answer is you shouldn't because although the additional depreciation in year-end Jan 2028 and overheads will be in the order of GBP 5.4 million, we think the cost savings from moving from the old to new capacity will give us at least GBP 5.1 million of savings. So there should be -- that's broadly cost neutral in that year. In terms of the full program, the GBP 307 million of CapEx, that will add around GBP 30 million of operating costs, but we get GBP 22.6 million, it's too precise, about GBP 22 million of savings, we think, from using that new capacity. That means that the net cost of all that new capacity is around GBP 7.3 million. And that's obviously, if sales don't grow at all. If sales -- the capacity that all of those projects together will give us is around GBP 1.5 billion worth of turnover. So what you can see is that the cost of the increased space, once it's at full capacity or even once it gets to 3/4 full or even half full, the cost of that capacity is very small as a percentage of sales. So over time, these investments should result in our fixed cost and warehousing coming down as a percentage of sales. In terms of where it leaves us in terms of capacity for growth, that's the 8% trajectory with the new space added on. The maximum we could get to is compound growth of around 12% online. I think, yes, if we have that problem, I'll be delighted, but I don't think we will. So we think that this program gives us comfortable capacity for the next 3 to 5 years. Next question you're going to say, I can see it instantly on your minds is like what do you do next? Here's the field. We've bought the field. The field, that's the warehouse that we have already got planning permission for. We have contracted for the land. We'll complete, I think, in 2 or 3 days. And we'll start work on that, getting foundations laid. We'll start work on that sometime over the next 18 months. So we could have floor space available if needed, maybe early '28 -- late '28. So we've got contingency. I think the important point there is that our model of centralized stockholding for the U.K. has got legs beyond Elmsall 3. And that mercifully is it almost. And just in terms of summary, hopefully, what you can see is that the avenues of growth that we had last year, all of them still have legs in terms of overseas, in terms of NEXT product, in terms of non-NEXT product, we still got an awful lot that we can do and that the business feels can push sales forward. We have got the means to control costs through the introduction of new software AI mechanization. We got the means that doesn't mean guarantee that we will, but we have got the means to do it. And we've got the capacity available planned to accommodate the growth if and when it comes. So if things go well, I think the business is really well positioned. What is, I think, really interesting when you kind of stand back from -- when we stand back from what we do day-to-day, and I think about the sorts of things that cross my days, desk and my colleagues' desks in terms of overseas new brands, new AI-driven marketing technologies with Google. All the things that are driving the business are completely different to the sort of things I was doing 25 years ago. 25 years ago, it was still very exciting, but it was about stores and believe it or not, catalogs. Getting more catalogs printed and printing those catalogs was central. And so what the business does today is unrecognizably different from what it was doing 25 years ago. The thing that really has not changed at all are the principles upon which that growth and the ethos of the business. And those 2 things are, first of all, absolutely everything we do, everything we do, we have to hand on heart, believe that it is giving good value to our customers. We have -- and the test there is, would you recommend this products to your customers. Now not everybody is in the market for a mesh dress, I'm not. But if you wanted a mesh dress, could you recommend one from the next website and say, yes, that is the service you want. It's fantastic, delivered next day, return to any store. You have to hand on heart believe that. And if you genuinely believe all of that and you're delivering something that's great for the customers, then you can't go too far wrong, whether you're doing with NEXT brands or others. The second principle is that it's fine to be doing things that are great for the customer, but they've got to make money. And the two things there is, first of all, we have to get a return on capital. Capital is the fuel that drives the business forward. And the better return we get on the capital we have in the business, the faster we can grow, the more benefit we can share with our shareholders. And the second thing is margin. And this is the easy one to overlook, particularly when things are good, but every single business we do, it doesn't matter if we're selling Love & Roses brand in Peru, that brand in that country has to make a margin, that is commensurate with the sort of risks involved in a fast-moving consumer and fashion business. And as long as we stick to those principles of do great stuff for your customers, get high return on capital and make healthy margins, then regardless of the environment you're in, you're going to be well placed to handle it. And we're making a trading statement in 6 weeks' time. The one thing I'm pretty sure is that it's going to move. The guidance is going to move. I just don't know which way. And -- but I think the point is that whichever way it moves, if the war peters out and things become more positive, then we are really well positioned to take advantage of continued growth in the U.K. economy, continued growth overseas. And if things don't turn out, and this will not be our first gig when things going wrong, COVID, financial crisis, cost of living crisis. If things don't turn out as we expect, then actually the business is well placed to cope with that it's well placed to cope with it because of those margins because kind of there are 2 lessons about retail that are enduring. And you can -- this is sharing wisdom. There are 2 lessons. One is like in the good years, don't get cocky. And in the bad years, don't go bust. And I think those 2 principles are really important. And that's the reason why when we've had a great year, we're not going into the next year with a huge estimate of what we can achieve going with conservative budgets. But whichever way things go, we've set the business up to cope with it. And on that cliff hanger, I think that leaves you just waiting for the next trading statement. We'll go over to questions. Anne Critchlow: It's Anne Critchlow from Berenberg. I've got 2 questions, please. The first one is about the store payback target and extension of that. Have you considered taking into account the benefit of a new store in terms of providing a free pickup and returns point for online customers? And then secondly, on aggregator website, you say you don't have visibility on the customer numbers there. But what insights do you receive from aggregators to help you make decisions about marketing, for example? Simon Wolfson: Yes. So first of all, on the store benefits to online, we don't account for that. We don't, in any way, put any benefit in the online business on stores. And there's actually a good reason for that. And that is that although the store does definitely help the online business, it also hinders it because it's a competitor. And so where we've only -- there's only one store where we've shut and had no other stores anywhere near to pick up the business. And there, we actually saw the online business move forward because GBP 2 million or so that we lost in the store, some of that went online. So we don't and we shouldn't account for online benefit of stores. In terms of customer insights into aggregation sites, we don't get very much insight. And quite rightly, they don't share that with us, and we don't share it with our brands either. So what they do share with us is the returns on the marketing we do on their sites. And on somewhere like Zalando, we'll spend around 2% of our sales on marketing. We still have the same hurdles. We still have to get a return on that money, but we can profitably spend money on aggregation sites, and we do. And the insights we get are not about who's buying it, but the returns we get on the marketing that we spend with them. Richard Chamberlain: Richard Chamberlain from RBC. A couple more related to the Middle East, if that's right. The cost savings you talked about that you've identified since the start of the year, GBP 15 million, how many of those or how much of that do you think might come back if demand is a little bit better or the war ends earlier than you're budgeting for? And the second one, can you just give us an idea of how the franchise stores in the Middle East have been holding up or not compared to the online offer there? Has there been any sort of big difference in trends? Simon Wolfson: Yes. Two good questions. So first of all, how much of the GBP 15 million will come back? I think very little. In all honesty, I think there's a much bigger downside risk to that number than there is an upside risk. So yes, it could come back. It might be that GBP 7 million of it doesn't materialize. We haven't yet incurred it. But I wouldn't -- I'm not getting excited about that. I think the downsides are much bigger, and they will have to go into cost. In terms of franchise business, I don't want to talk about that because it's not our business, but they have definitely been impacted. Adam Cochrane: Adam Cochrane from Deutsche Bank. First of all, on the Middle East. Just a question in terms of logistically, how is it working? Are you able to fly your products to your warehouse in Dubai? Simon Wolfson: In terms of the Dubai hub, so the Dubai hub, traditionally, we would have air freight out of Dubai to other countries like Saudi Arabia and Oman. At the moment, we're going by truck, and that's what's increasing the lead times to places like Saudi Arabia, Oman and Kuwait. Intermittently, we have seen that service come back on. And I think things are changing daily, but we're hoping to airfreight back on available for Saudi Arabia soon, but it does depend what happens in all. So the answer is to Dubai from the U.K., we are shipping by air, and we're getting replenishment in at the moment, albeit at a very high premium. That's a big chunk of that increased operating costs. And then from Dubai hub to territory, we've switched from air to trucks, which is adding 2 to 3 days to the lead time in most territories. Adam Cochrane: And the second question, in terms of international, are you progressing with -- or how are you progressing with other non-wobble brands, so third-party brands on your international site? Is that an area that you're still seeing more growth and more opportunity as brands would like to sell via the NEXT platform? Simon Wolfson: Yes, we have. And actually, it's detailed -- there is detail on that in the pack in that. There's one page with brilliant tables on it, which does show you that I think the overseas -- the growth in third-party brands overseas is around 22%. Most of that is driven by what's driving the growth in third-party brands anyway, which is a better selection of our key brands. But in some areas, partner brands have agreed to allow us to put their product on our overseas websites where they haven't in the past, and that's driven some growth as well. Frederick Wild: It's Freddie Wild from Jefferies. So apologies, it's going to be quite a broad question, but it was on a reasonably important topic was important until about 3 weeks ago. You seem on AI to be talking a lot about cost savings and the ability to run the business more efficiently. I suspect where the debate has been in the market is more about the risks of disintermediation versus the potential benefits to your consumer proposition. So I'd love to get your sort of thoughts on outlook on almost the demand side of the AI proposition. Simon Wolfson: It's a big question. I think the first thing to say is rightly or wrongly, it's not something that we're overly concerned about at the moment. And I think the disintermediation that we're talking about would be the disintermediation of the website, rather than any other cost at the moment, unless -- it will be relatively they could switch just a fraction of their data centers into beautiful clothing warehouses and ChatGPT would have the infrastructure. But at the moment, they don't. So you're really talking about the disintermediation of the shopping bag and the selection process. And there is an economic and just -- there's an economic and operational problem with that, that is yet to be solved. And the economic problem is that if you look at our average order value, net of returns, be around GBP 70. Cost of delivery to the consumer is around GBP 5. If -- that's about 6%. If your virtual shopping bag takes things from 5 different retailers, wherever the shopping -- wherever that intermediate website goes, it's got to go to a number of retailers. If it comes to us, then fine, it's just another form of advertising. If it goes to more than 1 retailer, then -- let's say it go to 4 retailers rather than 1, you end up with that 6% being multiplied by 4. So the economics, someone somewhere has got to pay for that additional 18% of cost that you'll get from splitting the order across multiple websites. I think the operational problem, which in many ways is more of a challenge and applies specifically to clothing is how you handle returns because you've got -- if you buy your -- or all of your online order goes to John Lewis or to Marks & Spencer or to NEXT or to Very, you know, exactly you can take the whole order back to any one of their shops, scan the items and you're credited instantly in the way in which you paid. For an intermediary to do that, you've got to know where to take the item back to, which is a Nike Train or which of the sub-vendors do I take it back to? How do I return it to them? And then how do they communicate with the intermediary, that the intermediary has got to repay me. So there are big customer service issues with it. So at the moment, it doesn't look -- it feels to me very much like what people were saying about marketplaces versus stocked retailers because the real asset in trading online clothing is the logistics infrastructure and the product, not the website. So I think is -- I think that is a direction they're unlikely to go in. And certainly, if you look at the difference in Google approach and ChatGPT approach, Google is still taking the approach of passing the consumer straight through from their AI engine to one or other retailer. So it becomes an enhanced form of advertising. And I think to that extent, it's very exciting. I think basically, the better search engines can find what customers are looking for, the more they'll buy, which has got to be good for the industry overall. So it was a long answer to a broad question, but I hope it covers. Geoff Lowery: Geoff Lowery, Rothschild & Co Redburn. You had a great year for customer acquisition in the U.K., both credit and cash. There was obviously some competitor disruption, et cetera, sitting behind that, weather, all of those things. But can you talk a little bit about the behavior? Is this gross adds? Is this better retention of existing? What is actually driving that? And what measures do you have to sort of keep them active as some of your competitors normalize, et cetera, around you? Simon Wolfson: I suppose, look, the reality is, and this comes back to this philosophy that everything has got to make a profit. And I think the risk here is saying the objective is to hold on to those customers not to make sure that all of our retention programs are profitable. And the amount we invest in a retention program is -- makes a good return on the money we invest. So our objective is not to hang on to customers. It's to continue to invest profitably in retention. And our retention programs are performing in line with last year. There's no significant -- I can't see any significant difference at this point, although we've yet to annualize the very strong weather last year, which may affect it and the competitive disruption. So we -- the answer is we don't really know how they will perform. I think the key takeaway for shareholders is that we're not going to throw money at trying to hang on to customers that aren't profitable to keep. Alexander Richard Okines: Warwick Okines from BNP Paribas. Two questions about warehouse capacity, please, Simon. Firstly, does the level of utilization that you're sort of running up against reduce the ability for the business to reduce the proportion of products not delivered in full and on time, which is something that you've been bringing down? And secondly, are there any options to reduce the proportion of products that are shipped from the U.K. out to international that could reduce the amount of capacity that you might need for the U.K. business? Simon Wolfson: Yes, really good questions. In terms of not on-time delivered in full statistics, they have -- I didn't put it in the slide because I'm superstitious because it only just got better. But basically, since Christmas, we have seen that dropping from around 8% to around 6%, which is sort of -- I think the lowest we got to was around 5%. So warehouse have made significant progress in terms of reducing the not delivered in full on time rates, and we are happy with that for the moment. But I'm going to talk about it in 6 months' time if we can hold it because it's only been a few weeks, but the signs on that are encouraging. I don't think there's anything I can see in this year's numbers to suggest that we won't be able to hold that, but it will depend on the effectiveness with which we fill the new mechanization and the effectiveness with which we can serve the main forward locations in the warehouse from the off-site reserve warehouses, which again, we haven't started doing earnings. But obviously, the risk there is that you've got something in reserve that you don't have in forward if you don't get it exactly right. So I think there is a small risk to that, but it's not something that I'm hugely concerned about. And I'm pretty sure that we'll see year-on-year improvements. Certainly, that's what we're seeing at the moment. In terms of delivery to hub direct, we're not doing that to Germany. And the main reason for that is that actually, it's -- because it's third party, it's very expensive. So we try to keep that on 6 weeks cover. We would normally have 12 to 14 weeks cover. So at the moment, we're not delivering direct to Germany, but it will be an option if we begin to hit capacity issues. I think the other issue with direct delivery is it's very hard to deliver much more than 20% to 25% of anticipated demand without getting it wrong because you never quite know what's going to sell in which territory. We are delivering direct to the Middle East, which obviously looks like a brilliant plan. And our first tanker -- our first cargo ships set off from the Middle East about, I think, from the Far East 4 or 5 weeks ago and have recently been turned back from Dubai. So that turned out to be a great plan implemented at exactly the wrong time. But going forward, we would plan to deliver, I think it's around 20%. I'm looking at Richard, about 20% of Middle East requirement direct from manufacturer. Andrew Hollingworth: It's Andrew Hollingworth from Holland Advisors. NEXT historically has been very, very good at the whole sort of mentality of sort of try stuff and do more of what works. So Costa Coffee is and all the rest of it. And wholly owned brands is obviously working extremely well. And I think in the statement or your presentation, you described it as sort of small business. What you've done up to now is sort of buy -- I don't want to say the wrong thing, but sort of troubled U.K. businesses and you've sort of reenergized them and helped them and all the rest of it. But you've wanted them, I think, in past Q&A to sort of prove their worth in terms of return on capital in the U.K. alone. We've now got a really powerful sort of wholly owned business internationally. What could this look like 3, 4, 5 years from now in terms of could we be buying Spanish brands or French brands or Italian brands? Or is it just going to be U.K. homegrown and see what we can do with it globally? Simon Wolfson: Yes. You know what, looking even a year ahead is difficult in fashion; 3, 4 years out is absolutely impossible. Would we buy a French, Italian brand? I don't think -- at the moment, no, because our business in those territories just isn't anywhere big enough. In Southern Europe generally isn't big enough to warrant the investment. The big advantage we provide for Northern European and U.K. brands is that we can give instant access to a huge market. Actually, our penetration in Southern Europe is very low. So I think those countries that you mentioned and France, although sort of in the middle, sort of fashion-wise is quite sudden, I think is unlikely. But I would never say no because even just access through Zalando to those countries might one day give us enough volume to justify. Andrew Hollingworth: Just a follow-up. So do you think with obviously not mentioning any names in terms of how you think about this part of the business that there's still lots of brands that can be added to the portfolio within the sort of your sweet spot of the sort of things you want to buy? Simon Wolfson: Yes. Well, what we're looking for is great brands, preferably with good management or our ability to provide good management for it to it. We're looking for things that we can add value to through our customer base and platform and at the right price. And I can't predict the fourth one. So I think there are lots of brands that I would buy for GBP 1, that I wouldn't buy for GBP 100 million. And where the price is in between will depend -- will drive pretty much what we do, I think. Georgina Johanan: It's Georgina Johanan from JPMorgan. Two for me as well, please. Just first of all, sorry if I missed it, but what actually is the Middle East trading at the moment -- like down at the moment, please? Simon Wolfson: Good spot. We didn't miss it. Georgina Johanan: And then the second one was just a bit of a broader question on GLP-1s. If you could share anything that you're seeing in terms of how like the sizing mix is changing in the business or not as the case may be? And also just thinking about it longer term, like any insights where from particular customer cohorts, if they are sort of materially changing the sizes of what they're buying, like is their spend increasing? Or is it steady? Just really any insights you can share would be great. Simon Wolfson: Yes. So on the Middle East numbers, the reality is it's very, very hard to read. So -- and the reason it's hard to read is because of the timing of it, because we are still in a period now where last year, people were ordering on their Ei'd. So it was on Sunday this time last year. This year, it was last Friday. So if we take the same days post-Eid that we are today, that number is changing every day in terms of growth. In terms of GLP-1s, we have seen some subtle change in mix in sizing on womenswear. And -- but where we've seen the most dramatic change is actually on the very large outsized. That's where you can see a change in terms of reduction in participation, these participations are tiny, but participations on the sort of 22-plus are definitely falling. I would say -- sorry, one last one. Unknown Analyst: I had 2. Marketing expenses, you're still talking to plus 25% or more. Are you repurposing some of the Middle East marketing into faster-growing Europe or rest of the world? Is something like that an option for you? And the second one, again, international, within the rest of the world, are there a couple of markets that you really are excited about and you see significant potential for them to be meaningful for next... Simon Wolfson: Within the -- Within where? Unknown Analyst: Within the rest of the world in international? Simon Wolfson: Okay. So the second -- the answer to the second question is yes. The answer to the first question, I think the premise of the question is that we've got a marketing pot. And if it doesn't work in the Middle East, we'll move it somewhere else. And that's just not how we work. We don't have a marketing pot. We have a hurdle rate of GBP 1.50 return and whichever territories give us more return than that we will continue to invest money in, and those that don't, will reduce. And so the answer to your question is, if I sort of stood back from it, do I think we will still be 25% up on what I've seen so far in marketing? Yes. But I think a lot will depend on the cost of air freight to some of our most expensive territories because if the price of airfreight goes up, the return on the marketing comes down, which constricts our ability to spend it. But overall, we brought down our sales by around 2% overseas at the moment. So that's our best guess as the full impact, but who knows. And we've kept the marketing budget where it is. And on that note, we really well finished. Thank you very much.
Bettina Schäfer: Hello, everybody, and welcome to our earnings call for the financial year 2025. My name is Bettina Schafer, and I'm responsible for Investor Relations at LPKF. I'm pleased to be joined today by our CEO, Klaus Fiedler, and our CFO, Peter Mummler. Klaus and Peter will walk you through the business development for 2025 and provide an outlook for the current financial year. After that, we will open the floor for your questions in a Q&A session. The conference will be recorded and published for a period of 2 weeks on our website. Before we begin, please note that today's discussion may contain forward-looking statements. These statements are based on current assumptions and are subject to risks and uncertainties that could cause actual results to differ materially. We do not undertake any obligation to update these forward-looking statements, except as required by law. With that, I would like to hand over to Klaus. Klaus Fiedler: Thank you very much, Bettina. Hello, and welcome, everybody, to our annual results 2025. I want to lead in with the key takeaways of the year. Looking at our revenue, we are at EUR 115.3 million, so down 6.2% from previous year and at the lower end of our adjusted guidance. Our EBIT improved from EUR 0.1 million to EUR 0.8 million adjusted EBIT, which basically shows that despite a decline in revenue, our cost-saving measures more and more are visible also in our bottom line. I want to quickly lead into when you look at the right-hand side, our distribution across the regions. You can see that our business distribution, North America and Asia is growing, while Europe basically now constitutes less than 1/4 of our revenue. Dominantly, our markets, our growth are shifting step-by-step outside of Europe. When we look at order intake, we are at EUR 91.6 million, significantly below previous year, which also reflects the backlog. The main impact factor that we have here in order entry also in revenue for 2025 is that we are going through a slow phase in our Solar business, which is driven by the upcoming technology shift to Perovskites, I'll come to that in a minute, that reflected also our order backlog and our order intake, which was very strong in the previous years in Solar. Looking at other business fields, despite, of course, the headwinds we had with the tariff situation, we had a moderate growth in Rapid Prototyping. We exceeded our planning and expectations in Welding, mainly driven by a large order in the consumer field coming out of China. Looking at advanced packaging, we don't make these numbers transparent yet, only for the packaging semicon sector, it's still in the low 8 figures. But from a positioning point of view, above our expectations. Looking at all the customers that are preparing for ramp-ups for glass and advanced packaging, over 80% are now qualifying with LPKF equipment, which gives us a sound basis for the upcoming ramp-ups. What we are doing, we basically treat this as an entry ticket into this market and are right now expanding our portfolio with the goal of becoming strategically relevant in the large growth field. For ARRALYZE, we took the decision to discontinue our internal activities and transfer the business to a suitable external partner. That is driven basically by the fact that our market entry is targeted at academic customers, funding for public institutions in Europe and also specifically in the U.S. is quite shaky at the moment. So we see that this would be a longer way to get into this market as anticipated. We need to focus. We need to watch cost. So here, we took the decision to basically look for an external partner to continue these activities. Peter will say more about the North Star program in the course of this presentation. We have a good start. Part of the journey is completed. Part of the savings are already realized, and we are now in a second wave to secure a double-digit profitability in a volatile market environment in 2028. And we also finished a new financing framework with our existing banking consortium to basically make sure we have the right funding for this transformation. Now a couple more details on our market situation. You know the increasing global tensions that are happening. We had the tariff impact in '25. We currently have the Iran situation. So this clearly overall creates headwinds for LPKF. There is more reluctance to invest than in a normal environment, and the investments that are happening, the deals that can be made are increasingly generated outside of Europe. We are below 25% share of sales in Europe now. The semiconductor industry transformation towards glass-based substrates is clearly beyond the point of no return. So several external sources, all the announcements of the large players, drive it. Positioning is very good, but not yet in '25 reflected in true volume sales. The qualification of the whole process chain took longer than also expected by our customers, but is driven with full force and is making the right progress. Our SMT markets were impacted because large-scale projects needed to reshuffle based on the tariff situation. This was just effect of, the demand is there, but given the tariff situation, all production chains could no longer be executed as planned. The tariffs would have destroyed the business case. So our customers needed to replan where do we do which process step in our business case. So we had delays in there, but definitely not the overall market drive going away. We see that it's only a delay and definitely not that projects are going away. What do we see in the solar market? You know in the solar market, we are active in the U.S., but also in China. What we see in the U.S. is that also the tariff situation required a complete reshuffling of the operational flows of our large key customer, which definitely weakened investment and allowed them to -- or forced them to focus their activities on setting up their production chain that it works in this tariff situation. And also in China, we see that overall investment appetite is low and where deals are to be made, there's a strong push to local-for-local, so an intensifying competition for solar scribing. Overall, and that's now a continued situation that we see, we are operating in an environment with persistent volatility, geopolitical tensions and also fragile supply chains. Looking at business development. In advanced packaging, our positioning, and we have mapped really every customer in the world that is active in the field, is working very well. We see more than 80% of customers choosing LPKF for their qualifications. We are also selling well into these qualification lines, but that's not yet the volume push we are now expecting for the future, but a very solid basis for this. We are seeing very clearly and also monitoring that many players definitely want a piece of that pie. So our IP situation and the work we put into this business in the past 10 years is now becoming very important to make sure we defend the market share we are targeting here. And as already mentioned, we know the full process chains. We know due to our contacts where also the future needs lie, we are using the opportunity to broaden our portfolio right now to become a strategically relevant partner in that field. Looking at Rapid Prototyping, we had a positive development under expectations, but positive year-over-year. Strong North America demand, the U.S. government shutdown in Q4 dampened the order entry a bit in Q4, but the overall trend and our market positioning remains positive. As mentioned, in Electronics, the tariffs delayed projects in the SMT market. We still could grow year-over-year with our cutting systems, but the over organic growth we clearly expect and which is driven by the fundamental shift away from mechanical milling to laser singulation, that was clearly dampened in '25 because a lot of production chains needed to reshuffle. In Welding, automotive continues to be weak, and that was part of our planning. But our strategic shift to other application areas, consumer and medical, definitely worked well in '25. We are significantly above plan in that area, driven by a large bulk order. And we also were able to win a substantial volume order in the smart robotics field in '25 with further orders coming in '26, which gives us a solid foundation for this transformation we are in Welding. Solar, we had a weak and significantly below-plan year in '25. Operational execution was perfect, but overall, the situation that the market is focusing on the shift to perovskites, but perovskites not yet being mature for volume ramp-up, that results in a phase of low investment demand. We consider the perspective for Solar very good with the transition to perovskites. So we definitely want to continue full force with our activities, but we had a '25, and we also expect a '26 where demand and revenue is significantly below historic figures. We are supporting all these customers with perovskites prototyping lines, of course, but that's a different revenue bracket than fitting a full high-volume factory. Looking at operations. We launched our North Star program to structurally reduce cost. Peter will tell a little bit more about that, and we have already gone a good step along the way, but are continuing with a true structural change of LPKF to be ready for a world that is in constant volatility. We are targeting through these measures, but of course, also through the measures of realizing growth, specifically in advanced packaging, a double-digit EBIT margin for '28. And we are safeguarding our innovation investments. IP is becoming more and more important for us. We are focusing our markets. Definitely, the advanced packaging is set up the way we expect it to be set up, and we see a lot of future perspective in that market. There, we do a focus in areas where we do not see the progress, be it external factors or not that we expect, we focus stronger and also discontinue where we say this will not bring the payback in the time we expected it. And as mentioned, syndicated loan agreement is redrafted, extended to '28, securing a solid financing for LPKF. Next slide, please. Just a bit of an insight, advanced packaging field, you all know very well what we are doing with glass structuring with LIDE. We are still in a positioning phase, not due to us. Our customers confirm LPKF is ready, but due to the whole production chain needing to reach volume maturity, we see the ramp-ups coming, and I'm happy to report how that reflects in our figures when we look at Q1, Q2 results. We expect ramp-up phase '27, '28; high-volume '29, 2030. We have been positioning us with two additional highly differentiated process steps in that field to immediately broaden our footprint and gain strategic relevance, that's ABF singulation and glass bonding. And we are in a market assessment phase in co-packaged optics, the logical next step where the glass is used for data transmission between the individual chips in a package. Most of you will know that 3 years ago, we started already a partnership with a large U.S. semiconductor company. So we already have a track record and the right technologies for this field. With that, I will hand over to Peter, who will walk you in more detail through the financial figures. Peter Mummler: Hello, everybody. I want to give you a little bit more insights about our financial year 2025. And it shows a little -- really a diverse picture in our world. When we go to the next page. As Klaus mentioned, that -- in the revenue, we had a challenging year. We are on our communicated guidelines on the lower end was still a raise towards Q4, but we are in the range. Klaus gave a little bit about -- feedback about this. And then later on, we showed a little bit more about our business units where the diverse picture comes from. The EBIT development is strongly hit by restructuring measures. We already mentioned that we started North Star -- and you see this on the lower end in employees where we -- on the one side, we are really reducing significant headcount, and these are special costs, restructuring costs, what we have here considered and therefore, this development of the profitability is really EUR 11 million of a hit towards previous year. When you look at our adjusted EBIT margin, there we have an improvement towards previous year. Here, you can see that we already have in the North Star, in our cost reduction measures, we have already the input. And when you look at the development of the revenue that we are 6% below, but we could improve our adjusted EBIT that there you can see that we're really hard working on the so-called breakeven point to be profitable. And we really put cost out of this during the year, and I would say this is a good situation and a really good move we did, and therefore, we could improve our adjusted EBIT towards previous year. When we're looking at our -- one of our really positive developments is, a lower element, is the free cash flow. Here, we must really say we did in our asset management, significant improvements and especially where we have a huge driver and I mentioned this in our DSO, where we really, on the one side, we're collecting much earlier the cash by the customers compared to last year, and we even made a significant improvement about collecting cash from so-called overdues receivables. There we did really a very good job, and therefore, we improved our cash -- free cash flow significant by 400%, even that we are still not growing towards previous year. The orders in hand, and you see this when you look at the order income numbers before, we are still in a book-to-bill rate below 1, that shows and is reflected in our development in the order backlog and the significant Solar business where we have so-called big orders in there that shows that we really had a hit in our order backlog by minus 47% in -- towards previous year. North Star, Klaus mentioned this, North Star is an overall profitability program we started. We see here already in the development of the employees that we are progressing here. We reduced by 6% our employees. There's still a way to go, but this is the first steps we are doing. And therefore, we have the right trend when we look at our revenue development today. Therefore, we made the first steps, and I'm really happy to show that we're developing in the right direction. Net cash follows the free cash flow, therefore. Here we are about our working capital. Next slide. Here, working capital. It shows a little bit worse. First of all, I mean, the working capital follows in the structure, the revenue development to our business development. But we have two elements where we really made good progress on top of the development is our inventory and our trade receivable. I mentioned the trade receivable already this slide before, where we really improved our DSO by 40% by the significant measures. And our inventories, even in our inventory asset management, we improved despite the development of the revenue, we had -- and you see this in our DIO, we reduced by 10% towards previous year. Overall, it's a very positive development. Our working capital improved by 34% towards previous year. This is a good step and we want to keep this level now for the future because it was a really good approach in our asset management. Overall, very positive development compared to the previous years. Next slide. Here, we see the diverse picture we mentioned. Klaus mentioned already in the beginning a little bit about the business development. But here, you can see really our diverse picture in our business units. When we look at Electronics. Electronics were short of the budget in our previous year, majorly hit by the tariff discussion about the investment, how the customer really looking at the investment, there was really a downside in our Electronic business. We're still pushing for the semi market. Therefore, the EBIT follows the reduction of the profitability a little bit more because we're still going -- investing in our semi business. Second business unit Development. I must really say development really grows even in this challenging environment -- market environment we have with the tariffs. There was a growth. It's a very good story. And we had even measurements in here that we over-proportional growth the profitability in this business by -- from EUR 0.1 million to EUR 1.3 million. This was really a good story and a good push. Welding. In Welding, Klaus mentioned this already, the growth of 30% towards previous year, majorly driven by an order out of the consumer electronics, must say we really executed this contract even very efficient. Therefore, you see the impact about the profitability, really the turnaround in the Welding business towards a positive business was really good improvement here and one of our good storylines we had in '25. Now Solar. Solar, mentioned this is our downturn in this year -- last year because we had a significant hit, 1/3 of the business has gone. And here we go. When you really look at the number that we had a significant reduction of revenue, we still made a pretty good job that it's not a one-to-one extreme hit in profitability. There were certain cost reduction measures when done that the hit we received here is still in a range where I must say, we did a good job. Therefore, it's mainly driven from the diverse business. You see Solar is kicking us very hard this year. So Klaus, I hand over to you towards the -- for growth. Klaus Fiedler: Thank you very much, Peter. So basically, given the overall situation we see in our markets, we see headwinds in our, let's say, core business. The Iran situation we factored in, is definitely not helping. On the other hand, we see that the growth drivers, especially in the semiconductor field, but also in overall Electronics are intact. So we went to a conservative guidance of EUR 105 million to EUR 120 million, that's resulting in an adjusted EBIT of minus EUR 3 million to EUR 4.5 million. What do we see happening at the moment? We clearly work strongly on both levers, the cost, but also the growth factors to work towards a double-digit EBIT in 2028. In the individual markets, what is our aspiration? What do we see? We see that the positioning in LIDE will now transfer into first ramp-ups. I'll tell you more about that when I am allowed to talk about Q1 and Q2 order entry, and we definitely take the strategic opportunity, expand the portfolio, use the deep market insight. This is the area where LPKF will be a strong and strategic player in the future. SMT and our Rapid PCB Prototyping, yes, we see solid growth prospects, stronger in SMT because the shift from mechanical routing to laser depaneling is still having a long way to go and a lot of market to grab. Rapid PCB Prototyping has a dominating market share, we'll defend that, but we'll generate cash. We see good prospects there. Solar is a hit. Solar was for many years a solidly growing and nicely contributing business. It is going through a weak phase also in '26. And this is largely driven by the fact that new investments are not happening because people need to reshuffle their production chains due to the tariff situation and people expecting perovskites to be the new technology to invest in. So we stay positioned. As you already saw in our '25 figures, we are managing the cost, despite significant movements in the revenue, but we definitely will support this business to the extent that we can grab the opportunities with perovskites when they become mature. But at least for '26, it will be a weak year for Solar, which definitely also reflects in the overall revenue of LPKF. In Welding, yes, we need to completely restructure this. The old automotive-driven model is definitely no longer working. We are in the middle of executing that, and we will also consolidate our production sites. We will go from 4 to 3 production sites in this course, but we definitely see the growth perspective in other markets. We see the orders coming in, in other markets, which definitely help and build a foundation. The robotics example was one of those. And we will make this, again, a profitable contributor to LPKF with the foundation in automotive, but with the growth coming from new technologies, A-to-A in other markets as well, consumer, medical, also robotics. And from the structural adjustments we are doing North Star, this is not just headcount reductions here and there. This is really setting up the company in a structure that a permanent situation of volatility in the macro environment we are operating in is something that LPKF is set up for and can absorb without short-term measures and, let's say, short-term cost reductions, but basically a model that is ready for outside challenges and volatility, but grabs the opportunities we have with the semicon back-end market being the dominating one. There, we will definitely stay the course and also continue what is necessary to play to win in that field. Thank you. With that, I hand over to Bettina for the Q&A. Bettina Schäfer: [Operator Instructions] And the first one comes from Apus Capital, Johannes Ries I assume. Johannes Ries: I have a couple of questions. So first one of my preferred topics, I have no word about foldable screens. There was a pushout you explained last time that the old technology was still used. But I hear, for example, that the expectation that the Apple foldable phone will be a big success and maybe push -- increase the market by 2x. Therefore, it is an interesting market. Are you still on the way maybe to come in this market? And how is the actual situation? Klaus Fiedler: Let me answer that immediately, Mr. Ries. We are definitely in this market or let's say, our customer, our partner is in that market and offering the glass technology there. But what we saw that beyond what was already invested, things are moving slower than expected. Of course, when I was in Korea, I asked them, look, guys, why is this -- why are you not getting more customer orders in? Basically, people stay a bit more on the conservative side with the technology change than expected. The fundamental of glass being used in that field, we still see as clearly intact. Actually, I'm next week in Korea to also raise that topic again. So to answer your question, this is still an attractive business opportunity, but definitely progressing on the slow side. Johannes Ries: Okay. Maybe on the more short-term interesting side, you have shown definitely interesting again, the chart about the different business areas in semiconductors could develop. But if I look at the market, the topic photonics is really heating up heavily. Could it be that this CPO topic could come a little bit earlier than you have on the chart? Klaus Fiedler: So of course, we are monitoring and also participating in co-packaged optics since many years. What we see at the moment is that a lot of different architectures are evaluated, shown at conferences, sometimes even shown in customer presentations. But having an architecture where we say this has a high probability of winning and making it into high volume, that we don't see yet. It's like VHS and Betamax. There's still a high risk that you bet your money on Betamax and then it's VHS and your investment doesn't pay off. So we are still in a market assessment phase. We are working with customers on a sampling basis, on a technology alignment basis. We do not see the point yet where we can with confidence say this technology will be a winner. This is where we invest in as LPKF. But we see that, that phase will be reached towards '27, and then we will definitely start the right activities to position ourselves with true volume offerings. Johannes Ries: Okay. The second thing I missed in your reporting was a statement you have made in the past that you expect the LIDE business maybe leads you to a low triple-digit sales. Is it -- you only talk about the margin. Is it still your expectation? Or is maybe the expectation come a little bit down? Klaus Fiedler: No, it's absolutely my expectation. You know we are very broadly networked in that market. First customers have now shared their volume demand profiles for the coming years. Some customers are still hashing it out. And what we see as numbers that are thrown on the table is absolutely in line with our previous market model, and that is also the number you were just mentioning. Johannes Ries: Super. On perovskites -- how's your visibility? Is there a good chance that this business really could start to fly in 2027? Or is it hard to say? Klaus Fiedler: My personal expectation is that it will not be ramped in '27, but in '28. Our clear goal is that we get high-volume orders for fitting the factories also already into our '27 revenue. We will have a slow year far below what we had in good years like '23, '24 and so on this year. And my -- I need my customers, my customers need me. And I will need to make very clear to them, look, guys, I can compensate maybe one very slow year like '26, even though it's in the big picture, of course, a big hit we take. But for '27, my clear goal is to have high-volume orders in the revenue. And that's what we are working towards. And it, of course, also depends on the progress our customers are making in the technology development. Johannes Ries: Very clear. Another area of Welding with the reorientation and rightsizing Welding, could -- is it possible with the new customer sectors like consumer, for example, that this business could return to the growth path, at least maybe slow growth in next year? Klaus Fiedler: Well, next year, we will focus -- or this year, let's say, we focus on finishing the transformation. And we do not go in with very high revenue expectations, but with realistic ones. For '27, yes, absolutely. We will operate this business on a far superior cost structure. We will use synergies in our production footprint, which also helps here. And yes, we see that in the markets we are now targeting, orders are to be gotten, and we have the new technology out with [ ATA ]. So yes, our -- otherwise, we wouldn't do it. If we don't believe that this can be a growing and profitable business, we would discontinue. But I absolutely see that perspective. And the foundation of nice large high-tech orders in sectors like we had in '25 in the consumer field like we have now in '26 in robotics tells me, yes, this is a viable plan. Johannes Ries: Very fast question, then I'll move out. On ARRALYZE, has the cost to downsize maybe to move out with your own activities or to reduce your own activities already included in the '25 figures or is more to come? And how far you already on the search for a partner? Klaus Fiedler: So the costs for ARRALYZE are out now with Q1. So we started this activity, decided in Q4 and immediately went to execution. Execution is now finished with Q1. So the dominating part of the cost is out with end of Q1. We are in talks right now with an external partner who has an awesome network in the biotech field now, on the right partnership, and we have the clear goal to finish also this in the course of '26. Operator: The next question comes from [ Tim Wunderlich ]. Unknown Analyst: Can you hear me now? Klaus Fiedler: We can hear you, hello. Unknown Analyst: Johannes already asked a lot of the questions I had on my mind as well. But I just wanted to get back to LIDE, and you made this interesting comment that you are going to -- will be able to tell us more about LIDE in Q1 and Q2 because there's some initial ramp going on. Could you just at least now today give us a quick introduction about what this is really about. Is it pilot production with some of the South Koreans. Is it -- what kind of volume could we see with these orders in Q1, Q2 when it comes to LIDE? And also for the full year, do you expect LIDE to show strong growth? And sorry, if you've spoken about this, my internet connection was down for a few minutes, so I may have missed something during your presentation. Klaus Fiedler: Any time, so I have to watch Bettina's face now closely because already this morning, she scolded me, look, you're not allowed to give too many details. So what are we seeing? Basically, '25, we were ready with end of Q1. We got confirmation from our customers, yes, your machine qualified, all great. But our customers took longer than they expected and already also planned, to really get the whole process chain qualified. So that held us down in '25. We had good orders, but still low 8-figure portfolio a machine here, a machine there, not what we really wanted to achieve. What I now see for '26, and I'll be in Korea, actually, I'll fly on Sunday to confirm all these plans that now customers are saying, okay, we finally figured it out. Let's go into first investments for true production purposes, but this will not be, hey, here's a PO for 100 machines. This will be, okay, we buy a little bit of a higher amount, but still single-digit machines per customers to go into a true production flow, try it out, get the yields to where they should be. And there, I see a handful of customers being ready for that now. And now I need to be quiet. Otherwise, Bettina will tell me not to say it. When we talk about Q1 and Q2 results, I will be able to also show you tangible numbers there. So this is what I'm seeing. How much we still get into '26 revenue or which ones will be top line '27, we are figuring that out, and we'll have a clearer picture on that by the middle of the year. But the overall picture in the market, I mean, you read what the OEMs are saying. They are all locked-in on glass now. And I see happening in '26, the first production start, but on a moderate volume, learn it and then go into the full investments in '27. I, of course, see, yes, we have a good positioning, but it's very rare that such a large market opens up in the laser field. So a lot of competitors want a piece of the pie, that's good because it cannot be a single source market if the people respect our IP and technology. A lot of our energy and also strategic thinking now goes into whoever wants a piece of the pie and tries to take a shortcut by copying us, we will definitely get very active in making sure this doesn't happen that we -- the key strategic goal is transfer this in the ramp-up deals into our target share now and not have a cheap copycat basically steal the pie. This is what we will be doing. And we definitely will be able to show what's happening in the order entry. I will make my picture by middle of the year what will still be operationally in revenue in '26 for what will be backlog for '27. I hope that answers your question, Tim. Unknown Analyst: Maybe a quick follow-up. Did I understand you correctly, you're talking about a handful of customers. So we're going to see not just one customer ordering machines in Q1, Q2, but we're going to see several customers? And regarding competition, I've also read a lot about this with Schmidt and Philoptics. And I think there's a bit of concern in the market that you are losing market share. So can you just confirm that this 80%, I think it was market share, at least when it comes to the customers in this early stage, can you confirm that you have kept this very high market share? Klaus Fiedler: So we have the fair now when people buy equipment for qualifying the process. That's what we see. We have a very good market overview. And yes, other players are going in. If they go in with their own technology they developed, fair, that's good. It cannot be a single source market. Again, if it's competitors copying us, there, we will be very active in avoiding it. How do I see it? We have a good overview also from our customers, how our machine performs, how competitive machines perform. My personal target is 70% market share. So I'm better than that in the positioning, but we need to be realistic. People want alternatives. The market is too big for single source. It will be slower if it would be single source. My goal is 70%. And I have to -- I need to be measured against, do I win that now in the ramp-up orders against what competition is offering or will be offering? From what I see right now, our machine is just superior in key KPIs that the customer wants. So I see nothing speaking against. On the other hand, again, we are a German company. All the action is in Asia or the U.S. So there, we have a disadvantage. And this, we need to balance smartly. Unknown Analyst: Okay. Sorry, did I miss the answer regarding the number of customers that are... Klaus Fiedler: Of course. So our total number of customers that bought from us is clearly two-figure. It's a lot of customers that bought individual machines. We are doing our internal assessment which customer we see as mature enough to really push the button on ordering first capacity expansions for true production. And there, I see a handful at the moment, but it will definitely not be one or two customers. It will be more. Unknown Analyst: So more than -- sorry for being -- for sticking with this point. So more than one or two customers that you're already going to see in the first half or that you expect to see in the first half of 2026? Klaus Fiedler: Bettina told me this morning, "Klaus, you cannot be that specific." I ask for your patience when I report Q1 and Q2, then it's a done fact, and then I will be able to speak more specifically. Bettina Schäfer: The next question comes from Bastian Brach. Bastian Brach: So my question is also on the LIDE and especially on the expanding offering in singulation, you talked about a lot and maybe co-packaged optics in the future. What is your first feedback from customers, especially your existing customers who also ordered LIDE products? And do you see the singulation ramp-up in parallel to the expected LIDE ramp-up? Or is it more like a little bit delayed or further in the future? Klaus Fiedler: So for the singulation, that's the ABF singulation, this was actually a customer pull. Our customers, we sometimes work with them for more than 5 years. They are very open where they stand and where their pain points are. And they specifically asked, for example, in ABF depaneling, look, we have a pain point. We need a mass production process for this. Are you able to do it? So there, of course, now with the sampling that is running, we create very high interest because the customer was asking, we need solutions for this process step, what can you do for us? For the glass bonding, that is -- so the ABF depaneling is parallel to the LIDE, maybe with a couple of quarters delay because people have figured out a workaround for this ABF singulation, which they don't want, but they don't want to wait with ramp until they have the final process for that, but it will be a slight delay. That's basically the same production chain where LIDE goes in. The glass welding also creates high interest, but that's one generation further in the architecture, that I would see with a certain delay and not fully parallel to the LIDE ramp-ups. Does that answer your question? Bettina Schäfer: The next question comes from Malte Schaumann. Malte Schaumann: First question is also on the perovskites side, but how many customers -- tangible customers are you speaking about perovskites technology? Klaus Fiedler: So I see two very large customers that really put very sizable investments into getting that technology to high-volume maturity. One customer in the U.S., one customer in China. And a lot, a handful of smaller customers that are investing in this technology, but I would expect them with a certain delay. They are more in the follower bracket and not in the "I push ahead and want to be first-to-market" bracket. Malte Schaumann: And do you see the large customers having or following kind of a similar time frame for the introduction of the technology? Klaus Fiedler: I need to be careful now because it's a key account business, and I'm bound to confidentiality. I see both customers having the same ambitions in terms of when do we want to ramp as soon as possible. I see one customer clearly ahead in technology. So my personal bet is that he will be the time-to-market winner. And please don't ask about the customer. Malte Schaumann: Maybe a comment on competition. How do you see, especially in the Asian markets, regional competition? Klaus Fiedler: So in Asia, it's brutal. There are a lot of companies who basically say, "Hey, I can do that. And of course, they want to buy getting into that market. We are long established for decades. Sometimes they put the equipment to the customer just for free, just to somehow get in. Our advantage is that none of them has a proven track record. Basically, you buy the PowerPoint. The disadvantage is they are brutally aggressive in pricing, and you know there is a political preference in local-for-local in China. And that is to be taken very serious. That's why we did the Allegro ESSENTIAL, to be price and cost competitive. And that is also why we need to very clearly market our KPIs that directly transfer into money for the customer, throughput dead zone. Otherwise, the locals will do everything to get their share. In the West, I feel very comfortable with the competitive situation. I don't see any viable competitor in the Western countries who is close to our offering. Malte Schaumann: Okay. Then on welding robotics, can you quantify what the market potential might be in 2 to 3 years? Do you have some visibility, the opportunity? Klaus Fiedler: Yes, I can, but I am skeptical about hockey sticks. You can take usual projections in growth for AI-driven robotics, the numbers are public and basically then scale our business exposure. For the moment, what we have is there's a credible frontrunner in that field, and he is now doing his ramp-up of production with our equipment. We are in the process flow. If this guy realizes his ambitions and LPKF is a chosen supplier, yes, it could reach a very attractive volume, which is definitely in the 8 figures. But at the moment, again, focus is here lean and mean cost structures for Welding, maximum synergies, set it up for smaller ambitions than in the heyday of automotive and then take it from there. Bettina Schäfer: Thank you. So I think we have time for two more questions in the chat that reached us. The first one refers to the Electronics segment. Could you say something more on expected order intake in Q1 and Q2 on Electronics? You already see an uptick in revenues in Electronics in Q4. What part of the financial guidance for '26 is driven by Electronics revenue? You might want to be careful again, Klaus, in answering this. Klaus Fiedler: Bettina, you already told me. So how do I answer? I see the fundamental growth driver in Electronics, and that is specifically our laser depaneling very intact. I see that the large-scale businesses, which we were expecting in '25 and which then got delayed due to the tariff mess that they are coming and that I see them in the order entry. I clearly expect growth out of this area relative to '25, and we will have headwinds again this time from the Iran situation, where the impact is not yet fully quantifiable at the moment. So please let me report my Q1 order entry figures for this sector when I have them, and Bettina will allow me to talk about them. But this is definitely something where I say overall setup, I'm bullish, but I need to be cautious about the headwinds we're going to have by whatever is now the fallout of this Iran situation. Bettina Schäfer: And the next question refers to the Solar segment. What is the expected path for Solar over the quarters in 2026? Revenue in Q4 was very low. Klaus Fiedler: Well, first and foremost, this is a large key account business. Revenue over quarters, you usually have 1 or 2 very strong quarters where you ship the large machines and then you can have a weak quarter. This is not a portfolio business where you can derive anything useful out of the sales for 1 quarter. We went in with a realistic and not too high revenue plan for '26 for Solar. So we are not hoping for, oh, a big order will come out of the blue. We are realistic here. And we absolutely see as of right now that they are in even slightly above plan, but we still -- we are not fully operating out of backlog yet. So a large part, we are already operating out of backlog against plan for Solar. We need still a couple of purchase orders for this year, and this is what we are strongly monitoring, but which we see progressing. The tenders have been opened. So it's on track, but not done yet. Bettina Schäfer: Okay. So we have reached the end of this call, and there are no further questions as far as I can see. So I would like to thank you all very much for joining this call and the next regular earnings call will take place in only 4 weeks on April 30 at the release of our Q1 report. Thank you very much, and goodbye. Klaus Fiedler: Thank you, everybody. Goodbye.
Rolly Bustos: Welcome, everybody, to our call today. I'm just going to give it a minute here while people start to file in, and then we'll get started. All right. Then just to make sure we keep on schedule. I think we will get started with today's call. So as always, greetings, and welcome to everybody to the shareholders and stakeholders to today's Draganfly 2025 Q4 and Full Year Earnings Call. My name is Rolly Bustos, and I am the internal Investor Relations representative here at Dragonfly. We appreciate you all joining us today. We will start, as usual, with our CEO and President, Cameron Chell, recapping the fourth quarter and full year earnings highlights. Next will be a more detailed financial review with our CFO, Paul Sun. We will then conclude by addressing the pre-submitted questions that we have received. Though I know I talked to many of you often, as always, you are welcome to reach out to me with questions directly at investor.relations@draganfly.com. I remind everyone that this presentation may include forward-looking information and statements. These statements are not guarantees of future performance or financial results and undue reliance should not be placed on them. Any future events or financial results may differ from what might be discussed here. The company's results and statements are accurate as of today, March 24, 2026. We are under no obligation to update or renew these statements outside material press release disclosure going forward. The full forward-looking disclaimer can be found on Page 2 of this presentation. So Cam, if you're ready, please go ahead. Cameron Chell: Great. Thanks, Rolly. Appreciate that. Thank you, everybody, for taking the time and your consideration to be here. We appreciate you as shareholders of the company, enthusiasts and maybe even some fans. And certainly, if there are any of our team members, employees or customers here, we deeply appreciate you. First and foremost, we want to just throw out all our blessings and prayers to all of those who are fighting for our freedom today and those who are in service and away from their families. We wish them Godspeed. So Q4 and year-end highlights for 2025. So 2025 was a really solid year for us in terms of, in particular, building on top of our infrastructure in preparation for the, I'll call it, the predetermined revenue ramp that we will be experiencing throughout this year and certainly into '26. So we did have record revenues in '25. We were up 17.8% and closed off the year with $7.7 million. We had gross profit of $1.3 million on that, which we're pretty pleased with given all the R&D and all the additional work that we've been doing into our systems and trying to do our best to overservice our customers. And we ended the year with a cash balance of about $90 million. So strong balance sheet for us to continue to build on as we move into '26 and '27. A few of the operational highlights for us this year, and there were many. But in particular, Draganfly unveiled a new product line or a new product within our product line called the Outrider. And this was particularly built for the Southern Border multi-mission agenda or concept of operations. So the Southern Border sheriffs have a very, very unique situation in terms of securing the border. Now a lot of the border flow in terms of just the mass migration coming through has been stemmed. However, the human trafficking, the firearms, the drugs has actually become more intense. And so the southern border commitment that our sheriffs have down there is actually even more imperative now than it was before. So the primary challenge, we had a -- from a special operations command, we were referred into the Southern Border sheriffs and in particular to Cochise County. Now Cochise County is renowned as a Southern Border sheriff county. They secure much of the entire Arizona border and the New Mexico border with covert cameras, an incredibly built from the ground up AI system and covert camera system that they built themselves. Now when they get hit on these cameras, the challenge is they've got up to 2 hours to get to that location. Their AI system is really effective on identifying if it's human trafficking, if it's drugs. They can even have a sense of what cartel it's coming from or even -- or if it's firearms or a combination of any of those. So then they've got to deploy resources into that area. So they've been experimenting for a couple of years with drones to be able to get to that area long before personnel can get to that area, whether that's by RZR, ATV, horse or four-wheel drive. But often, it takes up to a couple of hours to get there. By the time you get there, your situational awareness and the actual theater that you're operating in has changed dramatically. So they wanted to get drones to that location. However, the majority of drones that were available to them, especially in particular, the multi-rotor drones, really only had 30 to 40 minutes of flight time, which is enough to kind of get you there maybe, doesn't leave any dwell time and certainly doesn't give you enough time to get back. Also, the smaller drones really don't give you the ability to interdict and really only provide ISR, so intelligent surveillance and reconnaissance, which is still hugely valuable. So the concept of operations that they challenged us with was how do we have a drone system that can get as a responder there quickly? How can it stay on task for a long enough time? And how can it do multi-mission? So multi-mission might be not just doing ISR, but can it interdict, actually hold people in place? Can it act as a communication hub. That particular area is famous for very challenging communications, dead spots, wild temperature swings, very large differentials in altitude, thin air, et cetera, et cetera. You're starting at about 2,000 feet above sea level and then you're going up from there. So your performance on your motors is quite a bit different. There's a lot of variable factors in there. So we spent actually a couple of months working with them. embedding what we call our ITS team, so our Integrated Tactical Solutions team. They spent time on horseback in RZRs, understanding the use cases, the concepts of operation. And then we went to work with the sheriffs designing a drone platform that would enable them to be able to execute on all the missions, which isn't just interdiction and law enforcement, it's often search and rescue or personnel support. So what we designed for them was a drone system or with them, excuse me, was a drone system that could do everything a fixed wing drone could do, meaning it could stay up for multiple hours and it could do everything the multi-rotor could do, which means it could actually carry things into place because a fixed-wing drone doesn't really have a lot of payload capacity. It also takes up a lot more room to operate and generally can't work in as adverse weather conditions, which are quite variant in that particular area. So what we designed for them was the Outrider drone. Now this is a drone that can stay aloft for 7 hours, and it can carry up to 100 pounds. It can be a communication hub, can be an introduction device, it can be a search and rescue device. It can be a resupply device and certainly can act as a very sophisticated ISR device. So they've got the best of all worlds when they did this. Now the reason that we were able to deploy this very quickly is because Draganfly is one of only a very few companies, maybe arguably 2 that have an entire product lineup. So everything from small FPV attritable one-way drones, suicide drones or sometimes called that can be as small as 5 inches, right up to something as big as the Outrider, which is 9 feet across. And so we took our heavy lift drone, which was an all-electric drone, and we actually built on top of that platform 2 diesel engine,s, a number of other modifications that gave it the capability to stay up for that amount of time and have that payload capacity. It also is interoperable with all the rest of our drone platforms. So when the sheriffs are training on one platform, they have the capability to actually fly the other platforms as well. Often, you don't need a 9-foot drone that can carry 100 pounds if you've got an AI camera hit something that's closer or if you've got a unit that just happens to be on the seat beside you in the truck, you just want to grab it, throw it and get eyes on the situation. You might only need 40 minutes of flight time in that case. But all of these things are connected. They all provide multiple views to multiple different command centers. It might be search and rescue. It might be the sheriffs, it might be the local PD, whoever the case may be. It might be border management or border control. They've all got eyes on this as well. So this particular project has been extremely successful for us. We're really, really proud of the work that we did there, and we're very, very grateful to the sheriffs for trusting us in doing this work with us. Now the nice thing that's come out of this is we now have a border solution. We have a very unique solution that's just not an eloquent excuse me, piece of equipment that's integrated into law enforcement, but it's also a piece of equipment that was designed with the concept of operations in mind. So we've got the experience working with the sheriffs in order to understand what are those operational requirements. That is expertise that we're now able to take into several border opportunities in multiple countries, multiple jurisdictions around the world. And it's really become an area of expertise for us. The next thing that I wanted to mention is that we continue to resource up the company. So we're very, very fortunate to bring on Victor Meyers and Keith Kimmel. Victor is a former Navy SEAL, Keith is a former TOPGUN, both with incredible careers, highly educated, also very strong capital markets and sales backgrounds. And they are leading our military Board of Advisers, which effectively is they're leading our sales efforts within the military right now. And what we have seen is them bringing an incredible amount of expertise. Again, not that they didn't have great drone expertise, but what they really had was operational expertise and contacts that trusted them, and we are learning so much from them and the organization that they're building within Dragonfly that allows us to deliver solutions as opposed to just hardware or software. A really hot topic, as many of you know, over the last maybe a week or 2 has been swarming. Now swarming is a really important part of the drone ecosystem. In particular, it's had some attention over the last couple of weeks. we've been doing swarming work. In fact, we've been building FPVs within our company for over 15 years. An important story that a lot of people don't really know is that it was the U.S. Marines that developed FPVs. And they introduced them into Ukraine in 2022. Of course, the Ukrainian has taken it to an entire new level. But it was the U.S. Marines that designed FPVs into battle plans. And in fact, two of the folks that did all that original training work and much of the initial design work are now part of Draganfly. And so this swarming has always been an important component of what's going on. We're very fortunate to partner with multiple different swarming technologies. But in particular, we're really excited about what Palladyne is doing. They've got a very sophisticated swarming system. They've won some recent contracts, which we also made some more recent announcements with just in the last week, talking about who we're servicing with those contracts, their military contracts and how those are being integrated into the Draganfly line. Now our view of swarming in some AI software is we view it very much like a payload. So one of the things about the Draganfly line is it has dozens and dozens of integrations. So often, what happens is a customer shows up and they're like, "Hey, we need this particular surveillance camera or we need this particular AI system for whatever concept of operations that they're working on. And what works really well with the Draganfly system is that as we have all these different integrations, we have a platform that's multi-mission that can service that particular customer with the exact requirement. And so Palladyne is a very important part of that, and we're really enthusiastic about the software and the work that they do and the contracts that they're winning and that we are all -- that we are winning together. We did advance -- we did showcase at the Advanced Drone System at AUSA. That was a really big show for us. We did have a large Ukrainian contingent of military folks come over, participate, speak, workshop, and we had a number of dignitaries from the DOW there as well. We performed a meaningful strategic planning session there, and we've seen a tremendous amount of things unfold since that show. The Draganfly announced a strategic partnership with Defense Prime Global Ordnance. Now Global Ordnance is one of the largest DLA defense primes out there. Now they're really well known for their ordnance work. They provide about 80% plus of the ordnance into Ukraine. They have an incredibly strong push into drones. They understand that in many, many cases, the drone is the ordnance, not just in small FPV, but in larger formats, in swarming formats, in fixed wing formats. And I believe that they are going to be one of the dominant DLAs in the drone space. We have a very strong partnership with them. We're integrating deeply with them and are working hard to ensure that collectively that they are a DLA featuring Draganfly product capabilities, Draganfly's technology into their ecosystem as one of, if not the largest ordnance provider in the market today. Draganfly, we also deployed with Autonome a landline clearing mechanism. So they have a carpet that lays out and then has a number of explosives on it and very, very quickly clears the land mine -- clears land mines and creates a path or a road. So we integrated with them on our heavy lift drone where the heavy lift drone actually takes the carpet, lays it down, rolls it out, right, backs off, carpet explodes, takes out all the land mines and then we lay the next one on top of it and so on and so forth, and then it collects all the actual Autonome landmine carpets. We've had some great, great success with it. They're getting some significant traction in many areas of the world, and that's an exclusive integration that they did with the heavy lift. Look, one of the advantages that Draganfly or one of the differentiators, excuse me, that Draganfly has because of our 27 years of experience, we really focus on those integrations. So again, whether it's camera systems, whether it's radio systems, whether it's having partners like Autonome Labs or Palladyne work with them, they're all looking for ways to deploy their technology. I would say that we are certainly really strong in our ability to integrate those technologies so that the Draganfly product line has as many options as possible. In addition, those partners of ours become a channel reseller for the Draganfly line. So we're going to continue to -- you'll continue to see from us lots of integrations, primarily in the public safety and in the military space. But also in the commercial space, we have multiple energy projects on the go right now where we're integrating very, very specialized either sensors or tools in the energy space on that Draganfly line. And again, the reason that we typically are winning those types of integrations is because we've got a product lineup that one can carry those types of tools. It's big enough drones. It's not all just these small ISR drones, but there's also multiple sizes of them. So sometimes you need 2 types of tools, but you don't need a 9-foot drone carrying a smaller tool. You might need our Commander 3XL, which can carry 22 pounds to go up and do some of the tooling for the equipment that's on a power line or a windmill or on a pipeline. So to that measure, we had a Fortune 50 company, which happened to be a telecom company, purchased our heavy lift drones, in fact, standardize on our heavy lift drones, in particular, for standing up cell towers post disaster. So this particular company, which is a household name, is now standardized on Draganfly. We're deploying drones with them on our heavy lift and on our Outrider, both tethered and untethered in order to stand up cell phone towers, and now there's multiple other applications that they're looking at doing as well. Once we got the initial orders from the Southern Border sheriffs, we actually launched a significant demonstration for multiple agencies down on the Cochise border. We showed, demonstrated the concept of operations. We actually demonstrated 3 or 4 different concepts of operations. And it was that particular event that's now led to multiple jurisdictions, both national and international that are looking at and/or engaging with the Outrider drone as their border protection standard. So again, it's a brand-new greenfield opportunity that we created with our partners because we're willing to take the time and we're really strong at being able to go out and do that integration type work. But first of all, understanding what the customer is looking for. We have secured a number of military orders as well from the Department of War. And so this strategic international military order for Commander 3XL would commensurate with that as well. So we're seeing uptake not just from the DOW and also from the DND or the Canadian Armed Forces, CAF, but multiple military forces around the world. But they look to, in particular, as you would expect, what is the U.S. doing? What is the U.S. adopting? And so the credibility that we've been very fortunate enough to build within highly specialized special operations units, which you've seen by some of our press releases in this last quarter are really lending to our credibility to be able to sell internationally as well, which has actually been a really pleasant surprise for us. We are -- to that note, we do have some significant partnerships in the Asia Pacific region. So as we look at the different areas in the world where drone adoption is either in place or where the next place is that they are really going to be adopted quickly, we have been pulled into many opportunities in Asia and Southeast Asia, probably with countries that you would expect, but also many other adjacent countries who are looking at the asymmetric situation in terms of combat theater of warfare and understanding quickly that they've got to try to catch up with this curve that's happening of every military in the world right now is rearming and they're rearming with asymmetric capabilities in mind. Asymmetric in terms of cost to build, cost to deploy and maximum effect for dollars spent. Not only that, but the actual strategy and tactics that these new asymmetric tools on [ en masse ] are bringing to the table are actually providing them with an advantage. Now just because everybody else is doing it, it's kind of like everybody else has to be doing it as well. And so -- which I'll talk a little bit about in a minute as we talk about the Middle East. We also did receive another meaningful, very significant order win for us of FPV drones from the U.S. Army. We'll continue to see many of these from individual units and brigades and special operations commands as they get more and more exposure to the Draganfly product, the Draganfly team and the work that we get to do with them in order to purpose-build on en masse equipment that is very specific for their needs. And then, of course, a subsequent event that happened, which we're very grateful for, is we closed a $50 million registered direct offering, which was a no-warrant straight common deal. Just for a super quick review. Our product lineup does not have the Outrider on here. Just haven't updated the deck, my apologies. But it goes everything from the Flex FPV, which is a very, very unique FPV that was designed in Ukraine from our experience over there. We've been boots on the ground since 2022 in Ukraine. And this particular drone is winning a ton of business with folks that get time on the stick because they understand the different capabilities that it has as opposed to just a typical drone. It does work extremely well as an ISR drone as well. It's got multiple capabilities in terms of if you can change the blade and arm sizes on it. So this particular drone can carry anything from 1 pound up to 6 kilograms, anywhere from 1 kilometer up to 10 kilometers. And of course, if you put fiber on it, we could go further. The Apex drone is a drone that would be a replacement for any of you the drone nerds out there for the M30 drone. And the M30 is the DJI drone that's the second best seller that they've got or the M30 or the M350 series. The Mavic, the small ISR, is their best one. And you will see an announcement from us on that very shortly. That's relatively -- that is public news. I'm not telling anybody that isn't out there already. We're not displaying it here yet. There will be a product announcement on that coming, which we're really excited about. But this particular drone here can carry 6 kilograms, can fly for about 40 minutes, can carry multiple payloads and again, fits into that multi-mission mode. What we've learned from 27 years of experience is it's great to have a single-purpose drone, which could potentially be something like the Flex, but even that does ISR or something like a DJI Mavic or some of the other great ones out there like the Teal or the X10. But again, even with the one that we have coming out, it does multi-mission. The more experience that drone teams get with these, the more that they want to have them be able to do more than just one thing. It's extra weight they're carrying. It's extra things they have to worry about. It's cognitive load. And so they want to have one platform. Typically, the more experience they get, they can do more than one thing. The Commander 3XL is a 22-pound drone. It can carry about 22 pounds. Actually, it can do a much more than that, but we keep it under the 55-pound weight limit so that it's easy to qualify on a 107 license. But this is a drone that's the workhorse of the unit. This thing can -- there's really not much it can't do in terms of missions. It's great for dropping FPVs from it. It's great from dropping ordnance. It's fantastic for doing logistics. It's got -- it's just a big flying battery. So it's got terrific sensor capability, unbelievable ISR capabilities. And we're just seeing a ton of success with it. The heavy lift drone, this is a 9-foot drone flies for about 40 minutes, can carry 67 pounds. It's variant with 2 diesel engines on it. Actually, the Commander 3XL can come with the diesel engine variant as well. So it can stay aloft for up to 3 hours. But the heavy lift drone with a diesel engine variant on it can stay up for 7 hours and carry up to 100 pounds. So some really great capabilities. So when a particular unit, whether it's public safety or whether it's military, looks at the drone lineup, they come to realize, hey, wait a minute, we can solve all of our concepts of operations that we need, and we can come up with other ones as well because we've got variability in what we do. Now why this is really unique is that it takes a couple of years at least to actually field a new drone system. So while some other fantastic companies out there have been able to field a great small ISR drone and they stayed focused in that area for the most part, for them to build an entire lineup of drones regardless of the amount of money that you've got, it just takes time. And because we've been around for 27 years, that's why we've got the full lineup. So this is nothing new that anybody hasn't heard before, but certainly, there's been some events recently that have probably significantly grown the global market. So the amount of inbounds, and I'm sure you've heard this from other drone companies as well, the amount of inbounds that are now coming in from the Middle Eastern area because of, obviously, the unfortunate war in the region is enormous. And what's really unique about this is that each of these jurisdictions over there, they want their own capabilities. So much like the allied forces, the U.S. in particular, has taken a posture of we need to manage our own supply chain. We can't be at risk from global supply chains. We have to have our own technology. All these other jurisdictions are adopting that same posture. Now previously, for most defensive type of equipment, most jurisdictions cannot adopt that posture because they can't afford to build it themselves. They can't afford to research it. They can't afford to test it. They can't afford to build the expensive facilities required for these very elegant precision weapons or equipment out there. But what we've done now is we've entered into a realm of mass precision and that mass can be built very inexpensively. And so you've got all of these jurisdictions out there now saying, well, we want to build them ourselves so that we can afford ourselves that same protection through the supply chain, but also maybe have our own unique capabilities as well, which might be regionalized or might be nationalized for their own particular reasons. And so for that, I think what you've seen is, in particular, the North American drone companies have seen a swell of demand from that region over there in terms of, "Hey, how can you bring not just your device technology to the table, but your manufacturing technology, your experience in the field, et cetera, et cetera?". So again, this drone market continues to shock me in terms of how big it is. And every time it gets a little bit bigger, I kind of -- it's like the Internet. Once you've got one use for it, then you realize there's 2 or 3 other uses or other people can. And the more it propagates, the less expensive it gets for other people to propagate. So we're in a 10-year super cycle around drones, which is, in my opinion, a subset of autonomy and it's really being driven by policy by every national government and every military in the world right now, unprecedented. At this point, what I'd like to do is I'd like to turn it over to our CFO, Paul Sun, to run through our financial highlights. Paul? Paul Sun: Yes. Sounds good. Thanks, Cam, and thanks, everyone, for joining the call. Appreciate it. Yes. So just looking at this brief income statement here, I'll take you through year-over-year changes. So as Cam mentioned at the outset, revenue for the year was up 17.8% from 2024. Full year revenue comprised of the $6.86 million from product sales was $861,000 coming from drone services. Gross profit was $1.32 million for the year compared to $1.39 million from last year. This year's gross profit included a onetime noncash write-down of inventory of $259,000, while last year's gross profit included a noncash adjustment of $627,000 related to inventory. Exing out these adjustments, gross profit decreased by $444,000 year-over-year. As a percentage of sales, adjusted gross margin decreased from the 30.9% in 2024 to 20.4% this year, and sales mix was the main driver here. Total comprehensive loss for the year, including all noncash items, was $22.9 million compared to a loss of $14.06 million last year. The comprehensive loss for the year ended December 31, '25 included noncash changes comprised of a loss in fair value of derivative liability of $2.64 million. As a quick reminder, that's legacy back to a financing we did that is in a different currency than our reporting currency. So we have to report it as a liability. And we had a recovery of an impairment of notes receivable of $69,000 and that write-down of inventory of $259,000. So otherwise, would have had a comprehensive loss of $20.1 million versus last year's $15.3 million, excluding that year's noncash items. The largest contributor to the year-over-year change was an increase in office and miscellaneous wages and travel as we scale up the business. Following that, adjusted comprehensive loss per share this year would be $1.28 versus $1.46 that you see here compared to the adjusted loss per share of $4.85 versus $4.45 last year, respectively, again, as shown here. And Cam, if we could just move to the next slide, please. I'll do a quick snapshot of Q4 '25 doing a year-over-year comparison to Q4 of last year. So here, revenue for the fourth quarter was up 18.5% to $1.91 million, up from the $1.61 million in the fourth quarter of '24. Fourth quarter revenue comprised of $1.8 million from product sales with $108,000 coming from drone services. Gross profit was $85,700 compared to $215,700 in Q4 of last year. And Q4 this year had a onetime noncash write-down of inventory of $244,000 and otherwise would have been a gross profit of $329,700 compared to the same period last year where there was a onetime inventory write-down of $167,000, making the adjusted gross profit there $383,200. Adjusted gross margin for Q4 was 17.2% compared to last year's 23.7%. And this was a result of products and services mix comparing the 2 quarters. Total comprehensive loss for the quarter, $9.3 million compared to a loss of $4.7 million in the same period last year. This quarter includes noncash changes comprised of a fair value of derivative liability for the quarter of $788,000 and a onetime inventory write-down of $244,000 and would otherwise be a comprehensive loss for the quarter of $8.3 million versus an adjusted loss of $3.6 million in the same quarter for last year. The increase in loss primarily due to the higher office and miscellaneous costs and wages. And we'll stay on this page, and we'll this time do -- since we just did a year-over-year comparison for Q4, we'll now do a quarter-over-quarter look at Q4 this year versus Q3 of this year. So revenue for Q4 decreased 11.3% to $1.9 million compared to $2.15 million for Q3 of this year, mainly due to lower product sales. Gross margin for Q4 was 4.5% compared to 19.5% in Q3. However, if we back out that onetime inventory write-down that we mentioned earlier, gross margin again for Q4 this year, 17.2% compared to 21.5% adjusting for noncash items in the previous quarter. Total comprehensive loss Q4, again, $9.3 million compared to a comprehensive loss of $5.43 million in Q3 of '25. And again, please recall, we had that fair value of derivative of $788 million, the write-down of inventory. So Q4 '25 comprehensive loss would have been $8.3 million versus a loss of $3.54 million, excluding noncash adjustments in Q3 of '25. Again, increase in loss and primarily due to higher office miscellaneous costs and wage costs as we continue to scale the business. I think the last slide here, Cam, is going to be a quick shot of the -- some items on the balance sheet. Yes, great. So you can see total assets here increased from $10.2 million to $101.3 million year-over-year, which is largely due to the increase in cash. The working capital surplus at December 31, '25, is $95.2 million versus $3.8 million from 2024. So quite strong. However, working capital would have been a surplus of $95.7 million and shareholders' equity would have been $97.18 million if we -- versus that $96.5 million shown here if we ex out the noncash fair value of derivative liability of $492,000. Last year's adjusted working capital would have been $6.04 million and shareholders' equity would have been $6.81 million. So again, up strong year-over-year. And you can see we continue to have minimal debt. As Cam mentioned at the outset, cash at the end of the year was $90.1 million compared to $6.2 million at the end of last year, '24. And of course, our current cash balance is higher even still following the USD 50 million raise that Cam spoke about earlier. And with that, Cam, I'll pass it back to you. Cameron Chell: Great. Thanks, Paul. Great job, as always. So what I'm going to do is I'm going to turn it over to -- or I'm going to go next into a bunch of questions that just I'll stop sharing there, if that's okay with you guys. Cameron Chell: So let me jump into a bunch of questions that have come in. So the first question that came in is you've had a lot of meetings with the government and military of Canada. Do you see meaningful contracts coming from that? Well, we're sure hopeful. The Canadian Defense Industrial Strategy is a paramount and monumental document put out by the Canadian government that outlines the Defense Industrial Strategy and the $78 billion, I believe, maybe it's even higher than that $1 billion spend over the next 5 years that the Canadian government is doing as it relates to defense. A very large portion of that is scheduled to go into drones, in particular, into Class I and Class II drones. There's 2 manufacturers of drones in Canada in that category. Neither of our product lines cross over with each other. We have been very, very active with the Canadian government over the last year. And in fact, 2 weeks ago, we completed an exclusive Draganfly only Capabilities Day organized by the Canadian or helped to be organized by the Canadian Armed Forces, which demonstrated the 5 vignettes or concepts of operation that they plan to put into immediate use, immediate being over the course of the next 18 months using Category 1 and Category 2 drones. Within 2 weeks of that announcement, we were able to display successfully all 5 of those vignettes or concepts of operation, I would say, flawlessly and in a ice storm. So that -- so there was 4 concepts of operation that we planned on displaying. The fifth was an Arctic one, which we did not plan on displaying, but weather wasn't our friend that day or maybe actually it was our friend because we did move ahead with the Capabilities Day regardless of the ice storm and it went off very well. So there's a lot of activity happening there. I'm meeting with government at all levels, including Senate hearings. And I think we're well positioned up there. We'll continue to pragmatically move forward with the Canadian government. We are going to have to earn the business just because we're Canadian, doesn't mean anybody gets it automatically, but it sure is a big advantage. And certainly, I think we have the capabilities, and we're building that trust. The other question is, why do we think we didn't make it past Gauntlet I in Drone Dominance? And do you think we'll reapply for Gauntlet II? Gauntlet I was an incredible experience for us. We actually didn't get notice that we were in Gauntlet I until 36 hours before, where most other companies had a couple of weeks to prepare for it. We did show up. We did perform quite well. There was one mission set that did involve live ordnance that because of the time frame, we couldn't perform. And we think that's primarily the reason why we just didn't score on those particular points. We did score well on the other 2 categories. And we think primarily, that's why we didn't. We did learn a lot. There's some definitely some things we could have done better. We are very aggressive about Gauntlet II. We've seen the capabilities out there. They're great companies. There's fantastic industrial capacity that's being built in the United States because of this incredible unique and brilliant format that they put together, but we can more than compete with anybody there. And you'll see us in Gauntlet II, and we expect to be doing very, very well in it. So the -- Canada says there's really -- they're really focusing on drones. Do you think that Draganfly is in a good position there? Well, I think I addressed that already, so I'll just move on. But the answer is yes, I think we're in a really good position there, but we're not taking anything for granted. And we'll continue to understand that we've got to earn that business, and it's a very discerning customer. So there seems to be a lot more drone companies now than before. What are our competitive advantages to them? So for sure, there's a lot more drone companies and a lot more drone companies are going to figure out that it takes a lot more than ordering parts off Amazon and putting a toy up in the air to actually be able to service a public safety, commercial or military client. You're fielding -- we're fielding aircraft here, highly regulated, incredible demands in terms of the expectation and the performance requirements to actually be a commercial public safety or military unit or a military device. As mentioned earlier in the presentation, it takes up to 2 years to actually put a real commercial military or public safety unit up in the air. And so while you can kind of -- I kind of feel as like snowboarding. You can get really good the first day, but then you're going to spend 2 years being able to actually become a decent snowboarder, if you will. So I think -- and there's lots of great innovation out there. I do think that the more successful start-ups are probably likely acquisition targets for some of the more established public players out there. Our primary competitive advantage is the amount of time that we've been doing this and that we have a full product lineup that is completely integrated. I would hazard to say that there's really only 2 companies in the world that have that, and that would be DJI and the other would be Draganfly. And we've been working on other product variants or not product variants, product lines that come in and fill out that product line even more that you'll see come out this year. And when we come out with a product line, it's gone through the testing. It's been in customers' hands, and it's designed specifically for concepts of operations and missions that we were asked to build for. So because of that long-standing reputation, capability, our infrastructure is built out. The other thing a lot of these newer start-ups you're going to find out that it doesn't matter if you have the greatest whizbang. If you can't build 10,000 of them in a month or 100,000 of them or have like some ridiculous demands that you can scale on, which -- and scaling a drone is a whole bunch different than building 10 that work really well. You build 10,000 that work really well and have to have all the variants for the changes in potential operations. That in itself is an entire manufacturing process, an entire workflow that goes so far beyond the understanding of how to put 1 or 2 or 10 elegant machines together at a low cost. I think access to capital right now seems quite liberal. However, that is not going to be the case necessarily going forward as more and more winners are picked and customers become more and more discerning around knowing that they need to get a device and a company that they can rely on. So I think we have a lot of competitive advantages. It doesn't mean that there's not going to be great competitors out there. I've been watching these cycles for 25 years. Up until 7 years ago, every North American drone company has gone out of business except for Draganfly. So more competition doesn't scare us. I think it's all floats all boats rise right now. And the more innovation, the better. And the fact of the matter is that there could be 10 Draganfly or Red Cats or Audaces or whoever out there, it still isn't going to meet the demand that's coming down the pipe. So kind of the last thing we're worried about right now is competition. We kind of revel in it because we like to see the innovation, and it gives us a great insight into what might be coming as we're focused on other parts of scaling. So fifth question is, do you see yourself doing any acquisitions? It seems like lots of the other drone companies are. Yes, for sure, we do. I think we are somewhat fundamentally different, though. We are pretty organically focused. We have great capability internally. I think that we spend a lot of time refining our product with our customers, not that others don't, but I do think the operational history pushes us that way a bit more. That's -- so we're very focused in our acquisition strategy. We do have a number of acquisitions that are in the pipeline. However, they're not necessarily that they're not -- not that they don't come with significant revenue. That's not the driving force for us. Fitting particular technologies that actually have a maturity of manufacturing in them or the design theory that's on them has a particular amount of experience that's been put into it that can allow it to be mass produced and fit within all of our partners, multi-mission focused, et cetera, those are things that are really important to us. So yes, you'll see us do some acquisitions. They will not come across, in my opinion, as haphazard at all. They will be very, very strategic. And again, we're playing for the next 25 years. We believe that Draganfly in 10 years from now, for sure, will be a drone company. But really drone companies will be super intelligence companies. Nothing collects data better than a drone, nothing delivers anything better than a drone. And when you combine those 2 things in an autonomous world, the possibilities of drones are far beyond what the device is. And so we keep that end in mind when we're thinking about what Draganfly will become and where our real leverage is. We tend to announce many partnerships and pilot projects. Are they translating into meaningful orders as your competitors? The answer is, yes, they are. But again, I believe that our approach is somewhat much more organic and blue ocean. So if we think about the example I gave earlier around Cochise County, that's been now a year-long project that's turning into revenue and has created a blue ocean opportunity for us around border management. We don't see anybody approaching drones as border management. Now do we see people putting drones on borders? Yes. But do people have border management experience in terms of running, managing operations, designing, building, integrating information, super intelligence, autonomy, AI around a total solution that we can work with on our partners. That's really the difference. And that's why I think maybe our partnerships are perceived to take a little bit longer. We can go by revenue, but then we got to integrate revenue. And you got to write down all the costs around it. And it's just -- I believe, anyway, at least where our skill set lies is our customer deserves better than us just jamming a bunch of stuff on the top line. We are very capital markets focused. Please don't misunderstand me. But we are an employee first, customer second, shareholder third organization. And if our employees are really satisfied about what they're doing, they'll win customers. If we're winning customers, we'll win shareholders. And that's a philosophy that has allowed us to survive. Yes, we've stayed small but we survived for 27 years. Now we're really moving into a thrive mode, but I don't think we'll be anytime soon be moving away from the core principles that have established us with some great product line and some fantastic people in the organization. Can you expand on your integration with Palladyne AI software stack and how it expands your total addressable market and potential new revenue? So I think I addressed this a bit earlier, but the reality is Palladyne has got a fantastic system, and their swarming technology is very advanced compared to many others that are new and coming out and et cetera, out there. We ourselves do have our own -- some of our own proprietary swarming capabilities. However, we do not want to compete with what the customer wants. We don't want to tell the customer or have to convince the customer what they're looking for. Palladyne has got an incredible capability and a customer set that is really looking for their very specific capability. What we provide is a unique and really professional integration onto not just a drone, but a platform of drones that can now be utilized for all of that swarming technology. So imagine, if you will, you build a swarming technology for an FPV drone. That's a pretty cool capability. But now imagine if you can build a swarming technology for a set of fixed wings, a heavy lift, a Commander 3XL that can drop FPVs, you can have an Apex drone coming in and doing targeting acquisition. Your capabilities now are much more different than somebody who has a cool swarming technology on FPVs. Not that that's not important, but impressive in all the rest of it. But again, it's really trying to hone in on what is it that the customer is -- needs now and is going to need and what are they learning that they actually need out there. And I think that's what we're trying to address. So while Palladyne is a really important customer and an exquisite builder of swarming technology, there are other swarming and AI-type technologies that will be incorporated into the platform. We want to be known as that platform that can do multi-mission, right, and address as many concepts of operation with as little cognitive load as possible. You don't want to have to relearn a drone system, have different parts, have different supply chain, all the rest of it. So if we can incorporate all that complexity of logistics to the battlefield, right? So people don't have to buy different drones to get different swarming capabilities as an example, or buy different drones to get different ISR capabilities, they can buy one system that can provide them likely the most fundamentally important thing, which is capacity, logistics and supply where it's needed, when it's needed, then that's what we believe. And that's what our customers have told us that they believe is going to be a winning combination. So that was the end of the questions that Rolly forwarded off to me. So in closing, first and foremost, again, just blessings out to all the folks and the men and women who are fighting for our freedom today. Second of all, thank you very much to our shareholders. We absolutely wouldn't be here without you. Our customers, we appreciate the opportunity to be of service and in particular, our employees, thanks for your belief in what we're all doing together. On that note, I hope you all have a blessed day.
Michael Roney: Good morning to everybody. Before I hand it over to Simon, just a few comments. Two long-serving Board members, Jane Shields and Jonathan Bewes will be stepping down from our Board of Directors in May. Jane has worked for NEXT more than 40 years. You don't see that much anymore, do you? More than 40 years and been on the Board of Directors since 2013. Jane's contribution to the success of the company has been substantial, both at the operational level and certainly at the Board level. And I would just say, I think Jane represents the best qualities of what we have at NEXT plc. Jonathan Bewes has been a Board member for 9.5 years, and he has been Senior Independent Director and Chairman of the Audit Committee, and he's made significant contribution. So I'd say, Jonathan, many thanks for your work and your service on the Board. I would like to welcome two new Board members, Annette Court and Jeni Mundy, who will be joining the Board. Annette started on March 1, and Jeni will be starting on April 1, and both will stand for election at the May AGM. As you've seen, the results for the year ended 2026 are very good, and it certainly reflects the broad strength of the group as we outperform in all areas, be it retail or online U.K. and certainly in the international markets. Before I turn over to Simon, I would like to recognize and thank our more than 40,000 employees globally for their daily decision-making and basically making things happen for NEXT throughout the world. Simon? Simon Wolfson: Thank you very much, Chairman. All right. Good morning, everybody. Slight change of order to things today because I know some people like to slip away early, so I'm going to give you the punchline at the beginning. Punchline is about next year rather than all the stuff that last year. And in terms of next year, the big news today was that there was no news. We've held our targets. And you could look at that 4.5%. In fact, I think most people did look at it in January and think that it was pessimistic. And if you had only looked at our U.K. sales in the 8 weeks in the run-up to our announcement, then you would definitely agree that, that was a pessimistic assessment. However, if you were to look at what's going on in the Middle East and the potential knock-on effects in the U.K., you could argue that it was optimistic. And just in terms of the Middle East, I suppose first thing to say in terms of the U.K., the numbers, we had -- those first 8 weeks did not include the really big numbers we hit as the weather improved this time last year. We got some significant benefit from an early summer, and we're just about to hit those numbers now. In terms of the Middle East, it represents 6% of our total sales. We lost -- for the first week of the conflict, we lost virtually all the sales because it was our operations stopped working. We are now serving all of the territories in the Middle East. A few of them are on slightly longer lead times. But because we've got a hub in the Middle East, we are able to service them directly from stock based in the Middle East, which means we're not dependent on airfreight for anything other than replenishment. And we are shipping stock to the Middle East and replenishment runs at the moment, but that comes at a cost. And in terms of the cost of the conflict, we have quantified that at GBP 15 million, and that's GBP 15 million for 3 months, assuming the current levels of surcharges, disruption oil prices last for 3 months. That could be wildly optimistic or it could be pessimistic. We don't know. In terms of the breakdown of that cost, GBP 8 million of it comes from the outbound stock from the U.K. to our customers overseas. Of the GBP 8 million, GBP 5 million of it is Middle East costs. The rest of air freight surcharges to the rest of the world. We then got inbound costs. This is mainly the surcharge on container rates as a result of fuel price increases. That's around GBP 4 million. And then U.K. energy costs we anticipate incurring additional costs of around GBP 3 million. And what I should stress is that those numbers are very volatile, first of all. They're just throwing forward the costs we have today. And the second thing I should say is that we've offset all of them by cost savings or margin gains that we've identified since January, around GBP 8 million to GBP 9 million from margin gains and the balance from lower revenue expenditure, mainly systems. The biggest difference between now and January is that we brought our systems budget down by around GBP 6 million. In terms of -- don't take that number and multiply it by 3 to get to the cost for the rest of the year because if it looks like this is going to persist, we will begin to pass through those costs to consumers, specifically in the affected regions, but also in the U.K. In terms of U.K. prices, that would mean prices going up between 1% and 2% from where they are today in probably June, July if things persist. The much bigger worry, if you want things to worry about, which obviously you do, is the cost of goods because things like polyester and energy costs are a huge percentage. Energy costs are a big percentage of fabric as is obviously polyester. So I think you could see significantly larger increases in cost of goods coming through probably October, November is when those will begin to hit down again if the conflict persists. So that's sort of business affected costs and the potential impact on selling prices covered. The one thing I should say about that 4.5% is just a reminder that at this time last year, we were -- our guidance was at 5%. So the 4.5% guidance does not limit our ability to outperform that number. Now I think with things in the world as they are, I think that's unlikely. But what I want to stress is a cautious approach to a sales budget because we always buy markdown stock and we can eat into it. A cautious approach to sales budget always leaves us with the potential to beat budget if the demand is there. Moving on to last year and starting with the P&L. And just to remind you, this is all on a 52-week basis and not consolidated. Total group sales up 10.8%. Total full price net sales up 10.9%. In terms of the breakdown, retail stores up 3.5%. In many ways, that's the most remarkable number here. And we think that number is the one that is most flattered by the good weather in summer and the disruption to a major competitor. And we'll talk about each one of those as we go through. In terms of profit, profit up 13.9%. And the vast majority of the difference between the growth in sales and the growth in profit is about leverage over fixed overheads and some margin gains as a result of improved clearance of upstock through directory online. Profit before tax, up 14.5%. The drop in interest charge here is all about the fact that we didn't buy back shares during the year. So the cash that we accumulated during the year had interest on it that came to around GBP 8 million. So that reverses out in the year ahead. And obviously, you get back in earnings enhancement what you lose by way of P&L more than what you lose from the P&L cost. In terms of the quality of earnings, good quality of earnings. There was a very big noncash gain from GBP 20 million release of bad debt provision. That meant that our finance department worked even harder than usual to find looking every little nook and cranny of the business to check that all of our provisions were where they should be and that we had enough impairments for our small businesses. And we've -- so we've taken another GBP 14 million of impairment costs there to offset that GBP 20 million has offset it, not to offset it, obviously. And then some foreign exchange gains just on the instruments that carry over from one side of the year to the other. Earnings per share up 17%. The main difference between last year's profit before tax and EPS is the boost from the previous year's share buybacks. We didn't buy many shares back last year. Ordinary dividend up by 15%. That gets us back to cover of around 2.8x, which is where we want to be and GBP 3.60 return to shareholders by way of capital by B share scheme, and that is in place of the buyback because we were out of the market. We're now back in the market. Thank you very much for your help with that. And all of the numbers that we'll tell you today will be on the basis that we can continue to buy shares throughout the year. In terms of the cash flow on a consolidated basis, and this is looking at a 53-week year, GBP 147 million from profits, another GBP 24 million from the 53rd week of cash. In terms -- not much change in depreciation, that's gone up much less than sales. CapEx up by GBP 17 million, slightly less than the forecast in the half year, and that's all about the timing of store CapEx. So GBP 168 million last year. The really interesting number is the number this year because we've gone back and we've significantly increased our estimate of what we'll spend this year. And all of the increase is in warehousing. So I think we'll spend GBP 237 million this year. It's all about our Elmsall 3 warehouse. I'm going to go into a lot of detail later on, which is something to look forward to. But just to say this is a good thing. This is because we're growing our sales faster than we expected. In terms of throwing that forward because this is a sort of 3-year investment program in warehousing, we're looking at CapEx at around the GBP 250 million level for the next 3 years, we think. You might look at that and worry that NEXT has become fundamentally more capital consumptive. The business is entering a phase of strong capital consumption. Actually, this is our history of CapEx over the last 20 years. If you look at CapEx as a percentage of profit, which is the right measure, what you can see is that the 19.6% we're at this year is just below the last 20-year average. So fundamentally, the business is not more capital consumptive. It's just that in periods of strong growth, you have to invest more. In the periods fellow years, you invest less. And I think the other really important thing that this graph demonstrates is that if you look at the data for long enough and hard enough, you can always find the number you want. Working capital up GBP 46 million. The real difference here is the GBP 19 million increase that our aggregator partners owe us. That is all as a result of our sales increasing on their website. They keep -- they take the sales, take their commission hand on a month later the sales. So there is a debt there. The faster that grows, the bigger that debt grows. All the other movements in working capital were one-off. There was a one-off movement in the timing of aggregator payments. We got a benefit last year from that. We get this benefit this year. Cash in transit, this is a new accounting standard that we have rushed to embrace, and it's actually very sensible. It means in previous accounts, we had accounted for credit card sales as if they were cash and not accounted for 3 days that the credit card companies take to pay us. So this accounts for that conforms with new accounting standards. And also, I think for me, in the last 25 years, a bit of a landmark moment as well because this is the first change in accounting standards that I really agree with. In terms of surplus cash, GBP 129 million of surplus cash distribution to shareholders, GBP 221 million. The difference between that, the GBP 93 million difference is that last year or previous -- year before last, we were accumulating cash on the balance sheet, GBP 40 million of cash accumulation in anticipation of paying down the bond. This year, we got the bond away, and we've returned our leverage to its historic norms at around 0.63. And so there is a cash about GBP 53 million more of debt funding that difference. In terms of stock, stock up 8.8%. The NEXT stock as at week 52 was up 7%, so broadly in line with our sales increase. You'll note for the last, I think, 3 or 4 sets of results, we've shown stock increases much greater than sales. And what you can see from this is that those increases have stopped, but we haven't reversed them out. We're going to keep a little bit of extra cover in the business in anticipation of the sort of disruptions that we've seen over the last few years potentially happening again. We think it's better to have a little bit more cover, we didn't suffer from it last year. In terms of customer receivables, customer receivables up 2%. You would expect those to be up much more than 2% given the growth in our credit sales at 5.8%. The reason that we haven't got that growth is because our debtor days continue to reduce. They reduced by about 3.6%, which accounts for the difference in those 2 numbers. The reduction in debtor days is reflected in much lower rates of default. And what you can see, if you take a sort of pre-COVID to now view, you can see that our default rates have dropped to 2.2%. That is lower than the company ever has certainly as long as I worked for the business. We've never seen default rates that low. That 51% reduction is a little bit deceptive. It's not because 51% fewer customers are defaulting. Actually, the numbers of customers defaulting is around 8%. The -- what's the big difference is the balance they're defaulting at and this is the result of much tighter and better credit controls that we've implemented over the last few years. And one of the sort of advantages of some of the machine learning algorithms we've had and just greater vigilance. In terms of provisions, we're still comfortably but not over provided 6.9% as against default rate of 2.2%. So we've still got room for that to move the other way if it does. In terms of other debtors, I've talked about international aggregators, talked about cash in transit. The GBP 20 million of interest-free credit is because last year, we switched to funding our own interest-free credit for furniture in stores. That hadn't -- for the previous year, that didn't fully annualize until last year. So the tail end of that cash outflow is what you're seeing in that GBP 20 million. In terms of creditors, up 9%, broadly in line with sales, what you'd expect. In terms of net debt, net debt up 8%, I'm going to talk in a lot more detail about that in a moment. And then in terms of net assets, increase of GBP 26 million. It's only GBP 26 million, and that's what you'd expect because the vast majority of surplus cash we have rightly given back to shareholders. In terms of debt, the GBP 713 million was lower than where we targeted year-end debt. That's all about timing of payments. So we targeted GBP 739 million of year-end debt and leverage of 0.63, which is where we think is a good place for a retailer of our type to be. In terms of inflows in the year, we expect GBP 978 million of cash inflow, CapEx and dividends of GBP 237 million, GBP 300 million, respectively, GBP 500 million returned to shareholders through buybacks or other means. And that would get us back to the 0.63 leverage of GBP 790 million. In terms of buybacks, we've bought GBP 196 million to date, and our plan is to continue that evenly through the rest of the year. In terms of funding, started the year with GBP 1.2 billion of funding. This year, GBP 114 million of 2026 bond is repaid. That leaves us at peak with GBP 205 million of headroom. We think that's sufficient for the business. But if market conditions are right, which they're not at the moment, but if market conditions are right, we will almost certainly issue another bond between GBP 200 million and GBP 300 million or look to increase our RCF to give us a little bit more headroom. Moving on to retail. We had a good year. Total sales up 2.4%, full price sales up 3.5%. The difference was the fact that we pushed more of our clearance sales through online and out of retail. New space gave us 1.2% underlying like-for-likes of 2.3% up, which is in the context of the last 10 years, a very good number. Profit down 5%, which is given how strong the sales were a very disappointing number. When you look at the change in margin of 0.8%, that all is down to one factor and one factor alone. if you look at the cost of national insurance and the increase in national living wage and the numbers of the young people who moved on to the higher rate, the total cost of that was 1.4%. So had wages risen in line with sales, then we would have seen flat margins, positive margins actually. In terms of new space, and there's a little bit of a story here. I softened you up for this 6 months ago. So this should be no surprise. We missed our sales targets on the stores that we opened by 12%. And this is not because we had one big store that missed it. This was, I think, 12 out of 15 stores missed their target. What that meant was that although we were comfortably within our profitability target, we weren't, we missed our payback target. I don't think the miss in target and the 24 -- the missing 24 months are entirely unrelated. I think in reality, our sales team who put the estimates on the stores pushed the sales as far as they felt comfortable in order to hit those criteria to get the shops open. And in hindsight, that was a mistake. But as it turns out, it was a very profitable mistake because if we look at the amount of profit those stores are making, it's GBP 6 million of profit. over 30% internal rate of return. And if the landlords came back to us and said, I'll tell you what, you can have the shops back and we'll give you all your capital back, do you want it? My answer to that would be, no. So I think we've come to a bit of a big decision is that either we say, look, we're just in an environment where like-for-likes per square foot over the last 10 years down 30% and shop costs up 70%. We either have to say we won't take advantage of any opportunities to open new space or we'll change our criteria. And we've opted to move the goalposts. We don't think these are crazy levels of risk. We said internal rates of return at 27%, which equates to a payback around 30 months. And we think that's enough to be -- to get the sort of returns you need from stores to pay for the risk, but not so much to prevent us opening any shops going forward. In terms of the year ahead, we're expecting the one-off gain that we got in stores from a very good summer and competitive disruption to reverse out in the first half. We're expecting so total retail sales to be down 1.5% with 1.5% coming from space. Profit down 6%, that's around GBP 12 million hit to profit margins at 9.7%. So still comfortable retail margins. In terms of U.K. online, and just to remind you, I'm going to show you our U.K. online sales separately from international sales because the dynamics of the business are very different. In terms of U.K. sales, total sales were up 10.2% full price sales were up 8.7%. The difference was all driven by the increased warehouse capacity. Because we had more warehouse capacity, we were able to put more of our clearance stock online, both in the U.K. and overseas. That was more profitable than putting it through the retail stores, but that's what accounts for the difference. In terms of the balance of trade, just over half our business online is now NEXT brands and wholly owned brands, which are a full margin at another 9% and then third parties around 1/3. In terms of the growth of those areas, what you can see is wholly owned brands and licenses had an exceptional year. I'm going to talk a lot more about that later. I think the exciting thing for us was the fact that the NEXT brand, despite the increased competition from brands that we own, the NEXT brand still managed to move forward, which for us is confirmation to some degree that we're not just competing with ourselves as we add new brands to the website. In terms of margin, margin moved forward to 18.2%. In terms of where the margin gain was made, what these lines show is the difference between what's happened to the NEXT brand margin and the non-NEXT brand margin. You can see pretty much all the gain has come in the non-NEXT brands. So doing mental gymnastics where we sort of changed the axis and just walk forward the U.K. online NEXT brand profitability. You can see there's a no score draw on gross margin. Warehouse and distribution is flat, but there are a lot of things going on there. Wage inflation eroded and would have eroded margin by 0.8%, but leverage over fixed overheads and some of the efficiencies that we're seeing from the new warehouse pay for that. And then marketing and technology, slight leverage here. Technology, we're now beginning to get to the point where our sales -- our costs are not rising anything like as fast as sales. That's good news. And marketing is a surprise there. We have significantly increased our marketing budget, but not by as much as sales. In terms of the non-NEXT brands, two things, a gain of 0.5% on gross margin, two things going on there. The elimination of unprofitable brands where the commission rate was too low and weeding out some of the less profitable lines. And there, we said to our partners, basically the choice, either we can't sell a product or we might have to put commission up a bit. On the whole, they opt for the latter. And then because our wholly owned brands are growing much faster than third-party brands and we make more margin on them, that pushes the mix, the margin mix up. Big gain on warehousing and distribution here. And that's because wage inflation loss is lower on the branded goods because they're more expensive, so the labor content is lower. They're growing faster, so leverage over fixed overheads and the efficiencies are higher. And because we've weeded out some of the high returning low average selling price items, as a result of that, we see another 0.4% improvement in margin. So non-NEXT brand is still a long way behind NEXT brand in terms of profitability, but they have moved forward significantly. In terms of the year ahead, we expect U.K. online growth to be 4.6%. Margin nudge forward to 18.8%. That's mainly about reversing out large staff incentive payments for this year as a result of having such a good year. So it's not an operational saving. In terms of international business, international sales up 35% at full price, 39% in total. Again, that's a reflection of increased capacity to sell markdown through the online channel. I'm going to do a bit of a Grand Old Duke of York story here and talk you up the hill and then back down. So what I would have said before the Middle East conflict is be aware of the first half numbers because the first half numbers are likely to be much better than the second half in the year ahead because last year, we dramatically increased the amount of particularly wobble brands we were selling on our overseas websites. And we got a big step change increase in sales through Zalando as a result of consolidating our warehouse there. That reverses out, that annualizes in the second half. So all things being equal, you would expect the first half to be stronger than the second, but obviously, we've been hit by Middle East disruption just before ED, so that pretty much wipes that out, which you'll see later. In terms of third-party versus NEXT websites, third party is around 1/3 of the business. In terms of the growth, on the NEXT direct business, that was 29%, of which we estimate 22% was driven by increased marketing. Third-party aggregation, up 46%, of which 10% came from the addition of new aggregators and existing aggregator business boosted by the consolidation in Zalando. In terms of distribution of the business across the world, Middle East still around 28%. That distribution hasn't changed dramatically. What is encouraging is that pre-conflict, we were growing pretty much in every territory. In terms of profit, dramatic increase in profit, partly driven by the sales and also an improvement in margin. In terms of bought-in margin, the increase here is about product mix and duty savings. Surprisingly, although we put a lot more markdown on our website, we actually improved the rate at which we cleared it. But I think that is testament to the improvement that we've made in our online operations in terms of how we handle the clearance sites and the number of countries that we have pushed clearance stock to. A lot going on in warehousing, the same erosion of margin from wage inflation, although because overseas selling prices are on average higher than the U.K., not as much as the 0.8% erosion we saw in the U.K. Then we get leverage over fixed overheads from sales growth, a slight increase in handling charge income, where in some countries where we weren't making enough margin, we pushed that handling charge up a little bit. And the same benefit on average selling price and returns rate through sort of forensically going through and removing high returning low average selling price items. Marketing, a big adverse movement here, but that is kind of the whole point. And then leverage over technology, cost centers and central overheads. The central overhead gain is a little bit of a one-off. It's not a one-off this year. It was a one-off cost last year, and that was the cost of closing the German hubs. I think the exciting thing about the margin walk forward is the fact that the significant increase in marketing has been paid for by the cost savings we've achieved elsewhere. In terms of the year ahead, we're anticipating sales of 14.3% on a marketing spend increase of 25%. Margin forecast, broadly flat. In terms of customer analysis, and this is across all of our channels, U.K. and overseas, U.K. credit customers were up 6%. That number should be a surprise because that number has for the last 10, 15 years, been 1% or 2%. The big difference here has been the growth in the uptake of our Pay in 3 offer. Pay in 3 is where, it's a credit type offer where if you pay off all of the balance in 3 installments, you pay no interest. If you don't pay it off and you choose to extend it, then you pay a higher interest than you would have done on a revolving credit. That means the credit is growing much faster. It's not as profitable in terms of interest income as a traditional credit account, but it does significantly improve the amount of sales that we can make for those customers. So that's more of a sales benefit. That's rather more of a sales benefit than it is a credit income benefit. U.K. cash up 10% and then overseas, 31%. I should say that this doesn't include any customers that we get from aggregator businesses because obviously, we don't have visibility of that. I think the other surprising number here is the growth in the average sales per customer overseas. You would normally expect with so many new customers coming in, you would expect that number to move backwards. That's what we expected at the beginning of the year. It hasn't. Largely, we think, as a result of the improvements we've made on our website in terms of improving conversion and average order value, which I'll come on to later. In terms of total platform and equity partners, total profit, GBP 90 million, up GBP 13 million on last year. At the beginning of the year, I think we estimated that would be GBP 5 million or GBP 6 million. So we have done significantly better in pretty much all the partner businesses than we were expecting. Equity profit up GBP 9 million, service profit up GBP 4 million. The big increase in service profit comes from the fact that the previous year, we hadn't fully annualized the onboarding of FatFace from whom we get a big service income. In terms of that service income from Total Platform, very healthy margins, just around 20% profit on what we charge the clients and around 6% profit on their sales and their online sales, which is kind of where we set out to be. And although Total Platform is looking very exciting at the moment in terms of its numbers, you shouldn't expect any big acquisitions or transactions this year for simple reason we haven't got the warehouse space to accommodate a big transaction this year, which I'll talk about later. In terms of return on capital, very healthy return on capital, move forward from 17% to 23%, largely there is a result of the return to profitability of Joules and growth elsewhere. So Tom Joule, there in the audience, so thank you, Tom, for that. GBP 94 million profit -- GBP 95 million profit forecast for the year ahead, an increase of GBP 5 million. Moving on to guidance for the full year. We've already talked about the 4.5%. I won't talk more about that. Retail sales, we're expecting all the pain in the first half because that was the period where we had the exceptional weather and gained the most from competitive disruption. U.K. online, we think will be a more even performance throughout the year. That's largely as a result of the performance. The reason we are as confident on the H1 number is because of the sales we've seen to date online in the U.K. In terms of total U.K., 1.3% in the first half, 2.9% in the second. International, 14.7% in the first half, 14% in the second. If we look at the 2-year growth, which removes any distortion from the timing of the Zalando transaction and the increase in wobble brands on the website, what you can see there is that we're anticipating 47% in the first half, and that is a reflection of the significant disruption we're getting in our Middle Eastern trade and then a return to more normality in the second half. Obviously, a big health warning there. If the war carries on at its current rate, we won't see the recovery in those sales that we're -- in the Middle East that we're expecting. So total full price sales up 4.5%. In terms of what that means for profit in the year ahead, online profit driving GBP 76 million of profit increase, GBP 11 million decline in retail profit as a result of negative like-for-likes. Total platform and partners adding GBP 5 million. Cost increases. Wage inflation is still the biggest cost increase here, but around 2/3 of what it was this time last year. The reason that is quite as high as these actually, it would be around -- if it was just wage inflation, it would be nearer GBP 35 million. There's still 2 months of the NIC that haven't annualized in the current year. Middle East conflict, GBP 15 million of costs coming in there. Higher interest costs, which I mentioned earlier, that's all about the accumulation of cash last year in lieu of share buybacks, and we're anticipating that our marketing spend grows GBP 8 million faster than sales. In terms of cost savings, employee incentives, that's reversing out of large incentive payment this year for a great year. And then the margin gains are where we have already in our -- in the costings we've got, we already can see around 0.2% gain in margin for both spring/summer and autumn/winter. Normally, we'd give that back and reinvest it, but given the circumstances, we're not going to do that. So that would be GBP 10 million. And then versus last year, the difference of GBP 8 million is warehousing and distribution efficiencies and stores versus our January estimate, the GBP 7 million, GBP 8 million is technology. That's what it is. That gives us GBP 1.2 million of profit at year-end. In terms of earnings per share, we're expecting a smaller enhancement than last year, dividend yield of 2.2%. If you compare this year's expectations to last year's expectations, whilst the biggest difference is the delta in profit, you can see that the enhancement is significantly lower. The enhancement from dividends and buybacks is significant this year than last year. And that's because last year, in effect, we got a double benefit. The shares that we would have bought back last year would have enhanced earnings this year. We didn't buy back shares and we gave all the money back last year. So actually, dividends and share buybacks together, we would expect to be to give returns of around 5% to 5.5% in a normal year. And that's what we expect it to be sort of going forward next year and beyond. So that's all to say on the sort of the numbers and guidance. In terms of the business itself, it's difficult to keep a handle on this because with everything going on in the world, everyone is worried about more and worried about Middle East than they are about the business. But when you look at the business itself, it's actually very exciting because all the avenues of growth we had last year, we think are still there for the year ahead. There's more to do. And if we look at the GBP 550 million of growth and divide it U.K. overseas, what you can see is that actually, despite all the excitement coming from overseas, the U.K. delivered not a lot less in terms of actual growth. Same is true between NEXT products and non-NEXT branded products. You can see there exactly the same pattern in reverse is that NEXT, although the growth percentages are very exciting on non-NEXT brands, the NEXT brand still delivered the lion's share of growth. And if you divide that into sort of 4 different businesses, NEXT, non-NEXT, U.K. and overseas, you can see that those numbers are remarkably similar. And I think the message here is that the low growth in the big established businesses is delivering pretty much the same amount of growth as the very dramatic growth, 79% in our smallest non-NEXT brands overseas. We think that each one of those quadrants will be positive in the year ahead, and there's more to do. And in terms of what's driving that growth, it comes down to two things. Overseas, it's about improved functionality, services and most importantly, marketing. And across the whole business, non-NEXT and NEXT, it's about better product ranges and broader product ranges. I'm going to start by talking about what we're doing to improve the most important part of the business, which is the NEXT brand. And that comes down to what I've mentioned before in terms of newness, quality and choice. And this is a drive that we've talked to you about, I think, now for 2 years. And it's one of those things that I'm reluctant to talk to analysts about because there are no numbers and graphs that I can give you percentage newness and all that stuff because if I ask the product teams for what percentage of their age is new, they will give me whatever percentage I ask for because who's to say what's really new and what's not. But I think the key here is that where the buying teams have scoured the world, found the best trends and then most importantly, back to those trends with conviction and in depth, that is where we've seen by far the biggest sales growth. And where we haven't done that, where we led on last year's best sellers, a little bit of a tweak here and there, change the neck line, change the color. Those areas are the ones that have done worse. And that's pretty much universally true across not just the NEXT brand, but other brands as well. The customer wants newness and gone are the days where you can say, we'll trial this new style this year. And then next year, we might do it in 3 colorways and really maximize the opportunity. If you wait and see, you've waited too long, you're dead in the water. So that's sort of newness. In terms of quality, there's a lot going on here. And the big thrust on quality is about fabric. That is the thing that in terms of customer perception, actually upgrading of the fabric and the base materials, the yarns in knitwear, that is where we've had the most success in putting -- increasing our fabric. And this is a -- represents a change in the way we work. in the -- not all areas, but more and more of the areas at NEXT are now pushing further upstream and talking to mills, spinners, wash houses and developing yarns and techniques and fabrics long before they decide which garments they go into and what those garments will look like. And that process of pushing further upstream, I think it's got a long way to go at NEXT. I think it's very exciting for us. Other retailers too do it. It's not rocket science, but I think it's exciting for us. I think the other sort of unintended benefit of this is that, obviously, the mills have to see the fashion trends first because if they don't produce the fabric, you can't produce the trend. So the mills and the print houses are often also a good indicator of which trends are coming and which ones are going to be strongest. I think this is also a very good time for us to be investing in quality because we can see a distinct trend over the last 3 years, and this is a gradual thing. It's not dramatic of customers buying slightly fewer, slightly better things. It's not that they're spending more on clothing. It's that they are choosing to spend that money on better products. And this bit, I can give you some numbers. So this is analyst delight here. What the numbers -- what these numbers show is the underlying inflation in like-for-like goods. So if you produce the same T-shirt last year as this year. And obviously, we're doing less of that because of all about units. But if you look at those garments, then the price inflation we've seen over the last 3 years is negative or very modest. If you look at the sold mix, the total amount of cash we've taken versus the units that we've sold, the sold mix actually has moved forward. And we think that the difference represents the shift in consumer preference. And if you -- any 1 year, that doesn't look like very much. And I should say that the estimate for the year ahead is based on what we've bought, obviously, not what we sold because we haven't sold it yet. But if you add those all together, you get to numbers that do show a meaningful shift. And there are two things I should stress here. This isn't about just adding more expensive product to our ranges, although we have increased -- we have looked to stretch our price architecture and to sell some more expensive garments. But this is -- that's not been the main driver on this. And in fact, the biggest success we've had on improved quality is where we've significantly upgraded entry-level products to make them much better yarns or fabrics, and that's where we've had the most success without increasing price or by increasing price, just a modest amount. In terms of non-NEXT product, first of all, same messages about newness, choice, quality are coming through in all the brands that we can see that coming through in all the brands that we manage. The bigger increase was the less exciting percentage. Our third-party branded profit was up, and that is all about one thing, which is better ranges of our best brands. This is not about adding brands to the website. It's about getting much better selection and better depth on bestsellers from the top 20 or 30 brands that we sell. In terms of the wholly owned brands and licenses, very exciting numbers at nearly 50% growth in the year. And I think there are a number of encouraging things that I kind of would like to share with you today about this relatively new business. What this shows, this bar shows is the brands that we were already trading, the wholly owned brands that we had in 2022, '23. It's about GBP 177 million at that point. If we look at just those brands today, they are 53% up. That is an encouraging number in itself. But the really encouraging number is the fact that last year, those brands, those existing brands that we've owned for more than 5 years grew by 24%. And I think they'll grow again in the year ahead. And for us, this was the acid test because relatively easy to come up with a new label and stick it in a clothing and give it a bit of marketing, but actually having brands that are not flashes in the pan that can be developed and continue to grow in the long term is kind of what we're trying to achieve. And that looks like what we've delivered. And that number, in a way, is all the more impressive when you bear in mind that over the last 5 years, we've added another 29 wholly owned brands and licenses, which have themselves last year delivered GBP 116 million of margin on top. Again, the fact that those are growing in parallel with the NEXT brand, evidence, we think that the brands we are providing are genuinely giving our customers something different and new. We're estimating that the wholly owned brands and licensed business grows by 22% in the year ahead. And what this all comes down to is -- apologies for the cheesy analogy. We use these slides for staff later as well, so it's multipurpose. But we really think that NEXT is an amazing place to start a new brand or to take an old brand and relaunch it because when you look at it, what you need to start a new brand on NEXT is very different from what you needed to start new brands 20, 30, even 10 years ago in terms of resources. What you need is a great product team, a good idea and a sourcing base. And the investment, the total cost that you need to invest to launch a brand is around GBP 3 million, and that's the cost of the people and the stock that you have to buy before you put anything on sale. So the sort of money at risk is around GBP 3 million. And the reason that, that is so low is because those brands can straightaway take advantage of the billions of pounds that we've invested over the last 20 or 30 years in building 16 million customer base that those brands have instant access to all the websites, technology, data security, product systems, warehousing, contact centers and relatively inexpensive funding. So in terms of an environment in which we can begin to develop new fashion brands, we think this is very exciting. All the more exciting if we can sell those brands overseas. And what you can see from the international numbers is that we are getting good traction now with those brands overseas. We're launching 3 new brands. I say new Russell & Bromley, obviously isn't a new brand, but it's new to us. Bhoem, which is more of a sort of continental style of brand, and we'll be launching another womenswear brand, top-end womenswear brand towards the end of the year. In terms of overseas, 35% growth. And the driver here is functionality and marketing. I start with functionality. Now there's a detailed table with lots of complex numbers that are hard to understand, so you can read through that at your leisure. But the overall message is that we have significantly improved pretty much every part of the customer experience, both on the website when they pay and delivery and returns in most of the areas. There's still more to do. And the results, again, here, we've got some numbers. If you look at the organic conversion rate, that's the conversion rate of non -- of customers coming to the website, not through marketing. The average order value and the frequency of orders, those numbers have significantly increased year-on-year last year, and we think that's as a result of the improvements that we're making. The nice thing about those numbers is that they are cumulative that if you get -- if every person lands on the website, if 9% more of them order, they each order 3% more in that order and they then visit you 17% more times, the individual value of that customer visit significantly increases. And that is what has driven the growth in marketing. The fact that these two things work hand in hand. It's not just about spending more money, but the more effective you can make your website, the more effective your marketing becomes. And one of the things that has driven the marketing and one of the things that has allowed our returns to remain constant despite the dramatic increase in the amount we're spending is the fact that the website and services are so much better. And just to sort of dwell on those numbers a little bit, the return that we measure here, and just to be clear, we don't talk about growth, this is not sales, this is profit. This is the incremental profit on the incremental sales that we think we deliver from each and every campaign. They have to hit at least GBP 1.50. And you can see the returns last year actually, despite the enormous increase in spend, were slightly higher than the previous year. That's not just about functionality and services. It's also about the improvements we've made to our marketing and we continue to make to the marketing. And there's a long list, and you can read it in the report. But we have invested a lot of time, money and people in improving the way in which we market, and we can see that paying dividends. Next year, I've mentioned already, we plan to grow marketing overseas by 25%. Now you might look at that number at GBP 1.50 and say, well, why do they need to be next to being very greedy, 50% return. And you'd be right, if we believe that number, we would being greedy. But there are two reasons to be cautious about it. The first is that it is based on incrementality, the incremental sales, and that requires an estimate. We've got to estimate how many of the customers who saw the advert who then bought actually were stimulated by the advert and wouldn't have bought anyway. And what you'll find when you look at these incrementality tests that we do is that the incrementality is surprisingly low. So it's a very important thing that we're unsure of. We think we need fat margins to absorb that risk. The second and more important reason is that the profit we're talking about here is the marginal profit, we assume that if we spend the marketing that the increase in sales doesn't result in any increase in HR costs, finance costs, product costs, it all goes into profit. If you said, well, actually, our fixed overheads are going to grow as fast as sales, that GBP 1.50 drops to GBP 1.01. And I think what this does is it brings home a fundamental truth about -- which will affect our growth going forward. And that is our ability to control our costs and our fixed costs to make sure that they don't rise that they actually fall as a percentage of sales. It doesn't fall in absolute terms, but they fall as a percentage of sales. Our ability to control those costs will drive our ability to do marketing, which will drive growth. And that actually, as a message for people in the business is very positive. Normally, cost control is seen as a bit of a side. Cost control meeting that we have with all of our directors once every quarter is not their favorite meeting. But because people think it's all just about squeezing more out of the sponge. But once people see that, actually, this is not just about squeezing more profit out of the business. This is about driving growth. It's much easier to get that message across because people are more excited about growth than they are about cost saving. And the assumption that you might make about fixed overheads, by the way, being fixed is not necessarily correct. I do -- I remember my dad saying to me years and years and years ago that fixed cost to only have a fixed on the way down. And there's a little bit of truth there. If you look at technology, product, finance, legal, HR, add them all together as a percentage of sales in 2006, and look at them today, not only have they not declined as a percentage of sales, they've actually overperformed. They have grown faster than sales. Now don't panic about that. The overall business, the margins of the business have moved forward by 2% in that time. So -- and there is none of that investment, I say investment spending, none of that spending that I would regret. If we hadn't spent much more on technology, we wouldn't have websites, call centers, marketing campaigns. Our technology spend meant that we could stop producing GBP 65 million worth of catalog every year if we're going to grow our product ranges. And next, in terms of the ranges we offer online today, they're probably about 5 or 6x the size of the ranges we offer just in stores. You need more product people for that. We're going to have new wobble. We need new people. We're going to have extra third-party brands to need someone to manage those relationships. So it's not that those investments were wrong. It's that going forward, we need to grow them by less than sales if our marketing is going to be successful. And fortunately, we are at, I think, the perfect time for saving money in those areas because the combination of the fact that we've modernized pretty much all of our software platforms with the exception of finance over the last 6 years. The fact that we have transformed the way the company handles data, we've made sure that it's sort of universally accessible across the group, that it's consistent across the group. So the combination of modern software, high-quality data means that we are well placed to adopt AI. And I know that there's going to be a grown. I can't actually hear it, but a grown when chief executives start talking about AI because -- so I'm going to apologize in advance, but I am going to talk about AI a little bit and our approach to what we're doing with AI. And I think the first thing to say is that the degree of adoption that we're getting across the business is very different. The areas that have adopted it the most aggressively are technology, contact centers and e-commerce. Product on the sort of use of AI to envisage product and forecasting has made some progress. And the other areas really, I put a little blue bar here, but that blue bar could be smaller if I wasn't so generous. Where we have invested, we are definitely seeing AI resulting in productivity gains that is translating directly into not just better software and better service in the call centers, but also lower costs. And these are -- what they show -- this graph shows is the percentage of sales represented by technology and call centers. And I think in both these areas, there's further to go, and I've written about that. In terms of our approach to AI, I think I thought it would be useful to share a little bit as to how we're approaching the whole issue of AI. And I think the most important thing for us is what we're not doing. We don't have a central AI department or a Chief AI Officer, a CAIO, I think it would be called. It sounds like goodbye and Italian. We don't have that. And the reason we don't have that is because the nature of what we do across the different functions of the business is so different that to have one department trying to service all of those would be extremely unproductive because ultimately, the value of AI is not in the technology, it's in the applications it supports. And the design of those applications, what it does for the business can only be understood by the people who are running the business, not people who have access to the technology. And the best comparison I've heard is that it will be like having a central spreadsheet department. And Chief Spreadsheet Officer. Spreadsheets are used by everyone in very different ways across the business. Same with AI. It's got to be application led. That's not to say we're doing nothing centrally. We do talk a lot about it. We encourage people help them. Our IT department provides access to technologies. It ensures that the technologies we use are secure, most importantly. And it also monitors the cost of the AI tools that various departments are adopting. But we haven't adopted a one-size-fits-all approach to this. And each director is very much going to have to be their own Chief AI Officer if they want their part of the business to succeed. What I wouldn't underestimate here is the power of collaboration. And it's just the way that NEXT works is that all -- pretty much all of our directors see each other every week at our trading meeting, at least once a week, if not more. And the people who -- the directors who are most advanced are actively working not just in their department, but to help the other departments and show them the sort of things that AI can do for them and share people and technology providers with them. In terms of how far ahead we are in this, that graph looked quite impressive. But even in the areas that we are the furthest ahead, my guess is that we haven't, we're scratching the surface. There is so much more to go at, not just in terms of cost effectiveness, but also productivity in terms of what people can do. So I think this is a huge opportunity. In terms of the areas that really haven't move forward much. I'm not singing out warehouse because they've done anything wrong and all because AI isn't applicable to warehousing. Actually, I think AI could be brilliant to warehousing in terms of handling all the operational management of the warehouse, reforecasting, scenario planning, optimization, lots of variables that AI could really turbocharge the management of our warehouses. But they haven't had time quite rightly to worry about AI because the thing they'd be most worried about is ensuring that we've got the capacity in warehousing that we need to grow. And that provides a slightly artificial but neat segue into the next subject, which is the last subject you'll be pleased to hear, the investments in our warehousing. This is where we were 2 years ago when we started to invest in Elmsall 3. We were at 94% full in our old warehouses in 2023, where we thought we would be on 5% compound growth in sales was 80% full of the new extended complex. Sales have actually grown by, sorry, 28%. we're expecting 10%. We've actually grown at 28%. In addition to that, we've put more clearance into our online operation, and we've increased our cover. That pushes up the stock in peak week, and he was only talking peak weeks here to 84%. And we've decommissioned some of the oldest picking that actually turned out when we decommissioned it, we realized just how inaccurate and expensive it was. So we don't want to recommission it. We've had a slight drop in box drop, which means that last year, we got to 87% full. If we look at this year, with the 8% planned growth in online business overall, we'll be at 94%. Now 94% sounds okay, it's not. 94% at 94%, you begin to get a lot of congestion, things slow down. One small breakage, conveyor belt breaking can hold up the whole operation. So that's uncomfortable. We're going to manage this year by taking some of our reserve stock. This is the high bay stock that can't be picked out of high bay and Elmsall 3 and move it into other warehouses owned by the groups. That will be replenished in day, so it shouldn't affect stock availability for customers. There will be a slight increase in costs as a result of that, but that will be more than offset by leverage over the fixed overheads from using so much of the capacity. In terms of the year after, that's where we really get into trouble. If we grow at another 8% next year online, then we wouldn't have the capacity to do that. So we need to invest and we need to start investing now. In terms of what we're doing, those of you who've been to the warehouse, you remember that we only occupy half of the new Elmsall 3 complex, Chamber 1, and we don't occupy all of it -- all of Chamber 1. There's a little bit left. So Phase 1, which will be on stream in 2027, will give us 10% more capacity at a cost of GBP 48 million. Phase 2, which is the first half of the second chamber, that's more expensive because that chamber is a shell. So it's more expensive per percentage of capacity. It's GBP 134 million. And the final chamber, which will come on the following year, 2029, is another 17% capacity at GBP 125 million. In terms of the P&L impact to that, you could look at that and begin to worry about is are we going to see a big P&L impact as all this CapEx goes through? And the answer is you shouldn't because although the additional depreciation in year-end Jan 2028 and overheads will be in the order of GBP 5.4 million, we think the cost savings from moving from the old to new capacity will give us at least GBP 5.1 million of savings. So there should be -- that's broadly cost neutral in that year. In terms of the full program, the GBP 307 million of CapEx, that will add around GBP 30 million of operating costs, but we get GBP 22.6 million, it's too precise, about GBP 22 million of savings, we think, from using that new capacity. That means that the net cost of all that new capacity is around GBP 7.3 million. And that's obviously, if sales don't grow at all. If sales -- the capacity that all of those projects together will give us is around GBP 1.5 billion worth of turnover. So what you can see is that the cost of the increased space, once it's at full capacity or even once it gets to 3/4 full or even half full, the cost of that capacity is very small as a percentage of sales. So over time, these investments should result in our fixed cost and warehousing coming down as a percentage of sales. In terms of where it leaves us in terms of capacity for growth, that's the 8% trajectory with the new space added on. The maximum we could get to is compound growth of around 12% online. I think, yes, if we have that problem, I'll be delighted, but I don't think we will. So we think that this program gives us comfortable capacity for the next 3 to 5 years. Next question you're going to say, I can see it instantly on your minds is like what do you do next? Here's the field. We've bought the field. The field, that's the warehouse that we have already got planning permission for. We have contracted for the land. We'll complete, I think, in 2 or 3 days. And we'll start work on that, getting foundations laid. We'll start work on that sometime over the next 18 months. So we could have floor space available if needed, maybe early '28 -- late '28. So we've got contingency. I think the important point there is that our model of centralized stockholding for the U.K. has got legs beyond Elmsall 3. And that mercifully is it almost. And just in terms of summary, hopefully, what you can see is that the avenues of growth that we had last year, all of them still have legs in terms of overseas, in terms of NEXT product, in terms of non-NEXT product, we still got an awful lot that we can do and that the business feels can push sales forward. We have got the means to control costs through the introduction of new software AI mechanization. We got the means that doesn't mean guarantee that we will, but we have got the means to do it. And we've got the capacity available planned to accommodate the growth if and when it comes. So if things go well, I think the business is really well positioned. What is, I think, really interesting when you kind of stand back from -- when we stand back from what we do day-to-day, and I think about the sorts of things that cross my days, desk and my colleagues' desks in terms of overseas new brands, new AI-driven marketing technologies with Google. All the things that are driving the business are completely different to the sort of things I was doing 25 years ago. 25 years ago, it was still very exciting, but it was about stores and believe it or not, catalogs. Getting more catalogs printed and printing those catalogs was central. And so what the business does today is unrecognizably different from what it was doing 25 years ago. The thing that really has not changed at all are the principles upon which that growth and the ethos of the business. And those 2 things are, first of all, absolutely everything we do, everything we do, we have to hand on heart, believe that it is giving good value to our customers. We have -- and the test there is, would you recommend this products to your customers. Now not everybody is in the market for a mesh dress, I'm not. But if you wanted a mesh dress, could you recommend one from the next website and say, yes, that is the service you want. It's fantastic, delivered next day, return to any store. You have to hand on heart believe that. And if you genuinely believe all of that and you're delivering something that's great for the customers, then you can't go too far wrong, whether you're doing with NEXT brands or others. The second principle is that it's fine to be doing things that are great for the customer, but they've got to make money. And the two things there is, first of all, we have to get a return on capital. Capital is the fuel that drives the business forward. And the better return we get on the capital we have in the business, the faster we can grow, the more benefit we can share with our shareholders. And the second thing is margin. And this is the easy one to overlook, particularly when things are good, but every single business we do, it doesn't matter if we're selling Love & Roses brand in Peru, that brand in that country has to make a margin, that is commensurate with the sort of risks involved in a fast-moving consumer and fashion business. And as long as we stick to those principles of do great stuff for your customers, get high return on capital and make healthy margins, then regardless of the environment you're in, you're going to be well placed to handle it. And we're making a trading statement in 6 weeks' time. The one thing I'm pretty sure is that it's going to move. The guidance is going to move. I just don't know which way. And -- but I think the point is that whichever way it moves, if the war peters out and things become more positive, then we are really well positioned to take advantage of continued growth in the U.K. economy, continued growth overseas. And if things don't turn out, and this will not be our first gig when things going wrong, COVID, financial crisis, cost of living crisis. If things don't turn out as we expect, then actually the business is well placed to cope with that it's well placed to cope with it because of those margins because kind of there are 2 lessons about retail that are enduring. And you can -- this is sharing wisdom. There are 2 lessons. One is like in the good years, don't get cocky. And in the bad years, don't go bust. And I think those 2 principles are really important. And that's the reason why when we've had a great year, we're not going into the next year with a huge estimate of what we can achieve going with conservative budgets. But whichever way things go, we've set the business up to cope with it. And on that cliff hanger, I think that leaves you just waiting for the next trading statement. We'll go over to questions. Anne Critchlow: It's Anne Critchlow from Berenberg. I've got 2 questions, please. The first one is about the store payback target and extension of that. Have you considered taking into account the benefit of a new store in terms of providing a free pickup and returns point for online customers? And then secondly, on aggregator website, you say you don't have visibility on the customer numbers there. But what insights do you receive from aggregators to help you make decisions about marketing, for example? Simon Wolfson: Yes. So first of all, on the store benefits to online, we don't account for that. We don't, in any way, put any benefit in the online business on stores. And there's actually a good reason for that. And that is that although the store does definitely help the online business, it also hinders it because it's a competitor. And so where we've only -- there's only one store where we've shut and had no other stores anywhere near to pick up the business. And there, we actually saw the online business move forward because GBP 2 million or so that we lost in the store, some of that went online. So we don't and we shouldn't account for online benefit of stores. In terms of customer insights into aggregation sites, we don't get very much insight. And quite rightly, they don't share that with us, and we don't share it with our brands either. So what they do share with us is the returns on the marketing we do on their sites. And on somewhere like Zalando, we'll spend around 2% of our sales on marketing. We still have the same hurdles. We still have to get a return on that money, but we can profitably spend money on aggregation sites, and we do. And the insights we get are not about who's buying it, but the returns we get on the marketing that we spend with them. Richard Chamberlain: Richard Chamberlain from RBC. A couple more related to the Middle East, if that's right. The cost savings you talked about that you've identified since the start of the year, GBP 15 million, how many of those or how much of that do you think might come back if demand is a little bit better or the war ends earlier than you're budgeting for? And the second one, can you just give us an idea of how the franchise stores in the Middle East have been holding up or not compared to the online offer there? Has there been any sort of big difference in trends? Simon Wolfson: Yes. Two good questions. So first of all, how much of the GBP 15 million will come back? I think very little. In all honesty, I think there's a much bigger downside risk to that number than there is an upside risk. So yes, it could come back. It might be that GBP 7 million of it doesn't materialize. We haven't yet incurred it. But I wouldn't -- I'm not getting excited about that. I think the downsides are much bigger, and they will have to go into cost. In terms of franchise business, I don't want to talk about that because it's not our business, but they have definitely been impacted. Adam Cochrane: Adam Cochrane from Deutsche Bank. First of all, on the Middle East. Just a question in terms of logistically, how is it working? Are you able to fly your products to your warehouse in Dubai? Simon Wolfson: In terms of the Dubai hub, so the Dubai hub, traditionally, we would have air freight out of Dubai to other countries like Saudi Arabia and Oman. At the moment, we're going by truck, and that's what's increasing the lead times to places like Saudi Arabia, Oman and Kuwait. Intermittently, we have seen that service come back on. And I think things are changing daily, but we're hoping to airfreight back on available for Saudi Arabia soon, but it does depend what happens in all. So the answer is to Dubai from the U.K., we are shipping by air, and we're getting replenishment in at the moment, albeit at a very high premium. That's a big chunk of that increased operating costs. And then from Dubai hub to territory, we've switched from air to trucks, which is adding 2 to 3 days to the lead time in most territories. Adam Cochrane: And the second question, in terms of international, are you progressing with -- or how are you progressing with other non-wobble brands, so third-party brands on your international site? Is that an area that you're still seeing more growth and more opportunity as brands would like to sell via the NEXT platform? Simon Wolfson: Yes, we have. And actually, it's detailed -- there is detail on that in the pack in that. There's one page with brilliant tables on it, which does show you that I think the overseas -- the growth in third-party brands overseas is around 22%. Most of that is driven by what's driving the growth in third-party brands anyway, which is a better selection of our key brands. But in some areas, partner brands have agreed to allow us to put their product on our overseas websites where they haven't in the past, and that's driven some growth as well. Frederick Wild: It's Freddie Wild from Jefferies. So apologies, it's going to be quite a broad question, but it was on a reasonably important topic was important until about 3 weeks ago. You seem on AI to be talking a lot about cost savings and the ability to run the business more efficiently. I suspect where the debate has been in the market is more about the risks of disintermediation versus the potential benefits to your consumer proposition. So I'd love to get your sort of thoughts on outlook on almost the demand side of the AI proposition. Simon Wolfson: It's a big question. I think the first thing to say is rightly or wrongly, it's not something that we're overly concerned about at the moment. And I think the disintermediation that we're talking about would be the disintermediation of the website, rather than any other cost at the moment, unless -- it will be relatively they could switch just a fraction of their data centers into beautiful clothing warehouses and ChatGPT would have the infrastructure. But at the moment, they don't. So you're really talking about the disintermediation of the shopping bag and the selection process. And there is an economic and just -- there's an economic and operational problem with that, that is yet to be solved. And the economic problem is that if you look at our average order value, net of returns, be around GBP 70. Cost of delivery to the consumer is around GBP 5. If -- that's about 6%. If your virtual shopping bag takes things from 5 different retailers, wherever the shopping -- wherever that intermediate website goes, it's got to go to a number of retailers. If it comes to us, then fine, it's just another form of advertising. If it goes to more than 1 retailer, then -- let's say it go to 4 retailers rather than 1, you end up with that 6% being multiplied by 4. So the economics, someone somewhere has got to pay for that additional 18% of cost that you'll get from splitting the order across multiple websites. I think the operational problem, which in many ways is more of a challenge and applies specifically to clothing is how you handle returns because you've got -- if you buy your -- or all of your online order goes to John Lewis or to Marks & Spencer or to NEXT or to Very, you know, exactly you can take the whole order back to any one of their shops, scan the items and you're credited instantly in the way in which you paid. For an intermediary to do that, you've got to know where to take the item back to, which is a Nike Train or which of the sub-vendors do I take it back to? How do I return it to them? And then how do they communicate with the intermediary, that the intermediary has got to repay me. So there are big customer service issues with it. So at the moment, it doesn't look -- it feels to me very much like what people were saying about marketplaces versus stocked retailers because the real asset in trading online clothing is the logistics infrastructure and the product, not the website. So I think is -- I think that is a direction they're unlikely to go in. And certainly, if you look at the difference in Google approach and ChatGPT approach, Google is still taking the approach of passing the consumer straight through from their AI engine to one or other retailer. So it becomes an enhanced form of advertising. And I think to that extent, it's very exciting. I think basically, the better search engines can find what customers are looking for, the more they'll buy, which has got to be good for the industry overall. So it was a long answer to a broad question, but I hope it covers. Geoff Lowery: Geoff Lowery, Rothschild & Co Redburn. You had a great year for customer acquisition in the U.K., both credit and cash. There was obviously some competitor disruption, et cetera, sitting behind that, weather, all of those things. But can you talk a little bit about the behavior? Is this gross adds? Is this better retention of existing? What is actually driving that? And what measures do you have to sort of keep them active as some of your competitors normalize, et cetera, around you? Simon Wolfson: I suppose, look, the reality is, and this comes back to this philosophy that everything has got to make a profit. And I think the risk here is saying the objective is to hold on to those customers not to make sure that all of our retention programs are profitable. And the amount we invest in a retention program is -- makes a good return on the money we invest. So our objective is not to hang on to customers. It's to continue to invest profitably in retention. And our retention programs are performing in line with last year. There's no significant -- I can't see any significant difference at this point, although we've yet to annualize the very strong weather last year, which may affect it and the competitive disruption. So we -- the answer is we don't really know how they will perform. I think the key takeaway for shareholders is that we're not going to throw money at trying to hang on to customers that aren't profitable to keep. Alexander Richard Okines: Warwick Okines from BNP Paribas. Two questions about warehouse capacity, please, Simon. Firstly, does the level of utilization that you're sort of running up against reduce the ability for the business to reduce the proportion of products not delivered in full and on time, which is something that you've been bringing down? And secondly, are there any options to reduce the proportion of products that are shipped from the U.K. out to international that could reduce the amount of capacity that you might need for the U.K. business? Simon Wolfson: Yes, really good questions. In terms of not on-time delivered in full statistics, they have -- I didn't put it in the slide because I'm superstitious because it only just got better. But basically, since Christmas, we have seen that dropping from around 8% to around 6%, which is sort of -- I think the lowest we got to was around 5%. So warehouse have made significant progress in terms of reducing the not delivered in full on time rates, and we are happy with that for the moment. But I'm going to talk about it in 6 months' time if we can hold it because it's only been a few weeks, but the signs on that are encouraging. I don't think there's anything I can see in this year's numbers to suggest that we won't be able to hold that, but it will depend on the effectiveness with which we fill the new mechanization and the effectiveness with which we can serve the main forward locations in the warehouse from the off-site reserve warehouses, which again, we haven't started doing earnings. But obviously, the risk there is that you've got something in reserve that you don't have in forward if you don't get it exactly right. So I think there is a small risk to that, but it's not something that I'm hugely concerned about. And I'm pretty sure that we'll see year-on-year improvements. Certainly, that's what we're seeing at the moment. In terms of delivery to hub direct, we're not doing that to Germany. And the main reason for that is that actually, it's -- because it's third party, it's very expensive. So we try to keep that on 6 weeks cover. We would normally have 12 to 14 weeks cover. So at the moment, we're not delivering direct to Germany, but it will be an option if we begin to hit capacity issues. I think the other issue with direct delivery is it's very hard to deliver much more than 20% to 25% of anticipated demand without getting it wrong because you never quite know what's going to sell in which territory. We are delivering direct to the Middle East, which obviously looks like a brilliant plan. And our first tanker -- our first cargo ships set off from the Middle East about, I think, from the Far East 4 or 5 weeks ago and have recently been turned back from Dubai. So that turned out to be a great plan implemented at exactly the wrong time. But going forward, we would plan to deliver, I think it's around 20%. I'm looking at Richard, about 20% of Middle East requirement direct from manufacturer. Andrew Hollingworth: It's Andrew Hollingworth from Holland Advisors. NEXT historically has been very, very good at the whole sort of mentality of sort of try stuff and do more of what works. So Costa Coffee is and all the rest of it. And wholly owned brands is obviously working extremely well. And I think in the statement or your presentation, you described it as sort of small business. What you've done up to now is sort of buy -- I don't want to say the wrong thing, but sort of troubled U.K. businesses and you've sort of reenergized them and helped them and all the rest of it. But you've wanted them, I think, in past Q&A to sort of prove their worth in terms of return on capital in the U.K. alone. We've now got a really powerful sort of wholly owned business internationally. What could this look like 3, 4, 5 years from now in terms of could we be buying Spanish brands or French brands or Italian brands? Or is it just going to be U.K. homegrown and see what we can do with it globally? Simon Wolfson: Yes. You know what, looking even a year ahead is difficult in fashion; 3, 4 years out is absolutely impossible. Would we buy a French, Italian brand? I don't think -- at the moment, no, because our business in those territories just isn't anywhere big enough. In Southern Europe generally isn't big enough to warrant the investment. The big advantage we provide for Northern European and U.K. brands is that we can give instant access to a huge market. Actually, our penetration in Southern Europe is very low. So I think those countries that you mentioned and France, although sort of in the middle, sort of fashion-wise is quite sudden, I think is unlikely. But I would never say no because even just access through Zalando to those countries might one day give us enough volume to justify. Andrew Hollingworth: Just a follow-up. So do you think with obviously not mentioning any names in terms of how you think about this part of the business that there's still lots of brands that can be added to the portfolio within the sort of your sweet spot of the sort of things you want to buy? Simon Wolfson: Yes. Well, what we're looking for is great brands, preferably with good management or our ability to provide good management for it to it. We're looking for things that we can add value to through our customer base and platform and at the right price. And I can't predict the fourth one. So I think there are lots of brands that I would buy for GBP 1, that I wouldn't buy for GBP 100 million. And where the price is in between will depend -- will drive pretty much what we do, I think. Georgina Johanan: It's Georgina Johanan from JPMorgan. Two for me as well, please. Just first of all, sorry if I missed it, but what actually is the Middle East trading at the moment -- like down at the moment, please? Simon Wolfson: Good spot. We didn't miss it. Georgina Johanan: And then the second one was just a bit of a broader question on GLP-1s. If you could share anything that you're seeing in terms of how like the sizing mix is changing in the business or not as the case may be? And also just thinking about it longer term, like any insights where from particular customer cohorts, if they are sort of materially changing the sizes of what they're buying, like is their spend increasing? Or is it steady? Just really any insights you can share would be great. Simon Wolfson: Yes. So on the Middle East numbers, the reality is it's very, very hard to read. So -- and the reason it's hard to read is because of the timing of it, because we are still in a period now where last year, people were ordering on their Ei'd. So it was on Sunday this time last year. This year, it was last Friday. So if we take the same days post-Eid that we are today, that number is changing every day in terms of growth. In terms of GLP-1s, we have seen some subtle change in mix in sizing on womenswear. And -- but where we've seen the most dramatic change is actually on the very large outsized. That's where you can see a change in terms of reduction in participation, these participations are tiny, but participations on the sort of 22-plus are definitely falling. I would say -- sorry, one last one. Unknown Analyst: I had 2. Marketing expenses, you're still talking to plus 25% or more. Are you repurposing some of the Middle East marketing into faster-growing Europe or rest of the world? Is something like that an option for you? And the second one, again, international, within the rest of the world, are there a couple of markets that you really are excited about and you see significant potential for them to be meaningful for next... Simon Wolfson: Within the -- Within where? Unknown Analyst: Within the rest of the world in international? Simon Wolfson: Okay. So the second -- the answer to the second question is yes. The answer to the first question, I think the premise of the question is that we've got a marketing pot. And if it doesn't work in the Middle East, we'll move it somewhere else. And that's just not how we work. We don't have a marketing pot. We have a hurdle rate of GBP 1.50 return and whichever territories give us more return than that we will continue to invest money in, and those that don't, will reduce. And so the answer to your question is, if I sort of stood back from it, do I think we will still be 25% up on what I've seen so far in marketing? Yes. But I think a lot will depend on the cost of air freight to some of our most expensive territories because if the price of airfreight goes up, the return on the marketing comes down, which constricts our ability to spend it. But overall, we brought down our sales by around 2% overseas at the moment. So that's our best guess as the full impact, but who knows. And we've kept the marketing budget where it is. And on that note, we really well finished. Thank you very much.
Tang Shuo: Distinguished investors, analysts, media friends ladies and gentlemen, good afternoon. Welcome all of you to China Construction Bank's 2025 Annual Results Announcement. Thank you very much for your trust, care and support to CCB over the years. This announcement has two venues in Beijing and Hong Kong. We were connected by video. And we will also broadcast to the shareholders and public through the online platform. Present in Beijing include President of CCB, Mr. Zhang Yi. Mr. Li Jianjiang, Vice President. Those in Hong Kong venue include Mr. Ji Zhihong, VP; Mr. Lei Ming, VP; and CFO, Mr. Sheng Liurong. Those present also include the non-executive directors, independent director representatives, the heads of departments of head office and Hong Kong institutions, et cetera. I am VP, Tang Shuo. The 2025 annual results of CCB is already made public today. The PowerPoint is also released on our official website for your reference and reading. The announcement will begin by the speech made by President Zhang, then we will have the Q&A session. Now Mr. Zhang, please. Yi Zhang: Distinguished investors, analysts, media friends, welcome all of you to CCB's 2025 annual results announcement. 2025 is concluding year of 14th five-year plan and also the 20th anniversary of CCB's IPO. In the past 20 years, we have been developing with the national development, the capital market, and we use reform to generate new growth, providing stable and long-term values for our shareholders and also the public. Here on behalf of CCB to all the shareholders, to our clients and to the general public, we'd like to thank you all for your support and trust. Today, we have reviewed and approved the 2025 annual results and made them public. Now I would like to report to you the financial performance, development and the future outlook. In 2025, we stick to Mr. [ Shi's ] philosophy, and we have implemented the -- all the principles in the central government meetings and we have also coordinated and promoted the quality development and quantitative development of -- our overall development. And we have achieved steady developments. The core indicators have all recorded new growth. In terms of asset structure, it continued to optimize. The 5 priorities, manufacturing and infrastructure, loan disbursement has also recorded more than average growth. And we have also recorded a net profit increase of 1.04% at CNY 339 billion, and operating income is also increased by 1.69% YoY. Profit before provisions also increased by 1.7% Y-o-Y. All the indicators have a steady growth. NIM is 1.34%, ROA 0.79%, ROE 10.04% and Capital adequacy ratio 19.69%. Cost-to-income ratio 29.44%. Net interest -- net income ratio is 22.69%. They are all leading in the market. In terms of risk control, it is steady. And the NPL ratio is only 1.31% and we continue to enhance our capacity. The provision coverage ratio is 233.15%. So based on these quality and quantity development, our capital is also -- asset is also recording -- is also recording growth steadily. Our total assets increased to CNY 45.63 trillion by 12%. Gross loans to customers also increased by 7.47% to CNY 27.77 trillion. Financial investments also increased by 12.9 -- 20% to [ CNY 12.9 trillion ] The liabilities also increased to CNY 41.65 trillion by 12%. The debt deposits also increased by 7%. Our loan continue to support the real economy, and we are also serving the public and the society support the economy to go smoothly. Based on the annual results, in 2025, we have also sent -- dispatched a total dividend of CNY 106 billion. And we will also have interim dividend for first half of RMB 1.858 per 10 shares. The final dividend for the whole year is RMB 2 per 10 shares, and we continue to enhance our capital capacity. Over the year, we stick to the inherent high-quality development, and we have done the following things. First, we focus on core responsibilities on the primary business to empower the real economy, we have advanced the 5 priorities with scale and quality. We have the technology, digital, green and inclusive and pension finance. So technology finance, the loans are over RMB 5 trillion, and we have underwriting of sci-tech innovation bonds amounted to RMB 72 billion. In terms of green finance, we issued RMB 6 trillion, up by 20.54%. Green bonds, leasing, investment and funds continue to boom. The MSCI rating maintained at AAA level. In terms of inclusive finance, the loan customers reached 3.69 million. The finance loan balance reached RMB 3.83 trillion. Agriculture-related loans balance reached RMB 3.71 trillion. In terms of pension finance, we actively expanded the application scenarios. There is a solid growth in enterprise and personal pension business. The Pillar 2 or AUM management also grew by 15%. Digital Finance also accelerated. Mobile banking and the CCB lifestyle app users reached 546 million. We developed the home living and auto living service platforms. We also provided a lot of digital economy, advance to core business and the digital economy. It also grew by 18.7% to RMB 891 billion we have multiple channel expansion of credit resources facilitating the domestic and international dual circulation, we actively supported efforts to boost consumption, stabilize the market and expand investment. The personal consumption loans grew 29.41%. Balance is at RMB 6.72 trillion in terms of loan balance to private economy, up by 12%. And the loan balance to manufacturing sector reached RMB 3.52 trillion. Digital supply chain financing provided RMB 1.32 trillion. We also support balanced regional developments such as Beijing-Tianjin-Hebei, Yangtze River Delta, Greater Bay Area, and Chengdu-Chongqing area. The loans and deposits also outpaced the bank-wide average. We also continue to strengthen financial service for key areas. We continue to coordinate the cross-border loans and investment and also the -- the loan balance to the project cross-border M&A and also the loan balance to Belt and Road partner countries also reached RMB 55 billion. We also uphold people-centric finance and enhanced group-wide integrated service. We try to accelerate the transition from a product-driven approach to client-centric mindset. We advanced commercial and banking, investment banking and integration. Underwriting of nonfinancial corporate bonds increased by 85%. M&A loan balance increased by 24%. New equity investment scale also increase -- is 20% higher than -- over the period. We also advanced corporate and retail banking integration. We deepen the ecosystem-based operation of payroll disbursement and social security card service, continue to upgrade and promote the Xinxiaotong payroll service, development of social security card Ecosystem. So that we can connect the corporate and retail banking. We also advanced the domestic and foreign currency operation integration. The international business loan balance is CNY 1.5 trillion, cross-border RMB settlement reached RMB 6.5 trillion. With advanced group-wide integration -- the overseas institutions recorded net profit of RMB 12 billion. The integrated operations subsidiaries recorded net profit of RMB 9.45 billion, up by 31% and 7% Y-o-Y, respectively. We also explored ecosystem plus industry and supply chain plus industry and business clusters service model. We developed 12 enterprise-level models across ecosystem, supported by integrated service throughout the customer journey. And we continue to enhance our customer base. And we also have 785 million customers. So we also recorded double-digit growth. And for the personal CTS customers, it exceeded 100 million. Assets under custody is CNY 27 trillion. And thirdly, we adopted a systematic approach and strengthened risk and compliance management. With solid foundation for comprehensive risk management, improved 3 lines of defense risk, governance, framework. We optimized the integrated financing management systems and enhanced comprehensive risk panorama. We also strengthened the penetrative risk management across overseas institutions and subsidiaries. We also try to accelerate the upgrading of risk control systems. We also try to look at the management of emerging risks, including model risks, data risks, fraud risks and new product risks. We also try to optimize risk-related processes. The NPL ratio is only 1.31% decreased by 0.03 percentage points. The SML ratio also stands at 1.77%, also decreased on a Y-o-Y basis from the last year. We also strengthened development foundations and continued upgrade operation and management systems. We promoted the development of operation, data and technology. We promoted AI application in business system. We also emphasized on various risks in terms of the model risks, data and fraud risks. We also continue to enhance internal control, strengthen employee conduct management, case prevention control, anti-money laundering, et cetera. We further enhanced the consumer rights protection framework. So the foundation is more solid. Fourthly, we strengthened development foundation and continued to upgrade the operation and management system, promote the integrated development of operation data and technology. And we also enhanced the foundation. We have a transformation from a centralized core business system to distributed model. The cloud computing scale increased by 12%. We also have the AI plus technology and framework. Large-scale modeling technology has been applied for 398 application scenarios within the group. We enhanced enterprise-level large-scale operations in many key areas such as tech development, building a more comprehensive cloud system, including an omnichannel optimization mechanism to provide customers with one-stop services, which enhance the efficiency of key operations to enrich an online processing scenario and enhance the automated capabilities of our centralized operations to better serve corporations and the public. In the future, we're going to continue to work in line with the 15th Five-Year plan to find our proper positioning to continue to promote further upgrade and development, continuing to support a new qualitative and high-quality development. In terms of business layout, financing method, customer structure, room for development and server model, these 5 aspects, we're going to consolidate and expand traditional strengths and tap into the potential for high-quality development. In 2026, we're going to do 4 major things. We will continue to serve the national strategy. We're going to do the 5 priorities of finance business. We are going to anchor ourselves as a leading financial institution of China to continue to enhance our professionalism and comprehensiveness and the integration of our business to strengthen our sustainable business model to continue to support domestic demand to follow up on consumption stimulus policies to offer consumer financial services to have a comprehensive solution covering credit payments, merchant services and value-added offerings to continue to unleash the growth potential of consumer financing to seize opportunities to further expand effective investment to fully expand financial services for infrastructure projects across land, sea, air, digital roads, network bridges and waterways to continue to strengthen our unique advantages here and to accelerate key project progress, we focus on key areas such as ultra-long-term special government bonds, local government special bonds and new policy-based financial instruments to support the binary star and the 2 focuses to support regional banking coordination upgrade and enhancement to support the Hainan Free Trade Port and offshore renminbi market development. We're going to enhance county-level financial services based and help urban rural development and regional coordination and to enhance our financial services based on local conditions. We are going to continue and commit to advancing high-quality development. Customer operation is all about maintaining a strong focus on enhancing service capabilities. Our asset business focuses both on scale, pricing and risk to maintain a balance among the 3. Our liability business, we're going to maintain a dynamic alignment across scale, pricing and quality. We're going to consolidate our base. And our intermediary business is about maintaining category-specific policies across intelligence, technology, equity and debt financing to enhance our value creation capabilities. Cost management, we will maintain an alignment between cost reduction and efficiency enhancement to dynamically support our growth of our business and to maintain high efficiency. We're going to continue to commit to upgrading our integrated service model. Depending on our customer needs as they change, we're going to continue to invest in -- investment in commercial bank integration, domestic and foreign currency integration, group-wide integration and corporate and retail banking integration across institutions, across sectors and across markets, we will upgrade and refine the service models across ecosystems, industrial and supply chains and industrial and business clusters. We're going to upgrade and deep integration -- deliver personalized services tailored to individual custom needs across the entire life cycle, we are going to optimize our services, achieving a tailor-made service depending on the customer you are. We further deepened integration under the Binary Stars model. We will have a more product -- in-dev -- product matrix and accompanying purposes to rejuvenate the financial system. We're going to committed to safeguard the bottom line of risk control. We are going to remember the key of risk management and continue to advance a comprehensive, proactive, intelligent and agile risk control system to improve the working mechanism of the 3 lines of defense to further strengthen the joint risk management between bank and subsidiaries and enhance the look-through management of overseas institutions. We are going to further adopt a more dynamic loan control mechanism. We're going to roll out inclusive loans and continue to assess regional risks. We are going to hold true fast to the bottom line of risk control in order to assess risk in advance and increase our resolution capabilities. We're going to enhance enterprise-wide anti-fraud capabilities as well. We're going to continue to build a better consumer protection system to protect the deep -- promote the deep integration across the entire business process. In 2026, we are going to continue with the political and fundamental nature of our business. We are going to continue to keep our eye on risk on the business development to continue to serve the development of our nation to prevent financial risk and enhance our international competitiveness. We will have higher commitment, more measures to play the role that we should play in the development of our nation's history to show our value, to work with all partners to open up a new chapter of high-quality development. Tang Shuo: Thank you. Thank you, President Zhang. Now we go into Q&A. So this event will have questions alternatively from both the Beijing and Hong Kong venues so that everybody gets a chance to ask question. Tang Shuo: [Operator Instructions] Our first question comes from the Beijing venue. May I invite the lady on the left on the third row, please. Unknown Analyst: I am from CCTV. [indiscernible]. So in 2025, you have achieved a stable and fantastic results. Congratulations. In terms of profit growth, we see that there's a positive recovery trend as well. May I ask what's the core drivers behind this good performance in 2025? And what's the outlook for our operations in 2026? May I invite our President to answer that question. Yi Zhang: Thank you. Thank you, Madam [ Wu, ] for that question. In 2025, the CCB's business has continued its steady progress. I should say that the high-quality development has achieved certain results. Our steady foundations are getting better and better. Our total assets have surpassed CNY 54 trillion. Our net profit is CNY 339-plus billion, 1.04% growth. Our profit attributable has grown by 0.99% as well. Our operational revenue has also grown by 1.69% and 1.7%, respectively, profit before provisions. These are the key metrics. In terms of the trend, ever since Q2, our operational income has continued to grow. Our annual profit growth continues to be healthy. The development quality continues to grow and improve. A lot of our assets have been optimized and improved in quality. Amongst our loan to key sectors under the 5 priorities has continued to go up. Our ROA, ROE, our NIM, our capital adequacy ratio, our cost-to-income ratio and noninterest net income ratio, all are very balanced. We continue to lead the pack amongst our peers. Our income structure continued to be more diverse, 22.69% noninterest net income ratio, which is a year-on-year increase of 3.65%. Our subsidiary contribution from overseas continued to increase. These 2 entities have gone up by 0.98% in terms of their net profit. I would say I attribute our success to the following 5 reasons. Firstly, we are able to stabilize the basic NIM structure and the decline has continued to narrow. In terms of quantity, we have a 9.38%, which is a 1.38% acceleration, primarily because our core asset growth have been faster. The average liability balance net is at 89.13%, which is a year-on-year increase of 0.66%. In terms of price, we continue to lead the pack in terms of our profit. The decline has decreased by 2 basis points year-on-year, 1.32%, which is a 33 basis point decline in our liabilities for savings, which is a very good foundation for us to continue to improve our business. In terms of the structure, we have increased our investment into mid- to long-term quality efforts. And among nondiscount loans for 1-year plus loans of duration has increased by 0.8%. We continue to consolidate our traditional advantages in this space. Personal consumption loans, personal business loans have achieved double-digit growth for 3 consecutive years. We continue to accelerate to settlement of a low-cost financing. Domestic loans is at 24.34% by proportion, which is still a very good level compared with our peers. Secondly, we offer more in-depth comprehensive services. Noninterest income continued to grow. We continue to create value through service to achieve a win-win situation with our clients. 5.13% growth in the noninterest income front. So we consolidate traditional interest-based income. But on the other hand, we continue to improve our services capabilities, wealth management, asset management and the revenue from all these areas continue to grow steadily, amongst which our wealth management products growth has been faster, more than 25% growth for funds, which we sell and for wealth management is more than 90% growth year-on-year. This is all like higher growth compared with our administrative fees, which is a net growth. We continue to assess the market to improve our investment strategy. Equity-based investments and relevant income revenue has grown by more than 40%. Thirdly, we continue to manage our costs. Fee controls has been working. Our cost ratio is 92.44%, which is a 14 basis point improvement, continued to be a very healthy level, amongst which operational fee increased by [ 1.5%, ] which is lower than our operational income growth. Structurally speaking, we continue to manage our operational costs. We are going to increase our input into key businesses, accelerate digital transformations. Fintech is 3. 61%, which is 0.26% growth of overall in good. We are going to continue to improve our asset management and risk management. Our asset maintains healthy. NPL is 1.31%, which is a year-on-year decline of 0.33%. Our risk management capability is quite adequate. Provision coverage ratio is 233.15%, which is basically flat year-on-year. We consolidate our customer base, enhancing our overall service capabilities. In terms of quantity, we have expanded our scope of coverage for our clients. For corporate clients, 12 million plus, which is an increase of 1.05 million different clients. Our different unit core clients have also increased by more than 10%, which is both 9.9% growth year-on-year, which is 1% faster growth compared with last year. Personal customers have surpassed 785 million customers. Our number of wealth management clients and private banking clients have both achieved more than 10% growth. Our CTS customers, the total assets has grown assets under custody have increased to more than 27 billion, which is a high 20-something percent double-digit growth. Our product coverage, our client activity are all looking good. And CTS, our personal customers have achieved double-digit growth. 2025 is the starting year -- 2025 is the starting year of the next 5-year plan period. We are going to continue to work with the government to build a better life for our people, our nation. We are confident and capable that we can achieve long-term sustainable and resilient business performance. We're going to continue to leverage our traditional strengths in liability management business and to in-depth find more service value propositions amongst our clients. We would have an effective growth of our quality development and a reasonable amount of quantitative development. Thanks to our traditional base, we are able to continue to work on our 5 key priorities. We want to be one of the leading banks in Fintech. There are several consumption stimulus policies to optimize the product supply out there in the market to enhance our international competitiveness to approve of our quality loans. We were going to develop our service capabilities to better integrate the rural city areas development to continue to build both corporate and commercial bank, domestic and foreign integration and room for development in our customers' development. We're going to empower our business development through finance. In terms of asset liability, we enhance our liabilities greatly to enhance our core loan business to more settlement management and wealth management type of funding, which can effectively help manage our costs. On customer service side, we are going to have a more tier-based approach in customer service to upgrade our customer service model. We use different models to offer a better comprehensive and optimized financial services solution for our customers. And we are going to continue to manage costs and increase efficiency to increase pricing management mechanism to restrict the low-yield assets to further stabilize our overall business. So that the new momentum can be created. We will also optimize our services and increase their quality. And we will also enhance our stability management continues to enhance linear management. Based on the solid development, we should explore more room for linear management so that the cost effectiveness will be improved. Thirdly, we will have to have a preemptive management and get more quality risk control assisted by AI, improve the comprehensive, proactive and intelligent management system so that we can more actively respond to the risks. We have to stick to the three guarding lines, also enhance the management of the NPL. Thank you. That's all. Tang Shuo: Thank you, Mr. Zhang. Now I would like to invite questions from Hong Kong. The lady -- on the left, the third row. Katherine Lei: My question is about loan. We see that in 2025, it has a very steady growth to about 7%. Just spoken, this is the opening year of the 15th five-year plan. So what is the new arrangement compared with 2024 in terms of regional dispatchment and the sectors, how different would it be? I would like to invite Mr. Zhang to answer the questions. Yi Zhang: Thank you, Mr. Lei, for your question. Your first question is about the loan disbursement sectors. In 2025, CCB stick to the real economy service, and we also stick to the strategy of quantity and pricing balance. We also continue to expand our customers and markets, and we also look at the pipeline of the key projects. The loan growth is steady and enjoy high quality. In terms of quantity, we enhanced our capacity to support the real economy. We have 2 highs and 2 advancement. The 2 highs include the growth of 7.47%, up by 1 percentage points than the average of the industry. The second high is the domestic loan is 8% in terms of growth, it is also higher than the CCB average. It also supported the real economy. What is -- what are the 2 advancements? First, in terms of the residential loan and the retail consumption loan, the disbursement are also leading in the industry. In terms of the retail consumption and also the advancement of some structural arrangement, we continue to support the mandatory needs for residential improvement of the customers. So in terms of residential finance and retail finance, we maintain our competitiveness in -- compared with our peers. We continue to improve the quality, and we have 2 elevation in the key areas and key regions. The loans percentage continue to increase. In 2025, CCB also has the 5 priorities and all the key area and the 5 priorities have recorded double-digit growth. In terms of technology loan, it also exceeded CNY 5 trillion and increased by [ 89%, ] supporting the high-tech company. And also the green finance also increased by CNY 6 trillion. And the inclusive finance also stands at 3.69 million. We continue to expand our customer base. In terms of pension finance and digital finance, it reached 53 million and is up by 15% and 18%, respectively. We also continue to enhance the manufacturing infrastructure. So the loans to these key sectors have also recorded double-digit growth. And in some key regions like Beijing-Tianjin-Hebei, Yangtze River Delta, GBA, Chengdu-Chongqing also has maintained a very steady growth. It's also higher than the average. The Retail finance continued to show its competitiveness. The domestic loans also exceeded CNY 9 trillion, and it also takes up 32% of the total loans. Compared with our peers, we also maintain a leading role. This is a solid support for our steady development. In terms of the total arrangement for 2026, this is the opening year of the 15th Five-Year plan. So we will try to guarantee a steady growth. In terms of structure, it will be driven by the domestic need. Also, we need to nurture the new quality development. The macro policy is more proactive, and we will support the industry upgrading, the internal needs satisfaction and the internal social welfare services. All these sectors have provided good opportunity for our banks. So we will stick to the strategic goals, guarantee the steady volume and also will be structure oriented. We will respond to the needs and improve the high-quality development of loans disbursement. And we will guarantee steady total volume. We will guarantee a reasonable growth of the total scale. For the new increment of 2026, it will maintain very steady as compared with the previous years. And in terms of the rhythm, we will also get a little bit more energetic, and we will have 2 anchorings. First to the corporate loans. We will support the modern industrial clusters and systems, realize the new quality development, support the emerging and strategic sectors, especially the high-technology sectors, and we will also continue to dig out the investment needs centering around the 5 priorities and manufacturing and key infrastructures. We will also echo the objectives of 109 items in the 15th 5-year plan in terms of the local government dedicated loans and some new emerging markets loans, we will also provide our support so that we can support the industry transformation. And we will also support the domestic demand consumption and its growth. We will also execute some dedicated projects and make full use of the fiscal policy, support the EV, automobile, the electronic devices and digital devices, consumption and travel, tourism, catering and the hospitality services so that the clients' experience will be elevated. We will also guarantee the demand of the service industry. And for the property markets, we will also be prudent, support the commercial residential buildings, support the social welfare system reform and enhance our competitiveness in the real estate sector loans. Through these measures, we will also through our efforts, we will continue to maintain our edge in terms of the retail consumption loans. Tang Shuo: Thank you, Mr. Zhang. Now I would like to invite a question from Beijing. The lady. Shuaishuai Zhang: I'm from CICC. I'm Shuaishuai. We noticed that in 2025, the decline of NIMs continued to show very steady momentum. So can you introduce the NIM influences in terms of supply and demand side? And also, what is your outlook for NIM in 2026. Now I would like to invite our CFO, Mr. Sheng Liurong, to answer the questions. Liurong Sheng: Thank you Ms. Shuaishuai for your question. Your question has 2 aspects. In 2025, performance and 2026 outlook of NIM. In 2025, the NIM is 1.34% as reported by Mr. Zhang. Vertically, we can see that in 2025, the NIM narrowed by 2 pp. And in terms of the changes in the 4 quarters, the spread continued to narrow. Horizontally, we compare with our peers. Our NIM is also maintaining a leading position. So the -- also -- have reached a balance in terms of the quantity price and the spread. So for the 2026, three factors will influence the NIM. First, the savings deposits has repricing, and we have completed the repricing. So the loan pressure has been alleviated. Secondly, for the interest rate, for the high interest savings deposits, and it will all -- most of them will be mature. So the interest pressure will be lower. Thanks to -- in 2024, the bank industry has executed a good mechanism. So we have attributed our growth to that aspect. So it has kind of buffered the loan interest influence to NIM. Thirdly, through very proactive management and structure optimization, we have also decreased the loan interest buffered the negative result of the loan interest decline. And through the management optimization and through cash management and also some payroll services, so we can make better use of our custody capital. So you asked to analyze from the assets and the liability side. In terms of asset side, we continue to improve the quality of investment, mainly the bond investment. So the percentage has been increased. President Zhang also mentioned that our interest capital also increased -- recorded increase. So for the -- some financial investments, its percentage also increased by 1.6%. So it helps the asset side. And through structural optimization, the negative impact has been offset. In terms of liabilities, so through differentiated layer management, we also reduced some high interest rate savings. And we also have expanded some peer savings so that the high interest savings impact will be reduced. So it also helped to narrow the spread of NIM. For 2026 outlook, we can also -- we can also look through the macro and micro levels. In quarter 4 of 2025, the banking report also mentioned that we need to enhance the system and also strengthen our monitoring, reduce the liability cost of the banks. In other words, in terms of macro policy, the PBOC on the one hand, pays attention to the market orientation of the interest rates. They also pay attention to the reasonable costs for bank operations. I think that macro trend is quite obvious. From a micro perspective, through improved liability management, active debt management, which is very effective to optimize our asset liability structure to enhance our multi-tiered customer pricing mechanism from the asset side and the liability side, we expect to be able to do more. We believe through our active debt management, we can continue to enhance our quality and efficiency in our operations. Therefore, we are confident, the NIM decline could continue to slow down, and we are confident that our NIM would still compare -- favorably compared with our peers in the future. Tang Shuo: Thank you. Thank you to our CFO, Mr. Sheng. Next question comes from the Hong Kong venue. The gentleman on the left from the fourth row, please. Shuo Yang: I am Yang Shuo, Goldman Sachs. So you just mentioned that you did pretty well in terms of your asset returns, right? What about bonds? Because in 2025, the scale and yield of your bonds were all very good. What's the highlight of your bond investment philosophy? And secondly, outlook in 2026. In terms of asset allocation strategy and investment returns outlook, can you comment on that, please? Tang Shuo: So may I ask Executive VP, Ji Zhihong from Hong Kong venue to answer that question. Zhihong Ji: Thank you. Thank you for that question, and thank you for paying attention to our performance. So as aforementioned by my colleagues in terms of our CCB investment, actually, both our CFO and our President has mentioned how we have increased our efforts in terms of asset allocation. That way, our books are more resilient. That's a very important factor. I'd like to say 3 things. There's like broader trends in changes in social financing and social lending. And in reference in this new environment, we are going to double down on our efforts of asset allocation. So corporate loans for the first time has surpassed other forms of loans. We are going to continue to support this active financial policy -- active fiscal policy. Government investments is CNY 12.8 trillion annually last year, which is leading the way out there in the market. And secondly, we will comprehensively satisfy domestic and foreign direct lending needs from our clients. The financial loan growth is quite rapid, like green loans, pension loans and tech loans. These are all actively growing area. We continue to participate in Panda-led debt, Panda loans, offshore renminbi markets is continued strengthening, which is in alignment with our overall capability to serve the development of the real economy. And secondly, we have enhanced active management. That's another thing. In lieu of a complicated market environment, and we have increased our forward-looking aspects of our asset allocation. Right now, our bonds have surpassed CNY 12 trillion in terms of size, which is quite substantial. In order to properly management in terms of our investment strategy, we are more active and nimble. We want to seize opportunities out there in the market. We are able to make much more good use of existing capacity. And we have improved integration of domestic and foreign currency. We have many ways of asset allocation to optimize asset structure to increase the profitability and stability of our assets. Thirdly, we are actively participating in the bond trading market to increase our customer service capability. We, of course, are a big bank, and we actively perform our obligations out there in the market to continue to expand our circle of friends in our trading, which is 127% increase in our size of our circle, more than 50% increased distribution. And at the same time, through satisfying SMEs and the investment needs of various types of clients, the annual transaction volume has surpassed RMB 100 billion. The centralized settlement business is also a key business of us, which achieved new breakthrough. When foreign investors want to come to China and invest in China, we provide a brand-new, more convenient channel for them to invest in renminbi-denominated assets, and we are developing that. And we also provide a fixed income and other FICC types of services in order to satisfy the various needs of our clients. On your second question, market uncertainty is still quite high at the moment, I'd say, particularly geopolitical factors have impacted the financial market somewhat. What we need to pay attention is how much will the rising energy cost change the risk appetite and expectations of the market at large. Right now, overall, domestic liquidity is very stable. External market, the volatility out there in the foreign markets are actually greater. Of course, the foreign and domestic market are linked, and we have seen different risk profiles for some types of traditional assets. And in that environment, we are going to continue to maintain our stable, steady value-oriented investment principle. We are going to continue to make sure to tune our strategies appropriately to respond to the market conditions and strike a good balance. So those are the 3 major areas that we are going to work on. The 3 areas are active adapting to changes in daily needs of our clients, including value creation and customer service. And secondly, we know that the yen market, the renminbi market and the opening up of the renminbi market is vast and rapid. Offshore issuance of Dim Sum bonds is very convenient, very convenient these days. And domestically, we also issue permanent perennial debts to continue -- we're going to continue to optimize the coordination of -- across domestic and foreign markets across domestic and foreign currencies. As a flagship institution, right, Hong Kong trading with is Hong Kong, of course, in M&M Asian financial hub, trading is very active here as well. We do recommend international players to actively participate in trading in the Hong Kong markets. Fixed income asset class has shown very positive development trends. As the yen market and renminbi market continues to expand here in Hong Kong, we have a lot of opportunities. Furthermore, we continue to emphasize on multi-strategy adoption, more active management in order to make sure that the full group in terms of operational management, we are able to do more innovation amidst this volatile environment. The key thing is that we have to have adaptability in face of the markets and clients, particularly managing significant volatility risks. The CCB has to play various roles in this regard. We are a service provider, we are a bank, et cetera. We have to better leverage our foreign and domestic and foreign and domestic currency integration advantages. And Mr. Zhang has brought this up just now. The targetedness, the diversity and the efficacy of our operational strategies will continue to be enhanced, in particular, our execution must be enhanced to make sure our investments work out. And furthermore, we are going to increase investment into our tech empowerment to build a smart ecosystem. Right now, digitalization has many applications in financial trading, things are developing rapidly, and the CCB is going to continue to invest in developing such capabilities, iterating and evolving our systems, upgrading our systems to make sure that finance and bond investments can continue to develop in a high-quality manner. Thank you very much. Tang Shuo: Next question comes from the Beijing venue. The gentlemen on the fifth row on the left, please. Unknown Analyst: Thank you for this opportunity. I am [indiscernible] from CIS. So my question is as follows. The external environment is very complicated and our country's economic development is facing a structural change as well. But despite that background, in 2025, your NPL ratio has continued steady decline. Your asset scale is also steady. So may I ask what measures have you adopted in terms of risk management? And with respect to future risk assessment, what do you think? Especially in key core areas such as consumer loans. Tang Shuo: This question will be addressed by Mr. Li Jianjiang. Jianjiang Li: Thank you. Thank you for your question. 2025 is the last year of the 14th 5-year period. And we, at the CCB continue to implement the strategies by the central government at the State Economic Reform Council. We're going to continue to focus on resolving and preventing risks as the first priority of our bank. So you have already -- Mr. Zhang has really cited a lot of relevant data up till last year, which is -- NPL ratio is 1.31 ratio, which is 0.03% decline year-on-year, 1.7%, [ 12 bp ] decline of such loans. As you've seen, right, we have improved on these metrics. And at the same time, our risk management capacity is adequate. Our provision coverage ratio is 233.15%, flat year-on-year. So over the past period of time, in face of various risks and challenges, the CCB has continued to think about the bottom line risk management mentality. And we continue to properly coordinate and management preventative risk management measures to make sure our overall risks are under control. On the one hand, we continue to persist on high-quality development to hold true to our baseline security. We want to actively service the real economy, focusing on 5 priorities to increase our capacity in service of key areas. We are going to continue to do that, and our risk control measures will not weaken as such a result. Therefore, our NPL ratios continue to improve and our asset structure continues to improve. And furthermore, we to defend the risk bottom line resolutely through better risk control measures. We actively agilely built up our risk management systems. We enhanced the synergy across our 3 risk management bottom line mechanisms and integrated the group-wide risk management. And we have started to assess and improve our efforts when it comes to assessing the nature and trends of risks to offer more preventative measures. And over the past period of time, you asked about the increase in risk associated with retail loans. We continue to focus on the changes that need to be made. And with respect to our retail business, we are going to enhance the risk management control measures therein and continue to focus on the key risk hedges in the key processes of our retail loan risk management mechanism. So I could say that over the past year, these measures have worked. The CCB's personal loans nonperforming ratio has not increased as quickly as it did before. With respect to the current environment, we think risk management in retail loans will still be the key focal point of our work. I believe as our management mechanism, our risk control measures continue to be fine-tuned and implemented better, we are confident that we are able to maintain quality business in our retail business and control the risks therein. The new year would be the first year of the 15th 5-year plan period. It would be a key and pivotal year to accelerate and improve management of a great nation. The CCB will continue to implement the President Xi Jinping's important guidance on the 3 key capabilities we have to continue to do risk management properly to better coordinate developmental security. We will work hard to achieve a good start, steady progress to continue to serve high-quality development and provide a solid foundation. Tang Shuo: Thank you, Mr. Li. Next question is from the Hong Kong venue. May I invite the lady on the right third row to ask a question. Unknown Analyst: Hello. I'm [indiscernible] from Phoenix TV. I'd like to ask right now, the bank industry is accelerating its deployment in AI technology. May I ask what are the key initiatives that CCB has with respect to AI tech? May I ask Executive VP Lei Ming from the Hong Kong venue to respond to that question. Ming Lei: Thank you for the question. This is an important opportunity. The AI technology has provided a lot of opportunity, and we are going to implement a nation strategy to continue to do the AI plus implementation to focus on in-depth application of AI technology across all our business segments. Firstly, we have improved our foundational capability of AI capability. As you know, there's computational power, data and algorithms. In terms of computational power, we reserve enough room for our computation power for further development. We have 5 different data IDC centers with a high computational power clusters. And over the past year, in [indiscernible], our computational power continue to be unleashed. In [indiscernible] and in these 2 new areas, we have advanced IDCs, which are being built and the progress is very smooth. And we also reflect a flop of over CNY 14 billion. So you can see that 1P is hundreds of billions of FLOPS. So 1 FLOP would be 1.4 billion of computing. So it also increased by 14% compared with 2025. We also have monitored the AI system better in terms of algorithm. So all the advanced models has been adopted like DeepSeek, [indiscernible]. And we also have the coordination of big models and small models. And so the decision-making AI is also being integrated. In terms of the digital model, we also accelerated the nonstructural model and the clearing of the stock data. So we know that the potential of AI depends largely on how linear and how better -- how well you comb the data. So we need to sort out the data in a good way. And we need to also set up a database, including the experience base. We also introduced over 500 million items of data -- of experience data, and we also advanced the application of different sectors. We also have the people-centric principle, stick to high-quality development in 2 dimensions. And we also proceed the linear management, deeply integrate various data, continue to optimize the whole procedures, emphasize on the service of various smart applications and smart management, smart risk controls. We have constructed over 400 scenarios covering all the 6 areas. So I would like to report the 6 areas. First, in terms of the channel service, the interactive AI, interactive service and AI also completely upgraded our service. We try to have automated identification and very speedy respond through remote dialogue, we improved the quality and efficiency of service. For the employees, we also have assistance to the employees so that the convenience of work is also being elevated. Now we have various scenarios applied. And also, we are leading in the industry. If the employees want to check up some guidelines or principles or write an article or they want to utilize some data or check up the data, they can all rely on AI to help them. In terms of the business, [ Bonder ] is the smart application. [ Bonder ] means help the manager to get enough sales support. And we have the retail and also inclusive finance. All the managers can be -- can get all the integrated, comprehensive and whole chain assistance. If a retail manager wants to get the customers, they cannot remember too many customers' names. They cannot cover so many customers. It will be already a high level for them to cover 100 of them. But through the smart assistance, they can manage over 20,000 customers. And so the manager can conduct high-quality and high-efficiency service to the clients, providing customized service to the clients. In terms of products, AI is deeply integrated into the product, inclusive the corporate and settlement businesses. In terms of international settlements, we also have the technological breakthrough through over 500 smart judgment points. We also realized smart analysis, and we have also had the smart extraction of some anti-money laundering points and the cross-border settlement. We know that some cross-border settlements may be -- may come in the form of images or videos or even black and white papers. So we need to extract all these information through smart tools. And the third is about the operation. We comprehensively improved the intelligence level of operation. In terms of question response, AI already reached 99.42%. That means when our clients want to raise questions to the head office, 99% is answered by AI, firstly. And the AUM -- the active user daily is over 100,000. And we also have a dynamic monitoring and a dynamic management of AI. And AI also covered R&D and design. And in terms of coding, it contributed over 62% adoption over 48%. So it helps to improve the efficiency of employees. So the 48 test passing rate is very key. We know that design system and design demand, whether it is truly useful, especially for a high-frequency transaction scenario of banks, we need to have a good test. So the test is generated by AI. It has greatly improved the efficiency. In terms of risk control, we also have AI plus risk control system. In terms of the licensing, the approval vetting system and approval system, we also use AI. We also rely on the generative AI to have a whole procedure application. In terms of approval level, we recorded a double-digit growth. And in the meantime, the average handling time also decreased by 30%. We also continue to enhance quality control. We highly emphasize on the compliance issue of AI. So -- and we have a multidimensional safety and risk control for AI. And we also established the big model, the alerts and the red flag raising keywords so that the cybersecurity can be enhanced, the coordination also can be more smooth. We also guarantee the sensing of some sensitive information, the AI tools and also all these AI assistants -- when they are used, the users, the human users will be the gatekeeper so that all the AI application will be fully under control and monitoring of human. And we will also seize the trend and also continue to improve the efficiency and safety of AI adoption. We use technological power to support the high-quality development of our banks and support our financial system enhancement. Tang Shuo: Thank you for your question. Now we would like to invite questions from Beijing. Gentlemen, on the right in the fourth. Unknown Analyst: I'm from [indiscernible] Securities. I'm [indiscernible]. My question is about savings and deposits. First, can you introduce our 2025 savings growth and characteristic. And then in 2026, our estimation is that a lot of the savings will be mature, especially the retail savings. So what is your feeling about it? What about -- how do you feel about the retail savings and any new changes and to respond to the new changes, what are the measures to be taken? Tang Shuo: Okay. I will answer the question. Thank you for your question. I would like to answer the first question first. We always have a people-centric principle, pursue high-quality development. In 2025, we enhanced the steady savings and deposits. The savings growth is steady, the optimal structure and have a deep structure. It continued to grow. By the end of last year, the volume is over CNY 30 trillion, increased by 1.21%, CNY 112 million, guarantee the volume of the capital. And we also have to look at the structure. First, about the retail savings, it has a rapid development. The balance also increased by 1.7 percentage points to [ 4.6%. ] And the corporate savings also increased by 2.66 percentage points. The savings also increased to over CNY 400 billion, and we're maintaining a leading edge in the peers. And we will also balance the quantity and quality. The saving is increasing steadily, and it is on par with the increase of clients. And the ratio is also very steady, also has a slight decrease as compared with 2024. And for the hot topics, the savings are growing steadily. The volume is over CNY 18 trillion, deposits, nearly CNY 12 trillion. And the maturity level also is increasing. The acceptance level is good. And for the financial assets of the retails, it has some new dynamics flowing into the funds, for example. This momentum may be -- may continue this year. So we would ride on the trend. In 2025, AUM is over CNY 23 trillion, up by CNY 1.4 trillion. For insurance and some -- the precious metal products continue to grow. Next up, we will focus on the bottom logic of wealth management, continue to re-enrich the product structure and design more products for our clients. The third is about how we can guarantee the steady of savings. We will follow the momentum and meet the customer demands, the new changes, optimize the service and promote high-quality development of savings and deposits. For the corporate and retail needs, we have optimized our network like payroll services. Next step, we will also focus on some key products and the scenario coverage, expand the scale of our capital so that the high-quality capital can be maintained. We will also respond to the needs, provide comprehensive one-stop services and serving the corporate and the individual clients well. We will also continue to improve our system, provide a good experience to the clients. Now I would like to hand over the next question to Hong Kong. Unknown Analyst: I'm from Hong Kong Commercial Day. I'm [indiscernible]. We noticed that in recent years, the fee income of bank industry is affected by the lowering of fee policy. So the Hong Kong banks are also diversifying the businesses to cope with the challenge. CCB has recorded positive growth of fee income. So we want to know what are the sources of fee income increase? And what about the intermediary business growth opportunities? Tang Shuo: Okay. Mr. Sheng Liurong will answer the question. Please. Liurong Sheng: Well, thank you for that question, Mr. [ Zhang. ] As you've said, ever since 2023 due to a series of fee reduction measures, the growth in that revenue for our bank has faced some challenges. In 2025, overall, our intermediary revenue growth is pretty good. Overall, it has reached 5.31% growth or more than CNY 100 billion. Maintaining the momentum on one hand, we also see 2 positive features. Firstly, is asset-light. Our admin fee revenue accounts for 14.89% of overall fees, which is 0. 49% growth, which is leading the pack. And secondly, the revenue structure continues to be improved. In 2025, our asset management, our wealth management, our custody management service business contribution continues to go up. This means that our new types -- new kinds of intermediary services growth has seen new found momentum. In 2025, this new momentum is quite strong. You mentioned that in 2025, our intermediary income and what are the highlight areas. There are 3 of the highlights. Firstly, we consolidate our advantage in our traditional strengths. On the one hand, we satisfy the fund money transaction needs for both the private and public clients. And secondly, our traditional bank cards, payment services, settlement services, the revenue on all those fronts continue to grow. Our bank cards, the payment settlement-related revenue has reached more than CNY 57 billion. In other words, more than half of our revenue comes from these sources, which is our base. Third-party payments is more than CNY 22 billion. Credit card, more than CNY 15 billion revenue. To public entities, more than CNY 11 billion, both foreign and domestic currencies. This is the area that you highlighted. The growth in revenues in these areas continues to -- is about our solid foundations, our rapid networks and our continually improved and reiterated products. And as Mr. Zhang, our President has mentioned, our settlement accounts with public entities have almost reached 18 million different accounts. Several pieces more of data. Our mobile payments, cardholders has reached 493 million, right, almost 500 million. Our network accounts have more than 100 million different card holders and transaction has more than 2 billion transactions annually, right? These are all leading indicators compared with our peers. And secondly, a key area of development would be in 2025, the Chinese capital markets have recovered and the bond markets has also recovered somewhat, and we see opportunities. So last year, in terms of wealth management and capital asset management, we also recorded positive growth. In terms of wealth management, it is a hard one success. In 2023, we -- actually, the fee income continued to decrease. So we have to enhance our customer base and expand the business scope so that we try to get more income through these measures. And we have intermediary services like selling insurance products, the funds and the precious metal products. So the income is around CNY 8 billion. So this is really a hard one results, and it attributes to the expansion of our customer base and also our services expansion. The wealth management clients also increased by 8 million. It also has a new increment of [ 930,000. ] In terms of the scale, the daily volume is around CNY 5 trillion. It does not include the traditional savings business. So this is about the other wealth management products. The growth is over 15%. In terms of asset management, the revenue is over CNY 15 billion. The AUM is around CNY 6.94 trillion. The growth is over 20%. Another thing worth noting is that wealth management and capital management has a very important link that is custody business. Last year, the custody income also reached CNY 6.5 billion. The scale is over CNY 37 trillion. It also has a Y-o-Y increase of over CNY 3 trillion. So over the years of exploration, we have wealth management, asset management and custody business, and these 3 priorities have contributed a lot to our business. The third area is to promote our characteristics. Some businesses are leading like some specialty businesses, we have a competitive advantage. There are several aspects. First, we respond to the diversified needs -- financing needs of the customers. So like investment business has also recorded positive growth around CNY 7 billion. And -- we have a unique business called the fair selection business because we are construction bank, we are born for construction. We also prosper for construction. So in terms of infrastructure, we have a licensing that is the engineering consultants. Years ago, the real estate business is transforming and is restructuring. So the consultant business in real estate has declined, but we have transformed the business. In terms of key infrastructure and information infrastructure, we have expanded the business. In terms of the traditional infrastructure, like railway, the airport and some hydraulic projects and the railway businesses. And for the new emerging sectors like the wind, solar power and also the fiber businesses, and we also expanded to a whole life cycle consultancy and the revenue also reached CNY 2.3 billion last year. And we also had the pension finance and the related business. We serve the clients of the social insurance, the settlement, the payment and also the loan of the residential insurance also are handled by us, and the revenue is also very good. So these are all the contribution of various fee sources. And for the 2026 outlook, I think it has both challenges and opportunities. In terms of challenges, you also mentioned just now that there is a policy of the fee reduction, so it will continue to have its impact. So this is a common challenge faced by the whole banking industry. But for opportunities, there are still a number of them. Just now, President Zhang also mentioned, no matter from the 15th Five-Year plan or the government address, we all emphasize on the importance of internal demands -- domestic demands and consumption is #1 for consumption demand. So we will continue to satisfy the new consumption models. So these will be good opportunity for our settlement business. like the consumption and the credit card segment businesses will continue to be enhanced. The second aspect is the capital market booming. The investment mindset is also enhanced. So we have the wealth management, asset management and the custody businesses. These are 3 driving forces are very important. And we are also improving the modern system development in terms of stocks, securities, insurance, loans, et cetera. So we have multiple licenses of these different businesses. So in terms of integration of all these businesses, just as mentioned by Mr. Zhang, in terms of financing, the financing of credit, financing of different demands, we can also satisfy our clients. I believe overall, due to many reasons, our intermediary fee revenue can continue to maintain this steady growth trend. Tang Shuo: Thank you -- thank you for your response. So recently, we have, of course, made an announcement about today's results announcement event -- and we have collected questions through channels such as our investor hotline e-mail, and we also have a live stream today, and some investors have left comments to interact with today's event. Most of the questions raised by online investors have been answered in previous questions. But A lot of people are still very curious about our 5 priorities. We're going to pick one of those questions. This question reads Fintech is #1 amongst our 5 priorities. It's also a very important lever for building a modern service industry ecosystem and to cultivate new qualitative productive forces. What have you done in this area of Fintech? I like Executive VP Lei Ming to answer that question. Ming Lei: With respect to the service area, service area covers nurturing tech talent, innovative tech services, conversion of R&D results and to build and run an ecosystem of technology. And we serve tech firms, tech parks, science parks, technological practitioners, developers, institutions and other entities. Specific work include all of our value-added services across the entire ecosystem of our bank services. I'm going to comment on those. Firstly, we actively develop our integrated service advantage. We are going to break through our industry and create a positive feedback loop. We are going to actively serving great financial [indiscernible] to have solid long-term investments into hard technology using our group capabilities in terms of enterprise innovation, we are accelerating equity financing efforts in early stages of investments. We use investment, equity, insurance, bonds, and we use many diverse tools to empower technological entrepreneurship and industry entrepreneurship. We continue to develop clusters of innovative fund clusters. Please pay attention to the word clusters, right? We work alongside with in Hubei, Xiamen, Shanghai. In those areas, we work with the nationwide fund entity to establish innovative tech funds. We use this patient capital to nurture tech upgrade and enhancement and steadily promoting the progress of financial asset investment companies and equity pilot schemes. Cumulatively speaking, we have set up 28 pilot funds to enhance the toolkit we have for equity investment. More than 160 issuers investing into more than 180 different tech firms, empowering tech companies and optimize their financial capital structures. Secondly, we use our average advantage as a large bank to empower technological innovation and industry innovation and its integration and synergy. In terms of enterprise innovative capabilities, we have a patent valuation model. Our technological valuation model has already obtained 3 nation level -- nationwide level authorizations. Our traditional sheets, right, the balance sheets, our profit sheets, our cash flow. In the past, our customer service managers basically look at these 3 things, right, to depend on your creditworthiness. But in order to adapt to the development of Fintech, we have innovatively looked at the fourth sheet, what we call an innovation sheet. And in that sheet, we introduced IP innovative capabilities and information pertaining to the founder of that tech firm to quantify and digitalize and to help more potential tech innovators to access funds and finance. And when it comes to enriching our financial products offerings, we have more convenience, conversion loans, tech innovation loans, we have a lot of special products, which effectively satisfy the differentiated needs of these tech firms across different phases. As you know, that tech firms grow very rapidly, but in the start-up phase, in the growth phase and the mature phase, they need different services in both scale and variety. So therefore, throughout their entire life cycle, we must provide them with a basket of financial services, particularly for smaller micro firms. We have [indiscernible]. These are new specialized products, which has given out more than CNY 160 billion worth of loans year-on-year growth rate of more than 50%. We have CNY 5.25 trillion worth of loans to tech firms serving more than 300,000 different firms leading the way across the industry. Thirdly, in our work, we continue to focus on comprehensively building a team in tech and banking to service the nation's strategic development, focus on Beijing, the Greater Beijing, the Greater Shanghai area and the Greater Bay Area to serve the construction of these tech clusters, innovative clusters. Wuhan, [ Xian and Xin Cheng, ] these new innovative areas are also areas where we focus on providing more support on. We have a 5-tier interlinked. So at the headquarter levels, branches, Tier 2 branches and even our frontline branches. At the headquarters, we have our innovative department, tech department to focus on our -- we have in several major key areas, we have innovative centers managed directly by the headquarters. In some key Tier 2 branches, we have set up a direct of the operated tech center. These centers can better serve more local clients. And we also have closed quarter services available. And throughout the group, we have enhanced the nurturing of a professional team to actively train people who knows finance, who knows tech, who knows the industry. We want these -- to train these talents to support our future endeavors. In the future, our bank would continue to promote high-quality development of the entire Fintech ecosystem. We want to continue our quality traditions and to convert those in this new era as are part of the important forces and important implementations in serving our nationwide strategy to become an advanced and great nation in terms of tech and other areas. Tang Shuo: Thank you. We only have time for 1 more question. May I ask the gentleman at the very far right to the back. Unknown Analyst: Thank you. Thank you for giving me an opportunity to ask this question. I'm [ Lijun ] from GF Securities Company. I'd like to ask a question about personal consumption loans. Recently, the Government has launched quite a lot of stimulus policies. The recent discount loans have been widened in scale and the barrier of entry has been lowered as well. May I ask what's the growth of possible consumption loan at CCB and what are the applications looking like? And furthermore, when it comes to helping stimulate domestic consumption, what more can CCB do? Tang Shuo: Thank you for the question. Allow me to answer -- to answer that question. So the CCB continues to implement the strategical initiative of stimulating domestic demand and personal consumption to benefit the public and continue to promote these initiatives to participate in the major initiatives by the Chinese government to continue to provide more fiscal support and financial support for SMEs and personal loans to satisfy the many different consumption needs of our nation. Personal needs, personal credit card development indicators continue to be healthy. We effectively are able to stimulate and help financing such consumption behavior. The total balance have reached CNY 620-plus billion, which is an increase of CNY 115 billion, which is more than CNY 100 billion growth for 3 consecutive years. The balance and growth is all leads our industry peers. Ever since the implementation of this optimization, we continue to ramp up our advertisement on these discount loans. We offer discounts wherever we have to lower the spending and consumption costs of our customers. We have 630,000-plus customers and provide discount loans for more than 18 million different transactions. We have done 3 things primarily. Firstly, we actively promote collaboration between bank and businesses to engage in synergistic efforts. We work with commercial 9 commerce borough departments to roll out a spring festival initiative. We have specifically themed consumption stimulus activity to stimulate consumption and more than 25,000 businesses participate, reaching 0.75 million customers with a ratio of 2.91, 18.5% growth and 21.3% growth in consumption and consumption loans throughout the spring festival period. We continue to roll out the basket of policies of stimulating domestic demand to continue to build out more personal loans, loans for relevant entities and credit card loans. In terms of stimulating personal consumption, we still lead amongst our peers. We continue to handle more subsidy issuance by the government fiscal department, a lot of old for new policies for home appliances and other things. And last year, in 331 cities, we gave out CNY 20-plus billion worth of subsidies for the government, driving CNY 180-plus billion worth of consumption. This year, we provide systematic support and actively enhance the efficiency of these events. Thirdly, we focus on key consumption areas and to support financial innovation. We want to enhance the integration capability of our service spending, new types of spending, personal consumption type of model, and we want to adopt a new consumption model. We want new financial services to merge into new scenarios and merge with new forms of businesses. And at CCBs [indiscernible] and our lifestyle app, we built a lifestyle platform, consolidating resources to provide our customers with relevant loans such as upgrading, renovation, buying a car, buying houses. We have a lot of one-stop service and financing solutions. The next step, we're going to continue to work along the main line of stimulating domestic consumption to further leverage our own strong digitalization capabilities to further work alongside in tandem with the government to enhance the quality and efficacy of domestic consumption stimulation policies to further contribute to society. Okay. That's the Q&A session for today. I'd like to thank everybody's participation. Our management have engaged in a frank professional in-depth communication with respect to questions on everybody's minds. I hope that helped everybody better understand CCB's strategic measures, our performance and our development trends. We have always cared about management of our market value and investor returns. We have already established the CCB Holdings Limited market value management scheme, and we have relevant provisions and principles to govern the work relevant in the management of our market value. Up to late 2025, our market cap has reached USD 265 billion, which is a 25% increase compared with late 2024. We will continue to promote our high-quality development to continue to enhance value creation capabilities. We will continue to use steady cash dividends to thank our investors to enhance our information disclosure and IR management to continue to promote our investment value to the market and actively implement our market value management mechanism. That's basically the content for today's event. If you have any other questions and queries, please feel free to contact us at our IR team at our Board office. Finally, I wish everybody good day. [Statements in English on this transcript were spoken by an interpreter present on the live call.]
Operator: Good afternoon, and welcome to the Origin Materials' Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Matt Plavan, CFO and COO. Please go ahead. Matthew Plavan: Good afternoon, and thank you, everyone, for joining us. Speaking first today is Origin's CEO and Co-Founder, John Bissell; followed by myself, Matt Plavan. Then we will open the call to questions from analysts and discuss questions submitted as part of this quarter's Ask Origin campaign. Ahead of this call, Origin has issued its 2025 fourth quarter and full year press release. It can be found on the Investor Relations section of our website at originmaterials.com. Please note that during our discussion today, we will be making forward-looking statements based upon current expectations and assumptions, which are subject to risks and uncertainties. These statements reflect our views as of today, should not be relied upon as representative about views of any subsequent date, and we undertake no obligation to revise or publicly release the results of any revisions to these forward-looking statements in light of new information or future events. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. For further discussion on the material risks and other important factors that could affect our financial results, please refer to our filings with the SEC, including our annual report on Form 10-K. During today's call, we will discuss non-GAAP financial measures, which we believe are useful as supplemental measures of Origin Materials' performance. These non-GAAP measures should be considered in addition to and not as substitutes for or in isolation from GAAP results. You will find additional disclosures regarding the non-GAAP financial measures discussed on today's call in our press release issued this afternoon and our filings with the SEC, which will be posted to our website. The webcast of this call will also be available on the Investor Relations section of our company website. With that, I'll turn the call over to John. John Bissell: Thank you, Matt. Good afternoon. Last year was a challenging one for Origin but also brought meaningful progress. Our commercialization journey has taken longer than we initially anticipated, which has had a negative impact on our stock price. However, today, we are sharing that this month, we are delivering the latest iteration of Origin PET caps to multiple world-class beverage brands with approximately 30 key prospects in our pipeline receiving and evaluating our latest design. The new cap design incorporates feedback from household name beverage brands. Origin's internal testing of these caps demonstrates market improvement in seal performance and impact resistance in a single design, meeting industry benchmarks for pressurized water applications on key test metrics such as ball impact and heated stress testing. Customer qualification processes for these new caps are now underway, and we anticipate related customer announcements pending the completion of successful qualifications with time lines varying depending on customer requirements. For those new to Origin, our technology platform produces what we believe are the only commercially scalable PET bottle caps as opposed to the HDPE and polypropylene caps, which today dominate the over $65 billion closures market. Our platform excels in 7 areas: recyclability, oxygen and CO2 barrier, enabling shelf life extension, closure diameter, which enables more economic large-format production, thickness, which enables lightweighting, rigidity for a premium feel, use of recycled content and optical clarity. Our innovation stands to be transformative for the packaging industry. Turning now to financing. To strengthen our financial position in November 2025, we announced a convertible debt facility with an initial tranche of $15 million in cash with the option to raise additional capital for up to $90 million in total. We also announced the execution of a nonbinding term sheet for $20 million of equipment financing. To date, however, due to the significant decline in our stock price since securing the convertible debt facility, we have been able to make only limited use of the equity payment feature of this facility to service the outstanding debt at reasonable conversion values, which we had originally intended to do in order to preserve our cash for operations. Servicing the outstanding debt with cash has had and will continue to have an adverse impact on our liquidity. Also, at recent stock prices, we do not meet the minimum equity requirements for additional capital draws from this facility. Further, the aforementioned nonbinding term sheet did not progress to a definitive agreement because the lender made material reductions to the valuation assumptions underlying the debt financing. As a result, absent near-term financing and reductions in operating expenses, including reductions in force to extend our planned operations, we currently estimate that our existing cash and cash equivalents will allow us to continue our planned operations into the third quarter of 2026. Therefore, we are intensifying our focus on potential strategic arrangements that we believe could help accelerate value creation from our technology for the benefit of our shareholders, including a potential business combination, equity and debt financing, divestiture of assets, technology licensing and other arrangements. Despite challenging business conditions and customer adoption time lines longer than we initially anticipated, our prospective customers remain interested and engaged. These companies consume billions of caps per year and the latest cap designs reflecting modifications which our customers requested are now in their hands undergoing testing. On the commercialization front, we are executing our water-first go-to-market strategy within the $65 billion global closures market. In August 2025, the first products with Origin PET caps went on to store shelves in California, a milestone for PET cap market acceptance. We've also made significant progress developing our distribution network for PET caps. In March 2026, Origin announced HP Embalagens as strategic distributor for sustainable PET bottle caps. HP Embalagens is a major Brazilian packaging company serving world-renowned brands such as Nestlé, Ferrero Rocher, Natura, and Johnson & Johnson. The relationship complements Origin's strategic partnerships with Berlin Packaging and Matrix Bottling Group announced in August 2025 and February 2026, respectively, and supports Origin's ability to access markets and distribute PET caps globally. Acquisition of premium water customers is expected to continue throughout 2026. Finally, for PET cap production capacity, Origin's CapFormer line build-out in 2026 entails 6 lines already fully procured and projected to be installed by end of the year. With that, I'll hand it over to Matt, who will discuss the company's financial performance metrics. Matthew Plavan: Thanks, John. First, with respect to the changes in our expected financing sources outlined previously by John, it is the case because of the uncertainty in the duration of customer validation cycles, coupled with the impact of these changes to our expected financing sources, we are at higher risk of operational disruption if we are unsuccessful in replacing the prior funding arrangements in relatively short order. Therefore, we continue to actively source equipment financing and are currently engaged with multiple prospects. In addition, in connection with our strategic review process, we are in discussions with multiple parties and capital infusions are within the scope of those discussions. Overall, we believe our path to maximizing shareholder value will be a combination of successful new capital sourcing, monetization of current assets and continued cost containment measures and we look forward to sharing updates as we progress these initiatives. Turning now to guidance. We are updating our projected timing for adjusted EBITDA run rate breakeven. Because of the additional time we have spent and will spend on design iteration and customer qualification, reflective of customer feedback received in this past quarter and because of our increased understanding of the bespoke design requirements of key market players, we no longer project achieving adjusted EBITDA run rate breakeven prior to 2028 as compared to our previous projection of adjusted EBITDA run rate breakeven in 2027. Further, this update reflects what we expect will be a more gradual commercialization process, likely characterized by multiple smaller product launches in series rather than a single launch consuming all or most of Origin's PET cap production. Turning now to our balance sheet. Cash, cash equivalents and marketable securities were $53.5 million as of December 31, 2025. The net accounts receivable balance at year-end was $13 million and is comprised of receivables associated with the company's legacy supply chain activation program associated with the Origin 1 biomass conversion plant. Concurrent with the wind down of the supply chain activation program, we expect to collect all related net receivables in due course, resulting in a significant source of cash. Additionally, at year-end, the company had $9.1 million in land held for use in Geismar, Louisiana. We are actively seeking the sale of this land, which would also result in significant cash coming to the company. Also, at year-end, the company had $15 million in convertible debt outstanding. In a press release issued February 12, 2026, the company announced an organizational realignment and provided a business update, including the decision to cease all further investments into the furanics platform on which the OM1 and OM2 technologies are based. A significant reduction in headcount, including OM1 and OM2 focused headcount was also announced as the company continues to focus now solely on its caps and closures business. The decision to cease all further investment in the furanics technology platform resulted in a reevaluation of the OM1 and OM2 asset fair values. Therefore, the company engaged a third-party consultant, a sustainable energy and chemicals adviser to help assess the value of these assets based upon potential alternative applications for the plant and related assets and to estimate the liquidation value of each. As part of their analysis, our consultants estimate the rebuild cost of OM1 today to be almost twice that of the original build cost. Despite that increased replacement cost without continued investment into the furanics platform, the most probable valuation of these assets is more closely aligned to a repurposing of OM1 and OM2 design engineering and related assets. This valuation includes the impact of fit-for-purpose reconfiguration costs and results in an adjusted fair value of $18 million. This resulted in the recognition of a $165.9 million impairment expense recorded in the fourth quarter. With that, I will pass the call back to John for concluding remarks. John Bissell: Thanks, Matt. I'll conclude with the following. Despite challenging business conditions and customer adoption time lines longer than we initially anticipated, Origin is the clear technology leader for PET caps. We have made significant progress with respect to our product development. Our customers remain engaged with approximately 30 customers receiving and evaluating our latest cap iteration. This is the first time in decades a truly new pressurized cap has been introduced into the beverage space. And while Origin has already overcome substantial technical obstacles, we expect to continue customer-driven product qualification and optimization on the way to adoption. We look forward to sharing our milestones with you as we progress in our mission, centered on the future of packaging, sustainable materials and true bottle-to-bottle recycling. With that, I'll open up the call for questions. Operator, may we have the first question, please? Operator: [Operator Instructions] Our first question comes from Frank Mitsch with Fermium Research. Frank Mitsch: I appreciate the candor, perhaps not the way that we were looking to end our week, but it is what it is. Before we talk about biocaps and so forth, so on the furanics side of things, it -- obviously, you're not investing in it and you're looking to repurpose the assets and so forth. As part of the strategic review process, is there no one -- are there -- are you not getting any inbounds whatsoever in terms of another company looking to take up the flag on converting wood into chemicals. I mean, quite frankly, the events of the past month in terms of oil, et cetera, would have made that a much more interesting business. So yes, any updates that you can give us there in terms of interest level, et cetera? John Bissell: Yes. Frank, thanks for the question. Obviously, you're right that the current oil price environment shifts the picture for furanics pretty meaningfully. But I think -- or at least the conceptual picture. We do have some inbound interest. We think that -- we're optimistic that, that will result in the, as you say, the torque being picked up and carried on biomass chemicals. And we do think that, that could result in long-term value for Origin and shareholders as a result of the sort of furanics development. We don't think that it's going to have a significant impact on the amount of operating cash that we have available as a consequence of that. So consequently, it's sort of something that's a little bit further down the road. But we do see interest there. It's possible that the OM1 and even perhaps the engineering designs for OM2 could be used for that. But again, because we see that as something that wouldn't be seized upon immediately, the value for those are going to be likely discounted just due to time. But no, we do see some interest there. Frank Mitsch: Okay. Got you. And any sort of update that you can give us in terms of the overall strategic review, where RBC stands and how that process is coming along? John Bissell: Yes. We have some parties that are interested. As we've said before, it's a pretty wide variety of different potential arrangements that could be put together. Our view on which of those arrangements are optimal for Origin has shifted over the course of the last couple of quarters. And so we continue to pursue that. We -- as we said in our prepared comments, we think that the -- there are some attractive opportunities there that we can move towards, but hard to predict exactly which one is going to be the winner. Frank Mitsch: Got you. And it sounds like a lot of the issues that you're facing pertain to the time line working with your customers in terms of them testing and the iteration process to when things can be commercialized. You did put products on the shelf back in August with power hydration. Can you give us an update as to how that product performed on the shelf? Where does it stand now? Is it continuing and so forth? Any update that you -- because that's actually a project that is on store shelves. So was possibly giving us some confidence that, that time line from testing to commercialization might be narrowing, but it doesn't appear to be the case. John Bissell: Yes. So the product performs essentially equivalently to the standard HDPE caps. there can be some variance inside of even existing caps. We were easily inside of that variance. And so I would say performed well. We expect that there will be an expansion of our caps in that product line in the relatively near term. So I would say, generally, that was a success. That has not translated as you were just commenting, that has not translated into immediate market acceptance by other customers, not because they aren't interested, but just because the larger companies that we have tended to work more closely with also have extended and quite rigorous internal specification requirements that we've spent quarters previously talking about quite a bit. And it's taking quite a few iterations to get that done. I think that was not our expectation. We thought that this would be faster, as we've said numerous times. We really still believe that this cap is going to get to market and that it will perform as well or better than existing HDPE caps. But as it is obviously taking us more time than we were expecting to get it into market and at volume. Frank Mitsch: Okay. Got you. And then lastly, I believe the last quarter, you indicated that you expected '26 sales to be between $20 million and $30 million and then ramp to $100 million to $200 in '27. As you sit here today, how would you characterize your expectations on sales in '26 and in '27, assuming that the financing comes through? Matthew Plavan: Yes. Frank... John Bissell: Matt, can you take that one. Matthew Plavan: I do. Thanks for the question, Frank. And last quarter, we actually said we weren't going to provide revenue guidance until we got a little further into the ramp and production of the product. What we did was we provided updated guidance with respect to when we expect it to be EBITDA positive breakeven and that was in '27. We updated that in this call to pushing that into '28, just to give some cushion for what we expect to be a ramp that is going to probably be more customers at smaller sizes in addition to the large customers. So maybe a little more protracted in bringing everybody up to significant production levels. So that's really the updated guidance from where we were before. Frank Mitsch: Okay. Great. And lastly, are we through all the factory acceptance tests on all the lines? And in terms of actual start-ups, obviously, Line 1 is up, where do Lines 2, 3 and 4 stand? John Bissell: Yes. So we're pretty much through the factory acceptance tests for all of the lines. We have not gone through and completed site acceptance testing for all of these lines in large part because we've had our team focused on the iterative product development with our customers. There are a lot of customers that we've been working with. There are a variety of different designs that we've run through modifications to these designs, some small, some modest, a little bit larger than -- let's say, a little larger than modest, but nothing with a major redesign. However, each time you do that, there is really sort of a requalification of the line in order to make sure you're getting consistent product. And then, of course, you've got to retest that product and send to those customers. And so we've had a lot of our efforts focused on just a couple of lines to make sure that we can be making those changes quickly rather than spreading those efforts out across lots of different lines to increase our volume capacity when we don't have customers that are taking volume imminently, right? And so we could put our efforts into SAP those lines quite quickly if we wanted to, and we expect to do so once we see customer uptake increase. But right now, it's really all focused on iterating as quickly as we can. Operator: Now I'll turn it over to Matt Plavan, CFO and COO, for a Q&A section answering Ask Origin questions submitted by investors prior to today's call. Matthew Plavan: Great. Thank you, operator. As you just mentioned, prior to the call, we've invited all investors to submit questions as part of our Ask Origin campaign. And I want to thank everyone who submitted questions and participated. It's a good number of questions. And so let me jump right into it, starting with a couple of questions for John on manufacturing capacity. The first question is, why haven't Lines 2 and 3 started up yet? John Bissell: Yes. And I think this is -- Frank fortunately asked a similar question there. I think the reality is that we need to -- what's important to Origin right now is iterating on the product development as quickly as we can so that we can get that to customers. Ramping capacity -- production capacity isn't the important thing yet. And so we've had our resources focused on iterating on that product rather than bringing on the sort of last mile of bringing all these different lines on -- we will be able to bring those lines on relatively quickly once we get customer uptake to increase, but not yet. Matthew Plavan: Yes. Okay. Thanks. Secondly, in terms of manufacturing capacity, how is the 100-up mold progressing? Any expectations on when that will be installed? And does that require requalification of the CapFormer lines? John Bissell: Yes. So there's a sort of similar answer in terms of why we haven't or when we would install the 100-up mold on our existing lines. So increasing throughput is not the important thing right now. The important thing is that we iterate as quickly as we can on product. However, we had a really good and encouraging test on the 100-up mold when we did an in-line test a little while ago. We had some pretty modest alterations that we wanted to make for that mold. Those alterations are in process. And when it's appropriate, we will reinstall that mold on one of the lines, and that will -- we think that, that iteration is quite likely to be the final iteration before the 100-up mold is put in service. That said, we are not taking any resources off of the product iteration at this point in order to do that 100-up mold installation even once that mold is ready. Additionally, I think when that 100-up mold does get installed in the line, it will require some level of line requalification, and then we'll need to ensure that the caps that are being produced by the line meet the specifications that our customers require, but that has not tended to be the gating item for us. We're pretty good at making the caps that we designed so far anyway. Matthew Plavan: Great. Next question regarding bottling trials. When are you doing the next bottling trial with Matrix? John Bissell: That's a pretty easy answer. We're doing one right now. So in process. Matthew Plavan: Great. Okay. Now shifting to partnerships and sales. A question here is Berlin Packaging, Matrix and HP Embalagens announcements are all related to distribution and cap supply chain. Is there a logic to these announcements preceding major end customer announcements? John Bissell: No, it's mostly idiosyncratic. So we announced customers and partners when we are able to announce them. And it's turned out that our distribution partners like the 3 that you mentioned, were made it to the point that we can announce those partnerships before some of the other customers did. That said, there is, I suppose, a logic to the fact that we are working with those particular parties aside from the fact that they were announced before others, which is that it is important for us to access many of the sort of smaller and midsized brands by going through these kinds of distributors and reselling organizations. We don't maintain a sales force that's large enough to go after many of the small and midsized brands, whereas these partners do. And so that's a path to a large part of the market that we really would not be staffed to access otherwise. Matthew Plavan: Okay. That's helpful. Thank you. Also under kind of sales, and I think we've addressed this indirectly in this call, but let's go ahead and ask this because I think a lot of people are asking the same question, and it probably bears hitting it head on. So why has it taken longer than you expect to get meaningful sales volumes? John Bissell: Yes. It's very straightforward, which is that the customer qualification process has taken longer than we were expecting. We modeled our customer qualification processes and timing around the acceptance and qualification time for a modification to an HDPE or polypropylene cap design. Obviously, we had some buffer in that in order to iterate more. And what we found is that for a variety of reasons, a PET cap design has required a lot more time than we were expecting. And I think that has to do both with the fact that it's just a new cap. And so that makes customers a bit more wary in the way that they adopt it. But also the design specifically that we have used to make a PET cap work is a bit of a different design. It's actually visually apparent if you look at our PET caps versus the HDPE caps. Some of that's due to the material, some of it is due to the process that we use to make it. But as a consequence, there are -- even when the cap is performing well in application, it took us time to figure out which tests were testing it appropriately and which tests weren't. And what we found was that there were a number of tests that were actually not well designed to test a PET cap with our particular design. And that's just one example of the kinds of challenges that we've run into, none of which are insurmountable, none of which are actually particularly difficult, but all of which took time for us to discover and then fix and many of them had to be done essentially in series. And so instead of being able to identify every difference in the qualification and acceptance process all at once and then fix all of them in parallel, we've had to do it in series one by one, which is frustrating, has been challenging, but has not changed our view of the ultimate performance and capability -- market capabilities of our PET cap. Matthew Plavan: Thank you, John. I think that's it for the Ask Origin questions. So as we close this out, what should we be excited about with respect to the future as investors? John Bissell: Yes. Look, I think looking forward, we will continue to share our milestones when we reach meaningful milestones. We are the clear technology leader for PET caps. And we believe that as we grow, we can dominate this new market category. We look forward to announcing the partnerships that we believe will help us take this cap to market appropriately. And we appreciate the support that we've had from our investors and our customers all the way through here. We believe that we will still get customer qualifications that enable us to announce those customers in the very near term. But obviously, due to the series reveal and discovery of qualification challenges, we don't really know until we get there exactly when we're going to get there, so that's all. Matthew Plavan: Great. Thanks, John. Okay. Thank you, and thanks to all of our investors on the line today. This concludes our call. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Unknown Executive: Good afternoon, ladies and gentlemen, a very warm welcome at the conference at which we will present the results of KGHM Group for 2025. Remigiusz Paszkiewicz, CEO; Anna Sobieraj-Kozakiewicz, Vice President of Foreign Assets; Zbigniew Bryja, Vice President for Development; Piotr Krzyzewski, Vice President for Finance; and Miroslaw Laskowski, Vice President for Production. We also have Janusz Krystosiak, Director of Investor Relationships Department at KGHM. I would like to inform you that our conference is broadcast online. In the second part, you will have a Q&A session. And the questions can be asked both here in the room or by e-mail. All answers will be published on our website in the Results section. Now over to the CEO. Remigiusz Paszkiewicz: Good afternoon, ladies and gentlemen. Once again, a very warm welcome at the annual conference summing up the results and above all, the efforts of the entire KGHM Group throughout 2025. If I were to summarize the year 2025, I could say that it was a good year for the entire group. I'm talking not only about KGHM Polska Miedz S.A., but I would also like to focus on the Polish group and its foreign assets, which contributed very significantly to excellent results achieved by the group globally, both in production, processing and first of all, sales which translated finally into financial results, which again translated into a significant increase in the value of the entire group at the end of 2025. The company and the group had excellent results, thanks to a number of factors, which we will talk you through in a moment. I would like to say that these good results were achieved against the background and under the pressure of changing macroeconomic environment last year as well as in the context of additional factors, which are more global geopolitical. When we talk about stability with regard to mining output, in particular in Poland, which was a major achievement and brought excellent results, I would like to mention something that was not noted by everyone last year. It was somewhere on the margin, while, in fact, it very much helped us in defining the future of mining in Poland, namely minimizing the risk of mine flooding in Poland. I would like to emphasize that under a longer period of omissions or even negligence, if I can put it bluntly, the Management Board of KGHM and the entire group of employees engaged in projects which minimized virtually to 0, the risk of mining waters destroying the mines. And those projects were finalized in 2025 as a result of which we can now look at mining output in Poland without this risk. But coming back to this broader context, which we operate in 2025, the macroeconomic volatility was characterized mainly by the impact of a greater demand, which was reflected in the quotation of our core products. Let me remind you that at the beginning of 2025, for example, the quotations of copper $8,500. And at the end of year on the 30th of December, that was already $12,500. And this stable high level of increased quotations continues, meaning that we are in the conditions of higher than last year quotations for both copper and silver. As you can see in the annual report and financial statements published yesterday that also contributed to an excellent result for the entire group for last year. As for more geopolitical environment, I think for the first time in many years, we had experienced deep destabilization of tariff policy. And it is not only about the U.S. or response to the U.S. actions in key markets in which we are active, those countries in response to the developments in the U.S. modified or changed completely the tariff policies. In spite of that, KGHM responded very well. And the major reaction was the diversification of sales markets, somewhat deeper diversification than in the previous years. But also, I would like to mention not sales, but also the production that makes sure that we have to sell and what the trade in. As for production results in mining and metallurgy in Poland, we had very good results, and I will allow Mr. Krzyzewski to discuss specific numbers. But you can see them in the slides, and you probably had an opportunity to get acquainted with them. We also faced turbulences on the part of our competitors. There were some industrial accidents. There were some weather issues in certain parts of the world, which decreased the supply of raw materials, including copper concentrate with high utilization of the copper concentrate by China. As you know, China concentrates a large part of copper production. But we returned with a better margin to some customers on copper concentrate. After a certain break in trading with customers, we were able to return to them offering better margins. So the global situation in the market helped us. That was also driven by changes in the policies of key countries worldwide. We were also helped -- apart from the increase in quotations, we were helped by major demand for gold, maybe it is not a major or the most important item in our production, but we know what happened with gold reserves and what policy was pursued, not only by the National Bank of Poland, but also by other Central Banks and private investors worldwide. We also experienced volatility in foreign currencies market. Dollar and PLN prices changed, PLN grew in value versus the U.S. dollar. And thanks to our stable policy of hedging prices of core products as well as ForEx hedging and securing our energy raw materials, including fuels, all that had a positive impact on our operations because we were able to avoid turbulences or negative impact of those factors in 2025. I mentioned 3 parts of our group. All this division into KGHM Polska Miedz, capital group in Poland and foreign assets. And I would like to stress now that for the first time in the history of the group, foreign assets, our foreign companies became financially independent. It is also worth adding here that we saw the first major repayment of loans to the mother company, Polska Miedz, from those foreign asset businesses. And that came from U.S. and Chilean assets. At the end of the year, we revalued Sierra Gorda assets. And after the test, the result was positive [ $504 million. ] That's an important aspect because there was a check at history of that part of operations over the past years, even in the past decade, there were varied opinions about the value of those investments, their exposure the -- now, we can say, however, at this stage is over. Foreign assets started generating appropriate profits. And I would also like to stress here that in the near future, we would like to utilize those profits in the investment program that we plan for the future, for the upcoming years, starting already in 2026. Also, we do not forget about building the foundation that will consolidated position of KGHM worldwide. That is the base of our results. Of course, at the time when the quotation of our resources, metals are high, this building of the base is difficult because there are a few opportunities to do so. There are a few well-developed investments with regard to the mining of copper or metals that we deal with on a regular basis. That is why this is a very cautious, very prudent search, not so much opportunities as for things that can help us develop and increase value of the entire group. We also have the Victoria project in Canada. 2025 was a year of intense investing and development of this project, and our drilling went down to 1,400 meters. Now we are starting lateral drilling, which will allow us to operationalize not only the deposit, but also its surroundings. We want to operate it in a foreseeable period, which is now longer according to our estimates than initially expected in the project, and that has a very positive impact on the projections here. Among the factors that I would also like to mention as the ones that contributed to the 2025 results, I would like to say that in the context of our foreign assets, I talked to our -- to the CEO of our Chilean partner. It's a very good relationship, the partnership based on last year's experiences is going to be developed. We will increase our efforts with regard to looking for opportunities abroad. And also, we made some decisions regarding the development of Sierra Gorda itself, that is the fourth line of processing and preparation of the concentrate. Ms. Sobieraj-Kozakiewicz, I do apologize, Madam President, that's because of my -- today's presentation, the stage fright made me confused, and I do apologize. Stable hedging policy. That's something I have already mentioned. The beginning of this year was marked by turbulences in the market of gas and fuels, but thanks to those previously prepared and proven solutions, we were able to go through this difficult situation, maybe not completely unharmed but we've had better than those who are more heavily dependent on fuel prices. I think maybe I should mention some extra things. The first view of what we would like to do this year and the following years, building on what was achieved in 2025. We would like to focus on preparing the entire capital group, strengthening some key companies in Poland so that they can develop, so that we can benefit from the potential even more. We would like to enhance their capacity to be able to better use capacity and potential of those companies in Poland. This already was reflected in 2025 and was true in early 2026. That is the cooperation and mutual respect with the social actors involved. And towards the end of my preliminary remarks, let me extend my gratitude to a large group of over 34,000 people who work throughout the world for our group. This is an effort of all of them, all of our colleagues across the group, not just in Poland, let me reiterate that. So they are the ones that have done it. So once again, many thanks for that. We're hoping to continue our great successful cooperation, not just in the current year, but also going forward because I want to announce that towards the end of quarter 2, we will be announcing our strategy, work has been completed. There are some pathways that we want to emphasize again that have been addressed already adequately, and I think that the ending of quarter 2 will be a good time for us to announce the strategy. The baseline also will be the experience from early 2025 and early this year. And I think that will be the baseline for the final touches to the strategy. And now over to Mr. Laskowski for the production part, that's the baseline and the core operations. Miroslaw Laskowski: Indeed, you spoke about the water risk. Let me just perhaps bring you closer to what has been done over the last 2 years in KGHM to mitigate this natural threat. First of all, extending the [indiscernible] water draining system injections to the leak site. And those injections have allowed us to stabilize the water flow to the mining fields on at the pace of 36 cubic meters per minute. And then the Lubin mine dedicated for not so -- low mineralized water from the Rudna mine, and what was our biggest concern was the water management on the Zelazny Most retention. And we started work there on 2024, the capacity of this container was 14 million cubic meters. Right now the latest measurement show us that there's only just over 5 million cubic meters of water in this location. So a lot of work there. And a lot of work has been done. We managed to get -- we managed to get a permit to extend this location, which will allow us to stock floating deposits in this tank. And before I describe our results for 2025. Let me just say that we have managed to perform all our production goals in all our production segments, starting from mining, but also copper processing. This is not mentioned in my presentation. However, it's important to say that our budgets have been fulfilled and exceeded. So now regarding the results that you can see on the screen here. Let me just comment on 2025 from the point of view of our production schedule. It was not quite so favorable to us compared to 2024. 2025 is just 28 working days in February compared to 29 the year before 2024, and also an additional day off, which is Christmas Eve, and that was the first historically in our country. This is specifically meaningful for mining production because our crew and ourselves, we do not systemically work on public holidays. So this is based on a voluntary basis. Despite the unfavorable calendar, let's look at the bars here comparing 2025 to 2024 You can see that the output was quite similar or even better. So let me go back to what I said initially. This will allow me to comment the production results of 2025 in 3 words, stable, solid and good. And now going to details, the output, the first mining segment, over 30 million tonnes, but that perhaps might not be quite as important as the fact that we have already been able to get 1.49% of copper in the output and silver is 51 grams. And that directly translates to producing copper and concentrate, which was higher in 2025 than 2024 by about 1,000 tonnes, and it attained a level of 401,000 tonnes, and the Cu in concentrate is 22.6%. The production of silver is stable over 1,300 tonnes in total, together with the silver in our overseas assets allows us to keep in the top 3 silver producers in the world. And the electrolytic copper production, you can see a slight decrease vis-a-vis 2024, but we already communicated that on multiple occasions throughout the first semester of 2025. We were conducting some refurbishment work in electrorefinery hall in Glogow II. But already in quarter 3 and quarter 4, the work showed us that the capacity was being used to its maximum extent. And the production of the electrolytic copper was over 50,000 tonnes per quarter. I also would like to say a few words about copper processing. In 2025, we produced over 262,000 tonnes in Cedynia copper mine, and then [ 17,836,000 ], why am I saying that -- of wire. Why am I saying that? Because this is the biggest figure in our over 45 years history of the copper plant in Cedynia. Now early this year, this was a very good results. We already announced them for 2 months, and they are also over -- the budget over the assumed budget and the production in our national assets, stable, solid and good. Again, the same 3 words applied. Ladies and gentlemen, let's move on to the production results of our overseas assets. Now regarding Sierra Gorda, 55% of the share that we have in this enterprise. The production results for the extraction of copper were very good, and they went according to the budget, and that was [ 868,000 tonnes ] of payable copper, and that's 8% higher year-on-year. We were able to obtain that, thanks to a higher copper content in the ore, but also a higher output despite lower volume of the ore extracted processed. Now for silver production, we also see a 3% growth year-on-year. For silver production, we were able to produce 24 tonnes. And for gold, we can see a 15% decrease year-on-year. But you must remember that silver and precious metals only account for 11% of the revenue of Sierra Gorda, and these -- this is mostly due to the metal content in the ore. Now we can, however, proudly say that we had a very good year for molybdenum. The value of the production was 5 million pounds, and that's a 52% growth year-on-year, which also results from higher content of this metal in the extracted ore and a higher output despite a lower volume. Now to comment in just a few words about Sierra Gorda. Last year, we managed to stabilize the copper production on the processing plant, and we managed to maintain a high cost discipline. Thanks to that, of course, thanks to the support from metal prices and other macroeconomic indicators, Sierra Gorda may actually close -- was able to close the year with very good financial results. This was a historically good year for Sierra Gorda in terms of production, but I will talk about it further on. Now for the international segment. Let me initially remark that because we disposed of Sudbury -- of the assets in Sudbury in Canada, in March, early March, we stopped actually commenting on the production of copper, gold and silver, which lowered the balance of these metals in KGHM International. We are remarking here that there is a decrease by 14% of paid copper year-on-year to the level of [ 525,000 ] lower copper content despite higher output, but there is a slightly higher production of copper in the mine, but due to very low volumes, this is the Carlota mine, of course. But due to low volumes and copper production, this is not really meaningful for the whole segment and this asset's financial results. For silver production, we're also remarking that there is a drop, 87%, similarly to gold, 19%. But like I said, it is mostly due to, first of all, disposing off the assets in the Sudbury, but also lower content of precious metals in [ Nevada ] in the Robinson mine. Robinson mine is our main asset in the United States in the KGHM International segment. But ladies and gentlemen, we may also say that molybdenum is increasing up to 43%, thanks to higher content of this metal in [ Nevada ]. Now a brief comment. Let me go back to the fact that we were able to complete a lot of work in terms of optimizing the costs. We also need to be clear about the fact that last year, we had very good conditions in our mines in Chile and in Robinson. The metal content in the ore extracted was very high. And thanks to that also, we were able to use the favorable macroeconomic conditions and the TCRC premiums, our overseas assets positively contributed to the whole capital group EBITDAs. And they, in total, accounted for 48% of the adjusted EBITDA of the whole capital group. So from that point of view, this was a record year. And I think that we can perhaps cover potential development plans further on. And to sum up, last year, overseas assets paid into the budget of the group $379.7 million, Sierra Gorda over $300 million of that. In total, Sierra Gorda has repaid over $1 billion to Polish copper. Thank you. Unknown Executive: Thank you very much. And now let's hear about our development initiatives, Mr. Zbigniew Bryja. Zbigniew Bryja: Good afternoon again. Rational and responsible investment program, this is a slogan that best illustrates what we are trying to do for CapEx for 2 years now in our company. On the one hand, we need to sustain the production. We need to replace the machinery part, which is naturally getting old and, well, is devalued every year. But we need to think about the future, look forward, not just maintaining the volume, but we need to think ahead of what we are going to do in 10, 15 or 20 years or even perhaps further from that. We have adopted an investment plan for this year in CapEx on the level of PLN 3.8 billion, PLN 126 million of reserve, PLN 3.563 billion was actually performed, adding on top of that external financing. On the right-hand side, you'll see PLN 3.829 billion, plus leasing, PLN 3.926 billion (sic) [ PLN 3.928 billion]. Now what has been in the books is 96% of that. The slight difference results from the fact that many of our investments are still in the pipeline due to some delayed contracting processes, a very good results, a large discipline, and you must say that all our services have really done their job excellently. As this circle on the right-hand side, the analytical categories, we generally have 3 areas: recovery, maintenance. Recovery is this replacement of machine part. Development is everything that stands for the future, which is slightly more distant here, year-by-year. And last year, we started development of 3 shafts in KGHM area, those 3 shafts in the future are supposed to pump in additional to the mines. This production will grow. Now we're in a very early stage, but very soon, the proportions will change significantly. Annually, we have about 500 investment projects of smaller and bigger size. So the discipline in spending CapEx here is very important to us. Here, in this amount of PLN 3.014 billion, we are looking at the split of funds for mining. Both here and at other conferences, I mentioned that mining is the kind of enterprise, whatever name you give to it, it's an enterprise that every day consumes part of its resources and every day has to prepare another portion. Hence, expenditures stand for 70%. That's nothing out of the ordinary, that's a natural way of investing. Out of those PLN 3.014 billion, 17% goes to maintenance of mine carriers. They were partially handed over for an operation, but they need some fine-tuning like extension of conveyor belts and minor improvements that guarantee our ability to keep production at a high level. Another big area of expenses is replacement of machine. We bought new machinery, and this is the level which we also kept in previous years. We want closely the lifetime of our machinery. Maybe in the future, we will readjust the number of machines. Now this is the minimum necessary for our operation in mines. Another area is water removal -- water drainage in mines. Mr. Laskowski mentioned this task that we dealt with 2 years ago when we found the company, maybe not in a disastrous situation, but in a difficult one. The Zelazny Most tank, which is our tank for retention of our technological water was practically completely failed. The condition of pipelines, retention of water in underground corridors did not give us the peace of mind necessary for regular operations, in particular in the context of the other flying. So we had to apply for repairs, development of -- return them to pipelines and all activities needed water drainage, both up and down. So this explains this high item in expenditures. Then extension of the Zelazny Most tank, elevation of the embankment and we started intense work here at the end of 2024. Then in 2025, we continue this work. We changed the parameters of the land around the mine to change the hydrostatic pressure conditions. The recovery of mines and hydrotechnical plant. We had shaft relocators. This was not really maintenance but a recovery of obsolete machinery park. Then the next item, exploration. This is output from the deposit that we are only going to operate. Thanks to good planning, we are able to carry out our operations in the right way. And there is a dual mode of performing this exploration. Here, the trend is constant. We are ahead of time so that our geological knowledge about the relevant sections of the deposit is up to date. Then the next item, maintenance of the shaft. Now this is mainly SW-4 shaft, which has no casing. And now the plan is that 116 meters of salt section will be cleaned salt regularly. PLN 73 million out of PLN 170 million was spent on this task. And the next item, the program of making the deposit available for operations. In fact, I should have started with that. This is the largest portion because out of the PLN 3.14 billion, PLN 1.3 billion goes to this program. That is preparation of deposits for future operations, future shafts, identifying subsequent sections that will be handed over for operation, but it is also the construction of shafts. In a moment, I will go to the slide that will show you the GG-1 shaft works. And we will be soon starting the construction of one more shaft. We were 300 meters short to get PLN 800 million, which is a very significant amount. What contributed to this PLN 1 billion result in the program of deposit availability program. In this slide, you can see our favorite image showing the areas on which we have licenses, where we work. This dark circle, the GG-1 shaft Glogow, the deepest shaft in Poland at the moment, definitely, our deepest shaft, 1,348 then of course, Retkow GG-1 and Gaworzyce shaft. In June last year, they were identified in the field, geological study started. In the Retkow, we had 3 drills done, including 1 down to 1,370 meters. Gaworzyce is where we are now drilling, and we are able to start drilling in GG-2. Let me remind you that GG-2 is where we started drilling, but the previous location was not fortunate. We had to change it. It took us 1.5 years. Unfortunately, the planning procedures, finalization of the plot purchase and so on. In GG-1, we started utility connection. And now we are eliminating the structures from the transition part. When we were just building the shaft, now we are getting ready to hand over the infrastructure with all necessary installations at the moment of handing over the shaft for the operation is September 2029. But as regards to shaft, I would like to draw attention to the bars at the top. The ones that we showed previously show very significant differences. Now GG-1, the one marked in black circle that was joined with underground areas. Now or crew is working regularly there. Last year, we had ups and downs at 38%, 40%. That shows how very important. It is something extremely relevant to us. And then the next slide, PLN 3.014 billion was mining. Now we move on to foundries. This is mainly recovery investments or maintenance investments, but also to some extent, development. If we go from the top components and significant renovations. These are renovations with Glogow and Legnica foundries, electrolizers, convertors, anode furnaces. Then we have grinders that are renovated. The next major item is the recovery of the foundry, again 34% of CapEx. That is the money that was spent on preparatory works, mainly purchases and preparation of some elements that will be necessary to renovate Glogow II foundry. At the end of June, we will start a major renovation program of Glogow II. We wouldn't be able to buy everything this year. Hence, we started expenditures already last year as part of this project. Then we have this major furnace recovery that is dispatch purchases of new mills classifiers and new type of engines with permanent magnets. That is an element that contributes to environment protection and cost reduction. Then the alignment of the functioning and the operation of the foundry with current regulations. We have storage boxes, modernization of ventilation in the Lead hall Glogow. That accounts for about 8% of CapEx spend on foundries. Then we have modernization of those furnaces in Legnica, change of the refinement methodology. The project has been running for the third year now. We believe that this year, it is likely to see the completion of a major part and preparation of anodes for Glogow II and development of machine park for Form and Caissons in Glogow III. This year, we spent PLN 3.8 million on documentation of a new [indiscernible] line for Cedynia. And that's it from me. Thank you. Unknown Executive: Thank you so much. Now the financial part of our presentation, Vice President for Finance, Piotr Krzyzewski. Piotr Krzyzewski: Good afternoon, ladies and gentlemen. It's good to be the last one making the presentation, so I will be able to refer to what my colleagues have said. Undoubtedly 2025 and almost the entire first quarter of 2026 have one common denominator, namely high volatility in the raw materials industry, which we represent. This volatility is even greater. So our major objective, something very clear to us is focus on efficient production, which we are able to translate into sales and that can translate into cash while cash translates into investments, all that building value for shareholders. If you look at production on its own, major facts about 2025 have already been stated. I would like to stress some elements relevant to 2026 that you might have inferred from your reading of the report. I would like to draw your attention to silver. [ Mirek ], I extend great thanks to you and your team for the fact that you were able to produce more silver than planned and was I was then able to sell this. And it was excellent placing because the silver prices in January and February were very high. So that was our very intentional action and informed decision. We left more silver in storage for the end of the year, and then we were able to sell that in the first quarter. This is not random. This is based on our informed decisions. And as you can see, the actions from 2026 translate into our actions at prices at which we sell this year. I think this is the right moment now to thank our entire sales team, both in Poland and Toronto, Santiago and Shanghai. Just to remind you, 2025, 2nd April, Liberation Day, we had breakage and part of our standard connections between China and the U.S. The U.S. and Canada also faced some challenges. Europe, U.S. also faced some difficulties with delivering our products. Nevertheless, the CEO said diversification, diversification and change of directions. We also needed to recognize higher prices ultimately. It's very difficult probably for all of us to say what's going -- tomorrow is going to bring. But we have built our organizational resilience. We are prepared to find our way through this volatility. However, we will probably much prefer for it to be more stable and calm. It's something that everyone needs to be able to better plan investments. Also, what has already been said, let me remark what has been said about South. We are 100% responsible for Sierra Gorda sales, but the decision that's taken there and then is something that we sometimes agree and sometimes disagree with. So I'd like to thank our partners for that because this creative discussion, which is sometimes quite powerful that we have with them always allows us to develop a common ground and its optimal from the point of view of the output in results. Going to cash flow, what you're seeing in the -- in our equity and cash flow. We have put some of the copper and some of the silver into the inventory, 36,000 tonnes, I understand, of anodes, 38,000 actually. Why we do that? The goal is simple, but also very ambitious, 90 days of interruption for the Glogow plant, but we want to have a higher production than last year, higher by 20,000 tonnes exactly. So this seems logically not an easy thing to do. It will not be simple, but we know how to go ahead to do it. So the anodes will be growing. And I note that the use -- we will get to 50,000 tonnes probably in anodes, but that's only so that in quarter 3 and 4 we can strengthen the production. There will be a lot of cash there. We don't know what the macro will be like. But I can say that the end of the year, we'll be very aggressive on our side from -- in terms of production and sales, which is something that we are prepared for. Now referring to what Mr. Bryja has said about the shafts since they are a priority. But again, this is our ambition, and I think we will attain it. It's not easy to add the CapEx of the shaft and to produce the total CapEx. No, that is our ambition for the total CapEx to be smaller, of course, it will be slightly larger than now, but it won't be 1 plus 1 equals 2. We want it to be 1.5. It's not going to be simple, but seeing that we managed to do that when we try to optimize costs. I will show you the details soon. I think that this is also something that we can do. And the last component for building value and flows. It's a very important asset for you is the dividend. It is too early yet to say -- to talk about its value, but we can see grounds to be able to pay the dividend. So from that point of view, I think it's a component that's worth discussing. And we will be making that recommendation to the shareholders meeting. Now with reference to 2 components that are a day-to-day item right now is energy and gas. In the point of view of energy, we are the biggest consumer, industrial consumer of energy in Poland. Now for gas, 2, 2.5 terawatt hours, one of the big ones as well. What we have done and what the CEO has mentioned is focus on our basic goals where -- whenever we have some unknown data, we are trying to make sure that we have informed risk management processes in place. We are secured for gas supplies, 50% at least for this year. It's not a coincidence. It's an informed choice we made. Looking at our toolbox here in Poland and seeing that gas is being delivered by Orlen, we have been actually contracting deals with Orlen. We have hedged some of our exposure in gas. TTF listed in Amsterdam so we can manage this exposure to make sure that it's beneficial at the end of the day for our shareholders. Now for gas, one more point here. As you will know, we have gas and steam engines as one of our production equipment. This is also arbitrarily launched. Sometimes we reduced the power but we have also launched carbon units as well. And they are going to support us slightly, but also from a point of view of purchasing energy and gas. And one more thing about energy is the transaction from BGK, 94 megawatts of photovoltaic installations. These will be something powering our units directly. There is a subsidy included in there. But to illustrate that to you, the ultimate cost of producing this energy should be even below PLN 200. So this project will be supporting us. We will have our own sources. We will be more resilient, but also the purchasing cost of this energy will positively contribute to our EBITDA. And the last topic, managing risk from the point of view of revenue, as you can see in our financial statement, we are well secured from copper 20%, silver 32%. And that's an informed choice and a strategy of ours. We put in more building blocks, which you cannot yet see, we will show you after quarter 1. We have added some components here, small ones. Well, if I were to say what transaction they are, they are mostly silver and copper with higher exchange rates, and they will contribute a few hundred million zlotys to our results. But that's not the way we look at it. We implement some strategies step by step focusing on the elements that I mentioned earlier. Now let me move on to our presentation to sum up the key components on the side of the revenues, as you can well see, 3% increase in the capital growth. A lot of attention attributed to costs, I will show you that. But you can see the outcome here on the slide from the point of view of the EBITDA. All of these segments, both Poland, KGHM International and Sierra Gorda have a positive contribution to our EBITDA. Let me just remind you that already last year, when we were looking at '23, '24, the growth of EBITDA was 58%, 28% this year, 2023 was 5-something. So we tripled over the last 2 years. We have had some favorable contributions from the macroeconomic circumstances, but it's not just that, that did the job. There was a lot of work put into that, but a lot of work is still ahead of us. Now from the point of view of revenues, one thing is the volume that negatively impacted that electro refinery and some of the refurbishment in Robinson that was according to the plan. We got some support from the market. The dollar to zloty rate and the negative valuation impacted our revenue, the adjustment from the derivative instruments, PLN 678 million this year. Well, we have the securities in various places. But when we take into account all of them from 2025 was more than PLN 250 million and plus that we actually got as a company. Now in-kind costs, 8% about. But if we were to list 2, third-party input is one of the impacts, one of the factors. We bought more of the third-party input and something that's also outside of our control is the copper tax. And there's been a large increase, 21%. If we were to cut off those 2 elements, you could say that those in-kind costs year-on-year grew by about 4%. But also third-party services, in fact, their costs decreased year-on-year. We spoke about it last year. This was something that we put a lot of attention to, and we continue doing so, and you can see the outcome. Please look at quarter 2 of 2024 and compare it to quarter 4 of 2025. The quarter-to-quarter increase is just over 3%. So we're trying to lower that just to the inflation level. So the cost discipline is definitely being applied. And the outcome is from the point of view of C1, it dropped by 3% throughout the group. But the tax contributes to quite a large component of that. If we were to exclude tax and look at C1 then the drop would have been minus 17% year-on-year. If we look at specific segments, KGHM S.A. has an increase of 3%, I could say. But on the other hand, it was determined by the tax that grew by 27%. Without that, we would see minus 10% on C1 in Poland. And the operational leverage is well performing. And the cost discipline has made it possible for KGHM International to attain minus 32% and Sierra Gorda minus 46%, plus the accompanying metals, TCRC, which you are, I'm sure, observing. This has positively supported us as has the very good sales we have attained. So to sum up the results of the capital group, we've had the positive contribution of that, of the EBITDA vis-a-vis 2024. The exchange rate differences were quite significant because the dollar to zloty got stronger. And the outcome of our involvement in the joint enterprises according to international accounting standards, that was Sierra Gorda mostly, perhaps a few words of explanation. In 2025, Sierra Gorda accounted a loss that we have been settling. So this was the first trigger, and we then saw an improved performance. And that's so good in Sierra Gorda that the asset after tax represents a value in our books because before that, the value was 0, let me remind you. So we are reconstructing its value, but that's not yet the end for Sierra Gorda. If it continues to perform so well in the subsequent periods, we will probably be talking to you about its impact from the point of view of presenting it in our accounts in our books. And the last thing, key, I think, actually, financial flows, but we are trying to make sure that we do it by the book. So the operations will finance investment, and that's done, that's attained. But to a large extent, what Madam President has said for the investment activity, we have had quite a lot of support from the repayment of debt from Sierra Gorda, that's over PLN 1 billion that has positively impacted the financial flows in the group. As you can see, we are landing -- we are dropping our indebtedness, which I'm sure you will see that in the following periods. We will try to positively surprise you to make sure that our -- the cost of the debt servicing is as low as possible. Thank you very much. Unknown Executive: Thank you for presenting the results and now the Q&A session, which will be moderated by Mr. Krystosiak. Janusz Krystosiak: I open the floor for questions. Please introduce yourself. Unknown Analyst: [indiscernible] Congratulations on the excellent results. About the dividend, the cap is [ PLN 3.24 ] if we take into account the strategy that you listed. Can we expect about PLN 2, PLN 2.5? What is the outlook? And the second is on your working capital. The second question. On what level can we expect the increase of the working capital in the subsequent period of 2026, that's quarter 1 and quarter 2? And I wanted to ask you about Morocco. Can we get any further information about it? Analysis indicate that Morocco also has 12% of the world resources of rare minerals. So the question is whether KGHM will want to also follow that or focus on copper and silver instead? Thank you very much. Unknown Executive: Okay. So we will take it right now. As for the dividend or some potential in this regard. We do not want to -- and we will not depart from our to date dividend policy, which means that although the company did not pay out or the group did not pay out dividend last year, which was linked above all to the need to secure for ourselves the visibility for CapEx talks and tax reduction. We obtained this, and we want to use all funds that were not distributed as our CapEx. And that means that we can return to the dividend policy. As you know perfectly well, it can be said that this is not going to be over 30% of net profit. The decision about the amount to be distributed will be made in about a month. And we want to make the distribution as part of our overall dividend policy. So Morocco, Madam President. Unknown Executive: As for Morocco, more broadly, the development of our resource basis of the group, we operate following a long-term plan of developing our base of resources in foreign assets with policy envisages development of assets at various levels of advancement from greenfield stage where we are only seeking to obtain exploration licenses through development projects to already and operational mines based on the benchmarks with which we stick that is stable legislation, a stable deposit expected and predictable annual output and lifetime of the mine. Based on those parameters, we developed a map of future development. As for Morocco, indeed, we did sign an agreement with 2 public entities operating in that market. One of them is a company that seeks exploration licenses. The other is a company that extract copper as well as other metals. I would like to say this is an open agreement at this stage yet, which allows us to explore those projects very broadly, also including noncorporate products. Our main priority is and will be copper and its accompanying metals. Nevertheless, we have a broad view of the market, which we follow quite closely, and we're interested in developing our competencies with regard to other metals. I hope that in the near future, we will be able to communicate something more specific to you. At this stage, it is just a memorandum which is nonbinding yet and which opens out potential field for cooperation. Unknown Executive: Let me add that as regards expansion of the company based on foreign assets, potential foreign assets. We will give you more details about our prudent exploration when we get to the presentation of our strategy. As for working capital, over to the colleague. As you know, there are a lot of variables in this equation of working capital. If I isolate only the anodes, that will be an extra PLN 1 billion. But also, we are going to reduce our stocks of a large part of ready-made products. Maybe I should also make some comments on January and February production results, mainly in copper. The lower sales was driven by a few factors. January was difficult in ports and harbors from the perspective of their availability, and that concerns not only us but also other industries almost does not affect us directly, the Hormuz Strait does not affect us directly, but indirectly, it does because the loading of containers takes an increased amount of time and that can have some impact on working capital. But if I were to make some predictions, we will probably grow until June, then probably there will be some growth in September, a very strong flows in the fourth quarter, positive ones. We will focus on the strategy to make sure that the working capital is optimized. Pawel Puchalski: Pawel Puchalski, Santander. I have two sets of questions, one set concerns the volume, the other CapEx. As for the volume, in the second half 2025, you had very high levels of copper and silver in both group and parent company. Was it an exceptional semester and the following quarters will reduce those levels? And talking of volumes, I would also like to mention KGHM International because we can see the first 2 months were very weak in production. So I would like to find out whether this is only a minor glitch that will soon be overcome? Or should we expect a reduction of guidance for this project? That was in volumes. Unknown Executive: As for volumes, the figures concerning copper content in the deposit and silver content in the deposit remain at a similar level that is the third decimal point in the budget for 2026, we plan similar numbers to the actuals for 2025. As for volumes in KGHM International, you should bear in mind that we make reference to the previous year where copper was produced from 5 West, which had better deposit parameters. Now we are operating all from Liberty deposit, which has much worse parameters. We also have stripping from veteran deposit. And you can see the difference, if you make comparison year-on-year in the budget, but we strive to make sure that budget items for production are achieved as planned. Let me note that the volumes in International are worse not only year-on-year, but also worse compared to your budget. I do not make comparisons between years, I make comparison to your budget. Indeed, there are some challenges of geological nature and technological nature that we are grappling with. But we are not commenting our forecast. We are analyzing the reasons that we will strive to achieve our budgeted numbers. Pawel Puchalski: And the second set of questions regarding CapEx. I wonder when and if at all, KGHM will start a new investment, KGHM 2.0 that is building a new mine across the other. And the second question from this set, you mentioned talks about the fourth production line in Sierra Gorda. I would like to understand the economic rationale of building the fourth line because from my perspective, it's difficult to find such a rationale, but maybe there is one. So I would like to discover what it is. Unknown Executive: Let me start with the second question that is also about bringing us to the same page with our partners. We are now together analyzing what we are going to communicate as for our decisions. And the directional announcement of the decision whether we are going into this project or not, that will come at the end of the first semester. Maybe the production will increase even up to 20%, thanks to the fourth line. But this is still conditional on at least 2 factors. First of all, we accelerated exploration works that is drilling in further part of the Sierra Gorda deposit. That's the first thing, which will also affect the decision on the fourth line. We are also waiting for a report on the matter, which we are to receive in the upcoming weeks so as to be able to prepare the overall calculations for the project by midyear. Another thing is talks about additional processing from neighboring mines. This is as much as I can tell you right now answering your question. And Madam President? Unknown Executive: To add to what you have said, the fourth line assumes increase in the processing plant by about 20%. While maintaining the output that we have right now, we can expect an increase in production by about 20%. We are now at the stage of analyzing the project, not only financially, but also technically to make sure whether the fourth grinding line will meet our expectations, or maybe there are alternate ways to invest in this mine. We are talking with our partner in South32. And also importantly, Sierra is preparing a strategy for its mine development that relies on additional drillings of deposits in the surrounding area around Sierra Gorda pit. And the financial decision, which is to be made by midyear regarding the extension of the mine will be the result of all those studies, not just technological analysis but above all, a combination of technical, financial and the strategy with accepted by owners council with regard to the strategy of developments for Sierra Gorda. As for CapEx, you know more or less what CapEx would be involved. This has already been mentioned. We expect it to be about USD 700 million. Sierra Gorda has this financial capacity to rely on debt funding and finance extension of the company. Final decision in this regard will be communicated in the formal way. Unknown Executive: Coming back to KGHM 2.0. Let me just add one thing. I think I know Mr. Puchalski's point about the model of the transaction. We shorten LoM, we discount our flows. That is the major purpose of the fourth line. So by shortening LoM, we will shorten the cost, we will discount our flows faster. That is the whole point underlying the fourth line. Unknown Executive: I'll add some comment. This is an exceedingly interesting point. The fourth line will shorten LoM. But this is why we discuss details of strategy expansion including the operation of neighboring deposits to minimize the risk of shorter LoM. Back to KGHM 2.0, as for the exploration license on the licensed area, Bytom Odrzanski granted many years ago was appealed against to the international arbitration. No geological works were carried out there that could be used for the future operations. We did not carry out exploration across the other because we were unsure of the settlement. The situation now is that the license is maintained. We ask for its extension until 2036. Bytom Odrzanski deposit till the other well be operated based on the existing licenses of our company. And this year, we will start a major exploration of 12 drills at least across the other to confirm the parameters of the deposit. Additionally, we are drilling in Kulów-Luboszyce so just neighboring area. We have information from Glogów that geological information will allow us to design the whole thing. In a nutshell, in over a decade, we will be able to start building at least 2 shafts because that is the beginning that we plan. So you need to wait a few years more, although we can't very much on this development. When we talk about KGHM 2.0, we have to realize that we're operating on 3 mines. And there will be one huge area, and there will be one other. So this is also something that you have to bear in mind. Going back to your question, specifically in at least 10 years, we will start work in the field. Janusz Krystosiak: Okay, very briefly now. A question from our mailbox, Jason Fairclough, Bank of America. Could the new CEO take us through his priorities, please? And how is he going to manage the company? Could we have a comment on that? Remigiusz Paszkiewicz: First of all, ladies and gentlemen, this is a team effort, especially for a public company that has quite a big range in terms of functioning many areas of activity, et cetera, et cetera. And there's one priority, basic priority, and that's not just an empty slogan. The development of KGHM building its value through a few of the components that we have already touched upon. First of all is to raise the production effectiveness and an optimization of cost program has been established, especially for the acquisition policy that we want to improve, but also effectiveness in terms of technology searching for solutions, et cetera. And add on top of that is what Mr. Krzyzewski has mentioned that some of the strategy has to be devoted to obtaining cheaper energy because the scope of production and of the industry that we are operating in means that we are individually one of the bigger energy and gas consumers, industrial consumers so we want to improve and prepare a program so that we can be far lower than what it is now. What we have now in terms of energy prices, especially the contracts with -- from offshore wind energy or the predicted energy prices for nuclear. So we are looking for the golden means, and we might not be able to find an individual one, but that's one of the basic cost elements that we're looking at. On top of that, what I mentioned before, a big emphasis on improving the capital group functioning by deepening our actions for better corporate governance, but also putting emphasis on better use for the group for the whole company. That includes part of what we define as local content. So sometimes reaching out for more expensive solutions from outside. We have small companies with a lot of potential that can ensure that especially for the CapEx programs that we have -- can ensure better use of the already existing resources, and this is what we want to do, and we want to do it even cheaper. So we want to also deepen further our diversification in terms of sales and what Madam President has also mentioned, this is one of my personal priorities but it's never a one-person effort. We also have set a priority for the research of further resources in order to reinforce and build further value for potentially overseas assets, whether it's Morocco or any other deposits. We're looking high, low. There are no bargains right now available. We don't want to just look at things that are more expensive. We're looking at smaller but high in potential, the assets that are higher in potential. Janusz Krystosiak: Okay, from Jason. Melting copper on the market is not perceived as good investments. It does not generate a good return on capital. Have you spoken about -- that's not really a question, about building a plant in the U.S. Is that an actual consideration of yours? Unknown Executive: It might have been my fault in one of my interventions a few weeks back, I might have mentioned about this potential idea of building a copper smelter plant in the U.S. This is not just a slogan, although this notion for me is -- let me explain what it is to me. We are considering our potential participation in the value chain for copper production globally. What we have here in Poland, metallurgy is half of the European potential in copper metallurgy. We want to be stable. We want to at least maintain that. We want to use the green policy. We can see that in Legnica, there's a potential for waste copper smelter plant. Now for foreign investments, potentially a plant in the U.S., we can see how Polish companies are developing and investing in the value chain that's based predominantly on copper in the United States. That's a growing market. There's a lot of potential still to tap on and to grab on the market. And we have already -- for old copper, rolled copper, we are also considering our participation perhaps up to a final product. Okay. Ladies and gentlemen, if we were asked right now whether it is profitable right now to open a copper smelter right now anywhere geographical with the current [ TCRC ], perhaps not so much but we may not reveal, we are able to reveal exact destinations. But the last copper smelter other than the Chinese technology built was in [ Glogow. ] So we have some know-how right now. And various countries, are wondering whether to direct such an installation. It's too early to say. We cannot really reveal any details at this point, but we are really touching on the geopolitical aspects rather than financials because if any country wants to construct one in order to become more independent in the supply chain and to have an asset like this, this asset could be built. Potentially, we can design, construct one so we are party to various talks, but that's very sensitive information at this point, and it's also too early to disclose anything in particular. So yes, we are active in various market with various services, not necessarily good, but also services and the know-how that we have in our capital group. Unknown Analyst: Noble Securities. The work of analysis and research in Morocco, what kind of expenditure could this entail in 2026 to 2027, please? Unknown Executive: Ladies and gentlemen, like I said earlier, at this stage, we have signed a memorandum of understanding. It's a nonbinding document. It does not trigger any expenditure in the outlay. And this is where I will stop. We are not going to talk about the future. We're not aware yet of what the consequences will be of this MOU. We are analyzing the data. And at this stage, we can't reveal any further information about potential CapEx or expenditures. Unknown Analyst: One question about the sulfuric acid. There is a problem here in various mines. You are well secured that you have your own production, the 600,000 tonnes annually in Poland. If you could say anything else about the product or the process. Could you sell more of it if you are producing 600,000 tonnes? How much can you sell to the regional customers? And another question is whether Sierra Gorda and Robinson are using this product? And are they not experiencing any problems with the availability of this resource? Unknown Executive: Like you said, yes, we are producing about 600,000 tonnes. This is an important product for us also from a point of view of security because, as you know, we do not have a lot of retention, a lot of tanks. So the product needs to have -- needs to be sold quite quickly. So it's natural that geography plays a big role here, a big proportion of that remains in the country, and we will not be changing that. The prices perhaps are not quite as what you are saying. Let me just tell you why producers cannot -- producers of sulfur cannot get net prices that they wish around the world, but the experts that we have in sulfuric acid is quite significant in various destinations. But let me tell you why $150 or $200 cannot be attained because freight has become a lot more expensive. So availability of tanker ships is quite scarce. So when we ship through [indiscernible], only few large vessels can actually enter the harbor. So also in terms of railway transportation, [indiscernible]. However, this is a product that has been playing an important role for the last 2 years because so far, prices were even down to 0 on sulfuric acid, but we are now making money selling this product, quite a lot of money, but it is quite an exceptional product looking at our portfolio. Now the other question. We sell concentrate. We do not use this product in Sierra Gorda or in Robinson. We will probably be doing -- meaning this in the future. If we start leaching it, the importance of the substance is mainly for fertilizing industry. Our main partner is [indiscernible], and the Azoty groups or the [ nitrate ] group here domestically, it has slightly slowed down its production, I must say, to cut expenditure. So we will, I'm assuming, have more sulfuric acid for sale outside. Janusz Krystosiak: Any other questions in the room? Unknown Analyst: My name is [indiscernible]. I wanted to ask you about the shaft construction in '29. You said the shaft, GG-1 is going to be just for the staff. What about the others? What are you planning this year in terms of that initiative? Unknown Executive: Are you asking about the GG-1 shaft? Right now, we are reinforcing -- the reinforcement of the main shaft has been completed. We want to increase the capacity from 34 megawatts to 40 megawatts. And then following from that, we will be eliminating the temporary units and constructing the permanent ones. We have a contract with our engineers. This is PeBeKa company that's ours. So it remains in the group. The supervision will be carried out by BIPROMET, also a company that's owned by us. Other than the climate station with high technology devices, all of that, it will be local content other than just the technological solutions. Janusz Krystosiak: Okay. And again, from our main box, Morgan Stanley. What are the securities indicators for natural gas and electricity for 2026? Unknown Executive: Like I said, 2026, especially the first semester is over 50% on gas and more or less this 50% electricity. If I were to illustrate that it is our ambition to -- well, despite the fact that electricity was a lot expensive, a little more expensive in January. Now gas is a lot more expensive. We would like to wrap up inside the [indiscernible] the same budget as last year. From the point of view of the cost curve, we want -- we don't want the energy prices to increase vis-a-vis last year. But it is highly unpredictable whether we can do that. We will be monitoring this on an ongoing basis. Unknown Analyst: A technical question, perhaps a follow-up. Are the securities on copper and silver, are they going to be encumbered in advance? Or are they going to be -- or is this going to be distributed over the next 3 years? Unknown Executive: According to the accountancy, the transaction, first of all, needs to be effective. If it is effective, we will put it in operations, but they are settled once sold. So you will see in our note what the dates are. So I'm sure looking at the Annex, you can trace the details. So this will be -- this will take a year or 2, depending on which specific hedging transaction you are talking about. Janusz Krystosiak: Any other questions in the room, please? No, none? Okay. Let me use this moment. A question from the Internet from our mailbox. Can we -- that's a question from [ ESM. ] Can we say how we are going to distribute our capital between expansion in Europe, 3 new shafts and international expansion? So capital allocation. Unknown Executive: Let me briefly comment on the backstage of it. Each project is evaluated on an individual basis. At the end of this analysis, one by one, we build a list of projects, which meet certain parameters. One of these parameters is a risk development increase, decrease of maintenance. And then we make our strategic decisions based on risk diversification. This is a structured process, and it is not the case that we consider one project that's worse than another, just like that. We have specific metrics that's defined with a given project fits into strategy or not. So as a rule, it is a very structured process. The investment in 3 shafts is necessary for maintaining our production. Now it is designed in a manner that will allow us not to exceed certain CapEx thresholds throughout the investment process. There are all calculations supporting this project. We can also use some of those studies to use, for example, the funds as leverage of the obtained capital. Globally, the company is not excessively burdened with debt. So we have a few opportunities. If we have a good, reasonable and one that gives hopes for profits project, we can do that. Janusz Krystosiak: I can see no further questions here in the room. There are more questions in the mailbox, but they concern the aspects that have already been covered. So we will answer all those individual questions, specifically adding additional information. And that brings us to the end of the question. So is the CEO going to sum up? Remigiusz Paszkiewicz: No, I will not really wrap up the whole presentation. I just want to thank you for presence here and for your attention, your interest in our results for 2025 and your questions regarding our near and more distant plans. I would like to say also that with the macroeconomic background, we continue to see great uncertainty and volatility. It's enough to have a look at the prices of energy, each development brings changes, sometimes downward, sometimes upward. We have an in-company mechanism that is in place that triggers certain hedging solutions. We do our best to operate in a prudent, reasonable manner that balances our activities in the context of our objective of increasing the company value, and keeping that in equilibrium with expenditures. We also do our best to strike the right balance between securing the resources and output to sell. We will stick to our diversification plans. For sure, we will not make any sudden changes unless the macroeconomic environment gives us an extremely powerful blow. For the time being, in terms of hedging responses to market developments and geopolitical situation, we stick to the manner of operating that was presented to you earlier, and that was reflected in our results for 2025. We want to continue along those lines so as to be able to share with you mostly good news. Thank you very much for today's meeting. Please follow us regarding our plans to present the strategy. The strategy will be presented after the results of the first quarter this year. And I also invite you to track our plans in this regard. Thank you very much, and have a nice afternoon. [Statements in English on this transcript were spoken by an interpreter present on the live call.]
Unknown Executive: [Audio Gap] To summarize Q4 of 2025, but also the entire year 2025. We will also talk about our development strategy that we had a chance to present to you exactly a year ago. We will explain where we are in terms of the implementation of the strategy and how it translates on to our results. This is what our meeting will be about. Of course, the entire conference today will end with a Q&A session. And since we are holding this meeting in a hybrid mode as we also have online participants, the entire session is going to be divided into 2 parts so that all of you stand the same chance to ask your question. I will tell you more about the details of the Q&A session. But for now, an important piece of announcement for our online participants. [Operator Instructions] There is yet another piece of housekeeping since there is Marek Piechocki and Marcin Piechocki who very much care about their privacy. There is a kind request for those of you who are present here in the room, not to register the meeting, not to take pictures of the gentleman. We will be very grateful for you not doing that. And now the time has come to present our speakers, Marek Piechocki, Chairman of the Board; Marcin Bojko, Deputy Chairman for Financial; Marcin Piechocki, Deputy Chairman of the Board; and Mikolaj Wezdecki, Deputy Chairman. We also have Magdalena Kopaczewska, Investor Relations Director. And the meeting will be moderated for -- she will moderate the Q&A session for you. Let's move on to the session proper. I know that most of you have been following our business activity throughout 2025. But I guess it will do no harm to remind you of the most important events of that period. Let's see a short video together. [Presentation] Unknown Executive: 6 new markets, over 1,000 newly open stores, sixfold growth of our robotic fleet and new logistic facilities plus new markets where our mobile operations were launched. So quite a lot. How has all that translated into the results? This is what you're going to hear from Marek Piechocki, Chairman of the Board. Marek Piechocki: Good morning, ladies and gentlemen, welcome. I believe that we are very happy about how successful 2025 was. When we step back and think towards what this year brought about, it wasn't the easiest one for us or for the financial markets, at least for us. It started from the liberation day, which probably wasn't pleasant for you as investors or for us as the managing party because that raises a lot of uncertainty that is mid-tier. It affected us only -- I'm talking about the warehouses in Romania, which were burned. This is quite a challenge that our teams, our logistics and IT teams handled really smoothly. Practically speaking, the customers have not even noticed that the supplies from Romania were redirected to Poland, and it did not affect them at all. It didn't have any major impact on our financial results. But among all these difficult moments, when you take a look at the results, we opened over 1,000 stores, which is not easy. You need to explore over 1,500 locations in order to be able to approve of the choices and open over 1,000 stores. Think of how many architectural teams, how many teams responsible for the construction of those stores participated in this endeavor. This is a massive challenge and we increased the number of stores from 2,700 to 3,700. In order to do that well, you need a commitment and effort of many managers, the entire organization and numerous employees in the LPP Group. For us, that was the highest growth we've experienced. On top of that, if you add 6 markets with nearly 60 million consumers, you need to realize that, well, it sounds so easy, 6 new markets when you see it written down. But again, you need to make decisions on whether you have your own accounting or you decide to outsource it to begin with, you need to find a country manager, leasing teams. So the easy sounding 6 new markets actually mark a lot of effort. It's been the first time that we opened so many new markets over a single year. To this, again, we have [ PLN 6.2 ] billion in investments, out of which PLN 1.3 billion was invested in logistics, automation and robotics. Then again, let me emphasize that it takes tens of engineers, people launching these systems who approve them, who consider whether this or that system should be selected for that to be most suitable. Again, that's a considerable challenge. And I'm really proud of the entire organization, not just of the Board, but of all the managers in LPP or the people who contributed to that, not only the managers because we really had a lot of work. These endeavors that contribute to building our future, we were able to manage it smoothly, which is reflected in the results that you've probably seen, but that's our force, and that's not easy. E-commerce grew by nearly 20%. It rarely happens in European markets that somebody grows by PLN 6.4 billion in revenue in e-commerce. That's a lot. Now consider this, we do all that preserving substantial financial stability, 1.1, that's our net debt to EBITDA. After 2 years of working on the financing consortium banking, we do have financing. You know well that before the banks give loans, they scrutinize the applying institution organization really closely. And it's been the first time in my record and probably one of the oldest people in this room that we had oversubscription banks and a consortium wanted to give us PLN 20 billion, we went for PLN 13.5 billion. Rarely does it happen that you need to introduce a limitation on how much of a loan you take from this or that bank. So that's another source of our satisfaction. Now within this financial force, we wish to propose a dividend per share in 2026 of PLN 900, which is 36% more year-on-year. We want to offer you this during the general assembly. We are very happy that we are able to share our profit with you. All that has been done with a lot of attention paid to decreasing the pace of the growth of our costs. We made certain we spend every penny really carefully, considering twice whether the spendings are really necessary. That is what gives us a 20% of growth, but around 35%, 36 percentage growth of EBITDA -- EBIT or the net growth, net profit. That's what makes me proud as an organization. On the one hand, we were able to develop and grow really dynamically, keep investing into further years of development that lie ahead. And at the same time, we did that reasonably enough for the profit to allow us further investments and sharing of the profit with our shareholders. Now how did we make it in our greatest engine? This is what you are going to learn about from Marcin Piechocki. Marcin Piechocki: Good morning, ladies and gentlemen. Ladies and gentlemen, 2025 was a record year for us, not only in terms of revenue and profit, but also in terms of the scale of opening new stores. We set ambitious goals, but over 900 stores in 12 months is 60% more than last year. That's a result that we are really very proud of. There were weeks which we opened over 50 stores. And on a single Saturday, we broke the record, and we opened over 25 stores just on a single day. There are people standing behind these digits. Today, in Sinsay, we manage the network of nearly 2,500 stores, and we do that on 25 markets. But what do we do that for in order to reach out with our concept even further to be even closer to the customer at their hands reach physically, but also in the virtual reality. The numbers itself and the volume is not satisfying enough. We care for the quality. So for the profitability of our net average EBITDA on the stores in the net is 30% and 98% of the stores have a positive EBITDA contribution. These are not standard numbers in our industry. This is the model that works, and we scale up the format that is profitable at the level of the stores. The other strong pillar that we rely on is e-commerce. And even today, in the value, value for money segment, presence in this channel is not obvious. Competitors still have certain doubts about that, but we reached 32 million of total downloads of our application, which we are particularly proud of. And we did that plus 45 years year-on-year compared to a very strong basis. When we compare ourselves to Chinese retailers present only online, we have nothing to be ashamed of. Our application today is more popular than Shein or Zalando. And for us, what matters is Sinsay's share -- Sinsay's application share in sales, that means that our customers love our application and they are really loyal to it and to us. I'm an engineer, atomic engineer, and I've been observing technical trends with curiosity, but also taking a pragmatic approach. Every time I hear about different technologies. I ask myself a question whether a given solution really contributes real value to our business. And if the answer is positive, then we simply go for it. In LPP, for example, AI is used already today in designing. We are proud that our graphic designers use AI when designing prints [indiscernible] all over. We use it in logistics and back office and sales and other areas. This is a nice example where we create virtual photo sessions. This is the technical photo on a technical model on the left-hand side. It doesn't -- we don't need to send a person to a luxury yard to the Mediterranean Sea. We can use AI to get what you can see on the right-hand side. So again, you don't need to be Sherlock Holmes to guess that the right-hand side photo sells better, but the one on the left-hand side actually cuts costs. As for virtual sessions, we generate automatic images of details, buttons, pockets, fabrics or we limit the participation of small children in the sessions because it is not a very flexible solution. As for the virtual assistant creating the style and suggestions for the customers who, for example, know what occasion they're looking apparel for, but they don't know what to go for, ready outfits suggested by means of using this set. We also have a virtual try-on in the Sinsay app for women collection, but we are broadening it, adding new groups. The customer uploads her photo and she can see the product on herself. So we will see -- we are using AI. We will keep using it as it is really supportive to our business and we do that either to limit cost or to increase the sales. This is not the end of what we are doing. We are also using advanced technology in the logistics. We have 3 warehouses in Bydgoszcz, in Romania and in Jasionka. As Monika said, in '25, we've increased our fleet 6 times, they help us optimally arrange our goods. And at the end, the orders are fulfilled much faster with lower costs. We have significant tool to support the expansion of the store chain based on e-learning machines. These managers are facilitating because they select a location, they assess the sales for a particular location, they analyze the demographics competition. They do not replace people, but the manager is facilitated with taking a better decision. We are operating in 7 countries. And the last one, the last technological element I want to mention is a contact center, 35 languages. We can scale servicing, and we don't need to develop our teams. Ladies and gentlemen, for many years, we consistently talk about being fashion tag, and this is what we focus on for the future. Now I pass the floor to Marcin. He's going to present financial results. Marcin Bojko: Thank you. Good morning, one more time. Marek was talking about the final results, very attractive PR results. Marcin talked about technology and various solutions. So now we talk about money. It's a pleasant topic to talk to. Let's focus on like-for-like store sales, those that are with us for 12 months. The dynamics of like-for-likes is not including the VAT picture. In '25, it was a stabilization market in Sinsay and in other brands. How do we understand it? In Reserved, the second largest brand, it was a very positive normalization process. In '24, it was a bit of experimentation with our apparel. In the second half of '24, we've learned the lesson with improved results. And in '25 and the first quarter is a continuation of this positive standard. Normalization in Sinsay, our largest brand these days was dropping a bit. When you look at 24%, 20%, 11% and then 1.5%. So it was a very demanding base. So this normalization was following, as you can see here on the slide, minus 1% in Sinsay, over 5% in other brands. When you look at it from 2-year average, Sinsay, this is still 4.1% increase and 3.3% in other brands. So let's look at it this way. So season to season and quarter-to-quarter, it can show a different picture. We had some challenges in Sinsay. So the dynamics is definitely much different and further from what we can see. But in Reserved, we saw -- you saw what we can do and what the teams are capable of. When we look at our stores and new stores opened and e-commerce, in the first quarter, we grew by 16%, so double-digit increase. We are very happy about it. But yet, again, in the fourth quarter, it was a certain May related season. May was very cold. So the dynamic was low. The fourth quarter started not really very good. The first -- the beginning of November was difficult. The clients were waiting for Black Friday. Then in the second half, it was better till Christmas. It was relatively warm. E-commerce dropped a bit before New Year's Eve, the temperature dropped again. And after Christmas, then in January, it was really, really very cold. So the traffic in the stores dropped, but then e-commerce went up by 30%. So this is what we could see. We were operating with the margins. So we sold out our Winter collection with good margin. So this trend continued in February. So the fourth quarter was as it was and let's look at the entire year, 19% of growth in '21 in constant currency. So we are very happy about such results. Moving on towards PLN. We have the gross margin. What I said is we've managed with the margin. We've managed the margin very well in the last quarter of '24. The winter helped us with selling out our winter collection. Those of you who are with us on a regular basis, you remember that we started with the larger stock in Sinsay. Our appetite was much larger. We had to work with that. So we take turnover into consideration that resulted in a lower margin in Sinsay, but we secured this good -- our margin, 365. So you can see that in numbers. In the third quarter and in the fourth, there's a seasonal drop in our margin. Third quarter is always the best as for the sales and margin, but it's still plus 2 points year-on-year, so a very good result. And then costs, after revenue and margin, the cost, this is the third leverage affecting the result in our sector. We don't have [ Swavik ] with us today. We are here representing the entire management board. The costs, this is what we control. We are very happy about it. So the ball is in our corner here. As in '24, we were building the scale to open new stores. It's not easy to open 1,000 new stores. We had to build capabilities to do it in logistics and in our design teams. And you could see that in costs. And in '25, we focused on efficiency. And the numbers speak for themselves, the biggest cost group, these are stores with the sale growing 19%. The costs in total grew by 70%. Then logistics, only 14%, that was the growth, so slower than the revenue. And the biggest important -- the biggest impact came from investment. This is what Marcin was talking about. And back office, 11% of growth twice slower than the revenue. And this is the direction we want to continue apart from logistics, where we can see the technological impact in logistics, back office and marketing. This is hard work. And the cost of stores, we don't have like one big initiative that can limit the cost. This is just hard work of the entire organization and all of the teams that are measuring it, streamlining the processes, spending -- distributing the parcels online. So bringing that closer to the cash point or closer to the try-on section to optimize the processes. So this is what we are doing actually in the stores. When we are going to combine these 3 leverages, the sales, margin and costs at the end of the fourth quarter, we have significant growth. I will focus on the numbers below the columns here, 3 percentage points for EBITDA, for EBIT, almost 3% and net profit also 3%. This is what we focus on. Are we going to deliver year-over-year? I'm looking at Marek. This is our goal. Of course, challenges are ahead of us, but we want to deliver everything. What you see here, this is what Marek was talking already about. We did a significant leap. We can see that it might be difficult to repeat, but this is our goal. This is what we want to achieve. And from the strategic point of view, long-term strategy, we want to be consistent in improving profitability, whether these are 3 percentage points or 1.3 percentage points, this is our goal. This is what we want to achieve in the future. So this is the financial part. And it's not a boring part, but we also have operational KPIs. This slide is not giving you information attractively like these investments, but at the very beginning, we said that we perhaps had 2 large stock, we need to order collections in advance. And as you can see, at the end of the fourth quarter, or at the end of the first one, that was PLN 4.8 billion. And here, we have a similar amount. So we grew 25% in our network, and we have the same volume of stock. It was over -- we had too much of the inventory, this is also what we've communicated that 2 to 3 quarters unnecessary to manage that. Marek was talking about our flexibility and after especially our fire in Romania and our work with over inventories. And here, we have 1,500 as per the stores. Is this an optimum? Is this a long-term average? I believe that 1.6, 1.7, that would be more comfortable for us. We can see that in some departments, we had too much of the stock. So this is another slide we are very proud of from 5 to 2 to 4.6. This translates into the working capital. So we still have resources as for our liabilities. Marek was talking about our record financing with reverse factoring, so we can focus on the purchase of collections, quality collections. So this flow and liquidity is good, and this translates into our comfort and record investments to PLN 3.2 billion in 2025. I believe in Q&A, we will refer back to it. PLN 3 billion went to logistics. This was a record year. And in profits for every level, every other year is going to be a record breaking. In CapEx, this was a record year, and it will not be repeated soon. PLN 2.6 billion, that is the money that we are going to keep for future investments. So we've built the volume in investments. Now we will focus on robotization and the CapEx is going to be much lower. And what makes me very happy. I'm not sure if the other members of the Board are equally happy, but I'm happy as the financial -- as a CFO, I'm happy that we grow fast in a profitable way, and we grow safely. That is what makes me proud. Net debt-to-EBITDA shows that we can get indebted even more, but we do not have such plans because taking the war in Ukraine or be it COVID, it shows that our conservative approach to management makes sense. Gentlemen know it well that we can defend ourselves amidst all these crises. So on average, against the backdrop of the industry, we handled it pretty well, and we wish to continue. We have cash in store, we can invest, and we will do that reasonably. That was the summary of 2025. So we grew well in sales in a profitable way. And now we are entering 2026 with a nice foundation. We had a good start, a good entry into the year. How about the present year in detail because that's the end of March, so 2 months into this year, nearly and traditional trading update, sales and growth. These are 2 most important things. February in terms of sales, let me make it clear, started in a demanding way. The numbers speak for themselves. In total, we grew only by 10%. Online was even smaller year-to-year and the likes were negative. And now when we take a look at the first part of the table, it is not an impressive result, but you need to take my word and believe that from the margin point of view, February was maybe not extraordinary, but it was really enormously profitable. There was a very strong month with very low temperatures. In Q4, we were ahead of our stock from autumn and winter and in February, we continued on that. We didn't have to introduce sales bargain. So that is something that helped us work against the mass, and that explains our sales at the end of February when the temperatures grew, the likes returned to their norm. They are still rebouncing. We still have Easter ahead and we introduce further intakes of our collection. So the plus 18% is decent level, but you can also see online last year, maybe I did not mention that, talking about the cost, our cost in '25 in terms of the value of money were at the same level as in 2024. So the share of performance marketing in '24 was 9%, in '25, 8%. So that improved our profitability, but it also shows that we have a lot of space. So if we want to reach for new customers, we are likely to do so. Mikolaj is with us who is not at our quarterly meetings, but he's responsible for our e-commerce. So we know what we do. We enjoy this comfortable situation. We have a good tool. We're financing big CapEx as we have space as far as costs are concerned and we can unfreeze it. But we can see that we are heading in the right direction. And the other part that is growth comparable year-to-year, 120 new stores in the first quarter, around 110 -- 115 Sinsays, the other ones are new brands. And in the first quarter, around 350, somewhat lower than in the previous year, but Sinsay will be comparable as far as other brands, we are planning a lower number of openings. Now looking at the overall targets, we showed you this guidance in December last year already when we talked about the third quarter, and it actually remained unchanged largely, and that's good because it means that our guidance was set right, apart from gross profit margin. I talked to some of you when we talked about our guidance with a strong dollar that we contracted for the first half of the year. Our margin -- guidance margin of 54% to 54.5% is not conservative actually. And yes, we waited for the beginning of the season. We saw how the collection was selling. This margin also takes into account the market havoc resulting from the war in Iran. So you can see that the dollar grew to PLN 3.70. And this guidance takes that into account. So for us, it's also, I guess, it's positive news. The dilution of margin, well, is not to be expected for the year despite the challenging circumstances. And this natural increase of gross margin cascades downwards. So also EBITDA margin and net profit margin go 1 percentage point up. So I guess that's a positive piece of news for us. We do what we should be doing, working in our like-for-likes, but the first half of the year given how well safeguarded we are, is very promising in terms of the margin. And now summarizing 2025, it was a year of dynamic profit growth, but also double-digit growth in sales. We helped this process by means of a cost discipline. This is what we have in our hands, and that's our long-term trend. We've been working with back office teams on efficiency, everybody has their KPIs. As Marcin showed, we use AI, not only in manufacturing, but we also try to rely on it in back office, be it legal team or finance team. And I agree with Marcin, we take a pragmatic approach. This is not the one and only answer and tapping our potential. Now we are going to show 38% of cost to revenue unless we do such sales. But we want to systematically improve moving on because at the end of the day, the growth in costs is slower than sales, that will translate on to also the value for shareholders. So we wish to have more years like 2025 to come in the future. But looking at the broader perspective, I give the floor back to Marek, I guess he will be the best person to show us what it looks like. And I'm going to stay here with you on stage. Marek Piechocki: I want to show you some long-term prospects now. But before I move on to that, yes, I'll return to the results that Marcin showed you, those concerning the first quarter. I guess it's been the first time in our record. As the winter -- well, for the first time -- for 10 or more years, it was the first time that temperatures that we noted fell below minus 11% and 15%, and they were not just a single time occurrence but they lasted for 2 or 3 weeks, and we really experienced low temperatures of this winter. That is something that made it somewhat harder to get more customers to the stores because obviously, they were more eager to move to the online channel. But it was for the first time that customers unfortunately were forced to buy because when a mother with a child comes into the store, and she wishes to buy gloves and maybe she has to buy gloves, it doesn't matter to her if discount is by 10%, 20% or 50%. And in January and February, we had bargains, pretty big ones because when spring comes, hardly anybody wishes to buy the A/W collection. But as Marcin mentioned, in February, our financial results, the internal one, which we keep tracking the profit was much higher than last year. And that was caused not by us having negative LFLs, but the margin was by 8 percentage points higher. And of course, this is something that spreads into margin and so on. But I just want to draw your attention that negative LFLs were offset by the higher difference concerning the margin, and that resulted from the fact that we didn't have so many discounts, and we sold many pieces at a lower bargain than necessary because all the customers were forced to buy who want to buy a winter jacket or gloves in February or March, well, this year, the weather made our customers go for these choices. And I would like to share a reflection or a curve with you, a diagram that concerns our share prices over the last 10 years. We don't want to go further back to the beginnings of our being listed, but those 10 years is probably a perspectives that can tell you something about how the company has been operating. And I'm particularly proud, maybe not so much of the shape of this diagram. We, as a family, also invest and we also put our money from the dividends into certain investments, hoping for the biggest possible return on investments. But when we look at these returns, pay attention to the fact that the total shareholder return on CAGR for the last 10 years was 15%, then it doesn't seem to be a bad figure. You as investors, you are all here in order to listen about how the company keeps developing, what the company is doing, where it is investing, where it wishes to be present, what operational activities it has. So from quarter-to-quarter, you have certain doubts whether we will deliver or not, LFLs this way, that way, what kind of future lies ahead. But 10 years is a lot of quarters. That's 40 quarters. And when you try to draw an average from that, well, I can tell you that as an investor, I would wish -- these investments that my children implement also brought such a return. I'm not going to mention the period of 3 or 4 years because those figures [ PLN 24 or PLN 28 ] are striking. But still, when you look at a longer-term perspective, I believe, it's not bad and those who have faith in us, of course, among our investors, we have also those who've been with us ever since our beginnings and they bought our shares for PLN 48. There are such investors among us. But this prospect of -- this perspective of 10 years is not a bad one. It proves that it was worthwhile sticking to LPP, those who had faith in us also amidst difficult times. For example, when the war in Ukraine broke out or when we were accused of things that we were not guilty of. You know what I'm talking about. I'm talking about Hindenburg, the infamous Hindenburg. And I think that those who stay with us do not regret it. And I believe that there is still a bright future ahead and further years of dynamic growth. And we hope to keep you satisfied with those growth because we are here to multiply the capital. Thank you very much. Ladies and gentlemen, the time has come for us to listen to what you have to say. So let us move on to our Q&A session. I would like to invite [indiscernible] to join us here on stage. And I will tell you how we are going to go through the session. Marek Piechocki: First, we will hear out the questions from those of you who are here in the room. If you wish to ask a question, please raise your hand, and please wait until somebody from my team approaches you with a microphone. We care very much that because we have some of the participants listening to us online. And it is only via the microphone that we can provide the signal for the online transmission. And please introduce yourself and tell us which organization you represent. In the second part, Magda Kopaczewska will read out the questions posed via chat and which probably are still being posed. And this way, and we will make sure that both the groups will have the same amount of time for your questions to be addressed. And now we would eagerly take the first question from the floor. Sylwia Jaskiewicz: Sylwia Jaskiewicz, broker. I would like to ask you what happens in the markets where you buy. So China, Bangladesh, Pakistan, what can we expect? What can we expect of markets that you sell to in the light of those 2 wars. I mean the southern markets, first and foremost, how about the demand? And what's the greatest challenge when you look at your competitors as well? Unknown Executive: Okay. In terms of the situation concerning our purchases, we are in touch with our suppliers at all times. In terms of China, they announced 1%, 2% of increases. That's the beginning of our discussion, but that's the scale. Given what happens with oil, slightly higher 1-digit rises will concern polyester products. But again, we are at the beginning of the talks. And that's just the feedback straight from the market that I'm sharing with you now. So that's in terms of what we buy. This is also an element. And another element of purchases, supply times, delivery times are not affected, maybe slightly India, Pakistan, but we are talking about 2 to 4 days that doesn't really affect the accessibility. We do not use aviation. So that's 0.8 percentage in our mix. The airborne transport grew twofold, but it is of no impact on us. Everything that is a derivative of oil, so the cost of transportation. This is something that we will have to struggle against. But the sourcing itself doesn't really offer us any drastic pieces of information. What was the other part of the question, Sylwia, if you could remind me. Sylwia Jaskiewicz: The remaining markets, the southern markets. Unknown Executive: Well, no, again, following the weak February, actually, everything else rebounced, including Ukraine. Maybe Romania is lagging behind, slightly looking at the March likes versus the February ones. But across the board, so to speak, older markets really rising. And as for the competitors, that was the last part of your question, maybe Marek and Marcin can support me, how about competitors looking at Chinese platforms or the sales in brick-and-mortar. So in the stores, where we cannot see any fundamental changes. I believe that everybody in the market is approaching Central Europe cautiously, be it Slovakia, Czech or Hungary. I guess that -- well, we've talked about already that we are more selective of our locations. We wouldn't like to exclude our investments already now or slow them down, but this is the third, fourth quarter where there was a macroeconomic slowdown. We did not open any store out of 3 or 4 that would meet our expectations. They are still profitable, but below our target. So here, probably we would be slowing down, but there is no fundamental competition impact -- competitors impact. Okay. We will take our next question now. Unknown Analyst: Let me congratulate you on the results. Well, globally, a few companies at this point can post such a performance. So kudos to you. As for the question. Well, certainly, if you could tell us about robotics because you've made certain investments into that, you had a record year in terms of your spendings on robotization. To what extent are these activities visible, how have they translated into your cost efficiency? And where are you? How advanced are you in introducing robotics. That's my first question, but maybe I'll ask -- okay, I'll wait for you to answer before I ask some other questions. Unknown Executive: I returned from Romania yesterday from the distribution center that we recreated after it burned down. And further robots were installed there that support us. This is where we expect greatest savings. In terms of the percentage drop of costs versus sales because we simply think of what percentage of costs we have versus sales, and this is where we see the greatest advantages already last year, you can say, in the third and fourth quarter, we could see how we profited the automatized center in Bydgoszcz with robot was launched midyear and it brought its result towards the end of Q3, beginning of Q4. The one in Romania, what we can say that at this point, the one that I saw launched its operations in October, they have the so-called wrap-up period. So the period when they're getting to a complete efficiency, and we can see that owing to the solutions introduced, we can enjoy nearly by 50% greater shippings. They call it throughput. So how many pieces actually they pass through them per 1 hour. So it's around 75. So that means that we have considerable reductions of employment costs so we have the same level of employment at the same time, increasing the pace and the number of units shipped. So you'll see we will have an Investors Day that we will invite many of you -- most mystically everybody that is with us here, we want you to pay a visit to Bydgoszcz, where everything is highly automated and robotized with high share of AI activity. And you'll see the progress in the savings that we owe to it. These are one of the greatest sources of savings that we can generate as a company. Because actually, in the stores, certain level has to be preserved. We try -- well, having self-checkouts. So in Sinsay, for example, this solution, 75% of transactions, card transactions are handled by customers themselves using those checkout. But the logistics actually offers us much more in terms of the possibilities in e-commerce, there's the cost of 20% versus sales. And this is where there is a lot of scope, it can go down from 20% to 15%, well, this is what we are hoping for. But this is only owing to even more advanced robotic solutions being introduced, and we've been investing into that. By the end of this year, we are going to open up another warehouse that will be even more automatized than those that we've opened so far. The pace of introducing robotics into e-commerce is so enormous that what we were thrilled by and what we have in Bydgoszcz believing it to be outstanding. It is it is crazy. Anyhow, another distribution center, the one that we will open this year will be even more phenomenal because instead of a pile of small robots that you can see operating. And well, you need to just be careful not -- for them not to get into a traffic jam and not to collide. Now we will have robots actually climbing up on themselves on the shelves to put the stocks on the shelves. And this is what we'll keep investing in, and you are asking us whether we see the benefits and profits, we can see them already because what has happened in Q4 is not just savings based on catching down on marketing costs, logistics has a considerable share in it. And this one point of efficiency that you saw in Marcin's slide, there is a huge share of logistics. And we believe that in consecutive quarters, the profit benefits will be even greater. Those automatized centers we launched towards the end of Q3, beginning of Q4 this year, they are only beginning to climb up to this level of efficiency that we wish them to arrive at. I would like to add, we are keeping our promises when we had a call last week. We've analyzed the situation, how this affects the situation after the war. So I promised that regarding logistics, Marek was talking about business. So as for this year, we've been implementing everything. So this is still a ramp-up period. So this is shifting to [ 0.3 ]. This is affecting our OpEx. Maybe a bit more and the rest of that, these are our efficiencies in costs in back office [ 0305 ]. This is what we want to achieve. And giving you a scale a little bit. In e-commerce, the logistics costs, this is 20%, Zalando is publishing this benchmark, they have 23%. With us, this is a lower level. So just adding to that in terms of figures. Unknown Analyst: The second question, can you classify the impact of Middle East war on your gross margin assumption, it looks nice and reflects what the consensus was forecasting. But what were the assumption and what is the impact of the conflict in the Middle East regarding gross margin? And regarding guidance, what is the assumption in likes in Sinsay, I believe this like should reflect the price because in autumn, we should have in increasing prices. Is that correct? Am I understanding that correctly. Unknown Executive: So yes, the guidance of gross margin is including the impact, yes. The first quarter, we had the margin that was much better. When we add February to that, we had a significant reserve. As for the dollar, the currency of the dollar. That was [ $7.3, $7.8 ], dollar is not going to reach [ $4.5 or $5 ]. In this, we haven't seen such a forecast. So we approach that more pragmatically, [ $3.7, $3.8 ]. And our logistics did a really good job. So with freight cost, we entered the new year. That was a lower cost. Now the increase is not really affecting, but the situation is really dynamic. So yesterday, we received information from the logistics that the pressure is there, they can feel it. So whether this is going to be 25, we had a call from Trigon or maybe a bit more, if this is even twice as much. In gross margin, we can still see that the margin is growing year-over-year. So this is reaching a similar level. So it's a comfortable situation for us. Unknown Analyst: And now the second part of the question, Sinsay, what are the parameters and when -- what have you changed in Sinsay compared to last year? Because you said that there were some drawbacks related to the collection. So what has changed? Unknown Executive: So I will go back to LFLs. So this is 0 plus, a very conservative assumption. So we hope that it's going to improve. That was minus 1.5. So I hope it's going to be much, much better. February was very challenging. March is better. So let's wait for Easter and warmer season. What I can say, yes, last year, the base was definitely stronger. Now it's lower. So the goal that Marcin was talking about is not going too easy to reach as for our operation on sites. We don't always win, this is what I can say. The collections that we had last year were not so great. I believe that they are going to be better this year. We talked about also inventories. We talked about home department. Now it's still significant increase in the margin. So we start the sales, not so great, but we have this buffer zone with our margin. So I believe that we will have room to maneuver. As for the prices, the segment we are operating is very sensitive related to the price. So we need to be very cautious in our approach. We don't want to change the prices. And what it looks like in autumn, we will see. So we are still fighting in the game. The situation is as follows: in Sinsay, we have higher surplus in margin than in other -- in Reserved and other brands. So if we say in Reserved, the margin is 3 percentage points higher than last year. In Sinsay, this is 5x or 6x. So the prices are too high, so we are going to decrease prices in Sinsay to revive the sales. And we have room for that. So it's more comfortable for us to do that. You also wanted to ask a question? Unknown Analyst: [ Matos Bargen from Exact Entity ]. How the revised assumptions regarding '27 are supported. What is supporting these figures and new stores being opened. What is the most significant challenge for '27. And to Mikolaj regarding e-commerce. What is the impact that in such a challenging environment, you have 20% of dynamics without any elements affecting the margin. So when we look at the omnichannel and when we look at the e-commerce platform, either there are problems with the margin or the dynamics is relatively low because we focus on profitability? And can you talk about Sinsay about the structure of the offer? Do you add apparel or more home section or maybe does that depend on the market? How is that evolving? Unknown Executive: Okay. So I will start. Thank you for the question. You need to realize that we focus on growing, not the fastest, maybe around 20% or 19% is good, but to grow profitably. What Marcin was talking about was, if we have the demand that is slower or lower than like in February, we don't want to push that and spend money, but we focus on profitability to be as best -- as good as possible. What is the leverage as for our growth. I will talk about 3 aspects. First of all, there is a success today regarding investments in logistics. What Marek was talking about logistics. This is not always cost saving, automation, robotization, but shortened lead times in e-commerce, the logistics is the core in the organization, pumping the blood into all our vessels in the network. So for us, it's more important to shorter lead time for the client. And thanks to robotization, we are not only saving money, but we are also shortening the lead time to the client. So that was the first element that happened last year. Then a broader offer, especially in Sinsay, Marcin is going to talk about as well. We decided to establish a dedicated team for Sinsay products, for home department. And as consumers, you can see that this offer of dedicated products for Sinsay in e-commerce increased last year significantly, and we are going to continue this tendency to focus on the offer of the -- from -- in e-commerce to be much larger than in stores. So this is a leverage to improve sales, we don't have any barriers for e-commerce like warehouses for stores. But the efficiency we are talking about is much, much better. And the third aspect and omnichannel, this is another leverage. So we have -- we are better than Zalando or other channels. Clients can collect their products from -- with a package. So this is a result of a synergy. So the client knows that there is a stationery store and then collecting packages from e-commerce or they go to our stores in our retail park, they learn about Sinsay and they start interested -- they start being interested in our brands. So omnichannel means that our efficiency in marketing cost is much better. I want to repeat, our goal is not the pace of growth, but effective growth related to efficiency. It's not the situation. It's not a post-COVID situation. We focus on profitability. As for the offer, in stores, this is home department, but I wouldn't omit kids or men. So this is not what we are very famous for. We reach not obvious locations. So this is something new. This is a novelty, kids and men department. As for the Internet, home is priority. We have a team established for home department. They are developing the offer. It's not so easy. We look at Temu and SHEIN, what they offer, what this can be sexy for our clients? And we want to introduce that in our offer. And you were also asking about some differences about the structure. So home, you were saying that it was 50%, I believe. So well, 50%, this is too much. I think with 500, 700 home, 50%, that could be too much. So around 20%, I would say, with good turnover. So when we look at our competition, we can see they are very effective. We are still fighting, but we are not giving up. We need to dress every day, and we need many, many things at home on a daily basis. So that's true. Unknown Analyst: [ Bernard Krasuski ], I refer back to the Middle East and the war, our H&M provided a rather negative guidance. With you, the sun is shining. But is your guidance and your perspective for this year making the situation better, still were contrary to the situation with dollar, with the war in the Middle East. So are you going -- our customers going to jump from more expensive to less expensive products, you survived the previous crisis, like the COVID one. Now the situation is a bit different. We don't have new clients from Ukraine, for example. So how the situation is going to evolve from your experience, your analysis of the market. Are we going to have significant differences between different countries where we operate in or all the consumers are going to react to the crisis the same way. You are operating on a smaller scale in the Middle East. Are there any plans to close stores over there or not. Unknown Executive: I was thinking about these topics, the topics, the questions. Your question is related to the war in the Middle East, in Iran and many turmoil on the market. So my personal understanding that the world has changed since COVID. And now the turmoil is on a regular basis. We have 2019 COVID, 22nd war in Ukraine. And every certain period, we have Liberation Day. So every 2 years, something is happening, some turmoil on the markets. And as an organization, we managed to deal with that quite well in a situation when 20% of the stores disappeared in Russia. This is what we faced, and we managed with COVID where all stores were closed suddenly. The war in Iran, somewhere on the sidelines. It's still -- Suez Canal was closed, and they travel differently, there are different routes that were adjusted. So the war in Iran not affecting us at this point. If oil goes up, this is a smaller amount in transport cost. And the cost of oil is going to increase not only for us but also for our competitors, for all of us. And our brands like Sinsay, they will benefit from that, if not already. I look at it from this perspective. We try to be very competitive price-wise and very attractive in terms of what we offer to our clients. And this is our competitive advantage. This is the strength of our organization that we are -- we know how to adjust to the changing environment. We know how to effectively manage not only on the product, but also on the level of costs or, let's say, a year ago, when I was meeting investors, you were worried that we have too much of inventory, too much stock in our warehouses, what is going to happen with that? Maybe LPP is going to share the fate of e-commerce or other companies, Polish companies that also have problems with the stock. So in a difficult situation, we know how to manage that, how to deal with that. We had ups and downs. We were hit from right hand from left, and we are still recovering from such situations. So the war in Iran is not really affecting us. I would say bluntly, this is -- I'm not trying to use an explanation or an excuse that the war in Iran, so our results are worse. No, this is not happening. Magdalena Kopaczewska: Ladies and gentlemen, the time flies. We will take the last question here from the floor and we'll move on to the question posted by our online participants. A question about the long-term future. I wanted to ask you about what happens in the segment of the smallest Sinsay. At a certain point, you shared information with us that you focus on medium and big Sinsays, thinking about your prospects of growth in the future, we know that in terms of the development of the network, it's best to have all formats of stores because that opens up a lot of opportunities for development. How about the work in progress on the efficiency of the smallest Sinsay stores. Unknown Executive: Right? It's great to have all the formats, but it's also great to be profitable. And we paused in June last year, and we keep on working on the project. It's an ongoing process. In October, we launched its full swing. So we have those 2 groups of pilot stores or test stores, if you wish, we compare ourselves to them. And our diagnosis that we have too little of the fashion apparel department, mostly ladies, seems to be holding water. This is work in progress. The collection was what it was, particularly in A/W in '25. But we can see regularly, and we go through this at the Board meetings with our design team, there is an update in sales per square meter between 6% and 8%. And in order to comfortably say that all the projects and that was quite a pull over, 400 stores were frozen last year in order to unfroze them and add them to the pipeline of opening. Well, we don't have this comfort yet. We have too small A sample. It's been too short a time, it shouldn't be 6%, 8%, but closer to 14, 16, then we would be comfortable enough to put them back to the pool of development. We are working on that part. So we've been talking about development and profitability a lot. And this is what we care for. I guess you would like to refer to the question that was posed from this part of the room. As for the future, what constitutes the greatest challenge when we look forward. Well, we will be looking at profitability. Our target for this year is somewhat higher than last year in terms of the opening. But we can see that what Slovakia is what it is. We haven't thrown that out of our pipeline. Czech, also lagging behind. We are looking at those countries. We will not be afraid at a certain point cut of what has to be cut off should the need arise, but we don't see that need yet. Of course, that would not be cutting of plenty but pausing a while. But in the end, we want to be profitable. We closed '24 with EBITDA of PLN 1.4 billion, '27, we would like to double the EBITDA and arrived at PLN 8 billion. Following '25, our EBIT grew by 31%. Now to get to the all PLN 8 billion, that would be 20%, 22% a year in '26 and '27. And then that will mean that we've reached our target. That's what we're focusing on. And whether the path leads to 1,000 stores and certain profitability of 700 and higher profitability, in the end, profit is what matters. Yes, that's what I wanted to say as Marcin rightly draw your attention to regardless of the components we are going to rely on, still the ultimate target and the ultimate value is not growth, for growth's sake, but it's going to be a growth in profit and an even faster growth than in sales. So we need to have that on mind at all times. If I was to say what's changed in our minds largely over the last 12 months? It is that profitability matters most than anything else, whether it is an Oxford Street store, the rent is over, it will not bring profit. We will close it. If any other store will get to the end of its lifetime. The agreement is over. We'll close it. So the focus now is only in sustaining, preserving, not the prestigious but only profitable stores. So again, profitability, profitability, profitability, that's key. When profitability is high, when the profit rises faster than the revenues, only then, I'm also happy about it because the situation is sound. It's not just pumping up the sales. And in this respect, it doesn't matter. Whether it is mini, a maxi or nano in terms of format. What doesn't perform the way that makes them contributing to the increasing growth and profitability. Unfortunately, it will have to be the things that we will resign from. Let us hear out the questions that we got from our online participants now. Magdalena Kopaczewska: The first question concerns the liability, the receivables. You -- PLN 833 million is what is the write-off in Russia. Does the Board see any chance to gets at least some of those liabilities in '26. And how will you book what is left? Unknown Executive: Well, let us start with mentioning that we have not lost hope. But on the other hand side, what we -- our hopes were high in the past. Now those hopes are much lower. And well, it's better to simply envisage the weakest, the darkest scenario. We hold for a long time that may be the situation would improve, that we would get back what we should be giving back. But what do we focus on -- or the worst possible scenario that we will not have to worry on how to book anything. I would wish them to give back what they owe as much as possible. But we cannot only see any realistic potential for those hopes to come into fruition. Magdalena Kopaczewska: In 2025, PLN 342 million of losses were noted and analogous amount of claims in Romania. How about the business interaction costs and do you expect any income of cash in '26 in terms of -- what do you expect from the insurance? Unknown Executive: Well, for the time being to begin with, we are at the stage that we want to get back what we lost. We got back around 60% or 70%, PLN 210 million is already back onto our accounts, you can realize that with insurance, the situation is more beautiful when you need to pay the insurance, but when you want to claim your damages, it's not so beautiful. But we got PLN 210 million out of PLN 340 million. So things are going in the right direction. When we've received the full amount back, we will also claim the part coming from business interruption. We've calculated it all well. We created a team back when the loss was suffered. So the [indiscernible] who's not here led the team that we created, we hired fire fighting organizations and so on so as to have the full documentation proving that we were not guilty of what happened. And we are sure to receive this core amount, how much we will get back from business interruption. Well, what am I supposed to say? Again, that will be something that will be counted as a plus amount. But let's get the full of the core amount. The business interruption period and with the end of March. So then we will start talking about that. Magdalena Kopaczewska: The Board showed that AI algorithms support designing collections and optimizing of prices. Can you already evaluate the impact of these stores on to the level of sales in regular prices. And is AI responsible for fewer promotional marketing activities in the last part of the year? Unknown Executive: Well, let me respond as for pricing. It is the case that we are only starting to use AI for pricing purposes. What we started off as a certain algorithm that now defines prices for different markets. So we call it international pricing project, that's a tentative name of it. And the price that results from the algorithm calculating differences across different markets is what we've used. So yes, we did rely on, we did use AI. It's hard to talk about the effects really because that was the new season, the first time the new prices came into life. So it's been bought 1.5 months of the new season. We are now summing up the outcomes of the projects, so we still need a while to be able to answer. Magdalena Kopaczewska: Further questions concern the Sinsay brand, the first place in terms of activation of applications against the backdrop of the competitors, but Temu was not part of the list of competitors you've mentioned on the slide. Why? Unknown Executive: Temu was not there because it didn't have that many downloads of the situation as it might appear. It was an external source that we used for checking it, and it didn't have as many downloads last year as other competitors. Temu is not the fashion category, and we focus on the fashion category, and Temu simply belongs to some other categories like general merchandise precisely. So we also didn't have a Allegro there, right? Okay. Unknown Analyst: What share of those who activate application. The applications are active customers of Sinsay's online stores. Unknown Executive: Active customers of online stores. Sorry, I'm trying to understand the question. Could you repeat it? Unknown Analyst: What share of people who activated the application are active customers of Sinsay online store. Unknown Executive: Okay. Now I get it. So out of all the downloads of the application, around 80% are really the clients, customers that have been active customers of Sinsay online stores. So most of those who download the application had been in touch with our online stores or off-line channel. Unknown Analyst: Would you calculate in as to the incomes of Sinsay and other brands? And is it -- which of those constitute a growing share? Unknown Executive: Yes, what we do is we shuffle the policy calculating what we get from returns in the past, returns were free of charge. Now the competitors turned it into a standard that it is not free of charge anymore. So yes, those charges are calculated as part of our income. That's quite a detailed question. So I guess I can point at this general direction. Yes, it is also part of what I mentioned at the beginning. The post-COVID time increase mattered most for growth. Now the entire market migrated towards focusing on profitability. And paid returns is something that is not just what we do, it is also a part of the practices of our competitors. Now in terms of the revenues from logistics and from the returns, that's a few percentage points that we calculate to our sales revenue and to our margin. Having such a big network of offline stores and offering free returns there, we decided that a number of customers will simply come to our offline stores and visit in an offline store is also is oftentimes an opportunity to -- for the customers to buy something. Unknown Analyst: Which countries are considered now to be the most prospective ones. Which performed worse than expected? Unknown Executive: Listen, we, on the one hand side, when we look at the 6 new markets, it is too early to say anything about them. When we look at the markets that have been with us or where we have been present for a longer time, we can say, okay, we are not happy about the performance of Slovakia or this region. But it doesn't mean that those temporary difficulties of the region will make us leave the region. We believe that, well, in the past, for example, Greece was lagging behind Europe, now it is a flourishing country. So we need to take a long-term approach rather than make decisions on this spur moment just based on 2 or 3 quarters of weaker performance of a given region. Unknown Analyst: How does the company select locations for the new openings? Does AI make decisions on demographic and economic data of a given region, for example. How about the 30,000 towns, do they have the potential for 2 or 3 Sinsay stores? Unknown Executive: I can tell you -- well, I mentioned that [ Spot ], the tool that we are using for leasing managers, what it uses is more machine learning. It's not that it takes -- makes decisions on its own. It just supports leasing managers and making decisions. It helps to estimate the sales and to choose location. As for the 30,000 towns and 2, 3 Sinsays, well, it depends. There is right-forward answer to this question, case by case is how we make decisions when preparing the location estimates. For every location, we -- and we see what potential we have in have in [indiscernible], for example, we have 2 stores, it's 30,000 inhabitants. Both the stores are profitable. It works -- and let me just add that what she said about Spot. Well, Spot is a tool that reduces the number of erroneous decisions of errors concerning the selection of locations. If in this tool, you write any address, you can estimate 90% certainty what the result of a given location would be. We use a few sources of data, those concerning telcos, for example, so create the heat maps. We see how the clients move about a given location. And yes, we then identify locations, but also we use data from Mastercard, so we know exactly what sales are let's say, that we have a retail park, we know what potential revenues we might get from a given retail park. So again, it's a machine learning tool that helps us in making decisions. But in the end, it is a human that needs to make it. Well, that's not surprising. Most of us use ChatGPT and Gemini on everyday basis, and these tools do not make decisions for you. Magdalena Kopaczewska: We've reached the final question and is dedicated to [ Mike husky ]. I addressed [ Mike husky ]. You mentioned potential increases in prices of polyester. Would it make sense to invest in plastic waste processing plant? Unknown Executive: For many years, we've been persuaded into investing into, for example, building or manufacturing plants and other sorts of facilities. That's not what we know about. We are knowledgeable in e-commerce and how to create collections, how to offer them to our clients. So we do not get into industry. We are not going to make any investments of an industrial nature, we invest in people's growth and then in technologies supporting us in all that. Magdalena Kopaczewska: Ladies and gentlemen, thank you very much for all the questions that you posed. We hope that we've managed to answer them and provide you the necessary information. Thank you very much for getting involved in our conference, for accepting our invitation. Another meeting during which we will tell you about the results this time of Q1 of the present year is going to be held soon because in June. But since this is the last meeting prior to Easter, please accept our wishes of healthy peaceful Easter. Thank you very much for today. And all those of you who are here in the floor, we invite to continue the talks over lunch that is held in 2 places, right in front of the entry of the room and via end at the reception desk area. Thank you very much for attention. See you at our next meeting. Thank you. [Statements in English on this transcript were spoken by an interpreter present on the live call.]
Tang Shuo: Distinguished investors, analysts, media friends ladies and gentlemen, good afternoon. Welcome all of you to China Construction Bank's 2025 Annual Results Announcement. Thank you very much for your trust, care and support to CCB over the years. This announcement has two venues in Beijing and Hong Kong. We were connected by video. And we will also broadcast to the shareholders and public through the online platform. Present in Beijing include President of CCB, Mr. Zhang Yi. Mr. Li Jianjiang, Vice President. Those in Hong Kong venue include Mr. Ji Zhihong, VP; Mr. Lei Ming, VP; and CFO, Mr. Sheng Liurong. Those present also include the non-executive directors, independent director representatives, the heads of departments of head office and Hong Kong institutions, et cetera. I am VP, Tang Shuo. The 2025 annual results of CCB is already made public today. The PowerPoint is also released on our official website for your reference and reading. The announcement will begin by the speech made by President Zhang, then we will have the Q&A session. Now Mr. Zhang, please. Yi Zhang: Distinguished investors, analysts, media friends, welcome all of you to CCB's 2025 annual results announcement. 2025 is concluding year of 14th five-year plan and also the 20th anniversary of CCB's IPO. In the past 20 years, we have been developing with the national development, the capital market, and we use reform to generate new growth, providing stable and long-term values for our shareholders and also the public. Here on behalf of CCB to all the shareholders, to our clients and to the general public, we'd like to thank you all for your support and trust. Today, we have reviewed and approved the 2025 annual results and made them public. Now I would like to report to you the financial performance, development and the future outlook. In 2025, we stick to Mr. [ Shi's ] philosophy, and we have implemented the -- all the principles in the central government meetings and we have also coordinated and promoted the quality development and quantitative development of -- our overall development. And we have achieved steady developments. The core indicators have all recorded new growth. In terms of asset structure, it continued to optimize. The 5 priorities, manufacturing and infrastructure, loan disbursement has also recorded more than average growth. And we have also recorded a net profit increase of 1.04% at CNY 339 billion, and operating income is also increased by 1.69% YoY. Profit before provisions also increased by 1.7% Y-o-Y. All the indicators have a steady growth. NIM is 1.34%, ROA 0.79%, ROE 10.04% and Capital adequacy ratio 19.69%. Cost-to-income ratio 29.44%. Net interest -- net income ratio is 22.69%. They are all leading in the market. In terms of risk control, it is steady. And the NPL ratio is only 1.31% and we continue to enhance our capacity. The provision coverage ratio is 233.15%. So based on these quality and quantity development, our capital is also -- asset is also recording -- is also recording growth steadily. Our total assets increased to CNY 45.63 trillion by 12%. Gross loans to customers also increased by 7.47% to CNY 27.77 trillion. Financial investments also increased by 12.9 -- 20% to [ CNY 12.9 trillion ] The liabilities also increased to CNY 41.65 trillion by 12%. The debt deposits also increased by 7%. Our loan continue to support the real economy, and we are also serving the public and the society support the economy to go smoothly. Based on the annual results, in 2025, we have also sent -- dispatched a total dividend of CNY 106 billion. And we will also have interim dividend for first half of RMB 1.858 per 10 shares. The final dividend for the whole year is RMB 2 per 10 shares, and we continue to enhance our capital capacity. Over the year, we stick to the inherent high-quality development, and we have done the following things. First, we focus on core responsibilities on the primary business to empower the real economy, we have advanced the 5 priorities with scale and quality. We have the technology, digital, green and inclusive and pension finance. So technology finance, the loans are over RMB 5 trillion, and we have underwriting of sci-tech innovation bonds amounted to RMB 72 billion. In terms of green finance, we issued RMB 6 trillion, up by 20.54%. Green bonds, leasing, investment and funds continue to boom. The MSCI rating maintained at AAA level. In terms of inclusive finance, the loan customers reached 3.69 million. The finance loan balance reached RMB 3.83 trillion. Agriculture-related loans balance reached RMB 3.71 trillion. In terms of pension finance, we actively expanded the application scenarios. There is a solid growth in enterprise and personal pension business. The Pillar 2 or AUM management also grew by 15%. Digital Finance also accelerated. Mobile banking and the CCB lifestyle app users reached 546 million. We developed the home living and auto living service platforms. We also provided a lot of digital economy, advance to core business and the digital economy. It also grew by 18.7% to RMB 891 billion we have multiple channel expansion of credit resources facilitating the domestic and international dual circulation, we actively supported efforts to boost consumption, stabilize the market and expand investment. The personal consumption loans grew 29.41%. Balance is at RMB 6.72 trillion in terms of loan balance to private economy, up by 12%. And the loan balance to manufacturing sector reached RMB 3.52 trillion. Digital supply chain financing provided RMB 1.32 trillion. We also support balanced regional developments such as Beijing-Tianjin-Hebei, Yangtze River Delta, Greater Bay Area, and Chengdu-Chongqing area. The loans and deposits also outpaced the bank-wide average. We also continue to strengthen financial service for key areas. We continue to coordinate the cross-border loans and investment and also the -- the loan balance to the project cross-border M&A and also the loan balance to Belt and Road partner countries also reached RMB 55 billion. We also uphold people-centric finance and enhanced group-wide integrated service. We try to accelerate the transition from a product-driven approach to client-centric mindset. We advanced commercial and banking, investment banking and integration. Underwriting of nonfinancial corporate bonds increased by 85%. M&A loan balance increased by 24%. New equity investment scale also increase -- is 20% higher than -- over the period. We also advanced corporate and retail banking integration. We deepen the ecosystem-based operation of payroll disbursement and social security card service, continue to upgrade and promote the Xinxiaotong payroll service, development of social security card Ecosystem. So that we can connect the corporate and retail banking. We also advanced the domestic and foreign currency operation integration. The international business loan balance is CNY 1.5 trillion, cross-border RMB settlement reached RMB 6.5 trillion. With advanced group-wide integration -- the overseas institutions recorded net profit of RMB 12 billion. The integrated operations subsidiaries recorded net profit of RMB 9.45 billion, up by 31% and 7% Y-o-Y, respectively. We also explored ecosystem plus industry and supply chain plus industry and business clusters service model. We developed 12 enterprise-level models across ecosystem, supported by integrated service throughout the customer journey. And we continue to enhance our customer base. And we also have 785 million customers. So we also recorded double-digit growth. And for the personal CTS customers, it exceeded 100 million. Assets under custody is CNY 27 trillion. And thirdly, we adopted a systematic approach and strengthened risk and compliance management. With solid foundation for comprehensive risk management, improved 3 lines of defense risk, governance, framework. We optimized the integrated financing management systems and enhanced comprehensive risk panorama. We also strengthened the penetrative risk management across overseas institutions and subsidiaries. We also try to accelerate the upgrading of risk control systems. We also try to look at the management of emerging risks, including model risks, data risks, fraud risks and new product risks. We also try to optimize risk-related processes. The NPL ratio is only 1.31% decreased by 0.03 percentage points. The SML ratio also stands at 1.77%, also decreased on a Y-o-Y basis from the last year. We also strengthened development foundations and continued upgrade operation and management systems. We promoted the development of operation, data and technology. We promoted AI application in business system. We also emphasized on various risks in terms of the model risks, data and fraud risks. We also continue to enhance internal control, strengthen employee conduct management, case prevention control, anti-money laundering, et cetera. We further enhanced the consumer rights protection framework. So the foundation is more solid. Fourthly, we strengthened development foundation and continued to upgrade the operation and management system, promote the integrated development of operation data and technology. And we also enhanced the foundation. We have a transformation from a centralized core business system to distributed model. The cloud computing scale increased by 12%. We also have the AI plus technology and framework. Large-scale modeling technology has been applied for 398 application scenarios within the group. We enhanced enterprise-level large-scale operations in many key areas such as tech development, building a more comprehensive cloud system, including an omnichannel optimization mechanism to provide customers with one-stop services, which enhance the efficiency of key operations to enrich an online processing scenario and enhance the automated capabilities of our centralized operations to better serve corporations and the public. In the future, we're going to continue to work in line with the 15th Five-Year plan to find our proper positioning to continue to promote further upgrade and development, continuing to support a new qualitative and high-quality development. In terms of business layout, financing method, customer structure, room for development and server model, these 5 aspects, we're going to consolidate and expand traditional strengths and tap into the potential for high-quality development. In 2026, we're going to do 4 major things. We will continue to serve the national strategy. We're going to do the 5 priorities of finance business. We are going to anchor ourselves as a leading financial institution of China to continue to enhance our professionalism and comprehensiveness and the integration of our business to strengthen our sustainable business model to continue to support domestic demand to follow up on consumption stimulus policies to offer consumer financial services to have a comprehensive solution covering credit payments, merchant services and value-added offerings to continue to unleash the growth potential of consumer financing to seize opportunities to further expand effective investment to fully expand financial services for infrastructure projects across land, sea, air, digital roads, network bridges and waterways to continue to strengthen our unique advantages here and to accelerate key project progress, we focus on key areas such as ultra-long-term special government bonds, local government special bonds and new policy-based financial instruments to support the binary star and the 2 focuses to support regional banking coordination upgrade and enhancement to support the Hainan Free Trade Port and offshore renminbi market development. We're going to enhance county-level financial services based and help urban rural development and regional coordination and to enhance our financial services based on local conditions. We are going to continue and commit to advancing high-quality development. Customer operation is all about maintaining a strong focus on enhancing service capabilities. Our asset business focuses both on scale, pricing and risk to maintain a balance among the 3. Our liability business, we're going to maintain a dynamic alignment across scale, pricing and quality. We're going to consolidate our base. And our intermediary business is about maintaining category-specific policies across intelligence, technology, equity and debt financing to enhance our value creation capabilities. Cost management, we will maintain an alignment between cost reduction and efficiency enhancement to dynamically support our growth of our business and to maintain high efficiency. We're going to continue to commit to upgrading our integrated service model. Depending on our customer needs as they change, we're going to continue to invest in -- investment in commercial bank integration, domestic and foreign currency integration, group-wide integration and corporate and retail banking integration across institutions, across sectors and across markets, we will upgrade and refine the service models across ecosystems, industrial and supply chains and industrial and business clusters. We're going to upgrade and deep integration -- deliver personalized services tailored to individual custom needs across the entire life cycle, we are going to optimize our services, achieving a tailor-made service depending on the customer you are. We further deepened integration under the Binary Stars model. We will have a more product -- in-dev -- product matrix and accompanying purposes to rejuvenate the financial system. We're going to committed to safeguard the bottom line of risk control. We are going to remember the key of risk management and continue to advance a comprehensive, proactive, intelligent and agile risk control system to improve the working mechanism of the 3 lines of defense to further strengthen the joint risk management between bank and subsidiaries and enhance the look-through management of overseas institutions. We are going to further adopt a more dynamic loan control mechanism. We're going to roll out inclusive loans and continue to assess regional risks. We are going to hold true fast to the bottom line of risk control in order to assess risk in advance and increase our resolution capabilities. We're going to enhance enterprise-wide anti-fraud capabilities as well. We're going to continue to build a better consumer protection system to protect the deep -- promote the deep integration across the entire business process. In 2026, we are going to continue with the political and fundamental nature of our business. We are going to continue to keep our eye on risk on the business development to continue to serve the development of our nation to prevent financial risk and enhance our international competitiveness. We will have higher commitment, more measures to play the role that we should play in the development of our nation's history to show our value, to work with all partners to open up a new chapter of high-quality development. Tang Shuo: Thank you. Thank you, President Zhang. Now we go into Q&A. So this event will have questions alternatively from both the Beijing and Hong Kong venues so that everybody gets a chance to ask question. Tang Shuo: [Operator Instructions] Our first question comes from the Beijing venue. May I invite the lady on the left on the third row, please. Unknown Analyst: I am from CCTV. [indiscernible]. So in 2025, you have achieved a stable and fantastic results. Congratulations. In terms of profit growth, we see that there's a positive recovery trend as well. May I ask what's the core drivers behind this good performance in 2025? And what's the outlook for our operations in 2026? May I invite our President to answer that question. Yi Zhang: Thank you. Thank you, Madam [ Wu, ] for that question. In 2025, the CCB's business has continued its steady progress. I should say that the high-quality development has achieved certain results. Our steady foundations are getting better and better. Our total assets have surpassed CNY 54 trillion. Our net profit is CNY 339-plus billion, 1.04% growth. Our profit attributable has grown by 0.99% as well. Our operational revenue has also grown by 1.69% and 1.7%, respectively, profit before provisions. These are the key metrics. In terms of the trend, ever since Q2, our operational income has continued to grow. Our annual profit growth continues to be healthy. The development quality continues to grow and improve. A lot of our assets have been optimized and improved in quality. Amongst our loan to key sectors under the 5 priorities has continued to go up. Our ROA, ROE, our NIM, our capital adequacy ratio, our cost-to-income ratio and noninterest net income ratio, all are very balanced. We continue to lead the pack amongst our peers. Our income structure continued to be more diverse, 22.69% noninterest net income ratio, which is a year-on-year increase of 3.65%. Our subsidiary contribution from overseas continued to increase. These 2 entities have gone up by 0.98% in terms of their net profit. I would say I attribute our success to the following 5 reasons. Firstly, we are able to stabilize the basic NIM structure and the decline has continued to narrow. In terms of quantity, we have a 9.38%, which is a 1.38% acceleration, primarily because our core asset growth have been faster. The average liability balance net is at 89.13%, which is a year-on-year increase of 0.66%. In terms of price, we continue to lead the pack in terms of our profit. The decline has decreased by 2 basis points year-on-year, 1.32%, which is a 33 basis point decline in our liabilities for savings, which is a very good foundation for us to continue to improve our business. In terms of the structure, we have increased our investment into mid- to long-term quality efforts. And among nondiscount loans for 1-year plus loans of duration has increased by 0.8%. We continue to consolidate our traditional advantages in this space. Personal consumption loans, personal business loans have achieved double-digit growth for 3 consecutive years. We continue to accelerate to settlement of a low-cost financing. Domestic loans is at 24.34% by proportion, which is still a very good level compared with our peers. Secondly, we offer more in-depth comprehensive services. Noninterest income continued to grow. We continue to create value through service to achieve a win-win situation with our clients. 5.13% growth in the noninterest income front. So we consolidate traditional interest-based income. But on the other hand, we continue to improve our services capabilities, wealth management, asset management and the revenue from all these areas continue to grow steadily, amongst which our wealth management products growth has been faster, more than 25% growth for funds, which we sell and for wealth management is more than 90% growth year-on-year. This is all like higher growth compared with our administrative fees, which is a net growth. We continue to assess the market to improve our investment strategy. Equity-based investments and relevant income revenue has grown by more than 40%. Thirdly, we continue to manage our costs. Fee controls has been working. Our cost ratio is 92.44%, which is a 14 basis point improvement, continued to be a very healthy level, amongst which operational fee increased by [ 1.5%, ] which is lower than our operational income growth. Structurally speaking, we continue to manage our operational costs. We are going to increase our input into key businesses, accelerate digital transformations. Fintech is 3. 61%, which is 0.26% growth of overall in good. We are going to continue to improve our asset management and risk management. Our asset maintains healthy. NPL is 1.31%, which is a year-on-year decline of 0.33%. Our risk management capability is quite adequate. Provision coverage ratio is 233.15%, which is basically flat year-on-year. We consolidate our customer base, enhancing our overall service capabilities. In terms of quantity, we have expanded our scope of coverage for our clients. For corporate clients, 12 million plus, which is an increase of 1.05 million different clients. Our different unit core clients have also increased by more than 10%, which is both 9.9% growth year-on-year, which is 1% faster growth compared with last year. Personal customers have surpassed 785 million customers. Our number of wealth management clients and private banking clients have both achieved more than 10% growth. Our CTS customers, the total assets has grown assets under custody have increased to more than 27 billion, which is a high 20-something percent double-digit growth. Our product coverage, our client activity are all looking good. And CTS, our personal customers have achieved double-digit growth. 2025 is the starting year -- 2025 is the starting year of the next 5-year plan period. We are going to continue to work with the government to build a better life for our people, our nation. We are confident and capable that we can achieve long-term sustainable and resilient business performance. We're going to continue to leverage our traditional strengths in liability management business and to in-depth find more service value propositions amongst our clients. We would have an effective growth of our quality development and a reasonable amount of quantitative development. Thanks to our traditional base, we are able to continue to work on our 5 key priorities. We want to be one of the leading banks in Fintech. There are several consumption stimulus policies to optimize the product supply out there in the market to enhance our international competitiveness to approve of our quality loans. We were going to develop our service capabilities to better integrate the rural city areas development to continue to build both corporate and commercial bank, domestic and foreign integration and room for development in our customers' development. We're going to empower our business development through finance. In terms of asset liability, we enhance our liabilities greatly to enhance our core loan business to more settlement management and wealth management type of funding, which can effectively help manage our costs. On customer service side, we are going to have a more tier-based approach in customer service to upgrade our customer service model. We use different models to offer a better comprehensive and optimized financial services solution for our customers. And we are going to continue to manage costs and increase efficiency to increase pricing management mechanism to restrict the low-yield assets to further stabilize our overall business. So that the new momentum can be created. We will also optimize our services and increase their quality. And we will also enhance our stability management continues to enhance linear management. Based on the solid development, we should explore more room for linear management so that the cost effectiveness will be improved. Thirdly, we will have to have a preemptive management and get more quality risk control assisted by AI, improve the comprehensive, proactive and intelligent management system so that we can more actively respond to the risks. We have to stick to the three guarding lines, also enhance the management of the NPL. Thank you. That's all. Tang Shuo: Thank you, Mr. Zhang. Now I would like to invite questions from Hong Kong. The lady -- on the left, the third row. Katherine Lei: My question is about loan. We see that in 2025, it has a very steady growth to about 7%. Just spoken, this is the opening year of the 15th five-year plan. So what is the new arrangement compared with 2024 in terms of regional dispatchment and the sectors, how different would it be? I would like to invite Mr. Zhang to answer the questions. Yi Zhang: Thank you, Mr. Lei, for your question. Your first question is about the loan disbursement sectors. In 2025, CCB stick to the real economy service, and we also stick to the strategy of quantity and pricing balance. We also continue to expand our customers and markets, and we also look at the pipeline of the key projects. The loan growth is steady and enjoy high quality. In terms of quantity, we enhanced our capacity to support the real economy. We have 2 highs and 2 advancement. The 2 highs include the growth of 7.47%, up by 1 percentage points than the average of the industry. The second high is the domestic loan is 8% in terms of growth, it is also higher than the CCB average. It also supported the real economy. What is -- what are the 2 advancements? First, in terms of the residential loan and the retail consumption loan, the disbursement are also leading in the industry. In terms of the retail consumption and also the advancement of some structural arrangement, we continue to support the mandatory needs for residential improvement of the customers. So in terms of residential finance and retail finance, we maintain our competitiveness in -- compared with our peers. We continue to improve the quality, and we have 2 elevation in the key areas and key regions. The loans percentage continue to increase. In 2025, CCB also has the 5 priorities and all the key area and the 5 priorities have recorded double-digit growth. In terms of technology loan, it also exceeded CNY 5 trillion and increased by [ 89%, ] supporting the high-tech company. And also the green finance also increased by CNY 6 trillion. And the inclusive finance also stands at 3.69 million. We continue to expand our customer base. In terms of pension finance and digital finance, it reached 53 million and is up by 15% and 18%, respectively. We also continue to enhance the manufacturing infrastructure. So the loans to these key sectors have also recorded double-digit growth. And in some key regions like Beijing-Tianjin-Hebei, Yangtze River Delta, GBA, Chengdu-Chongqing also has maintained a very steady growth. It's also higher than the average. The Retail finance continued to show its competitiveness. The domestic loans also exceeded CNY 9 trillion, and it also takes up 32% of the total loans. Compared with our peers, we also maintain a leading role. This is a solid support for our steady development. In terms of the total arrangement for 2026, this is the opening year of the 15th Five-Year plan. So we will try to guarantee a steady growth. In terms of structure, it will be driven by the domestic need. Also, we need to nurture the new quality development. The macro policy is more proactive, and we will support the industry upgrading, the internal needs satisfaction and the internal social welfare services. All these sectors have provided good opportunity for our banks. So we will stick to the strategic goals, guarantee the steady volume and also will be structure oriented. We will respond to the needs and improve the high-quality development of loans disbursement. And we will guarantee steady total volume. We will guarantee a reasonable growth of the total scale. For the new increment of 2026, it will maintain very steady as compared with the previous years. And in terms of the rhythm, we will also get a little bit more energetic, and we will have 2 anchorings. First to the corporate loans. We will support the modern industrial clusters and systems, realize the new quality development, support the emerging and strategic sectors, especially the high-technology sectors, and we will also continue to dig out the investment needs centering around the 5 priorities and manufacturing and key infrastructures. We will also echo the objectives of 109 items in the 15th 5-year plan in terms of the local government dedicated loans and some new emerging markets loans, we will also provide our support so that we can support the industry transformation. And we will also support the domestic demand consumption and its growth. We will also execute some dedicated projects and make full use of the fiscal policy, support the EV, automobile, the electronic devices and digital devices, consumption and travel, tourism, catering and the hospitality services so that the clients' experience will be elevated. We will also guarantee the demand of the service industry. And for the property markets, we will also be prudent, support the commercial residential buildings, support the social welfare system reform and enhance our competitiveness in the real estate sector loans. Through these measures, we will also through our efforts, we will continue to maintain our edge in terms of the retail consumption loans. Tang Shuo: Thank you, Mr. Zhang. Now I would like to invite a question from Beijing. The lady. Shuaishuai Zhang: I'm from CICC. I'm Shuaishuai. We noticed that in 2025, the decline of NIMs continued to show very steady momentum. So can you introduce the NIM influences in terms of supply and demand side? And also, what is your outlook for NIM in 2026. Now I would like to invite our CFO, Mr. Sheng Liurong, to answer the questions. Liurong Sheng: Thank you Ms. Shuaishuai for your question. Your question has 2 aspects. In 2025, performance and 2026 outlook of NIM. In 2025, the NIM is 1.34% as reported by Mr. Zhang. Vertically, we can see that in 2025, the NIM narrowed by 2 pp. And in terms of the changes in the 4 quarters, the spread continued to narrow. Horizontally, we compare with our peers. Our NIM is also maintaining a leading position. So the -- also -- have reached a balance in terms of the quantity price and the spread. So for the 2026, three factors will influence the NIM. First, the savings deposits has repricing, and we have completed the repricing. So the loan pressure has been alleviated. Secondly, for the interest rate, for the high interest savings deposits, and it will all -- most of them will be mature. So the interest pressure will be lower. Thanks to -- in 2024, the bank industry has executed a good mechanism. So we have attributed our growth to that aspect. So it has kind of buffered the loan interest influence to NIM. Thirdly, through very proactive management and structure optimization, we have also decreased the loan interest buffered the negative result of the loan interest decline. And through the management optimization and through cash management and also some payroll services, so we can make better use of our custody capital. So you asked to analyze from the assets and the liability side. In terms of asset side, we continue to improve the quality of investment, mainly the bond investment. So the percentage has been increased. President Zhang also mentioned that our interest capital also increased -- recorded increase. So for the -- some financial investments, its percentage also increased by 1.6%. So it helps the asset side. And through structural optimization, the negative impact has been offset. In terms of liabilities, so through differentiated layer management, we also reduced some high interest rate savings. And we also have expanded some peer savings so that the high interest savings impact will be reduced. So it also helped to narrow the spread of NIM. For 2026 outlook, we can also -- we can also look through the macro and micro levels. In quarter 4 of 2025, the banking report also mentioned that we need to enhance the system and also strengthen our monitoring, reduce the liability cost of the banks. In other words, in terms of macro policy, the PBOC on the one hand, pays attention to the market orientation of the interest rates. They also pay attention to the reasonable costs for bank operations. I think that macro trend is quite obvious. From a micro perspective, through improved liability management, active debt management, which is very effective to optimize our asset liability structure to enhance our multi-tiered customer pricing mechanism from the asset side and the liability side, we expect to be able to do more. We believe through our active debt management, we can continue to enhance our quality and efficiency in our operations. Therefore, we are confident, the NIM decline could continue to slow down, and we are confident that our NIM would still compare -- favorably compared with our peers in the future. Tang Shuo: Thank you. Thank you to our CFO, Mr. Sheng. Next question comes from the Hong Kong venue. The gentleman on the left from the fourth row, please. Shuo Yang: I am Yang Shuo, Goldman Sachs. So you just mentioned that you did pretty well in terms of your asset returns, right? What about bonds? Because in 2025, the scale and yield of your bonds were all very good. What's the highlight of your bond investment philosophy? And secondly, outlook in 2026. In terms of asset allocation strategy and investment returns outlook, can you comment on that, please? Tang Shuo: So may I ask Executive VP, Ji Zhihong from Hong Kong venue to answer that question. Zhihong Ji: Thank you. Thank you for that question, and thank you for paying attention to our performance. So as aforementioned by my colleagues in terms of our CCB investment, actually, both our CFO and our President has mentioned how we have increased our efforts in terms of asset allocation. That way, our books are more resilient. That's a very important factor. I'd like to say 3 things. There's like broader trends in changes in social financing and social lending. And in reference in this new environment, we are going to double down on our efforts of asset allocation. So corporate loans for the first time has surpassed other forms of loans. We are going to continue to support this active financial policy -- active fiscal policy. Government investments is CNY 12.8 trillion annually last year, which is leading the way out there in the market. And secondly, we will comprehensively satisfy domestic and foreign direct lending needs from our clients. The financial loan growth is quite rapid, like green loans, pension loans and tech loans. These are all actively growing area. We continue to participate in Panda-led debt, Panda loans, offshore renminbi markets is continued strengthening, which is in alignment with our overall capability to serve the development of the real economy. And secondly, we have enhanced active management. That's another thing. In lieu of a complicated market environment, and we have increased our forward-looking aspects of our asset allocation. Right now, our bonds have surpassed CNY 12 trillion in terms of size, which is quite substantial. In order to properly management in terms of our investment strategy, we are more active and nimble. We want to seize opportunities out there in the market. We are able to make much more good use of existing capacity. And we have improved integration of domestic and foreign currency. We have many ways of asset allocation to optimize asset structure to increase the profitability and stability of our assets. Thirdly, we are actively participating in the bond trading market to increase our customer service capability. We, of course, are a big bank, and we actively perform our obligations out there in the market to continue to expand our circle of friends in our trading, which is 127% increase in our size of our circle, more than 50% increased distribution. And at the same time, through satisfying SMEs and the investment needs of various types of clients, the annual transaction volume has surpassed RMB 100 billion. The centralized settlement business is also a key business of us, which achieved new breakthrough. When foreign investors want to come to China and invest in China, we provide a brand-new, more convenient channel for them to invest in renminbi-denominated assets, and we are developing that. And we also provide a fixed income and other FICC types of services in order to satisfy the various needs of our clients. On your second question, market uncertainty is still quite high at the moment, I'd say, particularly geopolitical factors have impacted the financial market somewhat. What we need to pay attention is how much will the rising energy cost change the risk appetite and expectations of the market at large. Right now, overall, domestic liquidity is very stable. External market, the volatility out there in the foreign markets are actually greater. Of course, the foreign and domestic market are linked, and we have seen different risk profiles for some types of traditional assets. And in that environment, we are going to continue to maintain our stable, steady value-oriented investment principle. We are going to continue to make sure to tune our strategies appropriately to respond to the market conditions and strike a good balance. So those are the 3 major areas that we are going to work on. The 3 areas are active adapting to changes in daily needs of our clients, including value creation and customer service. And secondly, we know that the yen market, the renminbi market and the opening up of the renminbi market is vast and rapid. Offshore issuance of Dim Sum bonds is very convenient, very convenient these days. And domestically, we also issue permanent perennial debts to continue -- we're going to continue to optimize the coordination of -- across domestic and foreign markets across domestic and foreign currencies. As a flagship institution, right, Hong Kong trading with is Hong Kong, of course, in M&M Asian financial hub, trading is very active here as well. We do recommend international players to actively participate in trading in the Hong Kong markets. Fixed income asset class has shown very positive development trends. As the yen market and renminbi market continues to expand here in Hong Kong, we have a lot of opportunities. Furthermore, we continue to emphasize on multi-strategy adoption, more active management in order to make sure that the full group in terms of operational management, we are able to do more innovation amidst this volatile environment. The key thing is that we have to have adaptability in face of the markets and clients, particularly managing significant volatility risks. The CCB has to play various roles in this regard. We are a service provider, we are a bank, et cetera. We have to better leverage our foreign and domestic and foreign and domestic currency integration advantages. And Mr. Zhang has brought this up just now. The targetedness, the diversity and the efficacy of our operational strategies will continue to be enhanced, in particular, our execution must be enhanced to make sure our investments work out. And furthermore, we are going to increase investment into our tech empowerment to build a smart ecosystem. Right now, digitalization has many applications in financial trading, things are developing rapidly, and the CCB is going to continue to invest in developing such capabilities, iterating and evolving our systems, upgrading our systems to make sure that finance and bond investments can continue to develop in a high-quality manner. Thank you very much. Tang Shuo: Next question comes from the Beijing venue. The gentlemen on the fifth row on the left, please. Unknown Analyst: Thank you for this opportunity. I am [indiscernible] from CIS. So my question is as follows. The external environment is very complicated and our country's economic development is facing a structural change as well. But despite that background, in 2025, your NPL ratio has continued steady decline. Your asset scale is also steady. So may I ask what measures have you adopted in terms of risk management? And with respect to future risk assessment, what do you think? Especially in key core areas such as consumer loans. Tang Shuo: This question will be addressed by Mr. Li Jianjiang. Jianjiang Li: Thank you. Thank you for your question. 2025 is the last year of the 14th 5-year period. And we, at the CCB continue to implement the strategies by the central government at the State Economic Reform Council. We're going to continue to focus on resolving and preventing risks as the first priority of our bank. So you have already -- Mr. Zhang has really cited a lot of relevant data up till last year, which is -- NPL ratio is 1.31 ratio, which is 0.03% decline year-on-year, 1.7%, [ 12 bp ] decline of such loans. As you've seen, right, we have improved on these metrics. And at the same time, our risk management capacity is adequate. Our provision coverage ratio is 233.15%, flat year-on-year. So over the past period of time, in face of various risks and challenges, the CCB has continued to think about the bottom line risk management mentality. And we continue to properly coordinate and management preventative risk management measures to make sure our overall risks are under control. On the one hand, we continue to persist on high-quality development to hold true to our baseline security. We want to actively service the real economy, focusing on 5 priorities to increase our capacity in service of key areas. We are going to continue to do that, and our risk control measures will not weaken as such a result. Therefore, our NPL ratios continue to improve and our asset structure continues to improve. And furthermore, we to defend the risk bottom line resolutely through better risk control measures. We actively agilely built up our risk management systems. We enhanced the synergy across our 3 risk management bottom line mechanisms and integrated the group-wide risk management. And we have started to assess and improve our efforts when it comes to assessing the nature and trends of risks to offer more preventative measures. And over the past period of time, you asked about the increase in risk associated with retail loans. We continue to focus on the changes that need to be made. And with respect to our retail business, we are going to enhance the risk management control measures therein and continue to focus on the key risk hedges in the key processes of our retail loan risk management mechanism. So I could say that over the past year, these measures have worked. The CCB's personal loans nonperforming ratio has not increased as quickly as it did before. With respect to the current environment, we think risk management in retail loans will still be the key focal point of our work. I believe as our management mechanism, our risk control measures continue to be fine-tuned and implemented better, we are confident that we are able to maintain quality business in our retail business and control the risks therein. The new year would be the first year of the 15th 5-year plan period. It would be a key and pivotal year to accelerate and improve management of a great nation. The CCB will continue to implement the President Xi Jinping's important guidance on the 3 key capabilities we have to continue to do risk management properly to better coordinate developmental security. We will work hard to achieve a good start, steady progress to continue to serve high-quality development and provide a solid foundation. Tang Shuo: Thank you, Mr. Li. Next question is from the Hong Kong venue. May I invite the lady on the right third row to ask a question. Unknown Analyst: Hello. I'm [indiscernible] from Phoenix TV. I'd like to ask right now, the bank industry is accelerating its deployment in AI technology. May I ask what are the key initiatives that CCB has with respect to AI tech? May I ask Executive VP Lei Ming from the Hong Kong venue to respond to that question. Ming Lei: Thank you for the question. This is an important opportunity. The AI technology has provided a lot of opportunity, and we are going to implement a nation strategy to continue to do the AI plus implementation to focus on in-depth application of AI technology across all our business segments. Firstly, we have improved our foundational capability of AI capability. As you know, there's computational power, data and algorithms. In terms of computational power, we reserve enough room for our computation power for further development. We have 5 different data IDC centers with a high computational power clusters. And over the past year, in [indiscernible], our computational power continue to be unleashed. In [indiscernible] and in these 2 new areas, we have advanced IDCs, which are being built and the progress is very smooth. And we also reflect a flop of over CNY 14 billion. So you can see that 1P is hundreds of billions of FLOPS. So 1 FLOP would be 1.4 billion of computing. So it also increased by 14% compared with 2025. We also have monitored the AI system better in terms of algorithm. So all the advanced models has been adopted like DeepSeek, [indiscernible]. And we also have the coordination of big models and small models. And so the decision-making AI is also being integrated. In terms of the digital model, we also accelerated the nonstructural model and the clearing of the stock data. So we know that the potential of AI depends largely on how linear and how better -- how well you comb the data. So we need to sort out the data in a good way. And we need to also set up a database, including the experience base. We also introduced over 500 million items of data -- of experience data, and we also advanced the application of different sectors. We also have the people-centric principle, stick to high-quality development in 2 dimensions. And we also proceed the linear management, deeply integrate various data, continue to optimize the whole procedures, emphasize on the service of various smart applications and smart management, smart risk controls. We have constructed over 400 scenarios covering all the 6 areas. So I would like to report the 6 areas. First, in terms of the channel service, the interactive AI, interactive service and AI also completely upgraded our service. We try to have automated identification and very speedy respond through remote dialogue, we improved the quality and efficiency of service. For the employees, we also have assistance to the employees so that the convenience of work is also being elevated. Now we have various scenarios applied. And also, we are leading in the industry. If the employees want to check up some guidelines or principles or write an article or they want to utilize some data or check up the data, they can all rely on AI to help them. In terms of the business, [ Bonder ] is the smart application. [ Bonder ] means help the manager to get enough sales support. And we have the retail and also inclusive finance. All the managers can be -- can get all the integrated, comprehensive and whole chain assistance. If a retail manager wants to get the customers, they cannot remember too many customers' names. They cannot cover so many customers. It will be already a high level for them to cover 100 of them. But through the smart assistance, they can manage over 20,000 customers. And so the manager can conduct high-quality and high-efficiency service to the clients, providing customized service to the clients. In terms of products, AI is deeply integrated into the product, inclusive the corporate and settlement businesses. In terms of international settlements, we also have the technological breakthrough through over 500 smart judgment points. We also realized smart analysis, and we have also had the smart extraction of some anti-money laundering points and the cross-border settlement. We know that some cross-border settlements may be -- may come in the form of images or videos or even black and white papers. So we need to extract all these information through smart tools. And the third is about the operation. We comprehensively improved the intelligence level of operation. In terms of question response, AI already reached 99.42%. That means when our clients want to raise questions to the head office, 99% is answered by AI, firstly. And the AUM -- the active user daily is over 100,000. And we also have a dynamic monitoring and a dynamic management of AI. And AI also covered R&D and design. And in terms of coding, it contributed over 62% adoption over 48%. So it helps to improve the efficiency of employees. So the 48 test passing rate is very key. We know that design system and design demand, whether it is truly useful, especially for a high-frequency transaction scenario of banks, we need to have a good test. So the test is generated by AI. It has greatly improved the efficiency. In terms of risk control, we also have AI plus risk control system. In terms of the licensing, the approval vetting system and approval system, we also use AI. We also rely on the generative AI to have a whole procedure application. In terms of approval level, we recorded a double-digit growth. And in the meantime, the average handling time also decreased by 30%. We also continue to enhance quality control. We highly emphasize on the compliance issue of AI. So -- and we have a multidimensional safety and risk control for AI. And we also established the big model, the alerts and the red flag raising keywords so that the cybersecurity can be enhanced, the coordination also can be more smooth. We also guarantee the sensing of some sensitive information, the AI tools and also all these AI assistants -- when they are used, the users, the human users will be the gatekeeper so that all the AI application will be fully under control and monitoring of human. And we will also seize the trend and also continue to improve the efficiency and safety of AI adoption. We use technological power to support the high-quality development of our banks and support our financial system enhancement. Tang Shuo: Thank you for your question. Now we would like to invite questions from Beijing. Gentlemen, on the right in the fourth. Unknown Analyst: I'm from [indiscernible] Securities. I'm [indiscernible]. My question is about savings and deposits. First, can you introduce our 2025 savings growth and characteristic. And then in 2026, our estimation is that a lot of the savings will be mature, especially the retail savings. So what is your feeling about it? What about -- how do you feel about the retail savings and any new changes and to respond to the new changes, what are the measures to be taken? Tang Shuo: Okay. I will answer the question. Thank you for your question. I would like to answer the first question first. We always have a people-centric principle, pursue high-quality development. In 2025, we enhanced the steady savings and deposits. The savings growth is steady, the optimal structure and have a deep structure. It continued to grow. By the end of last year, the volume is over CNY 30 trillion, increased by 1.21%, CNY 112 million, guarantee the volume of the capital. And we also have to look at the structure. First, about the retail savings, it has a rapid development. The balance also increased by 1.7 percentage points to [ 4.6%. ] And the corporate savings also increased by 2.66 percentage points. The savings also increased to over CNY 400 billion, and we're maintaining a leading edge in the peers. And we will also balance the quantity and quality. The saving is increasing steadily, and it is on par with the increase of clients. And the ratio is also very steady, also has a slight decrease as compared with 2024. And for the hot topics, the savings are growing steadily. The volume is over CNY 18 trillion, deposits, nearly CNY 12 trillion. And the maturity level also is increasing. The acceptance level is good. And for the financial assets of the retails, it has some new dynamics flowing into the funds, for example. This momentum may be -- may continue this year. So we would ride on the trend. In 2025, AUM is over CNY 23 trillion, up by CNY 1.4 trillion. For insurance and some -- the precious metal products continue to grow. Next up, we will focus on the bottom logic of wealth management, continue to re-enrich the product structure and design more products for our clients. The third is about how we can guarantee the steady of savings. We will follow the momentum and meet the customer demands, the new changes, optimize the service and promote high-quality development of savings and deposits. For the corporate and retail needs, we have optimized our network like payroll services. Next step, we will also focus on some key products and the scenario coverage, expand the scale of our capital so that the high-quality capital can be maintained. We will also respond to the needs, provide comprehensive one-stop services and serving the corporate and the individual clients well. We will also continue to improve our system, provide a good experience to the clients. Now I would like to hand over the next question to Hong Kong. Unknown Analyst: I'm from Hong Kong Commercial Day. I'm [indiscernible]. We noticed that in recent years, the fee income of bank industry is affected by the lowering of fee policy. So the Hong Kong banks are also diversifying the businesses to cope with the challenge. CCB has recorded positive growth of fee income. So we want to know what are the sources of fee income increase? And what about the intermediary business growth opportunities? Tang Shuo: Okay. Mr. Sheng Liurong will answer the question. Please. Liurong Sheng: Well, thank you for that question, Mr. [ Zhang. ] As you've said, ever since 2023 due to a series of fee reduction measures, the growth in that revenue for our bank has faced some challenges. In 2025, overall, our intermediary revenue growth is pretty good. Overall, it has reached 5.31% growth or more than CNY 100 billion. Maintaining the momentum on one hand, we also see 2 positive features. Firstly, is asset-light. Our admin fee revenue accounts for 14.89% of overall fees, which is 0. 49% growth, which is leading the pack. And secondly, the revenue structure continues to be improved. In 2025, our asset management, our wealth management, our custody management service business contribution continues to go up. This means that our new types -- new kinds of intermediary services growth has seen new found momentum. In 2025, this new momentum is quite strong. You mentioned that in 2025, our intermediary income and what are the highlight areas. There are 3 of the highlights. Firstly, we consolidate our advantage in our traditional strengths. On the one hand, we satisfy the fund money transaction needs for both the private and public clients. And secondly, our traditional bank cards, payment services, settlement services, the revenue on all those fronts continue to grow. Our bank cards, the payment settlement-related revenue has reached more than CNY 57 billion. In other words, more than half of our revenue comes from these sources, which is our base. Third-party payments is more than CNY 22 billion. Credit card, more than CNY 15 billion revenue. To public entities, more than CNY 11 billion, both foreign and domestic currencies. This is the area that you highlighted. The growth in revenues in these areas continues to -- is about our solid foundations, our rapid networks and our continually improved and reiterated products. And as Mr. Zhang, our President has mentioned, our settlement accounts with public entities have almost reached 18 million different accounts. Several pieces more of data. Our mobile payments, cardholders has reached 493 million, right, almost 500 million. Our network accounts have more than 100 million different card holders and transaction has more than 2 billion transactions annually, right? These are all leading indicators compared with our peers. And secondly, a key area of development would be in 2025, the Chinese capital markets have recovered and the bond markets has also recovered somewhat, and we see opportunities. So last year, in terms of wealth management and capital asset management, we also recorded positive growth. In terms of wealth management, it is a hard one success. In 2023, we -- actually, the fee income continued to decrease. So we have to enhance our customer base and expand the business scope so that we try to get more income through these measures. And we have intermediary services like selling insurance products, the funds and the precious metal products. So the income is around CNY 8 billion. So this is really a hard one results, and it attributes to the expansion of our customer base and also our services expansion. The wealth management clients also increased by 8 million. It also has a new increment of [ 930,000. ] In terms of the scale, the daily volume is around CNY 5 trillion. It does not include the traditional savings business. So this is about the other wealth management products. The growth is over 15%. In terms of asset management, the revenue is over CNY 15 billion. The AUM is around CNY 6.94 trillion. The growth is over 20%. Another thing worth noting is that wealth management and capital management has a very important link that is custody business. Last year, the custody income also reached CNY 6.5 billion. The scale is over CNY 37 trillion. It also has a Y-o-Y increase of over CNY 3 trillion. So over the years of exploration, we have wealth management, asset management and custody business, and these 3 priorities have contributed a lot to our business. The third area is to promote our characteristics. Some businesses are leading like some specialty businesses, we have a competitive advantage. There are several aspects. First, we respond to the diversified needs -- financing needs of the customers. So like investment business has also recorded positive growth around CNY 7 billion. And -- we have a unique business called the fair selection business because we are construction bank, we are born for construction. We also prosper for construction. So in terms of infrastructure, we have a licensing that is the engineering consultants. Years ago, the real estate business is transforming and is restructuring. So the consultant business in real estate has declined, but we have transformed the business. In terms of key infrastructure and information infrastructure, we have expanded the business. In terms of the traditional infrastructure, like railway, the airport and some hydraulic projects and the railway businesses. And for the new emerging sectors like the wind, solar power and also the fiber businesses, and we also expanded to a whole life cycle consultancy and the revenue also reached CNY 2.3 billion last year. And we also had the pension finance and the related business. We serve the clients of the social insurance, the settlement, the payment and also the loan of the residential insurance also are handled by us, and the revenue is also very good. So these are all the contribution of various fee sources. And for the 2026 outlook, I think it has both challenges and opportunities. In terms of challenges, you also mentioned just now that there is a policy of the fee reduction, so it will continue to have its impact. So this is a common challenge faced by the whole banking industry. But for opportunities, there are still a number of them. Just now, President Zhang also mentioned, no matter from the 15th Five-Year plan or the government address, we all emphasize on the importance of internal demands -- domestic demands and consumption is #1 for consumption demand. So we will continue to satisfy the new consumption models. So these will be good opportunity for our settlement business. like the consumption and the credit card segment businesses will continue to be enhanced. The second aspect is the capital market booming. The investment mindset is also enhanced. So we have the wealth management, asset management and the custody businesses. These are 3 driving forces are very important. And we are also improving the modern system development in terms of stocks, securities, insurance, loans, et cetera. So we have multiple licenses of these different businesses. So in terms of integration of all these businesses, just as mentioned by Mr. Zhang, in terms of financing, the financing of credit, financing of different demands, we can also satisfy our clients. I believe overall, due to many reasons, our intermediary fee revenue can continue to maintain this steady growth trend. Tang Shuo: Thank you -- thank you for your response. So recently, we have, of course, made an announcement about today's results announcement event -- and we have collected questions through channels such as our investor hotline e-mail, and we also have a live stream today, and some investors have left comments to interact with today's event. Most of the questions raised by online investors have been answered in previous questions. But A lot of people are still very curious about our 5 priorities. We're going to pick one of those questions. This question reads Fintech is #1 amongst our 5 priorities. It's also a very important lever for building a modern service industry ecosystem and to cultivate new qualitative productive forces. What have you done in this area of Fintech? I like Executive VP Lei Ming to answer that question. Ming Lei: With respect to the service area, service area covers nurturing tech talent, innovative tech services, conversion of R&D results and to build and run an ecosystem of technology. And we serve tech firms, tech parks, science parks, technological practitioners, developers, institutions and other entities. Specific work include all of our value-added services across the entire ecosystem of our bank services. I'm going to comment on those. Firstly, we actively develop our integrated service advantage. We are going to break through our industry and create a positive feedback loop. We are going to actively serving great financial [indiscernible] to have solid long-term investments into hard technology using our group capabilities in terms of enterprise innovation, we are accelerating equity financing efforts in early stages of investments. We use investment, equity, insurance, bonds, and we use many diverse tools to empower technological entrepreneurship and industry entrepreneurship. We continue to develop clusters of innovative fund clusters. Please pay attention to the word clusters, right? We work alongside with in Hubei, Xiamen, Shanghai. In those areas, we work with the nationwide fund entity to establish innovative tech funds. We use this patient capital to nurture tech upgrade and enhancement and steadily promoting the progress of financial asset investment companies and equity pilot schemes. Cumulatively speaking, we have set up 28 pilot funds to enhance the toolkit we have for equity investment. More than 160 issuers investing into more than 180 different tech firms, empowering tech companies and optimize their financial capital structures. Secondly, we use our average advantage as a large bank to empower technological innovation and industry innovation and its integration and synergy. In terms of enterprise innovative capabilities, we have a patent valuation model. Our technological valuation model has already obtained 3 nation level -- nationwide level authorizations. Our traditional sheets, right, the balance sheets, our profit sheets, our cash flow. In the past, our customer service managers basically look at these 3 things, right, to depend on your creditworthiness. But in order to adapt to the development of Fintech, we have innovatively looked at the fourth sheet, what we call an innovation sheet. And in that sheet, we introduced IP innovative capabilities and information pertaining to the founder of that tech firm to quantify and digitalize and to help more potential tech innovators to access funds and finance. And when it comes to enriching our financial products offerings, we have more convenience, conversion loans, tech innovation loans, we have a lot of special products, which effectively satisfy the differentiated needs of these tech firms across different phases. As you know, that tech firms grow very rapidly, but in the start-up phase, in the growth phase and the mature phase, they need different services in both scale and variety. So therefore, throughout their entire life cycle, we must provide them with a basket of financial services, particularly for smaller micro firms. We have [indiscernible]. These are new specialized products, which has given out more than CNY 160 billion worth of loans year-on-year growth rate of more than 50%. We have CNY 5.25 trillion worth of loans to tech firms serving more than 300,000 different firms leading the way across the industry. Thirdly, in our work, we continue to focus on comprehensively building a team in tech and banking to service the nation's strategic development, focus on Beijing, the Greater Beijing, the Greater Shanghai area and the Greater Bay Area to serve the construction of these tech clusters, innovative clusters. Wuhan, [ Xian and Xin Cheng, ] these new innovative areas are also areas where we focus on providing more support on. We have a 5-tier interlinked. So at the headquarter levels, branches, Tier 2 branches and even our frontline branches. At the headquarters, we have our innovative department, tech department to focus on our -- we have in several major key areas, we have innovative centers managed directly by the headquarters. In some key Tier 2 branches, we have set up a direct of the operated tech center. These centers can better serve more local clients. And we also have closed quarter services available. And throughout the group, we have enhanced the nurturing of a professional team to actively train people who knows finance, who knows tech, who knows the industry. We want these -- to train these talents to support our future endeavors. In the future, our bank would continue to promote high-quality development of the entire Fintech ecosystem. We want to continue our quality traditions and to convert those in this new era as are part of the important forces and important implementations in serving our nationwide strategy to become an advanced and great nation in terms of tech and other areas. Tang Shuo: Thank you. We only have time for 1 more question. May I ask the gentleman at the very far right to the back. Unknown Analyst: Thank you. Thank you for giving me an opportunity to ask this question. I'm [ Lijun ] from GF Securities Company. I'd like to ask a question about personal consumption loans. Recently, the Government has launched quite a lot of stimulus policies. The recent discount loans have been widened in scale and the barrier of entry has been lowered as well. May I ask what's the growth of possible consumption loan at CCB and what are the applications looking like? And furthermore, when it comes to helping stimulate domestic consumption, what more can CCB do? Tang Shuo: Thank you for the question. Allow me to answer -- to answer that question. So the CCB continues to implement the strategical initiative of stimulating domestic demand and personal consumption to benefit the public and continue to promote these initiatives to participate in the major initiatives by the Chinese government to continue to provide more fiscal support and financial support for SMEs and personal loans to satisfy the many different consumption needs of our nation. Personal needs, personal credit card development indicators continue to be healthy. We effectively are able to stimulate and help financing such consumption behavior. The total balance have reached CNY 620-plus billion, which is an increase of CNY 115 billion, which is more than CNY 100 billion growth for 3 consecutive years. The balance and growth is all leads our industry peers. Ever since the implementation of this optimization, we continue to ramp up our advertisement on these discount loans. We offer discounts wherever we have to lower the spending and consumption costs of our customers. We have 630,000-plus customers and provide discount loans for more than 18 million different transactions. We have done 3 things primarily. Firstly, we actively promote collaboration between bank and businesses to engage in synergistic efforts. We work with commercial 9 commerce borough departments to roll out a spring festival initiative. We have specifically themed consumption stimulus activity to stimulate consumption and more than 25,000 businesses participate, reaching 0.75 million customers with a ratio of 2.91, 18.5% growth and 21.3% growth in consumption and consumption loans throughout the spring festival period. We continue to roll out the basket of policies of stimulating domestic demand to continue to build out more personal loans, loans for relevant entities and credit card loans. In terms of stimulating personal consumption, we still lead amongst our peers. We continue to handle more subsidy issuance by the government fiscal department, a lot of old for new policies for home appliances and other things. And last year, in 331 cities, we gave out CNY 20-plus billion worth of subsidies for the government, driving CNY 180-plus billion worth of consumption. This year, we provide systematic support and actively enhance the efficiency of these events. Thirdly, we focus on key consumption areas and to support financial innovation. We want to enhance the integration capability of our service spending, new types of spending, personal consumption type of model, and we want to adopt a new consumption model. We want new financial services to merge into new scenarios and merge with new forms of businesses. And at CCBs [indiscernible] and our lifestyle app, we built a lifestyle platform, consolidating resources to provide our customers with relevant loans such as upgrading, renovation, buying a car, buying houses. We have a lot of one-stop service and financing solutions. The next step, we're going to continue to work along the main line of stimulating domestic consumption to further leverage our own strong digitalization capabilities to further work alongside in tandem with the government to enhance the quality and efficacy of domestic consumption stimulation policies to further contribute to society. Okay. That's the Q&A session for today. I'd like to thank everybody's participation. Our management have engaged in a frank professional in-depth communication with respect to questions on everybody's minds. I hope that helped everybody better understand CCB's strategic measures, our performance and our development trends. We have always cared about management of our market value and investor returns. We have already established the CCB Holdings Limited market value management scheme, and we have relevant provisions and principles to govern the work relevant in the management of our market value. Up to late 2025, our market cap has reached USD 265 billion, which is a 25% increase compared with late 2024. We will continue to promote our high-quality development to continue to enhance value creation capabilities. We will continue to use steady cash dividends to thank our investors to enhance our information disclosure and IR management to continue to promote our investment value to the market and actively implement our market value management mechanism. That's basically the content for today's event. If you have any other questions and queries, please feel free to contact us at our IR team at our Board office. Finally, I wish everybody good day. [Statements in English on this transcript were spoken by an interpreter present on the live call.]
Unknown Executive: [Audio Gap] To summarize Q4 of 2025, but also the entire year 2025. We will also talk about our development strategy that we had a chance to present to you exactly a year ago. We will explain where we are in terms of the implementation of the strategy and how it translates on to our results. This is what our meeting will be about. Of course, the entire conference today will end with a Q&A session. And since we are holding this meeting in a hybrid mode as we also have online participants, the entire session is going to be divided into 2 parts so that all of you stand the same chance to ask your question. I will tell you more about the details of the Q&A session. But for now, an important piece of announcement for our online participants. [Operator Instructions] There is yet another piece of housekeeping since there is Marek Piechocki and Marcin Piechocki who very much care about their privacy. There is a kind request for those of you who are present here in the room, not to register the meeting, not to take pictures of the gentleman. We will be very grateful for you not doing that. And now the time has come to present our speakers, Marek Piechocki, Chairman of the Board; Marcin Bojko, Deputy Chairman for Financial; Marcin Piechocki, Deputy Chairman of the Board; and Mikolaj Wezdecki, Deputy Chairman. We also have Magdalena Kopaczewska, Investor Relations Director. And the meeting will be moderated for -- she will moderate the Q&A session for you. Let's move on to the session proper. I know that most of you have been following our business activity throughout 2025. But I guess it will do no harm to remind you of the most important events of that period. Let's see a short video together. [Presentation] Unknown Executive: 6 new markets, over 1,000 newly open stores, sixfold growth of our robotic fleet and new logistic facilities plus new markets where our mobile operations were launched. So quite a lot. How has all that translated into the results? This is what you're going to hear from Marek Piechocki, Chairman of the Board. Marek Piechocki: Good morning, ladies and gentlemen, welcome. I believe that we are very happy about how successful 2025 was. When we step back and think towards what this year brought about, it wasn't the easiest one for us or for the financial markets, at least for us. It started from the liberation day, which probably wasn't pleasant for you as investors or for us as the managing party because that raises a lot of uncertainty that is mid-tier. It affected us only -- I'm talking about the warehouses in Romania, which were burned. This is quite a challenge that our teams, our logistics and IT teams handled really smoothly. Practically speaking, the customers have not even noticed that the supplies from Romania were redirected to Poland, and it did not affect them at all. It didn't have any major impact on our financial results. But among all these difficult moments, when you take a look at the results, we opened over 1,000 stores, which is not easy. You need to explore over 1,500 locations in order to be able to approve of the choices and open over 1,000 stores. Think of how many architectural teams, how many teams responsible for the construction of those stores participated in this endeavor. This is a massive challenge and we increased the number of stores from 2,700 to 3,700. In order to do that well, you need a commitment and effort of many managers, the entire organization and numerous employees in the LPP Group. For us, that was the highest growth we've experienced. On top of that, if you add 6 markets with nearly 60 million consumers, you need to realize that, well, it sounds so easy, 6 new markets when you see it written down. But again, you need to make decisions on whether you have your own accounting or you decide to outsource it to begin with, you need to find a country manager, leasing teams. So the easy sounding 6 new markets actually mark a lot of effort. It's been the first time that we opened so many new markets over a single year. To this, again, we have [ PLN 6.2 ] billion in investments, out of which PLN 1.3 billion was invested in logistics, automation and robotics. Then again, let me emphasize that it takes tens of engineers, people launching these systems who approve them, who consider whether this or that system should be selected for that to be most suitable. Again, that's a considerable challenge. And I'm really proud of the entire organization, not just of the Board, but of all the managers in LPP or the people who contributed to that, not only the managers because we really had a lot of work. These endeavors that contribute to building our future, we were able to manage it smoothly, which is reflected in the results that you've probably seen, but that's our force, and that's not easy. E-commerce grew by nearly 20%. It rarely happens in European markets that somebody grows by PLN 6.4 billion in revenue in e-commerce. That's a lot. Now consider this, we do all that preserving substantial financial stability, 1.1, that's our net debt to EBITDA. After 2 years of working on the financing consortium banking, we do have financing. You know well that before the banks give loans, they scrutinize the applying institution organization really closely. And it's been the first time in my record and probably one of the oldest people in this room that we had oversubscription banks and a consortium wanted to give us PLN 20 billion, we went for PLN 13.5 billion. Rarely does it happen that you need to introduce a limitation on how much of a loan you take from this or that bank. So that's another source of our satisfaction. Now within this financial force, we wish to propose a dividend per share in 2026 of PLN 900, which is 36% more year-on-year. We want to offer you this during the general assembly. We are very happy that we are able to share our profit with you. All that has been done with a lot of attention paid to decreasing the pace of the growth of our costs. We made certain we spend every penny really carefully, considering twice whether the spendings are really necessary. That is what gives us a 20% of growth, but around 35%, 36 percentage growth of EBITDA -- EBIT or the net growth, net profit. That's what makes me proud as an organization. On the one hand, we were able to develop and grow really dynamically, keep investing into further years of development that lie ahead. And at the same time, we did that reasonably enough for the profit to allow us further investments and sharing of the profit with our shareholders. Now how did we make it in our greatest engine? This is what you are going to learn about from Marcin Piechocki. Marcin Piechocki: Good morning, ladies and gentlemen. Ladies and gentlemen, 2025 was a record year for us, not only in terms of revenue and profit, but also in terms of the scale of opening new stores. We set ambitious goals, but over 900 stores in 12 months is 60% more than last year. That's a result that we are really very proud of. There were weeks which we opened over 50 stores. And on a single Saturday, we broke the record, and we opened over 25 stores just on a single day. There are people standing behind these digits. Today, in Sinsay, we manage the network of nearly 2,500 stores, and we do that on 25 markets. But what do we do that for in order to reach out with our concept even further to be even closer to the customer at their hands reach physically, but also in the virtual reality. The numbers itself and the volume is not satisfying enough. We care for the quality. So for the profitability of our net average EBITDA on the stores in the net is 30% and 98% of the stores have a positive EBITDA contribution. These are not standard numbers in our industry. This is the model that works, and we scale up the format that is profitable at the level of the stores. The other strong pillar that we rely on is e-commerce. And even today, in the value, value for money segment, presence in this channel is not obvious. Competitors still have certain doubts about that, but we reached 32 million of total downloads of our application, which we are particularly proud of. And we did that plus 45 years year-on-year compared to a very strong basis. When we compare ourselves to Chinese retailers present only online, we have nothing to be ashamed of. Our application today is more popular than Shein or Zalando. And for us, what matters is Sinsay's share -- Sinsay's application share in sales, that means that our customers love our application and they are really loyal to it and to us. I'm an engineer, atomic engineer, and I've been observing technical trends with curiosity, but also taking a pragmatic approach. Every time I hear about different technologies. I ask myself a question whether a given solution really contributes real value to our business. And if the answer is positive, then we simply go for it. In LPP, for example, AI is used already today in designing. We are proud that our graphic designers use AI when designing prints [indiscernible] all over. We use it in logistics and back office and sales and other areas. This is a nice example where we create virtual photo sessions. This is the technical photo on a technical model on the left-hand side. It doesn't -- we don't need to send a person to a luxury yard to the Mediterranean Sea. We can use AI to get what you can see on the right-hand side. So again, you don't need to be Sherlock Holmes to guess that the right-hand side photo sells better, but the one on the left-hand side actually cuts costs. As for virtual sessions, we generate automatic images of details, buttons, pockets, fabrics or we limit the participation of small children in the sessions because it is not a very flexible solution. As for the virtual assistant creating the style and suggestions for the customers who, for example, know what occasion they're looking apparel for, but they don't know what to go for, ready outfits suggested by means of using this set. We also have a virtual try-on in the Sinsay app for women collection, but we are broadening it, adding new groups. The customer uploads her photo and she can see the product on herself. So we will see -- we are using AI. We will keep using it as it is really supportive to our business and we do that either to limit cost or to increase the sales. This is not the end of what we are doing. We are also using advanced technology in the logistics. We have 3 warehouses in Bydgoszcz, in Romania and in Jasionka. As Monika said, in '25, we've increased our fleet 6 times, they help us optimally arrange our goods. And at the end, the orders are fulfilled much faster with lower costs. We have significant tool to support the expansion of the store chain based on e-learning machines. These managers are facilitating because they select a location, they assess the sales for a particular location, they analyze the demographics competition. They do not replace people, but the manager is facilitated with taking a better decision. We are operating in 7 countries. And the last one, the last technological element I want to mention is a contact center, 35 languages. We can scale servicing, and we don't need to develop our teams. Ladies and gentlemen, for many years, we consistently talk about being fashion tag, and this is what we focus on for the future. Now I pass the floor to Marcin. He's going to present financial results. Marcin Bojko: Thank you. Good morning, one more time. Marek was talking about the final results, very attractive PR results. Marcin talked about technology and various solutions. So now we talk about money. It's a pleasant topic to talk to. Let's focus on like-for-like store sales, those that are with us for 12 months. The dynamics of like-for-likes is not including the VAT picture. In '25, it was a stabilization market in Sinsay and in other brands. How do we understand it? In Reserved, the second largest brand, it was a very positive normalization process. In '24, it was a bit of experimentation with our apparel. In the second half of '24, we've learned the lesson with improved results. And in '25 and the first quarter is a continuation of this positive standard. Normalization in Sinsay, our largest brand these days was dropping a bit. When you look at 24%, 20%, 11% and then 1.5%. So it was a very demanding base. So this normalization was following, as you can see here on the slide, minus 1% in Sinsay, over 5% in other brands. When you look at it from 2-year average, Sinsay, this is still 4.1% increase and 3.3% in other brands. So let's look at it this way. So season to season and quarter-to-quarter, it can show a different picture. We had some challenges in Sinsay. So the dynamics is definitely much different and further from what we can see. But in Reserved, we saw -- you saw what we can do and what the teams are capable of. When we look at our stores and new stores opened and e-commerce, in the first quarter, we grew by 16%, so double-digit increase. We are very happy about it. But yet, again, in the fourth quarter, it was a certain May related season. May was very cold. So the dynamic was low. The fourth quarter started not really very good. The first -- the beginning of November was difficult. The clients were waiting for Black Friday. Then in the second half, it was better till Christmas. It was relatively warm. E-commerce dropped a bit before New Year's Eve, the temperature dropped again. And after Christmas, then in January, it was really, really very cold. So the traffic in the stores dropped, but then e-commerce went up by 30%. So this is what we could see. We were operating with the margins. So we sold out our Winter collection with good margin. So this trend continued in February. So the fourth quarter was as it was and let's look at the entire year, 19% of growth in '21 in constant currency. So we are very happy about such results. Moving on towards PLN. We have the gross margin. What I said is we've managed with the margin. We've managed the margin very well in the last quarter of '24. The winter helped us with selling out our winter collection. Those of you who are with us on a regular basis, you remember that we started with the larger stock in Sinsay. Our appetite was much larger. We had to work with that. So we take turnover into consideration that resulted in a lower margin in Sinsay, but we secured this good -- our margin, 365. So you can see that in numbers. In the third quarter and in the fourth, there's a seasonal drop in our margin. Third quarter is always the best as for the sales and margin, but it's still plus 2 points year-on-year, so a very good result. And then costs, after revenue and margin, the cost, this is the third leverage affecting the result in our sector. We don't have [ Swavik ] with us today. We are here representing the entire management board. The costs, this is what we control. We are very happy about it. So the ball is in our corner here. As in '24, we were building the scale to open new stores. It's not easy to open 1,000 new stores. We had to build capabilities to do it in logistics and in our design teams. And you could see that in costs. And in '25, we focused on efficiency. And the numbers speak for themselves, the biggest cost group, these are stores with the sale growing 19%. The costs in total grew by 70%. Then logistics, only 14%, that was the growth, so slower than the revenue. And the biggest important -- the biggest impact came from investment. This is what Marcin was talking about. And back office, 11% of growth twice slower than the revenue. And this is the direction we want to continue apart from logistics, where we can see the technological impact in logistics, back office and marketing. This is hard work. And the cost of stores, we don't have like one big initiative that can limit the cost. This is just hard work of the entire organization and all of the teams that are measuring it, streamlining the processes, spending -- distributing the parcels online. So bringing that closer to the cash point or closer to the try-on section to optimize the processes. So this is what we are doing actually in the stores. When we are going to combine these 3 leverages, the sales, margin and costs at the end of the fourth quarter, we have significant growth. I will focus on the numbers below the columns here, 3 percentage points for EBITDA, for EBIT, almost 3% and net profit also 3%. This is what we focus on. Are we going to deliver year-over-year? I'm looking at Marek. This is our goal. Of course, challenges are ahead of us, but we want to deliver everything. What you see here, this is what Marek was talking already about. We did a significant leap. We can see that it might be difficult to repeat, but this is our goal. This is what we want to achieve. And from the strategic point of view, long-term strategy, we want to be consistent in improving profitability, whether these are 3 percentage points or 1.3 percentage points, this is our goal. This is what we want to achieve in the future. So this is the financial part. And it's not a boring part, but we also have operational KPIs. This slide is not giving you information attractively like these investments, but at the very beginning, we said that we perhaps had 2 large stock, we need to order collections in advance. And as you can see, at the end of the fourth quarter, or at the end of the first one, that was PLN 4.8 billion. And here, we have a similar amount. So we grew 25% in our network, and we have the same volume of stock. It was over -- we had too much of the inventory, this is also what we've communicated that 2 to 3 quarters unnecessary to manage that. Marek was talking about our flexibility and after especially our fire in Romania and our work with over inventories. And here, we have 1,500 as per the stores. Is this an optimum? Is this a long-term average? I believe that 1.6, 1.7, that would be more comfortable for us. We can see that in some departments, we had too much of the stock. So this is another slide we are very proud of from 5 to 2 to 4.6. This translates into the working capital. So we still have resources as for our liabilities. Marek was talking about our record financing with reverse factoring, so we can focus on the purchase of collections, quality collections. So this flow and liquidity is good, and this translates into our comfort and record investments to PLN 3.2 billion in 2025. I believe in Q&A, we will refer back to it. PLN 3 billion went to logistics. This was a record year. And in profits for every level, every other year is going to be a record breaking. In CapEx, this was a record year, and it will not be repeated soon. PLN 2.6 billion, that is the money that we are going to keep for future investments. So we've built the volume in investments. Now we will focus on robotization and the CapEx is going to be much lower. And what makes me very happy. I'm not sure if the other members of the Board are equally happy, but I'm happy as the financial -- as a CFO, I'm happy that we grow fast in a profitable way, and we grow safely. That is what makes me proud. Net debt-to-EBITDA shows that we can get indebted even more, but we do not have such plans because taking the war in Ukraine or be it COVID, it shows that our conservative approach to management makes sense. Gentlemen know it well that we can defend ourselves amidst all these crises. So on average, against the backdrop of the industry, we handled it pretty well, and we wish to continue. We have cash in store, we can invest, and we will do that reasonably. That was the summary of 2025. So we grew well in sales in a profitable way. And now we are entering 2026 with a nice foundation. We had a good start, a good entry into the year. How about the present year in detail because that's the end of March, so 2 months into this year, nearly and traditional trading update, sales and growth. These are 2 most important things. February in terms of sales, let me make it clear, started in a demanding way. The numbers speak for themselves. In total, we grew only by 10%. Online was even smaller year-to-year and the likes were negative. And now when we take a look at the first part of the table, it is not an impressive result, but you need to take my word and believe that from the margin point of view, February was maybe not extraordinary, but it was really enormously profitable. There was a very strong month with very low temperatures. In Q4, we were ahead of our stock from autumn and winter and in February, we continued on that. We didn't have to introduce sales bargain. So that is something that helped us work against the mass, and that explains our sales at the end of February when the temperatures grew, the likes returned to their norm. They are still rebouncing. We still have Easter ahead and we introduce further intakes of our collection. So the plus 18% is decent level, but you can also see online last year, maybe I did not mention that, talking about the cost, our cost in '25 in terms of the value of money were at the same level as in 2024. So the share of performance marketing in '24 was 9%, in '25, 8%. So that improved our profitability, but it also shows that we have a lot of space. So if we want to reach for new customers, we are likely to do so. Mikolaj is with us who is not at our quarterly meetings, but he's responsible for our e-commerce. So we know what we do. We enjoy this comfortable situation. We have a good tool. We're financing big CapEx as we have space as far as costs are concerned and we can unfreeze it. But we can see that we are heading in the right direction. And the other part that is growth comparable year-to-year, 120 new stores in the first quarter, around 110 -- 115 Sinsays, the other ones are new brands. And in the first quarter, around 350, somewhat lower than in the previous year, but Sinsay will be comparable as far as other brands, we are planning a lower number of openings. Now looking at the overall targets, we showed you this guidance in December last year already when we talked about the third quarter, and it actually remained unchanged largely, and that's good because it means that our guidance was set right, apart from gross profit margin. I talked to some of you when we talked about our guidance with a strong dollar that we contracted for the first half of the year. Our margin -- guidance margin of 54% to 54.5% is not conservative actually. And yes, we waited for the beginning of the season. We saw how the collection was selling. This margin also takes into account the market havoc resulting from the war in Iran. So you can see that the dollar grew to PLN 3.70. And this guidance takes that into account. So for us, it's also, I guess, it's positive news. The dilution of margin, well, is not to be expected for the year despite the challenging circumstances. And this natural increase of gross margin cascades downwards. So also EBITDA margin and net profit margin go 1 percentage point up. So I guess that's a positive piece of news for us. We do what we should be doing, working in our like-for-likes, but the first half of the year given how well safeguarded we are, is very promising in terms of the margin. And now summarizing 2025, it was a year of dynamic profit growth, but also double-digit growth in sales. We helped this process by means of a cost discipline. This is what we have in our hands, and that's our long-term trend. We've been working with back office teams on efficiency, everybody has their KPIs. As Marcin showed, we use AI, not only in manufacturing, but we also try to rely on it in back office, be it legal team or finance team. And I agree with Marcin, we take a pragmatic approach. This is not the one and only answer and tapping our potential. Now we are going to show 38% of cost to revenue unless we do such sales. But we want to systematically improve moving on because at the end of the day, the growth in costs is slower than sales, that will translate on to also the value for shareholders. So we wish to have more years like 2025 to come in the future. But looking at the broader perspective, I give the floor back to Marek, I guess he will be the best person to show us what it looks like. And I'm going to stay here with you on stage. Marek Piechocki: I want to show you some long-term prospects now. But before I move on to that, yes, I'll return to the results that Marcin showed you, those concerning the first quarter. I guess it's been the first time in our record. As the winter -- well, for the first time -- for 10 or more years, it was the first time that temperatures that we noted fell below minus 11% and 15%, and they were not just a single time occurrence but they lasted for 2 or 3 weeks, and we really experienced low temperatures of this winter. That is something that made it somewhat harder to get more customers to the stores because obviously, they were more eager to move to the online channel. But it was for the first time that customers unfortunately were forced to buy because when a mother with a child comes into the store, and she wishes to buy gloves and maybe she has to buy gloves, it doesn't matter to her if discount is by 10%, 20% or 50%. And in January and February, we had bargains, pretty big ones because when spring comes, hardly anybody wishes to buy the A/W collection. But as Marcin mentioned, in February, our financial results, the internal one, which we keep tracking the profit was much higher than last year. And that was caused not by us having negative LFLs, but the margin was by 8 percentage points higher. And of course, this is something that spreads into margin and so on. But I just want to draw your attention that negative LFLs were offset by the higher difference concerning the margin, and that resulted from the fact that we didn't have so many discounts, and we sold many pieces at a lower bargain than necessary because all the customers were forced to buy who want to buy a winter jacket or gloves in February or March, well, this year, the weather made our customers go for these choices. And I would like to share a reflection or a curve with you, a diagram that concerns our share prices over the last 10 years. We don't want to go further back to the beginnings of our being listed, but those 10 years is probably a perspectives that can tell you something about how the company has been operating. And I'm particularly proud, maybe not so much of the shape of this diagram. We, as a family, also invest and we also put our money from the dividends into certain investments, hoping for the biggest possible return on investments. But when we look at these returns, pay attention to the fact that the total shareholder return on CAGR for the last 10 years was 15%, then it doesn't seem to be a bad figure. You as investors, you are all here in order to listen about how the company keeps developing, what the company is doing, where it is investing, where it wishes to be present, what operational activities it has. So from quarter-to-quarter, you have certain doubts whether we will deliver or not, LFLs this way, that way, what kind of future lies ahead. But 10 years is a lot of quarters. That's 40 quarters. And when you try to draw an average from that, well, I can tell you that as an investor, I would wish -- these investments that my children implement also brought such a return. I'm not going to mention the period of 3 or 4 years because those figures [ PLN 24 or PLN 28 ] are striking. But still, when you look at a longer-term perspective, I believe, it's not bad and those who have faith in us, of course, among our investors, we have also those who've been with us ever since our beginnings and they bought our shares for PLN 48. There are such investors among us. But this prospect of -- this perspective of 10 years is not a bad one. It proves that it was worthwhile sticking to LPP, those who had faith in us also amidst difficult times. For example, when the war in Ukraine broke out or when we were accused of things that we were not guilty of. You know what I'm talking about. I'm talking about Hindenburg, the infamous Hindenburg. And I think that those who stay with us do not regret it. And I believe that there is still a bright future ahead and further years of dynamic growth. And we hope to keep you satisfied with those growth because we are here to multiply the capital. Thank you very much. Ladies and gentlemen, the time has come for us to listen to what you have to say. So let us move on to our Q&A session. I would like to invite [indiscernible] to join us here on stage. And I will tell you how we are going to go through the session. Marek Piechocki: First, we will hear out the questions from those of you who are here in the room. If you wish to ask a question, please raise your hand, and please wait until somebody from my team approaches you with a microphone. We care very much that because we have some of the participants listening to us online. And it is only via the microphone that we can provide the signal for the online transmission. And please introduce yourself and tell us which organization you represent. In the second part, Magda Kopaczewska will read out the questions posed via chat and which probably are still being posed. And this way, and we will make sure that both the groups will have the same amount of time for your questions to be addressed. And now we would eagerly take the first question from the floor. Sylwia Jaskiewicz: Sylwia Jaskiewicz, broker. I would like to ask you what happens in the markets where you buy. So China, Bangladesh, Pakistan, what can we expect? What can we expect of markets that you sell to in the light of those 2 wars. I mean the southern markets, first and foremost, how about the demand? And what's the greatest challenge when you look at your competitors as well? Unknown Executive: Okay. In terms of the situation concerning our purchases, we are in touch with our suppliers at all times. In terms of China, they announced 1%, 2% of increases. That's the beginning of our discussion, but that's the scale. Given what happens with oil, slightly higher 1-digit rises will concern polyester products. But again, we are at the beginning of the talks. And that's just the feedback straight from the market that I'm sharing with you now. So that's in terms of what we buy. This is also an element. And another element of purchases, supply times, delivery times are not affected, maybe slightly India, Pakistan, but we are talking about 2 to 4 days that doesn't really affect the accessibility. We do not use aviation. So that's 0.8 percentage in our mix. The airborne transport grew twofold, but it is of no impact on us. Everything that is a derivative of oil, so the cost of transportation. This is something that we will have to struggle against. But the sourcing itself doesn't really offer us any drastic pieces of information. What was the other part of the question, Sylwia, if you could remind me. Sylwia Jaskiewicz: The remaining markets, the southern markets. Unknown Executive: Well, no, again, following the weak February, actually, everything else rebounced, including Ukraine. Maybe Romania is lagging behind, slightly looking at the March likes versus the February ones. But across the board, so to speak, older markets really rising. And as for the competitors, that was the last part of your question, maybe Marek and Marcin can support me, how about competitors looking at Chinese platforms or the sales in brick-and-mortar. So in the stores, where we cannot see any fundamental changes. I believe that everybody in the market is approaching Central Europe cautiously, be it Slovakia, Czech or Hungary. I guess that -- well, we've talked about already that we are more selective of our locations. We wouldn't like to exclude our investments already now or slow them down, but this is the third, fourth quarter where there was a macroeconomic slowdown. We did not open any store out of 3 or 4 that would meet our expectations. They are still profitable, but below our target. So here, probably we would be slowing down, but there is no fundamental competition impact -- competitors impact. Okay. We will take our next question now. Unknown Analyst: Let me congratulate you on the results. Well, globally, a few companies at this point can post such a performance. So kudos to you. As for the question. Well, certainly, if you could tell us about robotics because you've made certain investments into that, you had a record year in terms of your spendings on robotization. To what extent are these activities visible, how have they translated into your cost efficiency? And where are you? How advanced are you in introducing robotics. That's my first question, but maybe I'll ask -- okay, I'll wait for you to answer before I ask some other questions. Unknown Executive: I returned from Romania yesterday from the distribution center that we recreated after it burned down. And further robots were installed there that support us. This is where we expect greatest savings. In terms of the percentage drop of costs versus sales because we simply think of what percentage of costs we have versus sales, and this is where we see the greatest advantages already last year, you can say, in the third and fourth quarter, we could see how we profited the automatized center in Bydgoszcz with robot was launched midyear and it brought its result towards the end of Q3, beginning of Q4. The one in Romania, what we can say that at this point, the one that I saw launched its operations in October, they have the so-called wrap-up period. So the period when they're getting to a complete efficiency, and we can see that owing to the solutions introduced, we can enjoy nearly by 50% greater shippings. They call it throughput. So how many pieces actually they pass through them per 1 hour. So it's around 75. So that means that we have considerable reductions of employment costs so we have the same level of employment at the same time, increasing the pace and the number of units shipped. So you'll see we will have an Investors Day that we will invite many of you -- most mystically everybody that is with us here, we want you to pay a visit to Bydgoszcz, where everything is highly automated and robotized with high share of AI activity. And you'll see the progress in the savings that we owe to it. These are one of the greatest sources of savings that we can generate as a company. Because actually, in the stores, certain level has to be preserved. We try -- well, having self-checkouts. So in Sinsay, for example, this solution, 75% of transactions, card transactions are handled by customers themselves using those checkout. But the logistics actually offers us much more in terms of the possibilities in e-commerce, there's the cost of 20% versus sales. And this is where there is a lot of scope, it can go down from 20% to 15%, well, this is what we are hoping for. But this is only owing to even more advanced robotic solutions being introduced, and we've been investing into that. By the end of this year, we are going to open up another warehouse that will be even more automatized than those that we've opened so far. The pace of introducing robotics into e-commerce is so enormous that what we were thrilled by and what we have in Bydgoszcz believing it to be outstanding. It is it is crazy. Anyhow, another distribution center, the one that we will open this year will be even more phenomenal because instead of a pile of small robots that you can see operating. And well, you need to just be careful not -- for them not to get into a traffic jam and not to collide. Now we will have robots actually climbing up on themselves on the shelves to put the stocks on the shelves. And this is what we'll keep investing in, and you are asking us whether we see the benefits and profits, we can see them already because what has happened in Q4 is not just savings based on catching down on marketing costs, logistics has a considerable share in it. And this one point of efficiency that you saw in Marcin's slide, there is a huge share of logistics. And we believe that in consecutive quarters, the profit benefits will be even greater. Those automatized centers we launched towards the end of Q3, beginning of Q4 this year, they are only beginning to climb up to this level of efficiency that we wish them to arrive at. I would like to add, we are keeping our promises when we had a call last week. We've analyzed the situation, how this affects the situation after the war. So I promised that regarding logistics, Marek was talking about business. So as for this year, we've been implementing everything. So this is still a ramp-up period. So this is shifting to [ 0.3 ]. This is affecting our OpEx. Maybe a bit more and the rest of that, these are our efficiencies in costs in back office [ 0305 ]. This is what we want to achieve. And giving you a scale a little bit. In e-commerce, the logistics costs, this is 20%, Zalando is publishing this benchmark, they have 23%. With us, this is a lower level. So just adding to that in terms of figures. Unknown Analyst: The second question, can you classify the impact of Middle East war on your gross margin assumption, it looks nice and reflects what the consensus was forecasting. But what were the assumption and what is the impact of the conflict in the Middle East regarding gross margin? And regarding guidance, what is the assumption in likes in Sinsay, I believe this like should reflect the price because in autumn, we should have in increasing prices. Is that correct? Am I understanding that correctly. Unknown Executive: So yes, the guidance of gross margin is including the impact, yes. The first quarter, we had the margin that was much better. When we add February to that, we had a significant reserve. As for the dollar, the currency of the dollar. That was [ $7.3, $7.8 ], dollar is not going to reach [ $4.5 or $5 ]. In this, we haven't seen such a forecast. So we approach that more pragmatically, [ $3.7, $3.8 ]. And our logistics did a really good job. So with freight cost, we entered the new year. That was a lower cost. Now the increase is not really affecting, but the situation is really dynamic. So yesterday, we received information from the logistics that the pressure is there, they can feel it. So whether this is going to be 25, we had a call from Trigon or maybe a bit more, if this is even twice as much. In gross margin, we can still see that the margin is growing year-over-year. So this is reaching a similar level. So it's a comfortable situation for us. Unknown Analyst: And now the second part of the question, Sinsay, what are the parameters and when -- what have you changed in Sinsay compared to last year? Because you said that there were some drawbacks related to the collection. So what has changed? Unknown Executive: So I will go back to LFLs. So this is 0 plus, a very conservative assumption. So we hope that it's going to improve. That was minus 1.5. So I hope it's going to be much, much better. February was very challenging. March is better. So let's wait for Easter and warmer season. What I can say, yes, last year, the base was definitely stronger. Now it's lower. So the goal that Marcin was talking about is not going too easy to reach as for our operation on sites. We don't always win, this is what I can say. The collections that we had last year were not so great. I believe that they are going to be better this year. We talked about also inventories. We talked about home department. Now it's still significant increase in the margin. So we start the sales, not so great, but we have this buffer zone with our margin. So I believe that we will have room to maneuver. As for the prices, the segment we are operating is very sensitive related to the price. So we need to be very cautious in our approach. We don't want to change the prices. And what it looks like in autumn, we will see. So we are still fighting in the game. The situation is as follows: in Sinsay, we have higher surplus in margin than in other -- in Reserved and other brands. So if we say in Reserved, the margin is 3 percentage points higher than last year. In Sinsay, this is 5x or 6x. So the prices are too high, so we are going to decrease prices in Sinsay to revive the sales. And we have room for that. So it's more comfortable for us to do that. You also wanted to ask a question? Unknown Analyst: [ Matos Bargen from Exact Entity ]. How the revised assumptions regarding '27 are supported. What is supporting these figures and new stores being opened. What is the most significant challenge for '27. And to Mikolaj regarding e-commerce. What is the impact that in such a challenging environment, you have 20% of dynamics without any elements affecting the margin. So when we look at the omnichannel and when we look at the e-commerce platform, either there are problems with the margin or the dynamics is relatively low because we focus on profitability? And can you talk about Sinsay about the structure of the offer? Do you add apparel or more home section or maybe does that depend on the market? How is that evolving? Unknown Executive: Okay. So I will start. Thank you for the question. You need to realize that we focus on growing, not the fastest, maybe around 20% or 19% is good, but to grow profitably. What Marcin was talking about was, if we have the demand that is slower or lower than like in February, we don't want to push that and spend money, but we focus on profitability to be as best -- as good as possible. What is the leverage as for our growth. I will talk about 3 aspects. First of all, there is a success today regarding investments in logistics. What Marek was talking about logistics. This is not always cost saving, automation, robotization, but shortened lead times in e-commerce, the logistics is the core in the organization, pumping the blood into all our vessels in the network. So for us, it's more important to shorter lead time for the client. And thanks to robotization, we are not only saving money, but we are also shortening the lead time to the client. So that was the first element that happened last year. Then a broader offer, especially in Sinsay, Marcin is going to talk about as well. We decided to establish a dedicated team for Sinsay products, for home department. And as consumers, you can see that this offer of dedicated products for Sinsay in e-commerce increased last year significantly, and we are going to continue this tendency to focus on the offer of the -- from -- in e-commerce to be much larger than in stores. So this is a leverage to improve sales, we don't have any barriers for e-commerce like warehouses for stores. But the efficiency we are talking about is much, much better. And the third aspect and omnichannel, this is another leverage. So we have -- we are better than Zalando or other channels. Clients can collect their products from -- with a package. So this is a result of a synergy. So the client knows that there is a stationery store and then collecting packages from e-commerce or they go to our stores in our retail park, they learn about Sinsay and they start interested -- they start being interested in our brands. So omnichannel means that our efficiency in marketing cost is much better. I want to repeat, our goal is not the pace of growth, but effective growth related to efficiency. It's not the situation. It's not a post-COVID situation. We focus on profitability. As for the offer, in stores, this is home department, but I wouldn't omit kids or men. So this is not what we are very famous for. We reach not obvious locations. So this is something new. This is a novelty, kids and men department. As for the Internet, home is priority. We have a team established for home department. They are developing the offer. It's not so easy. We look at Temu and SHEIN, what they offer, what this can be sexy for our clients? And we want to introduce that in our offer. And you were also asking about some differences about the structure. So home, you were saying that it was 50%, I believe. So well, 50%, this is too much. I think with 500, 700 home, 50%, that could be too much. So around 20%, I would say, with good turnover. So when we look at our competition, we can see they are very effective. We are still fighting, but we are not giving up. We need to dress every day, and we need many, many things at home on a daily basis. So that's true. Unknown Analyst: [ Bernard Krasuski ], I refer back to the Middle East and the war, our H&M provided a rather negative guidance. With you, the sun is shining. But is your guidance and your perspective for this year making the situation better, still were contrary to the situation with dollar, with the war in the Middle East. So are you going -- our customers going to jump from more expensive to less expensive products, you survived the previous crisis, like the COVID one. Now the situation is a bit different. We don't have new clients from Ukraine, for example. So how the situation is going to evolve from your experience, your analysis of the market. Are we going to have significant differences between different countries where we operate in or all the consumers are going to react to the crisis the same way. You are operating on a smaller scale in the Middle East. Are there any plans to close stores over there or not. Unknown Executive: I was thinking about these topics, the topics, the questions. Your question is related to the war in the Middle East, in Iran and many turmoil on the market. So my personal understanding that the world has changed since COVID. And now the turmoil is on a regular basis. We have 2019 COVID, 22nd war in Ukraine. And every certain period, we have Liberation Day. So every 2 years, something is happening, some turmoil on the markets. And as an organization, we managed to deal with that quite well in a situation when 20% of the stores disappeared in Russia. This is what we faced, and we managed with COVID where all stores were closed suddenly. The war in Iran, somewhere on the sidelines. It's still -- Suez Canal was closed, and they travel differently, there are different routes that were adjusted. So the war in Iran not affecting us at this point. If oil goes up, this is a smaller amount in transport cost. And the cost of oil is going to increase not only for us but also for our competitors, for all of us. And our brands like Sinsay, they will benefit from that, if not already. I look at it from this perspective. We try to be very competitive price-wise and very attractive in terms of what we offer to our clients. And this is our competitive advantage. This is the strength of our organization that we are -- we know how to adjust to the changing environment. We know how to effectively manage not only on the product, but also on the level of costs or, let's say, a year ago, when I was meeting investors, you were worried that we have too much of inventory, too much stock in our warehouses, what is going to happen with that? Maybe LPP is going to share the fate of e-commerce or other companies, Polish companies that also have problems with the stock. So in a difficult situation, we know how to manage that, how to deal with that. We had ups and downs. We were hit from right hand from left, and we are still recovering from such situations. So the war in Iran is not really affecting us. I would say bluntly, this is -- I'm not trying to use an explanation or an excuse that the war in Iran, so our results are worse. No, this is not happening. Magdalena Kopaczewska: Ladies and gentlemen, the time flies. We will take the last question here from the floor and we'll move on to the question posted by our online participants. A question about the long-term future. I wanted to ask you about what happens in the segment of the smallest Sinsay. At a certain point, you shared information with us that you focus on medium and big Sinsays, thinking about your prospects of growth in the future, we know that in terms of the development of the network, it's best to have all formats of stores because that opens up a lot of opportunities for development. How about the work in progress on the efficiency of the smallest Sinsay stores. Unknown Executive: Right? It's great to have all the formats, but it's also great to be profitable. And we paused in June last year, and we keep on working on the project. It's an ongoing process. In October, we launched its full swing. So we have those 2 groups of pilot stores or test stores, if you wish, we compare ourselves to them. And our diagnosis that we have too little of the fashion apparel department, mostly ladies, seems to be holding water. This is work in progress. The collection was what it was, particularly in A/W in '25. But we can see regularly, and we go through this at the Board meetings with our design team, there is an update in sales per square meter between 6% and 8%. And in order to comfortably say that all the projects and that was quite a pull over, 400 stores were frozen last year in order to unfroze them and add them to the pipeline of opening. Well, we don't have this comfort yet. We have too small A sample. It's been too short a time, it shouldn't be 6%, 8%, but closer to 14, 16, then we would be comfortable enough to put them back to the pool of development. We are working on that part. So we've been talking about development and profitability a lot. And this is what we care for. I guess you would like to refer to the question that was posed from this part of the room. As for the future, what constitutes the greatest challenge when we look forward. Well, we will be looking at profitability. Our target for this year is somewhat higher than last year in terms of the opening. But we can see that what Slovakia is what it is. We haven't thrown that out of our pipeline. Czech, also lagging behind. We are looking at those countries. We will not be afraid at a certain point cut of what has to be cut off should the need arise, but we don't see that need yet. Of course, that would not be cutting of plenty but pausing a while. But in the end, we want to be profitable. We closed '24 with EBITDA of PLN 1.4 billion, '27, we would like to double the EBITDA and arrived at PLN 8 billion. Following '25, our EBIT grew by 31%. Now to get to the all PLN 8 billion, that would be 20%, 22% a year in '26 and '27. And then that will mean that we've reached our target. That's what we're focusing on. And whether the path leads to 1,000 stores and certain profitability of 700 and higher profitability, in the end, profit is what matters. Yes, that's what I wanted to say as Marcin rightly draw your attention to regardless of the components we are going to rely on, still the ultimate target and the ultimate value is not growth, for growth's sake, but it's going to be a growth in profit and an even faster growth than in sales. So we need to have that on mind at all times. If I was to say what's changed in our minds largely over the last 12 months? It is that profitability matters most than anything else, whether it is an Oxford Street store, the rent is over, it will not bring profit. We will close it. If any other store will get to the end of its lifetime. The agreement is over. We'll close it. So the focus now is only in sustaining, preserving, not the prestigious but only profitable stores. So again, profitability, profitability, profitability, that's key. When profitability is high, when the profit rises faster than the revenues, only then, I'm also happy about it because the situation is sound. It's not just pumping up the sales. And in this respect, it doesn't matter. Whether it is mini, a maxi or nano in terms of format. What doesn't perform the way that makes them contributing to the increasing growth and profitability. Unfortunately, it will have to be the things that we will resign from. Let us hear out the questions that we got from our online participants now. Magdalena Kopaczewska: The first question concerns the liability, the receivables. You -- PLN 833 million is what is the write-off in Russia. Does the Board see any chance to gets at least some of those liabilities in '26. And how will you book what is left? Unknown Executive: Well, let us start with mentioning that we have not lost hope. But on the other hand side, what we -- our hopes were high in the past. Now those hopes are much lower. And well, it's better to simply envisage the weakest, the darkest scenario. We hold for a long time that may be the situation would improve, that we would get back what we should be giving back. But what do we focus on -- or the worst possible scenario that we will not have to worry on how to book anything. I would wish them to give back what they owe as much as possible. But we cannot only see any realistic potential for those hopes to come into fruition. Magdalena Kopaczewska: In 2025, PLN 342 million of losses were noted and analogous amount of claims in Romania. How about the business interaction costs and do you expect any income of cash in '26 in terms of -- what do you expect from the insurance? Unknown Executive: Well, for the time being to begin with, we are at the stage that we want to get back what we lost. We got back around 60% or 70%, PLN 210 million is already back onto our accounts, you can realize that with insurance, the situation is more beautiful when you need to pay the insurance, but when you want to claim your damages, it's not so beautiful. But we got PLN 210 million out of PLN 340 million. So things are going in the right direction. When we've received the full amount back, we will also claim the part coming from business interruption. We've calculated it all well. We created a team back when the loss was suffered. So the [indiscernible] who's not here led the team that we created, we hired fire fighting organizations and so on so as to have the full documentation proving that we were not guilty of what happened. And we are sure to receive this core amount, how much we will get back from business interruption. Well, what am I supposed to say? Again, that will be something that will be counted as a plus amount. But let's get the full of the core amount. The business interruption period and with the end of March. So then we will start talking about that. Magdalena Kopaczewska: The Board showed that AI algorithms support designing collections and optimizing of prices. Can you already evaluate the impact of these stores on to the level of sales in regular prices. And is AI responsible for fewer promotional marketing activities in the last part of the year? Unknown Executive: Well, let me respond as for pricing. It is the case that we are only starting to use AI for pricing purposes. What we started off as a certain algorithm that now defines prices for different markets. So we call it international pricing project, that's a tentative name of it. And the price that results from the algorithm calculating differences across different markets is what we've used. So yes, we did rely on, we did use AI. It's hard to talk about the effects really because that was the new season, the first time the new prices came into life. So it's been bought 1.5 months of the new season. We are now summing up the outcomes of the projects, so we still need a while to be able to answer. Magdalena Kopaczewska: Further questions concern the Sinsay brand, the first place in terms of activation of applications against the backdrop of the competitors, but Temu was not part of the list of competitors you've mentioned on the slide. Why? Unknown Executive: Temu was not there because it didn't have that many downloads of the situation as it might appear. It was an external source that we used for checking it, and it didn't have as many downloads last year as other competitors. Temu is not the fashion category, and we focus on the fashion category, and Temu simply belongs to some other categories like general merchandise precisely. So we also didn't have a Allegro there, right? Okay. Unknown Analyst: What share of those who activate application. The applications are active customers of Sinsay's online stores. Unknown Executive: Active customers of online stores. Sorry, I'm trying to understand the question. Could you repeat it? Unknown Analyst: What share of people who activated the application are active customers of Sinsay online store. Unknown Executive: Okay. Now I get it. So out of all the downloads of the application, around 80% are really the clients, customers that have been active customers of Sinsay online stores. So most of those who download the application had been in touch with our online stores or off-line channel. Unknown Analyst: Would you calculate in as to the incomes of Sinsay and other brands? And is it -- which of those constitute a growing share? Unknown Executive: Yes, what we do is we shuffle the policy calculating what we get from returns in the past, returns were free of charge. Now the competitors turned it into a standard that it is not free of charge anymore. So yes, those charges are calculated as part of our income. That's quite a detailed question. So I guess I can point at this general direction. Yes, it is also part of what I mentioned at the beginning. The post-COVID time increase mattered most for growth. Now the entire market migrated towards focusing on profitability. And paid returns is something that is not just what we do, it is also a part of the practices of our competitors. Now in terms of the revenues from logistics and from the returns, that's a few percentage points that we calculate to our sales revenue and to our margin. Having such a big network of offline stores and offering free returns there, we decided that a number of customers will simply come to our offline stores and visit in an offline store is also is oftentimes an opportunity to -- for the customers to buy something. Unknown Analyst: Which countries are considered now to be the most prospective ones. Which performed worse than expected? Unknown Executive: Listen, we, on the one hand side, when we look at the 6 new markets, it is too early to say anything about them. When we look at the markets that have been with us or where we have been present for a longer time, we can say, okay, we are not happy about the performance of Slovakia or this region. But it doesn't mean that those temporary difficulties of the region will make us leave the region. We believe that, well, in the past, for example, Greece was lagging behind Europe, now it is a flourishing country. So we need to take a long-term approach rather than make decisions on this spur moment just based on 2 or 3 quarters of weaker performance of a given region. Unknown Analyst: How does the company select locations for the new openings? Does AI make decisions on demographic and economic data of a given region, for example. How about the 30,000 towns, do they have the potential for 2 or 3 Sinsay stores? Unknown Executive: I can tell you -- well, I mentioned that [ Spot ], the tool that we are using for leasing managers, what it uses is more machine learning. It's not that it takes -- makes decisions on its own. It just supports leasing managers and making decisions. It helps to estimate the sales and to choose location. As for the 30,000 towns and 2, 3 Sinsays, well, it depends. There is right-forward answer to this question, case by case is how we make decisions when preparing the location estimates. For every location, we -- and we see what potential we have in have in [indiscernible], for example, we have 2 stores, it's 30,000 inhabitants. Both the stores are profitable. It works -- and let me just add that what she said about Spot. Well, Spot is a tool that reduces the number of erroneous decisions of errors concerning the selection of locations. If in this tool, you write any address, you can estimate 90% certainty what the result of a given location would be. We use a few sources of data, those concerning telcos, for example, so create the heat maps. We see how the clients move about a given location. And yes, we then identify locations, but also we use data from Mastercard, so we know exactly what sales are let's say, that we have a retail park, we know what potential revenues we might get from a given retail park. So again, it's a machine learning tool that helps us in making decisions. But in the end, it is a human that needs to make it. Well, that's not surprising. Most of us use ChatGPT and Gemini on everyday basis, and these tools do not make decisions for you. Magdalena Kopaczewska: We've reached the final question and is dedicated to [ Mike husky ]. I addressed [ Mike husky ]. You mentioned potential increases in prices of polyester. Would it make sense to invest in plastic waste processing plant? Unknown Executive: For many years, we've been persuaded into investing into, for example, building or manufacturing plants and other sorts of facilities. That's not what we know about. We are knowledgeable in e-commerce and how to create collections, how to offer them to our clients. So we do not get into industry. We are not going to make any investments of an industrial nature, we invest in people's growth and then in technologies supporting us in all that. Magdalena Kopaczewska: Ladies and gentlemen, thank you very much for all the questions that you posed. We hope that we've managed to answer them and provide you the necessary information. Thank you very much for getting involved in our conference, for accepting our invitation. Another meeting during which we will tell you about the results this time of Q1 of the present year is going to be held soon because in June. But since this is the last meeting prior to Easter, please accept our wishes of healthy peaceful Easter. Thank you very much for today. And all those of you who are here in the floor, we invite to continue the talks over lunch that is held in 2 places, right in front of the entry of the room and via end at the reception desk area. Thank you very much for attention. See you at our next meeting. Thank you. [Statements in English on this transcript were spoken by an interpreter present on the live call.]
Operator: Good morning, and thank you for waiting. Welcome to Braskem's video conference to discuss our results for Q4 2025 and the year 2025. Today, we have with us Mr. Roberto Ramos, CEO; Felipe Jens, CFO; and Rosana Avolio, Investor Relations, Strategic Planning and Market Intelligence. Please note that this event is being recorded. The presentation will be delivered in Portuguese with live translation and simultaneous interpreting into English. [Operator Instructions] Before we proceed, we'd like to clarify that any statements that may be made during this conference call regarding Braskem's business prospects, projections, operational and financial goals constitute beliefs and assumptions of the company's management as well as information currently available to Braskem. Future considerations are not a guarantee of performance and involve risks, uncertainties and assumptions as they refer to future events and therefore, depend on circumstances that may or may not occur. Investors and analysts should understand that general conditions, industry conditions and other operational factors may affect Braskem's future results and may lead to results that differ materially from those expressed in such future conditions. Now I'll turn the conference over to Rosana Avolio, Investor Relations, Strategic Planning and Corporate Market Intelligence Director. Ms. Avolio, you may begin your presentation. Rosana Avolio: Good morning, everyone. Thank you for participating in Braskem's conference call for the fourth quarter and the full year 2025. As indicated in the agenda shown on Slide 3, I will begin the presentation with the company's main highlights for the period, starting on Slide 4. During 2025, the petrochemical industry remained impacted by the prolonged downcycle with international petrochemical spreads below the historical industry average due to the continued imbalance between global supply and demand. These dynamics significantly affected the profitability and liquidity indicators of the global industry and therefore, the company in 2025. As a result, the utilization rate of the petrochemical complexes in Brazil in 2025 was 4 percentage points lower compared to the previous year. This reduction is mainly explained by the adjustments to production levels in line with demand, ensuring the Brazilian market demand remains supplied and prioritizing higher value sales. In relation to international businesses in the United States and Europe, utilization rates remained in line with those recorded in 2024. In Mexico, production levels were lower than in 2024 due to the first general maintenance shutdown of the petrochemical complex in the country since the beginning of its operations completed at the end of July 2025. Regarding safety, the global accident frequency rate was 0.80 events per million hours worked. This was the second lowest rate since 2002, reinforcing that safety is and will always be a nonnegotiable value to the company. In relation to the financial results, the company recorded recurring consolidated EBITDA of $109 million in the quarter. And for the full year, recurring consolidated EBITDA was $557 million. Regarding operating cash flow, the company posted operating cash generation of approximately $13 million in the quarter, and operating cash consumption was $246 million for the year, reflecting the lower EBITDA. Finally, the corporate cash at the end of the fourth quarter of 2025 totaled approximately $2.1 billion, including $1 billion standby facility maturing in December 2026, and corporate leverage was approximately 14.74x. Moving to the next slide. In 2025, the global macroeconomic environment was marked by volatile trade conditions driven by commercial tensions, geopolitical fragmentation and the economic slowdown of major economies, including China. These uncertainties impacted production decisions and inventory replenishment throughout the transformation. Thus considering the weakened demand and the global oversupply that has been occurring in recent years, international resin spreads, which are references for the products sold in the regions where we operate were lower when compared to 2024. In Brazil, after a 6% growth in resin demand in 2024, downstream converters sought to optimize inventory levels in light of global macroeconomic uncertainties. This resulted in a decline of approximately 2% in domestic resin demand in 2025. The same movement was observed in the United States, considering the growth in industrial activity. Now moving to the next slide. The performance of each business segment will be presented next, beginning with Brazil on Slide 7. In the fourth quarter, utilization rates at the petrochemical complexes in Brazil were 6 percentage points lower when compared to the third quarter of 2025, mainly due to the scheduled maintenance shutdown at the Bahia complex completed in January 2026 and the continued adjustments in production levels to reflect lower seasonal demand while ensuring supply to the Brazilian market. These effects also impacted the 2025 utilization rate versus the prior year. Domestic values -- sales volumes were 6% lower, mainly due to weaker seasonal demand in the period. Chemical sales were also lower due to reduced product availability resulting from lower utilization rates, as mentioned previously, especially at the Bahia complex. In this context, recurring EBITDA for the Brazil segment in 2025 was $698 million, 22% lower than in 2024, mainly due to the lower resin and chemical sales volumes and the lower average spreads, partially offset by the depreciation of the Brazilian real and cost reduction initiatives. Moving to the next slide. In the quarter, United States and Europe segment posted utilization rates 8 percentage points lower when compared to the third quarter of 2025, mainly to the scheduled shutdowns at European plants completed in the fourth quarter of 2025 and also the inventory optimization in both regions. Lower quarterly volumes also reflect seasonality. For the year, utilization rates and sales volumes remained broadly stable. Recurring EBITDA for the year was negative $52 million, impacted by lower polypropylene, polyethylene spreads in Europe, inventory effects on the cost of goods sold in the United States and the reclassification of the expenses from the corporate into this segment following an organization change. Moving to the next slide. In Mexico, polyethylene utilization in the fourth quarter of 2025 reached 85%, an increase of 38 percentage points versus the third quarter of 2025, driven by the ramp-up after the general maintenance shutdown completed in July of this year and higher imported ethane supply through the import terminal. For the year, utilization was 64%, a reduction of 14 percentage points compared to 2024 due to the same shutdown as previously mentioned. In the quarter, higher imported ethane volumes supported the gradual recovery after the shutdown, partially offset by continued lower deliveries from PEMEX. Recurring EBITDA for the segment totaled $2 million. The decline in comparison to the previous year reflects lower product availability due to the shutdown associated with the lower international polyethylene, ethane spreads. Now moving on to the next slide. The next chapter covers consolidated performance of the company. Recurring consolidated EBITDA for the fourth quarter 2025 was $109 million. For the full year 2025, recurring consolidated EBITDA was $557 million, a 49% decrease versus 2024. The decline was mainly due to the lower contribution margins resulting from continued pressure on petrochemical spreads. Lower sales volumes reflected weaker resins and chemical volumes in Brazil and lower polyethylene sales in Mexico. These effects were partially offset by higher revenues from tax credit recoveries and by the depreciation of the Brazilian real, which averaged approximately $0.20. Now let's move on to the next slide. By the end of December 2025, all work fronts in Maceio continue to advance as planned. The relocation and compensation program ended the quarter with 99.9% of relocation execution completed. The same percentage applies to proposals submitted, of which 99.6% were accepted and 99.5% were already paid. Together with that, the sealing and the monitoring of salt cavities continued as planned. All necessary actions to ensure the 35 cavities reach a long-term maintenance-free condition have already been provisioned for the long term. By the end of 2025, 6 cavities were naturally filled, 6 were completed and 4 of those cavities reached their technical filling limit and 6 cavities remained in the filling process. Thus, the total provision for Alagoas event was approximately BRL 18 billion, of which around BRL 13.9 billion had already been disbursed and approximately BRL 1.4 billion have been classified to other payables. With this, the remaining provision at the end of the fourth quarter of 2025 was BRL 3.5 billion. Now let's move on to the next slide. For the year, the company posted operating cash consumption of BRL 1.4 billion, mainly due to lower EBITDA in 2025 as a result of the prolonged downcycle as seen in the petrochemical industry. The working capital consumption increase was due to lower availability of certain payment arrangements with financial institutions and suppliers. Recurring cash consumption was impacted by higher interest payments resulting from higher gross debt. Including Alagoas' disbursement, total cash consumption reached approximately BRL 7.3 billion in the period. Next slide. At the end of 2025, Braskem's adjusted net debt was $7.5 billion, excluding Braskem Idesa. The weighted average cost was currency variation plus 6.2% per year, and the corporate leverage ended the year at 14.74x. Available cash of $2.1 billion includes the drawdown made in October from the $1 billion standby facility maturing in December 2026. Following our agenda, let's move on to Slide 15. Global macroeconomic volatility, combined with the prolonged petrochemical downcycle has resulted in lowest industry operating rates in decades. Demand declined by approximately 3 million tons of polyethylene and polypropylene globally. So it reflects a lower consumption in the main regions. Operating rates reached historically low levels of 79% for polyethylene and 74% for polypropylene, pressurizing the profitability of the global industry. So the company tried to use the global program of resilience with the purpose of minimize the downturn cycle, preserving cash levels and maintain the sustainability of the business. Throughout 2025, we implemented more than 70 action plans of over 700 initiatives across 6 major fronts: institutional agenda, supplier negotiations, commercial initiatives, asset monetization, optimization of employed capital and operational [indiscernible]. These were fundamental to minimize the effect of adverse scenario, preserve liquidity and reinforce the competitiveness of the company and of the Brazilian industry. At the same time, it continues moving forward with this restructuring agenda and also with transformation initiatives. Now let's move on to Slide 16. The next slides cover the global petrochemical scenario. On Slide 17, we bring an update on the global petrochemical scenario, focusing on the risks associated with the geopolitical environment. In recent weeks, we have observed an escalation of tensions in the Middle East involving the United States Israel and Iran. This movement has reflected in greater volatility in commodity prices, especially Brent crude oil and naphtha in addition to additional pressures on international freights. Since the beginning of the conflict, Brent prices have shown significant increase, reflecting the strategic importance of the Middle East region for oil production and export. Naphtha has followed this volatility given its direct link to oil, which can impact the costs of the petrochemical chain, especially for marginal producers with greater exposure to this feedstock. The prices of chemicals and petrochemicals have increased in the international market due to the direct impact of the increase in the price of naphtha. It's important to emphasize that impacts presented on the slide represent hypothesis. And this has to do with the additional increases of freight that can impact the parity of the export and the prices in the Brazilian market. As I said, it's important to point out that all those impacts are hypothesis that can or not materialize. And that would depend the geopolitical scenario and possible logical restrictions such as the Strait of Hormuz. On this slide, we hypothetically explore the potential global productive impact resulting from a possible logistical restriction of the Strait of Hormuz should the geopolitical conflict intensify further. Strait of Hormuz is a critical point for the flow of feedstock and resins produced in the Middle East. In a scenario restriction, estimates indicate that global supply of polyethylene could be reduced between 6 million and 19 million tons, which represents about 4% to 11% of the global operating rate. In the case of polypropylene, the potential supply reduction could range between 7 and 10 million tons, equivalent to 4% to 5% of the global operating rates. From the regional perspective, the effect would be very different. In North America, the combination of feedstock availability and structural competitive advantage could allow for the maximization of operation rates and eventual value capture through prices, both in polyethylene and polypropylene. In Europe, the expectation would be a reduction in import pressure in the short term. However, in the medium and long term, the process of capacity rationalization tends to continue reinforcing a more cautious stance regarding operational levels and working capital. In Asia, lower availability of feedstock imported from the Middle East such as naphtha and propane could lead to shutdowns and production reductions, accelerating the rationalization processes. In this context, the priority tends to be meeting domestic demand to the detriment of exports. In the Middle East, in addition to logistics constraints, there would be additional pressures on ports, increased costs and operational risks related to security and safety, which could significantly impact the region's export capacity in the long term. In South America, a scenario of lower global supply could lead to an increase in operating rates to meet the shortage of resins. At the same time, the region would remain exposed to the volatility of the availability and price of feedstocks impacting costs. For Braskem, these effects, the effects mentioned on the previous slide tend to be potentially positive in the short term compared to the scenario expected at the beginning of the year. However, we emphasize that all the impacts presented on this slide are potential scenarios, which may or may not materialize depending on the evolution of the geopolitical conflict and the international logistics conditions. The company continues to monitor these developments and their potential effects, maintaining discipline in the company's commercial, operational and financial management in face of this more volatile environment. Next, I will comment on the company's strategic direction for the coming years. Moving on to the next slide, please. For the 2026 and 2028 cycle, we will reinforce the pillar of actions of the strategy as defined in the previous cycle, including the reorganization of the capital structure with the aim of balancing the company's capital structure, enabling business continuity. Our strategy maintains safety as a nonnegotiable value in addition to people and culture and governance as its foundation. On this basis, we will advance initiatives of resilience and financial soundness as well as transformation initiatives aimed at the perpetuity of the business. In the area of resilience and financial soundness, we will focus on tactical initiatives to mitigate the impact of the downturn cycle and preserve liquidity, highlighting operational optimizations, strategic and commercial initiatives and feedstock initiatives in addition to initiatives for the defense of the Brazilian chemical industry. In transformation, we will seek to ensure competitiveness and continuity of the business through the implementation of an asset strategy and the expansion of the gas and renewable base in the company's feedstock profile. This strategy aims to enable the recovery of the company's value through an integrated set of actions, which will strengthen its capacity for value creation, maintenance of competitiveness and therefore, business sustainability. Now let's move on to the next slide. Finally, I would like to highlight the main priorities for the company for the year 2026, aligned with the strategic direction, which take into consideration the challenging scenario of the global petrochemical industry and the preservation of the business sustainability. The first priority is the reorganization of the company's capital structure, creating the necessary conditions to ensure the continuity of operations throughout petrochemical cycles. In parallel, we will continue with the implementation of the resilience plan, focusing on the preservation of the company's financial liquidity through strict cost control, discipline in capital allocation and initiatives that reinforce operational cash generation to mitigate the impact of the adverse scenario. The third priority concerns the transformation plan initiatives, focusing on seeking financing alternatives to ensure the necessary resources and make the strategic projects feasible, thus strengthening the company's competitiveness. We will also look for ways to continue growing the green portfolio -- green product portfolio, reinforcing its positioning in sustainable solutions and commercial differentiation in the long term. Additionally, we maintain our commitment to full compliance with the agreements related to the geological events in Alagoas. And finally, safety remains as a perpetual and nonnegotiable value for the company with safe and reliable operations aligned with the best practices of the global industry. These priorities will guide the company's decision throughout 2026. Thus, we conclude the presentation of Braskem's fourth quarter and 2025 earnings results. Thank you very much for everyone's attention. We will now begin the Q&A session. Operator: Ladies and gentlemen, I will now pass the floor to the company for their remarks. Unknown Executive: Good morning. Before we begin the Q&A session, I'd like to highlight a few points. First, it's important to remember that the year 2025, and I know you all follow the scenario very closely, was a very challenging year, especially because of the external perspective considering the geopolitical conflicts and tariff wars. In this context, we see the continuous imbalance between global supply and demand, which had an even bigger impact on petrochemical spreads around the world, compressed industry margins and as a result, affected Braskem. To tackle these challenges, we adopted some initiatives over the year 2025, focusing on generating value for various different company stakeholders, focusing on maximizing EBITDA and improving and maximizing Braskem's cash generation. Among these initiatives, I will highlight 3. First, defending the competitiveness of Brazilian petrochemical industry, where we maintained the 20% import rate for PE, PP and PVC resins. We approved the antidumping law affecting the United States and Canada and the PVC antidumping from PVC coming from the U.S. And lastly, approving PRESIQ and increasing and maximizing REIQ for the coming year, which are essential programs for the Brazilian chemical and petrochemical industries. Secondly, the transformation program. We hibernated the chlor-soda plant in 2025 with the goal of making Alagoas PVC more competitive and above all, more sustainable. And we approved the Transforma Rio program, which will transform Braskem's products through ethane and polyethylene. And thirdly, but no less important, operational improvements. We established 79 action plans with over 700 internal initiatives, of which I will highlight the following: optimizing feedstocks and gases with CapEx, prioritizing resins with greater added value and the demand in the internal market and reducing downtime in transitions between grades, reducing logistics costs, improving the acquisition of feedstocks and raw materials and adopting tax grids. I should highlight that these initiatives adopted by Braskem gave us $500 million in EBITDA and $600 million in cash generation for 2025, which allowed Braskem to remain healthy financially to date. Now with regard to the Alagoas' geological event, we signed an agreement with the state valued at BRL 1.2 billion in payment, of which the vast majority has already been paid. And so considering the total provisioned amount of BRL 18 billion and the payments that company has already disbursed by the end of 2025, we have a remaining provisioned amount of BRL 3.5 billion to be paid over the coming years, which demonstrates the company's strong commitment and healthy advances in improving the situation after the Alagoas event. I should also highlight the advances of our negotiations with our other parties with Braskem and Braskem Idesa, along with legal advisers and financial advisers the company hired for this purpose. This was announced to the market in various different events over the previous months. These events are essential for the financial health of both companies. Now with regard to the change in the company's shareholder situation and controlling structure, the Brazilian CADE has approved. And now in the U.S., the -- their organization still needs to investigate and approve. Now with Novonor and the Shining (sic) [ Shine I ] credit funds, including with any related topics will all be announced to the market if and when they arise. Now with our perspectives for 2026, in spite of a lot of instability around the world, the war in the Middle East and the remaining closure in the Strait of Hormuz as well as the limited amount of feedstocks coming from the Middle East, we may see captures in certain regions, value captures, including the Americas as well as spreads for the international market. This means we must continue to assess risks and opportunities and preserve the company's liquidity. Once again, we'd like to thank you all for joining our earnings call, and we'll now begin the Q&A session. Rosana Avolio: Good morning, everyone. As we did in the previous call, we received the questions. Of course, there are many questions related to the conflict in the Middle East. So I'm making a summary so that we can provide the answers. So these are the questions. Considering the current context, could you provide a view of how the global industry has behaved? Have you seen reduction of relevant capacity or events of force majeure impacting the business? And then there was also a question about how the petrochemical spreads are responding as a result of the conflict. I know that the company does not provide formal guidance, but what would be the effect of the war on the EBITDA of the company? Could we expect an EBITDA about $1 billion? And there's also a question about sourcing of feedstock. In previous year, have you managed to -- you have been able to diversify the purchase of naphtha, reducing the exposure of naphtha for Petrobras. The lower availability of naphtha has been affecting your feedstock considering the global price at the global level. So I'll turn the floor to Roberto for him to answer the questions. Roberto Ramos: I'll begin on the topic of sourcing with some relevant information first. First, the Asian petrochemical powers in Japan, South Korea and China, they have lower naphtha inventories than we do, roughly 15 days because the rate of replenishment of naphtha there is made much easier because of the fact that they purchased from the Middle East. So it's a shorter distance than what we have here in the Americas. So we started the war with a larger supply of feedstock than our competitors did. Naturally, we purchase -- we import naphtha, especially from the U.S. We also imported condensate from Algeria. We also have some shipments of naphtha coming from the Middle East. We do not purchase naphtha from Russia because of sanctions. Actually, our main supplier of naphtha is the U.S. because the U.S. is long in naphtha and in gasoline. Shale oil has a density that is very similar to diesel oil. So when you refine that type of oil, we have what we call medium and light shale products, and that includes naphtha. So the U.S. has a surplus of naphtha supply. And so they are a net exporter of naphtha, and we are a significant purchaser of U.S. naphtha. As you know, Braskem is the biggest buyer of naphtha in the world. So with regard to our naphtha supply, since it comes from the U.S., it is not impacted by any of these conflicts. Of course, there is an impact in higher prices because U.S. naphtha now is also being fought over by the Asian petrochemical companies. But our price minus the price of transportation, purchase minus transport is still better than these prices for Japan, Korea and China. But the question is very relevant because it is at the linchpin of our strategy, which is we want to reduce our dependency on naphtha. Today, we are 80% naphtha-based. The rest is gas and ethanol. And our plan is, by 2030, to reach 60% naphtha and 40% ethanol and gas, roughly 20% each. So we already had a very well-defined strategy to reduce our dependency on naphtha and look for others, not just ethanol, but also propane. Our plant 2 in Rio Grande do Sul, we are processing propane coming from Argentina. Argentina is potentially an important supplier. It already is for propane, but in the future, it could be for ethane as well, which we aim to use in plant 2 in Rio Grande do Sul. We're also importing ethane from the U.S. to use this ethane in some of the machines we have in Bahia as a way of sidestepping the increasing cost of feedstocks because ethane prices went up practically almost nothing, whereas naphtha practically doubled in price. So looking into the future and naphtha sourcing for Braskem not being -- it's not at risk at the source, but it is impacted due to price. So what's happening in the Japanese and Korean petrochemical companies is they are reducing production and scale because essentially, they were supplied almost exclusively by naphtha coming from the Middle East. So our sourcing is not at risk. We have access to naphtha. Of course, we must pay the price. Our initial supply of naphtha was already bigger than our competitors. And in the future, we want to be less reliant or less dependent on naphtha. Now the question is, how much time will this price increase that impacted naphtha resulting from the higher cost of oil? How long would this last? Well, that will depend considerably on how long the Iran conflict will last. And today, this is much more than a war between the U.S., Israel and Iran. It also involves other countries around the globe. I should also mention that the Gulf of Persia (sic) [ Persian Gulf ] and the Middle East has 50% of the energy inventory, energy stocks in the world, more than 50% of gas and oil. So the energy that can be stored because wind and solar cannot really be stocked. But storable energy overall, more than 50% of it is stored in the Middle East. So this conflict is not a conflict that involves just 3 countries. It involves a whole region, Iran, beyond Dubai, Bahrain, Qatar. So this conflict has a much bigger impact than just the incursions that the U.S. and Israel made in Iran last year. So this year's conflict is going to take much longer to be resolved and the impact on petrochemical supply and production chains and logistics chains is going to take a number of years before it is fully resolved. Rosana Avolio: Allow me to add, I'm going to read a question about the EBITDA impact. For sure, the company does not provide the formal guidance. So I'm going to use the history track from external consultancy services between 2014 and 2025. If we consider the historical consolidated EBITDA between 2014 and 2025, this is about [ $2.54 billion ]. And in this period, 2014 and 2025, we have a PE and ethane, which were very similar, which are the spread expected by the external consultancy. So this is a spread of the main chemicals and even higher than the average considering the increase in oil prices and the PE naphtha is a bit lower, about 10% below. So considering this market reference, the expectation for the future in terms of average petrochemical spreads according to the external consultancy, we would reach the historical levels. And the external consultancy services have been using an average of timing. And this is what's going to define the impact and the upsides and downsides, an average of 1 month for the war with a later impact considering the structural impact that we have seen in the region. But it's too early to try to imagine a future scenario. So we are considering different scenarios. We are getting ready for the best, for the worst. As Roberto mentioned, we see the price of the feedstock going up in a significant manner following the oil price, especially naphtha. And we can see that the rising prices have a lag so that it can be reflected in the results. And as Felipe mentioned, we are preserving cash and the liquidity, but we also have to be cautious because it's a dynamic scenario that changes at all times in real time, and this is the reason why we are considering different scenarios. Well, moving on to the next question. I'm going to ask Felipe. This was related to Braskem Idesa as follows. With the default of the bond interest rates and the lower ratings to D and possible reorganization via Chapter 11, what's the real likelihood of this scenario to materialize? What are the next steps? And what would the consequences of Chapter 11 in the consolidated balance sheet and the control of its assets? Felipe Montoro Jens: Thank you, Rosana. Thanks for the question. As you saw in the notes we published explaining our financial results recently, we are always very transparent and very objective. And we've been practicing this over the past years, explaining each and every step that occurred last year when we hired the Braskem Idesa legal and financial advisers to reorganize that company's capital structure. Now as the process progresses, we need to keep up our engagement in order to see what the final situation will be. It is not up to me to speculate about what any of the routes forward may be. But what I can tell everyone here in this room is that this is an absolute priority as we have announced here at the beginning of this call and focusing on liquidity. As soon as we have material information about what this reorganization restructuring will look like, we will certainly share it with you so that you all stay apprised in real time about the company's coming steps. Rosana Avolio: Thank you, Felipe. Moving on, there's a question related to the antidumping process of polyethylene in Brazil. So this is the question. What was the result of the meeting that was held yesterday? And will the new protections be implemented? And the current logistics restrictions, freight increases and production restrictions, can they reduce the possibility of using antidumping actions in Brazil? Roberto Ramos: Well, we had an information on the MDIC site that Gecex opted not to consider the in-depth detailed study that was prepared by the technicians at the Ministry of Industry and Commerce that recommended a $700 per ton antidumping norm for ethylene coming from the U.S. and it opted to maintain the protection that had been granted by the provisional antidumping law from 6 months ago. Apparently, the information that we received was that apparently, this decision was taken due to the public interest. We will appeal this decision because it is our opinion that the antidumping case is very strong and very well demonstrated. And there's actually access to information provided by the U.S.-based producers that effectively demonstrates that they were implementing a predatory pricing policy. So in effect, we have a concession of theirs about their infraction. And I think it's deplorable to consider that this information was not taken into account by the Brazilian Council and the technicians at the Ministry of Industry and Commerce were not informed by the Gecex. It's -- and there's more in particular, the sample of prices that were collected over the past year, including the provisional protection. This actually has been maintained as a result of the war because naphtha does follow the price fluctuation and our main feedstock is naphtha. So the unfair pricing that we suffer has been exacerbated by the war. So the situation not only failed to improve, but it also became worse. So the Gecex actually should have detected that we are in -- we are literally in a war. So it's really difficult for me to understand what sort of public interest could possibly have impacted this decision, but I can only base my opinions on the short clip that was published by the Ministry of Commerce and Trade. So I -- again, I reiterate, it is deplorable that a research -- a project with enormous technical information and quality was not taken into account. Rosana Avolio: Thank you, Roberto. And moving on, Roberto, we have a question. Why there are questions in the capacity to continue operating as we saw in the financial report of Braskem? Felipe Montoro Jens: Thank you [indiscernible] for the question. This question is very important. I need to make it very clear to start that the balance that has actually been confirmed by our auditors. It's one of the baseline assumptions of our statements, touches on the continued health, good health of the company and its operations. However, there is a plan that has been defined and approved by the company's Board. We've actually mentioned some of these topics recently. They involve a restructuring of Braskem's capital structure. And just as every company and every entity, the auditors, the independent auditors must raise any issues about significant or less significant uncertainties about any plan they assess. Now given the company that we're talking about, Braskem, it was mentioned that there are uncertainties about this plan, but we've already been working since September of last year with full engagement from everyone, financial and legal advisers to implement this plan. So that is the reason. That's why there have been mentions about uncertainties and the assumptions were maintained about the company's operational continuity. Rosana Avolio: Thank you, Felipe. Talking about our transformation plan, this is a question. The company announced investment in the Transforma Rio project and continues with strategic investments. Considering the high leverage and cash burn, how is the company going to finance this CapEx without affecting its capital structure? Was there any reevaluation in the scope of those investments? Roberto Ramos: Thank you once again for this question. Yes, we already mentioned this in the last time we published the Q3 '25 results, and we maintain the same answer. Yes. This restructuring, this reorganization of the company's capital structure does include the necessary resources for this essential project to transform Braskem. So the resources for this purpose have been earmarked and are included for this purpose. It needs to be materialized and implemented, but there is no discussion about the need for this to occur whatsoever. This really helps us to corroborate our entire business plan that was approved by the company's Board and the project itself was also approved and announced to the market as soon as the Board approved it. This will allow Braskem to survive, to stay afloat and survive healthily and go back to the not so ancient past. I'd like to highlight something about our strategy. We have a process underway where we are changing our feedstock. The Rio plant that is roughly 300,000 tons a year, it's gas-based. This allows us to pull Bahia's plant 1, which will be converted from a naphtha unit, and it will start processing ethanol. So the 300,000 tons that we are going to start producing in addition in Rio, plus the green ethane -- ethylene, sorry, that we produce in Bahia will replace the 600,000 naphtha-based ethylene. And in so doing, we are adding more competitivity and increasing our sustainability because whether it's because the prices are more interesting for us or because these feedstocks are more sustainable. So don't look at the Rio expansion as an isolated event, oh, Braskem is ramping up production in Rio because it's cheaper. Well, that is true, but we're doing more than that. We are replacing naphtha with other feedstocks. We are switching from gas and we are switching to green, which is our fly up to green. These factors are all integrated. This is not a simple operation. And so financing this project takes all of that into consideration. Rosana Avolio: Thank you, Roberto. Moving on. The question is related to petrochemical spreads. Since the closure of the Strait of Hormuz, what we have seen has increase and what are the potential impacts? I'm going to answer these questions, and then Roberto and Felipe can add to what I said. As I said, we are considering different scenarios. This is a very dynamic topic. Every day, there is something new and update. We learn about escalation of the conflict. So I'm going to talk about what we have seen in terms of consensus. In a more technical view, when we look at the feedstocks, if oil prices go up, naturally, as a co-product of the refinery will also have its price higher. So all those higher prices of naphtha that you have been observing in March will be the national reference that you will use as consumption of feedstock for next month. So we see that there's a working capital being consumed from the payables. When we consider the resins or the main products, we see a quicker response in relation to the chemicals. So base naphtha producer also make other chemicals that also have an impact on the margin of the company that would account to 15% to 20% of the historic EBITDA of the company. We already see this consequence in the result of March. But in terms of spot price, we have seen some increases. But in our cash flow, we can expect a positive result a little bit in the future. In terms of expectations, what are of the spreads of the first or the second quarter, based on the consultancies, there's an expectation from the external consultancies of an increase of about 50% of the spreads as we have observed in the first quarter of 2026. Roberto Ramos: I'd like to add with a reflection about the length of the rise in prices. How long do we expect that to last? Now if there even is a negotiating table between the U.S. and Iran, Iran has 2 demands that I personally think are very difficult to meet. First, Iran demands reparations for the losses that it is suffering as a result of the war. This reminds me of the war reparations that were imposed on Germany by the Treaty of Versailles. If you like history and economics, this was often cited as a cause for the German hyperinflation and the rise of Hitler. Now that's not exactly true, but I'm not here to talk about history. The fact of the matter is that the U.S. attacks destroyed Iran's fleet and Iran demands the U.S. and Israel to pay to rebuild that fleet. And Iran also demands that its sovereignty over the Strait of Hormuz be recognized internationally. This, if it occurred, would allow Iran to charge a toll on all goods that transit through the Strait. Now this will never be accepted by any party. So if these demands are real demands, if they are, in fact, stumbling blocks on the negotiation, then this negotiation will drag on for a very long time. Rosana Avolio: Thank you, Roberto. I'm going to move on to our last question. In relation to the potential change of control, could the company provide an update on the latest facts, please? Felipe Montoro Jens: Thanks for the question. We do also -- we have mentioned this often. I'd just like to highlight that Braskem is not party to these discussions or to these negotiations. And when -- and if Braskem is notified, then we will, in turn, notify the market immediately. As we've mentioned at the beginning of the call, there was public information that was published by the CADE and was materialized by the U.S. in the beginning of March with regard to the antitrust and final negotiations with the shareholders. So this is a topic that for us, there is our due diligence, the analysis that's done by potential investors. This remains ongoing here at the company, and we continue to respond to these requests in a timely manner. So -- and to send them to the market so that the market remains apprised in a timely manner as well. Rosana Avolio: Thank you, Felipe. Our last question, Felipe. Could you provide more information on Petrobras? Could there be any type of support from Petrobras to Braskem considering that the transaction with IG4 has been approved and the new shareholders' agreement is likely to be signed briefly. Felipe Montoro Jens: This question actually depends significantly on Petrobras, and it actually should be asked of Petrobras, not really Braskem. And with regard to the relevance between Petrobras and Braskem, we continue to work to develop future improvements and commercial conditions. Of course, respecting both parties so that both parties can reach an agreement that is fruitful for both companies. I believe that these discussions remain ongoing in parallel. They've always remained ongoing regardless of the -- any potential shareholder situation. Roberto Ramos: Just to add, Petrobras does hold a relevant stock in the company. They have 4 Board members in our Board. We have monthly meetings of the Board. So Petrobras is notified in a very timely manner of everything happening at Braskem. In addition, the Petrobras Board has direct access to the Braskem Board. And we talk every week, multiple times a week. So Petrobras is fully aware of the Braskem situation and the extremely negative petrochemical cycle. They are also enormously interested in the stake that they hold here at the company and the interest they have at the company. So what Felipe said is true, but I think the answer is a little obvious. Petrobras is enormously interested in Braskem and will remain interested. Operator: Ladies and gentlemen, we now conclude the question-and-answer session and the Braskem video conference. Our conference is now complete. Thank you all for joining us, and have a great day. [Statements in English on this transcript were spoken by an interpreter present on the live call.]