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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.]
Operator: Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Lassonde Industries 2025 Fourth Quarter and Year-End Earnings Conference Call. The corporation's press release reporting its financial results was published yesterday after market close. It can be found on its website at lassonde.com along with the MD&A and financial statements. These documents are available on SEDAR+ as well. A presentation supporting this conference call was also posted on the website [Operator Instructions]. Before turning to management's prerecorded remarks, please be advised that this conference call will contain statements that are forward-looking within the meaning of Canadian securities laws. Forward-looking information is based on management's current expectations and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated. For a discussion of key assumptions and risk factors, please refer to the forward-looking statements section of the MD&A. Also note that all figures expressed on today's call are in Canadian dollars unless otherwise stated, and that most amounts have been rounded to ease the presentation. This call will also include certain non-IFRS financial measures and ratios that are not standardized under IFRS and may not be comparable to similar measures used by other issuers. Reconciliations to the most directly comparable IFRS measures and related definitions are provided in the appendix to the presentation and in the corporation's MD&A. This conference call is recorded on Friday, March 27, 2026. I now turn the call over to Vincent Timpano, Chief Executive Officer. Vincent Timpano: Good morning, ladies and gentlemen. I'm here with Eric Gemme, our Chief Financial Officer. We appreciate your time today as we review our results for the fourth quarter and fiscal year ended December 31, 2025. Please turn to Slide 4. 2025 was a record year for Lassonde. We delivered record sales and a strong increase in profitability despite a challenging and rapidly evolving macroeconomic environment. Even with this context, each of our divisions recorded sales growth over the prior year. These achievements reflect our team's continued focus on executing our strategy supported by a deep and diversified product portfolio. They also show the resilience of our business model and the effectiveness of commercial execution in a challenged demand environment. More specific to the fourth quarter, sales increased 4.1% to $768 million, while net profit doubled to $54 million. Now let's turn to Slide 5 for a closer look at operations, beginning with U.S. beverage activities. Lassonde gained market share in the fourth quarter, increasing its total volume, while the category was down mid-single digits. Our private label business was in line with its category as positive impacts from our build-back plan were balanced by pricing discipline. With our ability to bring more volume to market, we are well positioned to benefit from private label momentum, which is gaining share as consumers increasingly seek value in uncertain times. Market share gains were more important in our branded business, driven by a sharper focus on higher velocity SKUs, following key investments in single-serve and juice box platforms at our North Carolina facility. We are increasingly reaping benefits from the relocation of production assets from a U.S. co-packer into our network. Over the coming months, this transition should continue to improve throughput, allowing us to capture additional volume across both U.S. branded and private label products. As for our new facility in New Jersey, the pace of construction is progressing well. The project remains on budget and on schedule with the building expected to be enclosed in the upcoming weeks. We plan to gradually begin transferring existing production activities from the current facility by late 2026 and complete this phase in early 2027. Turning to Slide 6 for our Canadian beverage activities. While category volumes declined mid-single digits in the fourth quarter, we continue to gain market share. Lassonde's national brands meaningfully outpaced the category, supported by distribution gains across both shelf-stable and chilled products and strong growth in single-serve formats. We continue to execute disciplined pricing execution alongside targeted promotional and marketing efforts, ensuring balance between pricing effectiveness, brand building and supporting consumer value in a challenging environment. For instance, our Oasis of Light marketing campaign launched in the quarter delivered strong results, enabling distribution gains, raising awareness and brand engagement while reinforcing our Canadian heritage. In quarter 4, we also continue to benefit from a Buy Canadian sentiment, but to a lesser extent. We also continue to reduce our commodity exposure through innovation by increasing the proportion of juice blends and of less than 100% juice beverages within our portfolio. Innovation is one of Lassonde's core strengths as it allows us to capture opportunities in on-trend and growing beverage segments. To reinforce our commitment to innovation, we are developing a multiyear pipeline aimed at further reducing commodity exposure and more importantly, expanding consumption, occasions by addressing evolving consumer beverage needs. Moving on to Food Service on Slide 7. Food Service activities had another strong quarter. Growth was driven by volume gains with broadline distributors in the United States and by ongoing progress in improving national account penetration in Canada. The deployment of our new bag-in-a-box aseptic packaging line continues to progress. We are exploring various opportunities to increase the market penetration of this packaging format and remain in active negotiations and bidding processes with large national customers and various other regional players across North America. Now let's turn to Specialty Food on Slide 8. In the fourth quarter, we continued our effort to integrate our North America specialty food network. Summer Garden sales totaled $52 million in the quarter, down from $55.7 million last year, as we lapped a very strong quarter in 2024. The reduction also reflects, amongst other reasons, a change in third-party mix and the timing of certain promotions. During the quarter, Summer Garden encountered system recovery and restoration issues that led to nonrecurring expenses and missed commercial opportunities, impacting their overall performance. The matter was addressed promptly, fully contained, not material to consolidated results and with only residual impact in the ensuing period. Meanwhile, legacy operations delivered solid sales and profit growth driven by premium pasta sauces as well as in the soup category. As we sharpen our specialty food strategy to drive sustainable and profitable growth, we recently proceeded with key nominations to newly created positions that mark important steps in the evolution of the division, as you can see on Slide 9. First, we appointed Jean-Philippe Leblanc as President, North American Specialty Food division. Throughout his career in the food and beverage industry, Jean-Philippe has distinguished himself through deep commercial expertise and operational understanding of complex business environments. He brings a proven track record of leading sizable branded private label and third-party portfolios and of developing high-performance teams. We also named Jamie Bradford as Chief Marketing Officer, North American Specialty Food. Jamie has been with Lassonde for over a decade, most recently as VP Innovation North America. As CMO, she will focus on building new marketing capabilities for our specialty food brands to capture new distribution opportunities and accelerate innovation. With these appointments, the structure of our Specialty Food division now aligns with that of our Beverage division, featuring a North American President, a Chief Marketing Officer and general managers overseeing private label and branded products. Now before turning the meeting to Eric, let me highlight 2 additional key nominations for our corporate executive team. I am pleased to welcome Francis Trudeau, who joined us earlier this month as Executive Vice President, Finance. Francis brings more than 25 years of experience in corporate finance, mainly with dynamic growth-oriented companies. We believe his leadership skills and proven background and strategic planning, corporate development and operations will allow Lassonde to sustain profitable growth and achieve its long-term objectives. His nomination is part of a leadership transition that will culminate with Francis being appointed Chief Financial Officer on May 19, this is a carefully planned phase transition. Eric and Francis are working closely to ensure full continuity and reporting discipline, capital allocation and strategy execution. Finally, earlier this week, we were pleased to welcome Minh Quan Dam as Chief Information Officer, with over 20 years of experience in technology, strategy, digital transformation and enterprise modernization for prominent Canadian and international organizations, Minh brings substantial expertise to Lassonde. In his new position, he will guide strategic vision for systems, infrastructure, data and AI projects, ensuring strong cybersecurity and foster skills and innovation to support future growth. I will now turn the call over to Eric for a review of quarter 4 results. Eric? Eric Gemme: Thank you, Vincent. Good morning, everyone. Let's get to the numbers by turning to Slide 10. Fourth quarter sales were $768 million, up 4% year-over-year. This increase was entirely organic with negligible foreign exchange effect. The growth reflects disciplined pricing actions mainly in Canada and higher sales volume in the U.S. Moving to Slide 11. Gross profit reached $225 million, up 17% from $193 million a year ago. This $32 million increase reflects a favorable impact of selling price adjustments, a positive shift in the U.S. sales mix and the absence of certain prior year start-up costs and costs related to a production disruption in North Carolina due to Hurricane Helene. These factors were partly offset by an increase in certain conversion costs in the U.S., mostly related to the deployment of new assets in North Carolina. SG&A expenses were $154 million, up slightly from $150 million last year due to increases in certain administrative expenses, performance-related compensation expenses and finished goods warehousing cost mainly in Canada. These were partly offset by lower transportation cost to deliver products to clients and costs incurred last year related to the strategy and the Summer Garden acquisition. Excluding items that impact comparability, adjusted EBITDA increased 28% to $102 million or 13.3% of sales from $80 million or 10.8% of sales last year, that's a 250 basis point margin expansion driven by stronger gross profit and disciplined cost management. Turning to Slide 12 for net profit. Adjusted profit attributable to the corporation shareholders reached $51 million or $7.52 per share, our highest quarterly adjusted EPS on record, up 47% from last year. Looking briefly at annual results on Slide 13. Sales amounted to $2.9 billion up 12.8% from $2.6 billion last year. Excluding the contribution of Summer Garden for just over 7 months and FX, the increase was 7.2%, driven by price, volume and mix improvement. Adjusted EBITDA reached $344 million or 11.7% of sales compared to $276 million or 10.6% of sales in 2024. Adjusted profit attributable to the corporation's shareholders totaled $156 million or $22.82 per share versus $130 million or $19.05 per share last year. Turning to working capital on Slide 14. At year-end, the days of operating working capital ratio dropped to 43 days from 55 days in Q3, returning to the historical range as expected. This decrease was primarily driven by lower DIO and DSO and a modest rise in DPO. In 2026, with working capital back within historical range, our focus will be on maintaining service levels while staying disciplined with the flexibility to build inventory selectively if supply conditions warrant hit. We should also recognize that working capital may fluctuate from quarter-to-quarter due to usual changes in payable and inventory timing. Now on Slide 15 for cash flow. Operating activities generated $122 million in Q4 2025, up from $76 million last year, driven by higher EBITDA and stronger working capital performance, particularly lower inventory as volume purchased earlier year were largely consumed. For the year, operating cash flow was $176 million versus $234 million in 2024, reflecting higher cash use of our working capital, mainly due to lower accounts payable and higher income tax and interest paid, partly offset by higher EBITDA. CapEx totaled $45 million in Q4 2025 and $187 million for the year, including USD 16 million for the construction of the New Jersey facility. While CapEx are projected to reach up to 7% of sales in 2026, including approximately USD 96 million for the New Jersey project, they remain aligned with well-defined milestone. We are actively managing execution risk and expect to fund the program primarily through operating cash flow while maintaining comparable leverage. Turning to our financial position on Slide 16. Lassonde's net debt totaled $489 million at the end of the fourth quarter, down from $550 million 3 months earlier. The decrease mainly results from our solid operating cash flow generation during the quarter, partly offset by CapEx. As a result, the net debt to adjusted EBITDA ratio improved to 1.41x at the end of Q4 2025 compared to 1.71x at the end of the previous quarter. All things being equal, the leverage ratio should remain below 2:1 throughout 2026, well within our comfort zone out less than 3.25:1. I'll now turn the call back to Vince for the outlook. Vince? Vincent Timpano: Thank you, Eric. Now please turn to Slide 17 for our outlook. Building on the momentum of 2025 Lassonde is entering 2026 from a position of strength. Our priorities remain executing our strategy and maintaining our focus on capturing profitable and sustainable growth. While being mindful of a challenging macro environment and of its potential implications on supply and consumer spending. In this context, we will continue to leverage our diversified portfolio, balance with pricing, promotion and other volume initiatives. Excluding foreign exchange impacts and barring any significant external disruption, we anticipate achieving our stated goal of $3 billion in sales by 2026. This being said, our focus remains on achieving profitable growth and supported by strong cash generation. If market conditions evolve, we will adapt to ensure sustainable expansion rather than prioritizing sales volume solely for revenue growth. Moving to Slide 18 for strategic priorities by division. For U.S. Beverage, our focus will be on continuing our private label volume build-back plan, delivering capacity ramp-ups for our single-serve and juice box lines, maintaining pricing discipline while being responsive to shifts in consumer behaviors and completing our new facility to improve capacity and lower cost. As for our Canadian beverage business, our priority remains fortifying our leadership through innovation-led growth initiatives, continuing our focus on effective revenue management strategies, which includes targeted promotion spending, while simultaneously investing in brand-building activities and strengthening our execution in core channels. Our North America Food Service team will continue its expansion push in this key market including through our bag-in-a-box initiative. In Specialty Food, our priorities are to achieve profitable growth by optimizing the integration of our North America network, strengthening brand equity and accelerating brand development and growth through a strategic refresh of our G Hughes brand in the zero sugar category. Turning to Slide 19 for an overview of certain cost components. On commodities, we're seeing some easing in orange concentrate versus 2025 spot levels. But realized benefits will depend on the timing of our hedges and other risk mitigation actions. Regarding Apple juice concentrate the near-term market sentiment remains cautious to moderately bearish and regional supply constraints are preventing significant price declines. The pineapple concentrates market is shifting from supply tightness towards a more balanced state. We see modest downward pressure on prices as inventories recover. However, availability in Thailand remains relatively constrained. Despite these improvements in the commodity environment, we must remain vigilant in monitoring changes in consumer food habits and demand elasticity for our products. To alleviate these effects, we will continue to bring innovation to market, which reinforces the key roles of our new marketing leadership in our Beverage and Specialty Food divisions. Recent developments in Middle East also raised our focus on transportation and PET resin cost. Geopolitics and trade remain key uncertainties. We're planning for continued volatility, running scenarios and mitigation plans across sourcing, pricing and cross-borders flows. We're staying agile in this dynamic environment. In closing, as shown on Slide 20, we expect to deliver another solid performance in 2026. We remain focused on executing our strategy and capturing growth opportunities. Our recently announced new leadership in finance and IT along with a new organization structure supported by new leadership built around our North America Beverage and Specialty Food divisions, supports one of our strategic pillars in building our capacity to act through talent, capabilities and a winning culture. Driven by the dedication of our employees and the strength of our diversified product portfolio, Lassonde is well positioned to maintain a strong competitive position and sustained profitable growth in the North American food and beverage market. This concludes our prepared remarks. We are now pleased to answer your questions. Operator: [Operator Instructions] The first question comes from Ahmed Abdullah with National Bank. Ahmed Abdullah: You saw a good balance of pricing and volume this quarter. How are you thinking about price elasticity going forward, particularly if we're in an economic scenario here that's seeing the consumer being pressured further into 2026? Vincent Timpano: Yes. Look, I'll answer that. It's Vince. The environment that we're moving into 2026, while we talk about continued volatility and uncertainty is really no different than what we were dealing with in 2025, where consumers were dealing with persistent inflation and having to adapt to various pricing scenarios. I think what I would take you back to is when you take a look at the core strengths of Lassonde and its ability to withstand some of these changes within the market, I take you back to sort of historically, the business has been proven to be quite resilient. Two, we've got a culture that is defined as agile, which stays true to our strategic priorities, but understands when and how to pivot when required. But I think most importantly and this is something that I've shared in the past is not losing sight of one of our core strengths is the diversification of our portfolio. So when you take a look at the diversity of our portfolio, whether it's product diversity, whether it's segment diversity between brand and private label as well as food versus beverage, as well as package diversity and channel diversity it does allow us to pivot to adjust to where consumers are going, in particular, in the value segment. So what I would reinforce is what we'll continue to do is simply stay the course in recognizing the strengths that we have and making sure that we continue to move that way in the market. Ahmed Abdullah: Okay. That's very helpful color. Just on the input costs, you're calling for a picture that seems a bit mixed in 2026 and rightfully so, given the ongoing uncertainties. Can you just help us frame the net impact we're expecting on margins here and where you still have some pricing flexibility to maybe offset some of that? Eric Gemme: So that's Eric, Ahmed. So you are correct. Of course, we are seeing yet again in the dynamic input cost commodity-related 2026. Orange is now at a more reasonable price range, which is good, remain to be seen if it's going to be stable at this price. Now from other commodities, absent of the current conflict and the implication, we are seeing apple and pineapple remaining a high-priced commodity with limited site in terms of abatement this year. So all in, and again, we're not giving guidance necessarily on profitability, like below our top line. However, all in, I believe that we have a relatively wash impact on our P&L. Again, all this subject to whatever will happen in the next few weeks and the next few months in terms of implication from what's going on in the Middle East. Operator: Your next question comes from Martin Landry with Stifel. Martin Landry: My first question, I want to dig in a little bit in your gross margin. I think it was one of the strongest gross margin you've reported in the last 5 years. And I was wondering if you could provide a margin bridge and quantify a little bit the main drivers of the margin expansion? Eric Gemme: Let me take that, Vince. So absolutely, Marty. So you are correct. This is a healthy 29.3% margin is not unheard of at Lassonde, but over the last few years, this is a very good performance. I think it's a story of -- it's a tale of many stories. I mean it's -- you look at from a pricing to cost gearing, I think now we are -- we were at the right place. So basically, our commodity were correctly priced in our products, so giving us the right margin there. Second, we had a slight volume effect that helped absorb fixed cost, right? As you know, we are capital-intensive business. So volume is an important contributor. So a bit of a better absorption. Also last year, right, if you compare to last year, there was, of course, some onetime costs associated with Helen and also the startup of our Line 5. And also, we've been investing in this organization over the last many years to improve efficiency and efficiency in our manufacturing environment and also logistic, and remember, right, we have a portion of our logistic cost spurred in SG&A, so everything that has to do with finished goods. But everything that has to do with raw material is in our cost of sales. So if you look at all of those little efficiency projects that we've done, I think they start to show up in our P&L. So the sum of all of that, I believe, explained a good margin at 29.3% in the quarter and a good margin for the year at [ 27.6% ] Vincent Timpano: Martin, it's Vince. I just want to build on what Eric said, that clearly, this remains a priority for us as an organization. And we're going to use all the tools in our toolbox to be able to continue to focus on gross margin expansion -- gross margin dollar expansion, which is important for us. The one item that Eric didn't reference, but I want to reinforce is this notion of innovation and also broadening the portfolio, lessening the dependency on commodities as a way that over time allows us to have a more attractive proposition that frankly, consumers are attracted to at a margin profile that are attractive for us. So I just want to build, like I said, on what Eric said, which just sort of adds this notion of portfolio and the role that innovation plays that allows us to manage our mix a little more effectively as well. Eric Gemme: Thank you, Vince, you're absolutely correct. The mix effect has also played its part on this quarter's margin. Martin Landry: Okay. Just maybe a follow-up, Vince, to that question. It's an interesting topic. Would it possible to have the proportion of your juices that are not 100% right now? Because I think that's what you're referring to in part, blends and juices that are not 100%? Just an idea of where it is, where it was before and where it could go? Eric Gemme: So Marty, this is a good question, very valid question. However, I don't have -- we don't have the information at hand at the moment. So I can see what we can do from a follow-up perspective. I apologize for not... Martin Landry: Super, and I know it's not an obvious one. So I understand. Okay. Maybe just moving on to '26. Following Ahmed's question, I'd like to dig in a little bit. I was in the same boat. Just trying to understand a little bit where EBITDA margins are going to land. So I heard your answer, Eric. It sounds like you're saying it's going to be a wash. So would you suggest in our model for '26 that we probably use a similar EBITDA margins than what you've realized in '25? Eric Gemme: So Marty, thank you for your question. Of course, you know what I'm going to answer is I'm not giving guidance. However, what I can tell you, Martin, 3 years ago already when we had -- or 3 years ago, we had this Investor Day. We've put a target on where we want to be from a sales perspective and where we would like to be from a margin perspective in the distribution. So -- and if you see what we've done over the last few years, we are slowly getting to that point. So we're happy to see our EBITDA margin today and we're getting close to where we felt was the right place for 2022 -- for 2026, I mean. Martin Landry: Okay. Okay. And maybe just lastly, Eric, any color or events that you can provide for Q1 to help us understand the moving parts and model a little bit what we should expect for Q1? How has this quarter started? How are your sales progression, your listings and your margin? Any color would be super helpful. Eric Gemme: Okay. Let me just go back on -- we are not going to give, of course, guidance on 2026. We're, of course, close to it. We have good visibility on it. But, Marty, I cannot comment on the quarter that has not been published. But no surprise so far on our side. 2026, again, we need to remain very vigilant and agile given the circumstance. But I'm sorry, I cannot give you more color on Q1 more specifically. Vincent Timpano: Maybe what I would turn you to, Martin, is a little bit of take a look at our MD&A and our reference to what we're seeing in the category. It's not so much guidance, but just to give you context in terms of the category dynamics in terms of what we're dealing with, more specifically, what you're seeing in Canada is a category that declines have accelerated a little bit, moving from -- actually held flat in Canada, apologies at mid-single digit. And in the U.S., they've slightly softened from low single digit to mid-single digit. And again, that is looking backwards over the course of the past many weeks, but I would just refer you to that. Eric Gemme: One last thing on the margins. So we need to focus on margin dollars. So percentage -- and I know that I referred you back to percentage earlier, but let's make sure that all of our eyes remain on margin dollars as well. Operator: Your next question comes from Luke Hannan with Canaccord Genuity. Luke Hannan: I wanted to follow up on a couple of earlier lines of questioning. So if we were to think back to the Investor Day, you guys gave some great color on how much of COGS is made up of ingredients and the packaging. And then I think you also gave some incremental color on how much exactly apple and orange juice concentrates also made up as a percentage of COGS. And then Vince, you touched on using innovation as a lever to sort of diversify a little bit there. How much -- maybe the question is, how significantly have you been able to diversify your inputs? Again, if I remember correctly, I think it was around 25% of COGS was apple and orange juice concentrates. How much lower is that number today? Eric Gemme: It's still within that range given the price of these commodities. From a volume standpoint, I don't have the exact number, but from what I recall from a volume, those commodities we are using less volume of them by themselves on the back of a higher production volumes. So the dependency on those commodities is slowly receding. Luke Hannan: Okay. And then I also wanted to follow up on the Food Service opportunity as well. And I appreciate these are ongoing discussions. I imagine they've also been going on for a while as well. Can you just speak to, I guess, how active that pipeline is? And is it fair to say that you could -- to the extent that you expect to see wins that, that could flow through in 2026 as well? I'm just thinking of I guess, the top line bridge. I appreciate you guys pointing out that you expect to achieve that $3 billion sales target. And admittedly, it does seem like a low bar and very achievable. So I guess I'm just trying to frame the upside potential beyond that. Vincent Timpano: Luke, as you would expect, it's a difficult question to answer because you're right. We're in active discussions now with many customers. But it's our hope that we can actually land some of those customers and see some of the benefits of those in 2026. But it's too early to give you that color. I would say as that occurs, we'll be sure to let you know when we land the key customer. But in the whole scheme of things, when you take a look at our business and when you think that will come into the pipeline, I would say it would represent a relatively small portion of the growth in 2026. Luke Hannan: Got it. When we think about the ramp-up of the new facility in New Jersey, I believe you had said you're going to be transferring production over towards the end of this year. Should we be anticipating, I guess, any sort of margin pressure as you presumably you're kind of running 2 facilities at once. There might be some duplicative costs, do you expect there to be some margin headwinds related to that? Or should it be a relatively sort of smooth transition... Eric Gemme: There will be, of course, duplicative cost that will not be capitalized that will help the P&L. And we will, of course, as we are getting into those quarters, be clear in our normalization to call out those nonrecurring costs or costs that are affecting the comparability, so you can appropriately model the going-forward margin. We incorporate the benefit of this great investment. Luke Hannan: That makes sense. Last one before I re-queue, Eric, you did touch on -- so at the Investor Day, you laid out a sales target. You also talked about not necessarily a target for margins, but just roughly where the Street should be thinking about margins moving forward. But that was before the acquisition of Summer Garden as well. So if we were to be -- and I realize at this point in time, it's a very dynamic environment probably too ambitious for us to assume things are status quo for the near term, but all else equal, just by virtue of that business organically growing higher than the Lassonde base business, there should be some implicit margin expansion overall... Eric Gemme: No... Luke Hannan: No... Eric Gemme: So when I go back to this -- back then, of course, although we -- that specific acquisition was not a line of sight, but getting more of the food segment part of our sales mix was considered. So therefore, a portion of the incremental EBITDA margin was coming from this diversification. So you cannot say add to that. Luke Hannan: Fair enough... Eric Gemme: And remember, that's about what, 17% of our sales. So it will take more of that specialty food contribution at that margin to have a direct impact on -- or a more meaningful impact on our EBITDA margin, which, again, guys, we need to focus on the dollars, please. But margin is -- margins coming from food were incorporated in our view back in 2023. Operator: [Operator Instructions] Your next question comes from Frederic Tremblay with Desjardins. Frederic Tremblay: On the U.S. beverage front, so the category was down mid-single digits in Q4. Lassonde made new volume gains driven by branded products. Just wondering if you have any thoughts on the sustainable aspect of these market share gains that you've been getting lately. Is that a dynamic that we should expect to continue in 2026? Or would you expect to normalize closer to sector performance in the near to midterm? Vincent Timpano: Okay. What I would say, Frederic, is most likely a normalization as we build back. And what you should see is volume growth associated with trends in the category that would favor private label in the long term. It doesn't suggest that we're not in continued build-back mode because we'll continue to innovate. We'll continue to pursue additional customers that will help us improve volume. In particular, as you think about the work that we're doing with New Jersey, that will give us a better cost structure and improve capacity to be able to secure new customers in the market. So that's how I would respond to the question. Frederic Tremblay: Yes, that's helpful. And maybe moving to pricing. On the last call, there was a discussion about you're starting to see the price gap between private label and branded products restored back to normalized levels in the U.S. Just wanted to see if you had any more recent observation on the pricing environment in the sector and the gap between private label and branded products? Vincent Timpano: I need to come back to you on that, Frederic. But when I reflect back on it, I think you have seen some of a normalization in terms of the gap to brand and private label. But you also see at the same time brands, in particular, intensifying its promotional activity to deal with this difficult consumer environment and the need for value. But I would just -- I would say, on an everyday retail price basis, there has been some restoration of the gaps to more normalized levels, but I'll confirm that back with you. Frederic Tremblay: Okay. Great. And then just last one for me. I know in the past, there was some talk or analysis being done on potentially expanding the Specialty Foods capacity, I think specifically Summer Garden was being considered. Is that still something that you're considering? Or are we still kind of in a wait-and-see mode there as you implement the new management structure in that division? Vincent Timpano: I would say it's still a little bit of a wait-and-see approach that we're taking. And actually, let me rephrase that. It's more of a pause as we fortify sort of the growth strategy for Specialty Food, in particular with our new leadership coming in. But the other thing is I want to acknowledge that the manufacturing team has done an outstanding job since the acquisition of leveraging our capabilities to help capture additional capacity beyond what we acquired at the time of acquisition within the existing footprint and within the existing equipment. And so we feel like we're adding capacity at a lower cost to be able to go capture that. Eric Gemme: And we want to remain prudent not to put too much capacity in the market. So we need to be mindful of that as well. Operator: This concludes the question-and-answer session. I would like to turn the conference back over to Vincent Timpano for any closing remarks. Vincent Timpano: Thank you for joining us this morning. We look forward to speaking with you again at our next quarterly call. Have a great day. Have a great weekend. Operator: This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.
Operator: Good morning. My name is Joanna, and I will be your conference operator today. At this time, I would like to welcome everyone to the Southland Fourth Quarter and Full-Year 2025 Conference Call. [Operator Instructions] Thank you. Alex, you may begin your conference. Alex Murray: Good morning, everyone, and welcome to the Southland Fourth Quarter and Full-Year 2025 Conference Call. This is Alex Murray, Vice President of Corporate Development and Investor Relations. Joining me today are Frank Renda, President and Chief Executive Officer; and Keith Bassano, Chief Financial Officer. Before we begin, I'd like to remind everyone that this conference call may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995. Forward-looking statements are neither historical facts nor assurances of future performance. Forward-looking statements are uncertain and outside of Southland's control. Southland's actual results and financial condition may differ materially from those projected in forward-looking statements. Therefore, you should not rely on any of these forward-looking statements, and we do not undertake any duty to update these statements. For a discussion of some of the risks that could affect results, please see the Risk Factors section of our Form 10-K for the year ended December 31, 2025, that was filed with the SEC last night. We will also refer to non-GAAP financial measures, and you will find reconciliations in the press release relating to this conference call, which can be found on the Investor Relations page of our website. With that, I'll now turn the call over to Frank. Frankie S. Renda: Thank you, Alex. Good morning, and thank you for joining Southland's Fourth Quarter and Full-Year 2025 Conference Call. The fourth quarter and full year 2025 results we are reporting today were significantly impacted by a number of discrete items, the most substantial of which we will address directly before turning to our capital structure and the performance of our underlying business. Before we review the details of the quarter, let me start by saying that I am extremely disappointed in our financial results for 2025, and I'm committed to providing you with a complete explanation of the challenges we faced and the strategic plan we have implemented to move the Company forward, which I believe tells a more complete and encouraging story than the numbers we reported last night. Revenue for the fourth quarter was $104 million, inclusive of the revenue reversal of $92 million from adjustments related to legacy-dispute negotiation. Gross loss for the quarter was $193 million, and significant drivers include $136 million related to an adverse legal ruling, $44 million related to other legacy-dispute negotiations, and a $22 million impact from our legacy Civil project. The unfavorable adjustment of $136 million is related to the Washington State Convention Center project within our American Bridge subsidiary. This was the result of an adverse trial-court ruling on a construction-contract dispute, combined with the reversal of an expected recovery and related items, this outcome had a material impact on our fourth quarter and full-year reported results. This was a legacy project that Southland took over when we acquired American Bridge from certain sureties in 2020. We believe we were contractually entitled to significant recoveries through an affirmative claim. This January, we received an adverse legal ruling, which ruled in favor of the counterparty, denying our claim and granting their counterclaim. While we intended to appeal this ruling, certain sureties entered into negotiations with the counterparty on behalf of Southland after year-end. Through the rights the sureties have included in their respective general indemnity agreements -- based on these negotiations and due to the events occurring prior to year-end that led to the adverse ruling, we recorded a long-term accrued liability, which significantly impacted results. Any settlement that is agreed will be paid by the sureties under the general indemnity agreements. The sureties agreed to forbear on seeking repayment of any settlement related to Washington State Convention Center until March 27, 2027. Over the past several months, we have also been working closely with our surety partners to bring additional capital into the business and to restructure our Senior Credit Facility. Our objective is to optimize the capital structure for long-term performance and the successful closeout of legacy projects. To date, we have successfully brought in $116 million to support bonded construction projects under our general indemnity agreements with the sureties. This included approximately $14 million before December 31, 2025, and $102 million so far in the first quarter. Repayment terms are expected to be included in a long-term financing agreement and the sureties have agreed not to require repayment prior to March 27, 2027. Separately, we announced in an 8-K this week that the sureties have also replaced our senior lender. As part of this transaction, we paid down and reduced our principal by approximately $14 million and the sureties assumed the remaining $110 million of debt under this facility. The sureties have agreed to waive all scheduled quarterly principal and monthly interest payments through maturity. Based on the current interest rate, this will reduce debt service by approximately $27 million over the next 12 months. Taken together, our sureties have committed to fund any Washington State Convention Center settlement with no repayment required until at least March of 2027 and have provided $226 million in total support. We are now working toward a long-term financing agreement and a Credit Agreement that will formalize these arrangements and expect to provide the flexibility we need to execute going forward. We are grateful for our surety partners' support. Their commitment to this comprehensive capital solution is a significant vote of confidence in Southland, the quality of our project teams, and our strategic path forward. Now I'll discuss our long-term plan. The first step in our strategic plan involved bringing necessary capital into the business. We have the funding and support of our surety partners to successfully closeout our legacy contracts and execute on the strong backlog of new core work. Their decision to provide support reflects their assessment of our work and the quality of the projects in our portfolio. We also took action to restructure our Senior Debt Facility to create greater flexibility and improved cash flow. Next, we have committed to the sureties to monetize idle equipment and non-core assets, including certain real estate. This is a strategic effort to optimize our asset base and ensure our fleet is aligned with our core-project footprint. We are also pursuing the settlement of outstanding disputes. We expect to use the proceeds from these asset sales and certain claim settlements to pay down our Senior Credit Facility prior to maturity, further strengthening our balance sheet as we execute on our project backlog. Moving forward, we will continue to focus our bidding on water-resource, bridge, marine, and tunnel projects in the geographies where our teams deliver the strongest performance and the highest margins. That is where we are most competitive. And by concentrating our resources there, we expect to produce more consistent and predictable results. During the fourth quarter, we added approximately $118 million in new awards in our core end markets. This was led by a $48 million data-center contract in our Civil segment for a private client in the Southwest. This project marks an important milestone for us as it involves installing water pipelines for a major data-center project. We recently broke ground, and the project is progressing well. We expect to complete the work in 2026. We were also awarded a $40 million Construction Manager at Risk or CMAR water resource project in our Civil segment in Texas, and a $30 million pump-station and transmission-main project in the city of Cape Coral, Florida. During the quarter, the Bull Run Filtration Facility project was terminated for convenience. This reduced backlog by approximately $160 million, which brings our total backlog to slightly over $2 billion. Turning toward the broader market, we see a period of robust multi-year demand for the specialized infrastructure services we provide. In the public sector, the Infrastructure Investment and Jobs Act continues to move from authorization to active construction. And in the private sector, the rapid expansion of data-centers has created a unique tailwind for our industry. This is creating a steady pipeline of water-resource, bridge, marine and tunnel projects across our key regions. Our pipeline remains active across both segments. Upcoming opportunities include the Pojoaque Basin Regional Water System Phase 2 design-build in New Mexico, Phase 3 of the Winnipeg North End Sewage Treatment Plant where we are already executing Phases 1 and 2, significant pipeline and treatment plant opportunities across Texas and the Southwest the Claiborne Pell Bridge rehabilitation in Rhode Island and the Liberty Bend Bridge design-build in Missouri. We continue to be selective in our pursuit strategy focused on high-quality work in our core markets. With our recent capital restructuring and strategic plan in place, we are confident that we have the right team to capitalize on these opportunities. In short, the market demand is here. We have the surety-support, and our fleet is being optimized. As we put the legacy impacts behind us and build on the performance of our core backlog, we expect to deliver the strong and consistent results our business is capable of producing. We have the technical capability and the discipline to be highly selective, bidding on the high-margin, high-quality work that we expect to drive Southland's value for years to come. With that, I'll now turn the call over to Keith for a financial update. Keith Bassano: Thank you, Frank, and good morning, everyone. I will discuss an overview of our financial performance during the fourth quarter and the full year ended December 31, 2025. You can find additional details and information in the financial statements, footnotes, and Management's Discussion and Analysis that were filed on Form 10-K last night. Revenue in the fourth quarter was $104 million compared to $267 million in the prior year period. The decline was driven by the revenue reversal on the Washington State Convention Center project of approximately $48 million and other adjustments related to legacy-dispute negotiations, which negatively impacted revenue by $44 million in the quarter. Gross loss in the fourth quarter was $193 million compared to gross profit of $8 million in the fourth quarter of 2024. The delta was driven primarily by the Washington State Convention Center judgment and related items, which represented a $136 million impact to gross profit in the quarter. This includes $85 million for the judgment, inclusive of fees and interest, $40 million for the reversal of a previously expected recovery, $6.4 million in retention and $4.8 million related to a sanctions order. Beyond the Washington State Convention Center impact to gross loss, we recognized additional unfavorable adjustments totaling approximately $44 million related to legacy-dispute negotiations in the quarter. Additionally, a legacy project in our Civil segment incurred a $22 million cost increase related to extended schedule impacts. Selling, general and administrative expenses for the fourth quarter were $17 million compared to $15.7 million in the same period for the prior-year. This increase was primarily driven by bad-debt expense of $1.4 million and $900,000 of business-transformation expenses offset by a reduction in compensation expense. Interest expense was $9 million in the fourth quarter compared to $9.6 million in the prior-year. Income tax benefit was approximately $300,000 in the fourth quarter compared to $14.1 million in the same period prior-year. The reduction in benefit was largely attributable to non-deductible items and the effect of our valuation allowance on deferred tax assets in the quarter. Net loss attributable to Southland stockholders was $216 million, or a loss of $4 per share, compared to a loss of $4.2 million, or $0.09 per share, in the fourth quarter prior-year. EBITDA was negative $202 million in the fourth quarter compared to negative $2.7 million in the prior-year. Now to touch on segment performance for the quarter. Our Civil segment had revenue of $58.4 million compared to $103.8 million in the same period in 2024. Our Civil segment had a gross loss of $31.3 million compared to a gross profit of $8 million in the same period in the prior-year. The reported loss was driven by legacy-project write-downs that more than offset strong core Civil performance. Our Transportation segment had revenue of $45.6 million, a decrease of $117.9 million from the same period in 2024. Our Transportation segment had a gross loss of $162.1 million compared to a gross loss of $365,000 in the same period in the prior-year. The delta was driven by the Washington State Convention Center adjustment and the other legacy adjustments I detailed earlier. The material-and-paving business-line had a gross loss of $26.9 million in the quarter. At the end of the quarter, we had approximately $74 million of remaining M&P backlog. We expect the remaining M&P projects to be completed this year. Now to touch on the results for the full-year ended December 31, 2025. Revenue was $772 million compared to $980 million in 2024, a decline of 21%. The decline reflects the revenue impact of legacy-project completions and the contract adjustments I described earlier. Gross loss for the full-year was $155 million compared to a gross loss of $63 million in 2024. Selling, general and administrative expenses were $61.6 million for the full-year, down from $63.3 million in the prior-year. The reduction was primarily driven by $2.4 million in compensation expenses, offset by $900,000 in business-transformation expenses. Interest expense for the full-year was $37 million compared to $29.5 million in 2024. The increase was primarily driven by the interest rates on external borrowings, amortization of deferred financing costs and the interest expense related to a real-estate transaction as compared to the same period in 2024. Income-tax expense was $56.5 million in 2025 compared to tax benefit of $46.9 million in 2024. This reflects the establishment of a valuation allowance against our deferred tax assets in 2025 given the cumulative loss position. I would like to reiterate, as I have in prior calls, that this valuation allowance does not limit our ability to use the deferred tax assets in the future. Net loss attributable to Southland stockholders was $306.5 million or $5.67 per share, compared to a loss of $105 million, or $2.19 per share, in 2024. Full-year EBITDA was negative $191 million for 2025 compared to negative $100 million in 2024. For the full-year, our Civil segment had revenue of $342.3 million compared to $323.3 million in 2024. Civil gross profit was $16.3 million, or a 4.8% margin, compared to a gross profit of $16.7 million, or 5.2% in the prior-year. Our Transportation segment had a full-year revenue of $429.8 million compared to $656.9 million in 2024. Transportation had a gross loss of $171.6 million compared to a gross loss of $79.8 million in the prior-year. The increase in the loss was driven primarily by the Washington State Convention Center charge and the legacy-project adjustments I just described earlier. The Materials & Paving business-line contributed $52.1 million in revenue and had a gross loss of $42.8 million for the full-year compared to $100.7 million in revenue and gross loss of $83 million in 2024. As we put the remaining legacy work behind us, we expect the consolidated margin profile to move toward our core performance. Before we open it up for questions, let me address our forward outlook. We ended 2025 with just over $2 billion of backlog, of which we expect to burn approximately 38% in 2026. We are not providing formal financial guidance at this time. Given the magnitude of the restructuring actions underway and the uncertainty around the timing of legacy-project resolutions, we do not believe it would be responsible to provide specific financial targets. We will revisit this decision as the restructuring progresses and our visibility into normalized-earnings improves. Our focus is on 3 things: closing out legacy-work with discipline, which we now have the working capital to appropriately advance these projects, enhancing the balance-sheet through optimizing our asset base; and lastly, continuing to execute in the core-business where our margins are the strongest. I will now return the call to Frank for closing remarks. Frankie S. Renda: Thanks, Keith. Before we open it up for questions, I'd like to thank all of our stakeholders, including our great employees, surety-partners and shareholders for sticking with us through this difficult-period. I acknowledge the results we reported are not acceptable. My 2 partners, Tim Winn and Rudy Renda, and I have been together from the start. We put everything we have into this business and continue to be majority-shareholders. This is all we have ever done. We've been through difficult periods before, and we've always come out stronger. This company has been standing for generations, and I have great confidence in our future, not because the numbers today are where we want them, but because I know the quality of our people, workmanship, and the strength of our core-business. Looking ahead, we have $2 billion of backlog, the majority of which is core-work at strong margins. We have the capital-support of our surety-partners, and we have a deep pipeline of opportunities in the markets where we perform best. Our job now is to execute, and that is exactly what we intend to do. Thank you for your time and interest in Southland. I appreciate everyone joining today. I'll now pass the call back to the Operator for questions. Operator: [Operator Instructions] First question comes from Julio Romero at Sidoti & Company. Justin Mechetti: This is Justin on for Julio. So last quarter, you highlighted data-center opportunities in the $15 million to $20 million range and $50 million to $75 million range, and recently announced a $48 million award in that vertical. Are you continuing to see opportunities of similar size? And how is that pipeline trending today? Frankie S. Renda: Yes. We're continuing to see opportunities in that size. We're pursuing jobs in that market, and this job is going really well for us, and we expect to continue to try to grow that side of the business. Justin Mechetti: And then can you discuss how the margin profile of data-center projects compared to your traditional contracts? Keith Bassano: Yes. So the data-centers are going to fit into our Civil segment, and we would expect margins to align with the core performance that we've had in that segment thus far. Justin Mechetti: And then shifting to your strategic plan. Does the sale of non-core assets, including equipment and real estate, impact your ability to win new projects or execute on your backlog? Keith Bassano: It does not. So that's going to be a key component to us paying down debt and one of the priorities that we have. We want to be able to maximize value when we monetize these assets. Some of that equipment is specialized and some of it relates to the wind-down of the M&P business-line. We do not anticipate this to have a material impact in the go-forward business from a bidding and execution standpoint. Operator: We have no further questions. I will turn the call back over to Frank for closing comments. Frankie S. Renda: Thanks, everyone, for joining. We will talk to you again soon. Appreciate your support of Southland. Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and we ask that you please disconnect your lines.
Operator: Good afternoon. Welcome to the Meitu 2025 Annual Results Presentation. We provide English simultaneous interpretation. If you'd like to listen to the interpretation, please log in through Zoom and click the Interpretation icon, select English channel. If you do not click on this channel, you will not hear the simultaneous interpretation. Today, the leaders participating include Mr. Xinhong Wu, Founder, Chairman and CEO of Meitu. Zeyuan Wu: Greetings. Operator: CFO and Company Secretary of Meitu, Mr. Gary Ngan; CPO and President of the Imaging Products Division, Mr. Chen Jianyi. A warm reminder, we include predictive statements, and many risk factors that we may not control may influence these predictive statements. Online participants, you need to rename and add your real name and affiliation name. Before giving your question during the Q&A session, please first clarify your affiliation and your real name. You may also provide your questions through audio or text in the comments section. Firstly, we provide information about our company. Zeyuan Wu: Investors, analysts and audiences, thank you for your participation. Before we formally start, I would like to extend about the announcement yesterday on behalf of the company. We found that some part of the results were published on social media. We investigated immediately after ensuring we found there may be some misoperations and functions in the process and some information was published on the account, and the responsible person deleted immediately. We took two effective matters. First, we deleted all content on the platform, and we applied for the suspension in the Hong Kong Stock Exchange. What's more? Relative information was just shortly spread on March 25th, and we ensure the smooth function on 26th. We feel sorry for all the inconveniences caused to our investors. Thank you all for joining today's earnings conference. Over the past few months, as generative AI technology has been evolving rapidly, there are various debates around the future of the AI industry. As you may have seen in the opening video through the QR code of -- that made the fastest moving trains, for example, from single model approach to model-agnostic strategy from AI-based apps to AI agents, from subscription to consuming tokens, from the form of our team, from mature teams to AI-driven teams. We reached a strong momentum. The adjusted net profit attributable to owners of the company grew 64.7% year-over-year to RMB 907 million (sic) [ RMB 970 million ] exceeding our latest thoughts on the AI applications. First, Meitu is an AI application company focused on the photo and video industry. Based on AI capabilities and efficiency-driven organization, we focus on high-value verticals and build industry-specific AI agent teams to help address users' end-to-end content creation needs, delivering high-quality output. In each specific use case, our AI agent teams are composed of multiple agents with distinct roles. They are responsible for efficiently executing different standardized repetitive tasks. Users can focus on creative ideation and decision making. The core advantage of the AI agent teams lies in their clear division of responsibilities and targeted training. Break down into multiple stages and assign corresponding roles and responsibilities to each agent, so we can ensure the teams perform better. Besides combining years of user insights, accumulated industry know-how and the ability to flexibly deploy models, we constantly translate AI technology into reliable product capability. Additionally, different models have different strengths. There is not a model that can cover all the areas suited for e-commerce styles. Vertical companies combining different models, it will be more common for companies to deploy models. We will focus on more flexible and global things. Centered around it, we will build AI teams meeting industry needs. Now, let me invite our Chief Product Officer, xiaobai, to elaborate on our AI agent teams. Jianyi Chen: Thank you, Xinhong. I will share our thoughts, mainly on how we plan to build the AI agent teams going forward. Firstly, for e-commerce-related content creation, we've been thinking for a long time. We think that we're not limited to e-commerce providers providing integrated method, but rather helping the suppliers to deliver more tangible results. According to what we observed, many of the e-commerce agents can design well-designed photos and images, but that's it. Many e-commerce companies lack the sufficient judgments of market and business, eventually causing the resulting product sales are often falling short of expectations. For instance, on Amazon, a product such as water bottles experience intense competition. For experienced e-commerce providers, we need to avoid the oversaturated competition of product background, such as home and living. Instead, they would pivot to fitness, to outdoor and other high-growth potential segments. So based on this know-how, DesignKit is building an e-commerce design specific AI agent teams. And this new agent team, aside from the original experts that have a good command in design, we have additional roles, such as for the verticals of e-commerce, we have market and data analysts. We have user research experts, copywriters, prompt designers, et cetera, delivering high-quality visual and also establishing a more refined social media commerce video expert team. For instance, the AI marketing strategist, they can serve as Creative Director, helping users to know what to capture, what to market, or we can have AI commercial directors responsible for the storyboard coordination, helping users to address how to present the visuals. We may also have AI audiovisual model experts acting as photographers, lighting specialists, actors, et cetera, helping users with their contents and their materials. Eventually, we have the AI smart editor compiling all of the editing and the distribution and the post-production methods, helping the users to package and publish their products. So what we aim to do for the e-commerce is to transform the visually appealing images to images that drive sales and to e-commerce videos that boost conversion rates. The DesignKit's new agent teams aim to help e-commerce service providers drive and achieve real business results. In addition, aside from DesignKit for Kaipai, for the talking videos, we also hope to create high conversion rate video contents. Based on this goal, we divided the three AI agent teams to assist with our eventual goal. For instance, we have the AI operations team. It helps with the trending topic research, account diagnostics and also content strategies. We also have the AI filming team, helping with the teleprompter assisted filming, the AI avatars, et cetera. We also have AI team helping with the rough and eventual cuts and editing. The entire workflow is coordinated by the AI director agents. Users only need to submit their industry know-how and their demands, and then the AI agent teams will take care of the rest of their work. For example, when an insurance broker asks for a short AI-generated video about pensions insurance, then once receiving the submission, the AI director agent will automatically break down the information and assign it to the corresponding teams, as mentioned before. And within a short time period, it can provide a ready-to-publish marketing video, and it can even generate social media covers and prompts alongside. So for small and medium-sized merchants, the advantage of this AI operations team is a 24/7 content providing team. And we aim for niche sectors, for instance, insurance, beauty solutions, local services, sectors that are heavily reliant on social content for customer acquisition. This not only lowers production costs, but also provides a reliable AI team that can have a high conversion rate, so we can help the suppliers to focus more on creative judgment and business operations. The production handed over more through directions that we have been doing. We have some progress over the past couple of months. For instance, within DesignKit, we already deployed our 4 agents, the e-commerce trial, poster and video agents. From December 2025, the agent function has become a primary driver of our revenue growth on both web and app portals. Our agent has a stable output quality. For instance, DesignKit, web-based DesignKit, it's e-commerce agent roughly has a 50% save rate, where users save at least 1 output per 2 outputs. Now furthermore, once the agent capabilities are integrated into Kaipai more, user experience continues to improve. According to the latest figures, the penetration rate of Kaipai agents have increased to approximately 11%. At the same time, the RoboNeo, from its official launch to current, it has topped the app stores across 26 countries and regions, demonstrating our globalization potential. Last but not least, as you may have noticed, we recently launched the Meitu CLI capabilities on our AI open platforms. Meanwhile, the first group of Meitu AI skills have been officially integrated into the OpenClaw ecosystem, covering personal and commercial use cases in the global photo and video industry. We focus on the core skills. We hope we could have from mature technologies around 8 core capabilities and we transform them into reusable skills. Based on the CloudHub and ACI, we can use Meitu AI's capabilities for photo and video production. We believe as OpenClaw community continues to grow, in the future, users do not need to switch between products. They simply need to have a single command and complete end-to-end creation. This can substantially increase productivity. Now I hand over to Gary to talk about the 2025 financial condition. King Leung Ngan: Thank you, Xinhong and Xiao Bai. In 2025, centered around the two core strategies of productivity and globalization, our operational performance continued to improve with sustained user growth. As of December 2025, our monthly active users grew 3.8% year-on-year to 276 million. Paying subscribers grew 34.1% year-over-year to 16.91 million. Over the past year, we continue to deepen the productivity strategy. As of December last year, paying subscribers of productivity tools grew 67.4% year-on-year, primarily driven by DesignKit and Kaipai, among them. Paying subscribers from international markets doubled, benefiting from the rapid growth of Vmake. Subscription rate for productivity tools reached 9%, an increase of 3.1 percentage points from December 2024. This further validates that with the continual improvement of our products, the output and the output quality, users' willingness to pay is also increasing. At the same time, the increase in subscription rate for productivity tools will help drive the increased proportion of high ARPU paying subscribers, providing support for our future revenue growth. On the globalization strategy front, 2025 was a year of significant milestones. Our MAU from international markets continue to grow, primarily driven by products for leisure. In the second half of 2025, we launched several global viral features, including 3D figurine, AI group photo, and AI snow. Among them, the AI group photo feature helped Meitu app MAU reach a record high and attracted over 3 million new users from the European markets. It also helped Meitu app top the U.S. iOS category chart for the first time. Driven by these features collectively, Meitu app topped the overall app store charts in 52 countries and regions, and the category charts in over 110 countries and regions. With the rollout globally for products, we observed in the second half of last year, paying subscribers in the international markets experience accelerating growth with the majority of new subscribers coming from high ARPU regions with mature subscription habits such as Europe, Americas and East Asia. Recently, in the top 50 global GenAI mobile apps list published by a16z, we ranked first in the photo, video and design category with 4 apps on the list, further solidifying our position as a globally leading AI photo and video application company. Looking ahead, we will continue to strengthen international markets. At the same time, we'll continue to launch highly effective features and optimize recommendation mechanisms, further enhancing users' stickiness. As a result, the oversubscription rate increased to 6.1% in 2025. Currently, the improvement in subscription rate remains our core growth drivers. Besides, with the deepening of our two core strategies, ARPU growth will also gradually become an important growth engine in the coming years. Before I begin sharing the company's financial results, I would like to note that in November 2025, we have officially discontinued the cosmetic supply chain management services, previously under the solutions for beauty industry. Under the IFRS, this business has been classified as a discontinued operation. Therefore, unless otherwise stated, all financial figures and the year-over-year comparisons for FY 2025 presented hereafter are continuing operation basis. In 2025, overall revenue grew by 28.8% year-on-year to RMB 3.86 billion, first largest revenue. Our core business of photo, video and design products grew by 41.6% year-over-year to RMB 2.95 billion. Looking at performance by market. Revenue from international markets grew by 37.4% year-over-year in 2025, outpacing growth rate in Mainland China. Revenue from international markets accounted for 38% of total in 2025, an increase of 2 percentage points compared with the same period last year. From the product perspective, in 2025, revenue from products for leisure and productivity tools accounted for 81% and 19% of overall photo, video and design products revenue, respectively. Advertising next, in 2025, revenue from this part was RMB 840 million, largely in line with 2024. We continue to remain cautiously optimistic about this business, although it is worth noticing that we have pioneered AI-powered creative advertising formats in brand advertisements. Collaborating with international brands such as McDonald's and Visa, this creative solutions have effectively enhanced the social interaction between users and advertisers. Last, revenue from others, which are mainly legacy and non-core businesses, was approximately RMB 62.11 million in 2025. Moving to the cost side, the total cost in 2025 was RMB 1.02 billion, a year-on-year increase of 42%. Specifically, the largest cost item was revenue-sharing fee to payment channels. The cost increases in line with revenue growth from photo, video and design products, rising 43.5% year-on-year, approximately are RMB 620 million. The second largest cost was computing power and cloud-related costs, growing 16.4% year-on-year to RMB 230 million. The third is third-party API costs accounted only middle single digit of total cost of sales because we were able to use the vertical-specific models and fine-tune open source models to fulfill the vast majority of our user demands, reflecting our in-house AI imaging companies. For gross profit, because we discontinued the low-margin cosmetic supply chain management business in 2025, the financial data in 2024 has been restated accordingly. Gross profit in 2025 was RMB 2.84 billion, a year-on-year increase of 24.6%, corresponding to a gross margin of 73.6%. The restated gross margin for 2024 was 76%. On a like-for-like basis, the gross margin decreased slightly, primarily due to two factors: one, the change in the revenue mix. Because the advertisement with high gross margins have decreased slightly and because to support our core imaging businesses and design businesses have continued to grow, the computing and API-related costs have increased compared to 2024. However, as mentioned earlier, thanks to our model-agnostic strategy and proprietary vertical model capabilities, the gross margin of our core business remains healthy and stable and will remain so in the future. On the expenses, selling and marketing roughly accounted for RMB 600 million, a year-on-year increase of 25.5%. The increase in expense was primarily directed to the growth of productivity tools in China and products for leisure and international markets. If we include the portion of combined revenue from photo, video and design products and advertising business, this ratio remained stable at 16% in 2024 and last year. This is consistent with the statistics -- the range, we previously communicated to the market in our earnings. The R&D expenses were RMB 950 million, a year-on-year increase of 3.8%. The relatively modest increase was primarily because the foundational model training costs decreased in 2025 for two reasons. Firstly, our MiracleVision model foundational training was completed roughly in 2024. Secondly, as we're fully committed to the model-agnostic strategy with fine-tuned open source models, proprietary vertical models, and third-party APIs, we delivered high-quality output for users and did not need to invest significantly into training foundational models. If we exclude the expenses related to foundational model training, the overall R&D expenses will increase 14.5% year-on-year, primarily driven by investment in our R&D talents. Looking ahead, we'll continue to optimize resource allocation between proprietary and external models and increase investment in vertical model training and R&D talents, continuing to enhance our product capabilities and competitiveness and delivering the users' diverse needs with precision. Administrative expenses were RMB 450 million, a year-on-year increase of 14%. On profitability, driven by sustained revenue growth, gross profit grew faster than operating expenses. This increased our operating leverage, further enhancing overall profitability. For ease of comparison with last year, the adjusted net profit includes discontinued operations. The 2025 adjusted net profit attributable to owners was around RMB 970 million, year-over-year increase of 64.7%. Under IFRS, our net profit attributable to owners of the company was around RMB 700 million in 2025, lower than around RMB 800 million in 2024. This change was primarily due to two factors. First, in 2024, we completed the disposal of all cryptocurrencies, generating a onetime gain of RMB 640 million, which elevated the prior year comparison base. Second, as we completed the issuance of convertible bonds to Alibaba at the end of 2025, we recognized a onetime noncash expense of approximately RMB 510 million under IFRS. This expense did not result in any actual cash outflow. Both items are non-operating in nature and are not directly related to our business performance. Lastly, I would like to share with you the latest progress on the Alibaba strategic investment and cooperation. On the business side, we are advancing collaboration across multiple fronts, including large model, e-commerce and cloud computing supplier offerings. In particularly on large models, we have deeply embedded, the capabilities of Alibaba's open source model series across multiple scenarios such as image editing and video generation to deliver better user experience. Meanwhile, our technology team and Alibaba's team have maintained close communication on the model training. Finally, as the AI industry continues to evolve rapidly, starting with this year, in addition to our two regular earnings releases each year, we will provide quarterly updates on key operating metrics for our core business. We believe this will further enhance transparency and help the market better understand our operating progress. In addition, we just announced a share buyback plan of up to HKD 300 million, valid for 1 year. This reflects the company's confidence in its future development, as mentioned by Xinhong. The market would consider large model might replace all AI applications. It's obvious in our industry that this might be a misunderstanding. Our growth is also very rapid. So I believe at this time point, it's proper and good for us to do the buyback, plus the 40% proportion. The overall cash return is around 60%. Thank you. Thank you all for participating today. Operator: [Operator Instructions] Unknown Analyst: I'm from [ Pana Internet ]. Congratulations on our performance. Based on the latest statistics, the paying subscribers are slightly lower than the first half of the year and the MAU is slightly lower than those in June. So if you could give us a brief reflection about the AI fragmentation, what are its impacts on your businesses? That's the first question. The second question is how can we better tackle with this decrease in terms of the statistics? Unknown Executive: Actually, we have another perspective. If we put statistics aside, the increase of model capabilities has the influence as positive. It can help us give out some products that develop faster. In terms of DesignKit's growth in the second half of the year, there are positive outcomes. For instance, the AI agent functions. Once it's been rolled out, it gradually spread to all businesses of DesignKits ad was taken up immediately. For Kaipai, for example, subscription penetration rate is really high. And the ARR [indiscernible] abroad is also increasing rapidly. So for us, we actually think from a longer perspective, from a business perspective, the positive outcome of AI agents is immense. As for you, what you saw in terms of the MAUs slight decrease, we've seen similar trends in past years because we need to bear in mind that the MAU is a snapshot of the past month, statistics of the past month. Last year, we had many blockbuster functions that came out in different months. So in December, we happened to have no blockbuster functions. So that's why there is a discrepancy between the statistics and our overall performance. For the actual numbers, the decrease in growth rates, to me, it's not caused by AI or large models or agents. But rather, if we look at it from a Chinese perspective, the products are maturing. So the growth rate with a large proportion and the large foundation would be slightly slower than before. But this is a positive signal because the productivity products or tools worldwide are growing fast. And these kinds of products are at the early stages of their product cycle. Put it in other words, in the second half of 2025, it seems our growth rate is declining. But we need to bear in mind that the products development are maturing from the early stages to the later stages. And we also need to bear in mind that the ARPU ratio with the subscription rates are better than we expected. Recently, we tested some new tools. The ARPU of new tools are already at $50 per month, translating to great average income. So from this perspective, you may think that the growing capabilities of AI is leading to issues. But from our side, we think that the positives outweigh the negative signals. I'm open to suggestions. Operator: We'll move on to the second question. Unknown Analyst: I'm from Morgan Stanley. Two questions. First, I would say about the expectations for the year 2026. Second, agent is integrated into our products. How do you refer to the subscription contribution and what do we have metrics to measure its contribution? Unknown Executive: I'm not talking about too detailed numbers. Also, what I've said before, the overall rate growing in 2026, the top line is basically the same with the 2025, but the underlying or its composition will include more productivity tools globally. In the coming several years, we'll also see a faster growth acceleration. This is the second curve being mature and the rising of the third curve. This might be a direction. The new adjusted net profits attributable to owners will be different. We'll control our expenses better because most of our operating expenses are about staff and personnel. We are actively tackling this problem by using AI to enhance our output. Meanwhile, with the rapid growth of operations, we will not increase the expenses for staff. I think these are positive directions. More about the agents. The final outcome, we felt happy for it because it solved the long-tail needs of many consumers. For example, the e-commerce, previously, the advertising photo or picture, for example, the barbecue oven, you can only use the outdoor backgrounds in the past, but we actually not only use it, we will also need some meat, smokes, flakes, but it's different. It's hard to achieve in the past. With help of the agents, they can have the chance to express more details. Users can express in verbal language and the AI model can translate it into visuals, representations. For example, the cat. Especially, in the past, we have cat models, they are very hard to cooperate. We can only change the background in the past. I think we should have a very cute cat on the cat equipment. So with the AI agent, we can have a very cute cat of specific species. You would also ask, why would you choose Meitu instead of other models? Whether we will be revolutionized by larger models. For the understanding of many vertical scenarios, I think we do better. For example, the cat tower, some cats are not satisfied with what you've chosen for it. So the sellers can better describe the characteristics of their products. For some nuanced parts, we can cooperate with the traditional conventional agent models or style. The user utilization rate is much higher than the general large models. We can tackle some pain points. Another example, Adobe. Why we think it will be revolutionized by AI, because we know the learning threshold is very high. We need to take -- spend months or years to learn to use it. With the help of AI, it could be very fast. This is also in line with our mission. We want you to feel better using targeted models or the subscription rates or selling. I think this is the biggest meaning integrating agent and also the point which satisfied our team. For paid subscription, agent is the top line function of all paid functions. Unknown Analyst: Thank you for your introduction. I'm from [indiscernible] Capital. I would like to ask some questions related to AI. Firstly, as mentioned earlier, the agent function, it has become the main driving factor of Meitu's businesses. So I would like to ask, the agents businesses in terms of the ARPU enhancements, can you elaborate more on the relationship? The second is, in the future, do you hope for the different vertical sectors to set differentiated pricing for the AI agent or the tiered pricing? Another question is that nearly 19% or 20% of the photo and imaging center cost is taken up by the production tools. So as AI becomes more prevalent in the near future, 3 to 5 years, what do you think will be the proportion of the revenue or production tools in terms of the overall revenue? Thirdly, what are your outlooks on the gross profits in the future? Unknown Executive: Because the ARPU rate is mainly provided in the latter half of next year, there will be fluctuations. But if you look at the DesignKit, we already have RMB combo. We did this combo is because we see there is tangible demand among the consumers. We have other combos at 30% to 35% in terms of the pricing. So the total consumption brought by agents is manifested more profoundly across many products. Of course, the increases in ARPU will need time. So in the future, you may see that different products will have more pricier subscription choices. Additionally, in the future, there will be different tiers of basic substitutions. But in different sectors, it will be based on the token consumption. In our prices, we discovered that there are drastic different token consumptions. So we use the appropriate skills choice. For instance, if we do consulting, we know that the consulting prices of different sectors are different. For instance, for high barrier sectors, we need to pay more for consultations. And for the meta prompts for instance, we just mentioned, it's based on sector experience. For the senior practitioners, his or her understanding of the sector have more insights, more personalized insights helping companies to stand out among the homogeneous competition. So that's why we do have the meta prompts and all of the field trial and paid consultations, eventually helping us to gain more insights into how to develop our vertical sectors. So eventually, we base on the different sectors different values and providing more returns for our consumers. In terms of the gross profits, we dropped by 1 to 2 percentage points, but the greatest reason is because of the changes in the revenue mix. Because in the past, advertisement took up a lot. But as advertisements proportion continue to decline, in the short term, the gross profit will decline as well. This year, the advertisement proportion will decrease, but it's already taking up a lower proportion. So its influence on the gross profits will be lower compared to 2025. Additionally, this year, because Apple in China is reducing its fees in China, it's helping with our gross profit. As for your concern, I think you may be concerned about third-party API use and deployments. You may think it influence our gross profits. But at present at least, because we only have a mid-single digit of our third-party API so it won't influence our gross profit that much. Overall, our gross profit will remain stable this year, around higher than 70%. We haven't had the specific statistics for the proportion of production tools in our overall revenue. If we look 5 years into the future, production tools will take up a higher revenue proportion than leisure tools. Put it in this way, production tools as discussed for 2.5 years or 3 years from 2023 until present. Now it takes up around 19% of our overall revenue. But actually, for the vertical sectors, we managed to integrate industry know-how into the products through the AI agents. So there is a scenario that I believe in the future, I think the growth rate will be different from 3 years before. It will be faster. But as for the specific statistics, I have yet to collect them. Operator: Thank you for your question. We will continue with the Q&A. Unknown Analyst: An analyst, Sara. I have two questions. First, as mentioned by the management, the cooperation with Alibaba especially for the products for leisure, what about the user portals who will have more AI-powered phones that would be integrated with many AI-powered functions. So how we see the changes in user portals for products for later? Question two, the productivity tools ARPU is more valuable or promising than of the products for leisure. We are the model-agnostic strategy. We want to build the model to tackle the pain points of users. The models are evolving rapidly. How does the management view the extension of models, this possibility into the photo, video and design vectors? For example, will the foundational large models be extended into the e-commerce area or sector? Unknown Executive: Products for leisure, from the perspective of user, I think we have an advantage because we have an MAU of over 280 million. Many new products of ours published in recent years have performed very good with rapid growth for DesignKit and Kaipai and also Vmake, Wink, we have access advantage. So we can be top-tier players in this sector. Other giants, including the smartphone producers, they, of course, will try new functions related to photo, video and design. It's always a very essential part of them. For example, many smartphone producers focus on the imaging capabilities of the phone. Of course, we feel the challenge. But we will find many corresponding room where they left or they overlooked because there is no one company that could serve the users' all needs. This is a marathon for innovation. We view this trend very objectively. This challenge, in turn, makes us feel the warning and have the spirits to challenge is good. And second question, what about the extension of large models into other sectors, I think the answer is yes, but it's similar to the answer of the first question. No large model companies can solve all factors on use, especially vertical sectors pertaining certain areas. A large amount of energy and expense should be devoted. So at present, we are digging into these perspectives and we saw the things that these models could not do. I believe this is also another marathon of innovation, different ecosystems for models and applications. Models cannot cover all applications. Actually, it's empowering applications. We know we would do something about it. They develop some independent targeted apps or software. For our team, they make us feel pressured and also urge us to increase our competency. Unknown Analyst: I'm from Citibank, Internet analyst, Vicky. I have an AI-related question. I look forward to your thoughts. I don't know what are your thoughts about this. Zeyuan Wu: Indeed, we saw this trend as well. Xiao Bai has elaborated over the AI teams. How we build the teams and how to deliver high-quality results, we also mentioned earlier that the business models have been changing from the subscription to the consumption of tokens. So to deliver high-quality results, so we think there's an opportunity for us. I suppose we roll out some new production tools that have a relatively high barrier, but users are willing to buy because they can deliver high-quality results. As a result, we see our ARPU rates increasing fast, especially production-related. Therefore, in June this year, we will post the Meitu Imaging Festival, and that will be launched, focusing on the AI agent teams' establishment and how to deliver high-quality results for our users. I believe, by then, we will have a better understanding. Jianyi Chen: I would like to add some more thoughts. I think an interesting thing is that there are many store apps through the subscription revenue. So after you subscribe to something, you may not use it for 99% of the time. So that is an issue of overpayment. It can't be like this. So there are many inefficiencies in the previous conventional model. But this cannot be applied to us because, in the past, we've been providing services that needs to be subscribed to be used. We don't have a model where we subscribed and the users do not use it for most of the time. So even though some people regard us as traditional imaging and photo industry, but we actually have some differences in terms of the conversion rate. For the subscription, I think the token consumption, a part of our revenue will be generated by subscription. It's just that in the past, by subscribing, we provide a group of tools. But now by subscribing, we have a bunch of tokens. After you consume all the tokens, you may need to buy higher-tier subscriptions that gives you more tokens. I think for the two models, they are not dichotomous. They are a combination. Operator: Due to the time limit, we will continue with the remaining two questions. Before online questions, we will have another question on site. Unknown Analyst: I'm an analyst, Xixi from [indiscernible]. My first question is that globally, last year, when we're expanding production tools, we mainly focus on vertical sectors,; for instance, the restaurants, et cetera. I wonder, in 2026, do we expand our vertical sectors to more sectors? Secondly, when we look to the production tools of users abroad, their habits may be different from those in China. Thirdly, I would like to ask more about your cooperation with Alibaba. Alibaba's users in terms of production tools, what are the percentage in terms of the contribution to the revenue? In 2026, the driving of production tools mainly come from ARPU or the paying tools. Zeyuan Wu: We're now doing extensions in vertical applications. As you may have seen, you have saw the financial results video and some AI agent studio functions. Besides what's mentioned, we saw very vertical sectors where there are opportunities for us. Under these scenarios, traditional services, they may spend over USD 10,000 to USD 20,000, but we can achieve this with 10% to 20% of that with same or even better quality. There are scenarios like this. Meitu will try to avoid the directions of manage giants, their core paths and strategies, so that we would not be greatly influenced. But we'll try to discover the parts where they may neglect or didn't consider it very important. So actually, we have many opportunities to lead in very vertical sectors. So we may try to avoid some popular or hot choices. For example, we still have a large user base in the off-line market. Traditional expense is high, but now it's just maybe 1% of the previous expense. In detail, I can't expose too much, disclose too much. But you will see our future products. And about the user habits of the productivity tools in international markets, we may observe different vertical scenario preferences and. Last month, our RoboNeo topped in the photo video category in 15 countries, including Brazil. For example, the South American users, they have a strong desire to express on social media. This is different from Asian markets. And we'll do more language and operation support in Southern American market. We cannot express too much about it, but I want to say that we have different orientations and directions. We will segment very carefully and precisely. We will try to serve well. a certain need and extend to more categories and markets. Jianyi Chen: As an additional reminder, as what Xinhong have said, the critical point is that the users demand on visuals because there are different cultures, they're vastly different than us in the past. But now due to the cultural differences, we need to have many different and AI adaptation. For instance, the same e-commerce platform, Chinese users may perform tests. They have less coherence but have more visual stimulation. But for overseas users, they may prefer more simplified accounts that look more high end. So there are great differences. For instance, Brazil, many Brazilian users would like the e-commerce platforms to stand out more. Some countries like light colors, for example. In our main business areas, we have all the compatibilities and adaptations. After the adaptation, we also observe the different subscription habits. For Chinese users, because we would like to subscribe low-cost orders, in China, the per week subscription is more preferred than monthly subscription. But for the U.S. market, the reverse is true because they think weekly subscriptions, it's is hard to experience the value of products in the short run. We need to have a longer time period to understand what values can the product bring. Because they are less sensitive on the price, they hope that they would pay to create value and then decide whether to subscribe. So for us, in the past, many of our products were based on the demand and habits of the Chinese market and then we ready it to the rest of the world. But now we hope we cater to the specific demands of each area in the world. In the past, we may have 100 products in China, but only 50 to 60 overseas. But now we look at the overall demand, and we have products that are 90% available and also 90% available in China and also overseas. That is our biggest change. Operator: And due to the time limit, we will have the last question. If we have investors on site that have questions, please raise your hand. So we'll have a question online from the meeting. Unknown Analyst: First, about the ARPU value. We mentioned we can see increase of the ARPU value. The main drivers are productivity tools in Chinese Mainland and international markets. And also, the third-party CPI are single digits. Which directions we use the third-party API? And why would we consider this of high, low status of proportion? Unknown Executive: Management answers the elevation of ARPU value, the main driver is that the introduction of agent. Many delivery of outputs will consume tokens. After the consumption increases the purchase more expensive packages, due to high-quality, they do not mind that much because this cost is much lower than in the past, nearly 10% or 1%. So the main ARPU growth are contributed by this partner, productivity tools. Products for leisure, I will not consider a dramatic increase in ARPU value. But with the higher proportion of international markets, this part certainly increases, but still not that huge. About the API part, compared with other model companies, you know we pay attention to quality or effector. We have an evaluation team of over 200 people. Many designs are outsourced. They comply to teams, but ultimately it's up to R&D team. But in Meitu, they are competing. If the design team do not consider it good, it's not published or aligned. For example, Xinhong himself also paid great attention to it, one, because the evaluation of the effect of different models. When we come up with a case, we first evaluate all models about their effects and outcomes. For example, 10 models, the winner, does it meet the expectations of the real users? If it's good, we use then the API. But after the competition, if we cannot find a very good winner, we self-develop. So our understanding about the external API, first, we evaluate. And if it meets our standard, we use it or we choose to self-develop. We hope they cooperate and build the industry's top standard. Operator: Thank you for your questions of investors and the detailed response. If you have more demand for our tools for statistics, you may contact the IR teams. Now we'll enter the media Q&A. This session will not have simultaneous interpretation. For the participants on Zoom, you may feel free to log off. Thank you for your participation and attention once again. [Statements in English on this transcript were spoken by an interpreter present on the live call.]
Operator: Good day, and thank you for standing by. Welcome to the Autolus Fourth Quarter 2025 and Full Year 2025 Financial Results Conference Call. [Operator Instructions] Please be advised today's conference is being recorded. I would now like to hand the conference over to your speaker today, Amanda Cray, Executive Director of Investor Relations. Please go ahead. Amanda Cray: Thank you, Kevin. Good morning or good afternoon, everyone, and thank you for joining us on today's call. With me are Chief Executive Officer, Dr. Christian Itin; and Chief Financial Officer, Rob Dolski. On Slide 2, I'd like to remind you that during today's call, we will make statements related to our business that are forward-looking under federal securities laws and the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These may include, but are not limited to, statements regarding status of the ongoing commercial launch of AUCATZYL in the U.S. and U.K., Autolus manufacturing, sales and marketing plans for AUCATZYL, the market potential for AUCATZYL and the status of clinical trials, development and/or regulatory time lines and market opportunities for obe-cel and our other product candidates. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations and reflect our views only as of today. We assume no obligation to update any such forward-looking statements. For a discussion of the material risks and uncertainties that could affect our actual results, please refer to the risks identified in today's press release and in our SEC filings, both available on the Investors section of our website. On Slide 3, you'll see the agenda for today's call. As usual, Christian will provide an overview of our operational highlights. Rob will then discuss the financial results, and Christian will conclude with upcoming milestones and closing remarks. We'll then take questions. With that, I'll turn it over to Christian. Christian Itin: Thank you, Amanda, and welcome, everyone, to our Q4 and full year update. As we have communicated in January, we had a very good first year of launch with AUCATZYL in the U.S. with $74.3 million in revenue recognized in 2025. By the end of 2025, we had 67 centers activated and are building on positive physician feedback and reliable high-quality product delivery for our second year. We are reiterating our guidance for 2026 with net revenue of $120 million to $135 million, a shift to positive gross margins in 2026 and increasing our commercial footprint, targeting more than 80 activated centers by end of 2026. Regarding gross margins, larger volumes will drive down fixed costs and improvements in the operating model will reduce variable cost per batch. By the end of 2025, we had also achieved regulatory approvals in the EU and in the U.K. and achieved market access in the U.K. and have initiated the launch at the very beginning of this year. On Slide 5, alongside the launch in the U.S., the ROCCA Consortium, which stands for real-world outcomes collaborative of CAR T in Adult ALL, collected data from all patients treated with AUCATZYL within participating institutions. Overall, 96 patients were apheresed. Of those, 91 actually achieved the infusions. And 5 patients did not receive an infusion due to medical reasons, either due to progressive disease or a combination of progressive disease and infection or a lineage switch of the disease and loss of CD19. Of the 91 patients that received the dosing, both infusions were received in all of those patients. And by the time of the analysis at the beginning of this year, 84 patients were evaluable for a day 28 assessment for response. The median follow-up is obviously relatively short because this was the first year of launch. So the median follow-up was 137 days from first CAR T cell infusion. Moving to Slide #6. What we're seeing in terms of the outcomes, we're looking here at both the outcome of the ROCCA Consortium in the real-world setting, and we actually juxtapose our prior clinical trial experience in the FELIX study. What is worthwhile realizing that the 96 patients that were actually collected in the database approximate about 60% of the U.S. commercial patients that were treated during the course of the first year of launch. When we look in terms of the patient population, we do see that we see a wide range of age with a median age of about 50 years comparable to what we had in FELIX and a very wide range, including patients that were very much on the elderly side already. Now what was very encouraging was to also see that when moving to the real-world setting that we actually were able to maintain the safety profile that we have seen with AUCATZYL or obe-cel in the FELIX study. So the real-world observation was from a CRS perspective, from a cytokine release syndrome perspective, is that about 59% of the patients had a cytokine release syndrome of Grade 1 or Grade 2, but no patient experienced a Grade 3 or higher cytokine release syndrome. Similarly, when we're looking in the -- on to the ICANS side, we had 17% of the patients that experienced Grade 1 or Grade 2 ICANS and only 3% experienced Grade 3 ICANS in this -- in the real-world setting. When you then look at the -- and compare that to the FELIX experience, you do see that, that actually does translate very well. We had in FELIX on CRS, a slightly higher level overall of cytokine release syndrome observed. And we also had a small proportion of 2% of the patients with high-grade cytokine release syndrome. And similarly, on the neurological toxicity side on the ICANS, we had in the FELIX study, 23% of the patients experiencing ICANS and about 7% experienced high-grade ICANS. So overall, a very nice reproduction of our clinical experience now in the actual real-world setting. Now when we look at the efficacy side, obviously, this is early data. So the -- what was available is the tumor assessment at day 28. Further data may become available at later time points, but that is what so far has been analyzed and what was presented at the ASGCT meeting in an oral presentation this year in Salt Lake City. What you see is, again, on the left-hand side, the data from the real-world setting. And you can see that overall, we have about 92% overall complete remission rate in the real-world setting, which actually is quite similar to what we've seen overall from a picture perspective with the mature FELIX data at 3 months, and it looks somewhat improved over the day 28 assessment in the FELIX study. But this, again, is a very nice, I think, confirmation of the data and the observations we had in our clinical trial now in a real-world setting and in patients that were obviously now treated in the normal standard of care environment that obviously at times can differ from clinical trial environments. So what is important is, obviously, the data is very nicely aligned with what we have prior observed. Very nicely corroborating the data that we have presented in the past. But what we also do see in the patient population that there is also a wider range of patients included from a tumor burden perspective, as you would expect in the real-world setting, where once you have evidence of disease coming back, you wouldn't wait treating the patient until the patient had high disease burden, but you would intervene at an earlier time point. It's reflective of the actual standard of care that we're seeing in the disease setting. So very encouraging observation of the first year. I think for us, quite a remarkable coincidence that indeed it was -- the Consortium was ready to collect the data practically from day 1 that we were able to make product available. And with that, get a real-time view of the performance of the product, both from a manufacturing, from a supply perspective, but also from an outcomes perspective. So with that, I'd like to move to Slide #7. And just a brief word on the overall activities that we have, in particularly around obe-cel oral capsule. Obviously, we have now a very strong foundation in the Adult ALL segment with our first label and the product in the market and performing well in the market. And we're now obviously building on that to actually broaden the utility of the product across a range of additional indications. And obviously, one of the first indications that is natural -- it's very natural to add is actually to aim for an ability to offer the product across the entire age range within acute leukemia. And hence, we started the work on the CATULUS study, and I'll briefly show you the data in the upcoming 2 slides. But what we're doing with the CATULUS data is really looking to actually get a data set that allows us to also get to a label for pediatric patients. We had started with a Phase 1 data set, which was presented at ASH just at the end of last year. And based on that data and discussions with the agency, we agreed on a path to expand the study and with that expanded study should have the data as a pivotal study to support a future label in this particular pediatric population. The second study that obviously we've been very active in, and we also reported data on at the end of last year, first at ACR and then in an oral presentation at ASH is the first experience that we gained in the autoimmune setting, and this is in systemic lupus with very advanced patients. It's the CARLYSLE study. This is a Phase 1 study where we evaluated the activity of the product and the safety of the product in this group of patients. And we have reported initial data based on that data and also interaction with the agency, we designed then the LUMINA study, which is focusing on lupus nephritis patients that are advanced patients, and we're in the process of actually enrolling that study. So that study is off the ground and running. And we expect data in 2028 for the lupus nephritis population. We have alignment with the FDA on the design and also as the design as a pivotal study to get us to enable the approval of the product if the data obviously can be generated. In addition, we're looking at progressive MS as sort of an exploratory study. That's a Phase 1 study called the BOBCAT study, which is currently enrolling. We treated the first patient in October last year. So that's enrolling, and we expect to have full data for this Phase 1 experience during the course of 2027 and hope to have early data by the end of this year to get a first view. Overall, when you look at the flow from the pivotal study perspective, the pediatric ALL study, we expect to have data by the end of 2027. The LUMINA study, again, pivotal data in '28. And in '26, we expect, obviously, a longer-term update and data update from the CARLYSLE study, which is planned for the end of the year. Now in addition, there are additional opportunities that we see with the products that we actually have obviously, on the one hand, a continuation of data collection that we expect to see from the ROCCA Consortium and sort of more of that experience being frankly, collected and analyzed in their hands. And then on the other hand, there is a substantial interest for investigator-sponsored studies with a particular focus on the opportunity in frontline patients to see whether you could actually develop a definitive consolidation and have data in that -- from that -- in that space to see whether indeed there is activity in that early setting as well. So there's quite a lot of interest, obviously, to explore a broader opportunity base here for the product. And also when we look at our internal studies, I think a very nice news flow as we go through '26 and '27 into '28 with very meaningful data updates and hopefully, data sets that will enable a broadening of the opportunity commercially as well for the product. With that, I would like to actually, on the next 2 slides, briefly summarize the data that was presented at the ASH conference for the pediatric experience. These are all relapsed/refractory patients. And I would like to start on Slide #8 with just a brief view on the safety data as it was presented at ASH. And what you can see when you go through the safety data set is you see this is consistent with what we have seen in the adult population in terms of immunological toxicity infection risk as well as neutropenia, which is very well characterized in this population. When we then go to Slide #9, what you can see here is a swim plot. First, I think, to observe is that, in fact, almost all patients managed to actually achieve a complete remission, either a CR or CRi. Overall, we do see that it was a CR/CRi level at the 95% level and the CR level in just around 91% of the patients. So clearly confirming the very high level of activity, consistent, obviously, with what we're seeing in the adult population as well. And we start to see a good duration of responses, as you sort of see the swim plot here in front of you. Obviously, the follow-up is still relatively early in this population. We have a median follow-up of 8.8 months. With that, I'd like to just briefly look on Slide #10 on how we're actually moving forward on the pediatric side. So we have decided to add an additional 30 patients for the Phase 2 portion of the study. It's an international study. So we have centers in the U.S., U.K. and in Spain active. We have developed the approach in collaboration with the Children's Oncology Group, the key group for pediatric oncology in the U.S. And in terms of the age range, we include patients between 0 and 18 years of age. You remember that our label in the U.S. is 18 years and older. And we have stipulated a minimum body weight, to 6 kilogram. Remember, the way we dose in pediatric patients with a single infusion with 1 million cells per kilogram. In terms of the population that we're including, obviously, these are relapsed/refractory patients, and we have a particular focus on the patients that have in the first line, a high-risk relapse and that -- first -- sorry, first line high-risk relapse population, which is actually populations currently excluded from access to CAR T therapy. I want to make sure there's an opportunity also for those patients to benefit from CAR T therapy. And hence, we're including that population in addition to obviously the broader range of relapsed/refractory patients. So this is where we are on the pediatric ALL side. As I mentioned, we expect to have data by the end of 2027. Moving to Slide 11 and the advanced SLE population that we have studied in the CARLYSLE study. We have determined the recommended Phase 2 dose in that study, which is a 50 million single infusion after the dose. When we look at the patient population that we have in the Phase 1, it was patients that had to the large extent, significantly impaired kidney function as well as quite a wide range of additional manifestations of autoimmune disease that you would actually then see represented in the SLEDAI-2K disease scores. And in fact, we're having overall a population with very high levels of disease scores, which obviously represent a very challenging to patient population. We have now 11.4 months of follow-up in the 50 million cell dose cohort. We achieved in 5 out of 6 of those patients, a DORIS response, achieved in 3 of 6 a complete renal remission. The product was overall well tolerated. We saw no ICANS and we had no high-grade CRS in these patients. And we start to get a good feel for some of the key biomarkers. And just to give you just a quick snapshot on the data, if you go to Slide #12. This is actually from the actual ASH presentation and starting on the left-hand upper side, the summary of the safety data. Obviously, the key there is overall very good, very well tolerated product and minimal immunological toxicity that we have picked up in the form of CRS and ICANS. Below that, you see the SLEDAI scores. You see in different colors, the different manifestations of autoimmune disease that are shown on the legend on the right-hand side of that panel. And you can see that these patients do improve over time. The blue color that you see is actually the renal scores in these patients. And obviously, some of these patients already had very advanced, very challenging disease. If we go to the right upper panel, you do see kind of a depiction of the DORIS remissions. And you see that 5 of the 6 patients actually converted into a DORIS response. The DORIS response actually looks at both the manifestation of the disease as you would actually have it depicted in the SLEDI score. So you need to have the SLEDI score improvement. But you also want to see that the patients are getting down to low levels of corticosteroids of no more than 5 milligrams per day or less. And so it is both a measure, obviously, of the improvement overall, but also the fact that, that is now a state that the patients are in where they get what's typically referred to as physiological levels of steroids. Now at the bottom on the right-hand side, we see basically took a look at both the persistence and the recovery of the B cell compartment. When we look at persistence, we do see that the median persistence is 3 months for the product. And when we look at the time to recovery, the median time to recovery for the B cells, we see that is at 6 months. We've seen very deep remission, a reset, a naive state after the B cells start to reappear and then obviously, over time, differentiation of these cells from there on forward. But this is clearly a deep cut and a nice sequence of loss of persistence followed by recurrence of B cells, as you would expect from a mechanism of action perspective. When we then go to Slide 13, this is a quick look at the way that we are developing in lupus nephritis. We've obviously done the CARLYSLE study. We selected the dose. We actually also have included now in the CARLYSLE study and report at the end of the year also teenagers, patients 12 years and older and include that population as well because we believe it's a particular medical need and quite often a very aggressive course of the disease in these teenagers and young adults. Based on this data, we're moving or have moved into the LUMINA study, which is a single-arm, 30-patients study in patients that have gone through B cell depleting antibodies. And Calcineurin inhibitors failed on both and are now basically outside the approved standard of care in this -- for that stage of the disease. The study is enrolling, and we're actually are active in the U.S., in the U.K., in Spain, and we're likely going to add 1 or 2 additional countries on top. When we then think forward, obviously, there is an opportunity once you actually create a foothold in the indication to then think about the ability to broadening the use of the product in a wider set of patients, and that's going to be sort of the second step once we sort of achieved our first approval in the indication. We expect data for the LUMINA study, as indicated in 2028. And then finally, on Slide 14, just as a reminder, the progressive MS study that we're conducting in the BOBCAT study. And obviously here, really what we're looking at is both the safety or obviously, the safety profile on the one hand, the clinical impact from a disease score perspective as well as a range of biomarkers and imaging measures to understand the activity of the product in these patients and obviously, depending on outcome, we'll move from there. So with that, we're getting to the financial results section, and I'm handing over to Rob. Robert Dolski: Thanks, Christian, and good morning or good afternoon to everyone. It's my pleasure to review our financial results for the fourth quarter of 2025, and I'll be referring to the information on Slide 16. Before diving into the specific numbers, I would like to note a refinement to the accounting treatment related to our product revenue and cost of goods sold that are reflected in the results that we'll discuss today. Importantly, this change has no material impact on our existing or anticipated AUCATZYL revenue and has a practical benefit of better aligning the timing of revenue and cost of sales. On a full year 2025 basis and moving forward, we plan to recognize both the full value of product sales and the associated cost of goods sold upon confirmation of the second dose administration for AUCATZYL. From a revenue perspective, this means we will no longer recognize a 50-50 split across the first and second dose confirmations. This also eliminates the previous deferred revenue accounting and earlier cost of goods recognition associated with those deferred revenues. The accounting for personalized cell therapy products is an emerging area. And during our year-end reported review process, we and our auditor concluded on this refined position within the accounting standards and again, with no material impact on the financial statements. Now on to the results. Net product revenue for the fourth quarter of 2025 was $23.3 million, bringing us to a total of $74.3 million for the first full year of AUCATZYL sales. I'll also note that we also recorded a $1 million license revenue component in Q4 2025, related to the achievement of a clinical milestone under our license and option agreement with Moderna. Combined, this gives you the $24.3 million in total revenue for the fourth quarter. Cost of sales in the fourth quarter totaled $25.3 million, and that's compared to $11.4 million for the same period in 2024. This change was primarily driven by having a full quarter of sales in 2025 and having only a partial quarter of commercial manufacturing activity expense recognition upon FDA approval back in November of 2024. Additionally, cost of sales in Q4 2025 includes canceled orders in the period, patient access program product, inventory reserves or write-offs, third-party royalties for certain technology licenses. As discussed on our full year guidance, we expect to shift to positive gross margin this year based on increasing patient volume, improving overall plant utilization, together with executing on operational efficiencies. Moving on, our research and development expense was $35.6 million for the fourth quarter of 2025. That compared to $30.8 million during the same period in 2024. This change was primarily driven by an increase in research and development activities, including some of our new clinical trial start-up and a reduction in the period-over-period U.K. R&D tax credit. This was partially offset by commercial manufacturing-related employee and infrastructure costs that have now shifted to cost of sales and inventory. Our selling, general and administrative expenses increased to $35.8 million for the fourth quarter of 2025 compared to $33.7 million in the same period in 2024. This increase was primarily due to salaries and other employee-related costs, driven by the increased headcount supporting the commercialization activities. Our loss from operations for the 3 months ended December 31, 2025, was $72.5 million as compared to $75.9 million for the same period in '24. And finally, net loss was $90.3 million for the 3 months ending December 31, 2025, compared to $27.6 million for the same period in '24. Our cash, cash equivalents and marketable securities at December 31, 2025, totaled $300.7 million. Operator: Hello, Rob? Rob are you still there? SP1 Pardon me, Amanda, can you hear me? Christian Itin: This is Christian. I can hear you. Operator: Okay. Looks like we might have just lost Rob. . [Technical Difficulty]. Christian Itin: Okay. I think I'm going to take over. Robert Dolski: Sorry about that. Operator: Are you back? Okay. Robert Dolski: Okay. I'm going to pick up on the -- our cash and cash equivalents and marketable securities at the end of '25 totaled $300.7 million as compared to $588 million at the end of December 2024. That decrease was primarily driven by net cash used in operating activities and impacted by a delayed receipt of approximately $18.6 million related to the 2023 R&D tax credit that we are expecting from the U.K. HMRC. As Christian noted, we are reiterating financial guidance issued in January that we expect between $120 million and $135 million in AUCATZYL net product revenue in 2026. This includes contribution from both the U.S. and U.K. markets. Finally, based on our current operating plans, including anticipated AUCATZYL net revenues, we expect that current and projected cash, cash equivalents and marketable securities will be sufficient to fund our operations into Q4 2027. I'll now hand back to Christian to wrap up with a brief outlook on expected milestones. Christian? Christian Itin: Thanks, Rob. All right. So going to Slide 18, upcoming milestones. We're actually just about 2 weeks away from a Virtual KOL Event that will be focused on acute leukemia and the opportunity there. I'll talk a little bit more on the next slide about that. We then actually have -- if you look into '26, we expect towards the end of the year, longer-term follow-up from the CARLYSLE Phase 1 trial. We also expect first data from our AUTO8 program in collaboration with UCL on light chain amyloidosis. Name of the trial is ALARIC and early data from the BOBCAT Phase 1 trial in progressive MS. The full data for BOBCAT is then expecting during the course of 2027. And we also, by the year-end of '27, expect the full Phase 2 data for the CATULUS study, which obviously is designed as a pivotal study. And then the second pivotal study, the LUMINA study in lupus nephritis is expected to read out in 2028. So with that, just a quick look on Slide 19, the event that we're planning for April 8. We got a great group of speakers who will talk through the landscape and the opportunity. It starts with Dr. Jae Park from Memorial Sloan Kettering, who will talk about the Adult ALL treatment landscape and unmet medical need. Dr. Lori Muffly from Stanford will talk through the ROCCA real world experience with AUCATZYL. Dr. Elias Jabbour from MD Anderson will look at the opportunity in the earlier lines of treatment in ALL and particularly through the lens of investigator-sponsored trials. And then we will get to the pediatric population with Dr. Michael Pulsipher from Utah University Huntsman, who will look at the medical need in the pediatric patients and the initial data that we have from the CATULUS study. The event, obviously, is going to be webcast and also will be recorded. And we're looking forward to hopefully many of you being able to join us, a great group of speakers, and I think a very nice direct feedback and sense for where the disease setting is and where the opportunities are and also, obviously, their perception of how AUCATZYL fits into this landscape. With that, just to finish and to wrap up, the focus for 2026, clearly drive market share for a AUCATZYL, improve the gross margins for the product and expand the utility of obe-cel with the clinical trial programs, development programs that we have ongoing that are designed to give us overall a broader range of indications ultimately to be able to serve with obe-cel. With that, I think we're at the end of the prepared remarks, and we're happy to take questions. Operator: [Operator Instructions] Our first question comes from James Shin with Deutsche Bank. James Shin: I have a couple. For the 2026 guide of $120 million to $135 million, Christian, can you -- or Rob, can you guys help us with how much might come from U.K. and other ex-U.S. regions? Secondly, what's the latest on more EU adoption or reimbursement for AUCATZYL? And then Christian, given we're pretty much through 1Q '26, can you shed any light on how AUCATZYL uptake has trended? Christian Itin: Yes. Well, first of all, thanks a lot for joining, James. So with regards to the U.K. guidance, as Rob said, this includes both the U.S. as well as the U.K. We're not planning to break that out. Obviously, we're early on in the launch. The U.K. is a substantially smaller country than the U.S. and much smaller population. So we're going to be actually presenting the data in the aggregate. And we do not expect a major contribution yet from the U.K. given that this is obviously very early in the process. So at this point, I think too early to tell and probably too early and frankly, too early to break out. With regards to other EU countries, we do not expect in 2026 any contributions from other -- from EU countries. As you remember, we have an approval in the EU, and we're actually in conversation with market access authorities in Europe to see whether there's appropriate path here for us to take. I think what is very clear for us is that obviously, we need to be able to enter a market in a way that actually is economically sensible. And different from maybe some of the larger players, we cannot afford actually taking a loss doing that. So we're in the process of evaluating, and we certainly will keep you updated as we learn more and we get a better understanding of the dynamics here. But for 2026, we are not actually guiding to any revenue coming outside of the U.S. and U.K. And with regards to Q1, obviously, we're not going to break out individual quarters. We've given you the full year guidance as we had actually at the beginning of the year and now reiterated. I think in overall, when you look during the course of last year, what we certainly saw were elements of seasonality that we're picking up. And certainly, in the -- as you sort of go through in the summer with vacation periods that is clearly visible as well as kind of the year-end holidays do have an impact on patients, particularly those patients that are -- have an ability to, frankly, buy some time or bridge some time and obviously are interested to sort of spend time with their families, particularly over Christmas, New Year's. So there's elements there that we see over the years. But overall, we're not going to give, I think, any sort of particular guidance per quarter because, frankly, there's too much variability in those numbers, but we're confident on the aggregate for the full year. Operator: Our next question comes from Gil Blum with Needham & Company. Gil Blum: So very nice ROCCA results. Do you think this is going to influence physician behavior? Is this sufficiently socialized? I mean feedback that we've gotten is most physicians already view AUCATZYL as a preferred therapeutic? Christian Itin: Thanks for joining, Gil. Obviously, we're very pleased with the observation, the real-world observation. And I think what's important to understand in this disease setting is that, obviously, this is an incidence-driven disease. It's a onetime therapy. And so what's really at the core of your ability to actually build market share is the continued buildup of confidence, experience and confidence that the treating physicians have. So that's a critical component in that, obviously, the ROCCA data, which is the physician's own data, obviously, is very important. Now we have to understand when we look into kind of the physician groups that actually are treating ALL patients, this is not just the transplanters or CAR T therapists that actually are treating ALL patients, but the wide range of hemato-oncologists who are treating them and particularly in the frontline and early relapse setting. So there's a lot of work that we do to sort of expand, obviously, the adoption of the product across the range of stem cell transplanters and CAR T therapists, but also increase the awareness within the group of those physicians that tend to do the frontline therapy. So those are kind of the key dimensions that we're working on. And obviously, the data is very important because this is their own data, their own experience in many of the centers for many of the centers that are very relevant for the treatment of ALL patients. So we think the data is very important, but there is a substantial amount of work that we have ahead of us to sort of go from a market penetration that is probably somewhere around the 10% range to really start driving that towards the levels of penetration that we're seeing with Blincyto, which is what we believe actually the actual potential would look like. Gil Blum: And are there any insights you can provide on how the LUMINA enrollment is going? Christian Itin: So the LUMINA study, as I indicated, is taking place in several countries. We started out in the U.K. and obviously building on the initial experience from the CARLYSLE study. So that is starting to get -- I think, to start to gain good momentum. We're in the process of adding U.S. centers, and we expect U.S. centers to come online in the upcoming quarter. And with that, I think we're going to start to see, I think, a very nice sort of development in the disease setting and in the enrollment characteristics. So far, we're seeing kind of what we had expected to see in the indication and then seeing the type of flow of patients consistent with what our expectations were. Gil Blum: All right. And one last one for Rob. So now that we're recognizing revenues and costs on the second dose, how should we view patients only receive one dose? Robert Dolski: Yes. Thanks for the question, Gil. So maybe just as a reminder on that, I mean, if you go back to the experience in the clinical study or even commercial experience last year, we're talking about a relatively small number of situations in patients. So they don't get the second dose. So the cutoff will be certainly, if there's a first dose towards the end of a quarter, that patient may still get the second dose, that revenue won't be recognized. But if they get the second dose in the second -- in the next period would be recognized then. If the patient only ever gets the first dose, that's going to be a situation where there's a number of factors that will feed in, depending on the type of patient in terms of the split CMS reimbursement or credits according to the trade policy that may apply. But eventually, what will happen there is we will wait until cash receipt to recognize that revenue on that individual patient. Whether it's a full reimbursement or a 50% reimbursement, it really depends on the patient characteristics. Operator: Our next question comes from Salim Syed with Mizuho. Salim Syed: Congrats on the progress. Just one for us on cadence of catalysts for this year. So I know we're getting a lot of data here at the year-end of '26. But a lot of these trials like BOBCAT, LUMINA, et cetera, I think even ALARIC are all open-label studies with -- I presume you're going to be looking at data through the course of the year. Is there any potential here on these studies for potential early disclosure? And can you just remind us specifically on BOBCAT, the intervals that you'll be measuring disability progression? Christian Itin: Yes. Really good question. Thanks for joining us. With regards to CATULUS the -- on the CARLYSLE study, obviously, we have presented sort of the baseline data at the end of last year. So what the next real question for that study is really kind of the longer-term outcome in these patients and obviously also the additional experience in the adolescent patients. We don't think we're going to make sense to actually to piecemeal that data. I think you want to give a proper update with a comprehensive review of the data, which is what we're planning to do. With regards to the ALARIC study, so that's the first data cut we're going to do in that study. Obviously, you want to have enough patients and also from a dose level perspective, have enough experience to actually look at the data and understand kind of what the impact of the treatment is. With regards to BOBCAT, one of the key things that obviously you'd like to understand is, on the one hand, the pharmacodynamic markers that you can look at and some of the imaging markers. But you also want to obviously see whether there is actually any sign of clinical activity eventually, and that will actually take time to build. So in a way, it's tempting to look very early, but the thing is you will not actually have any understanding whether or not there is a clinical -- anything you could link to a clinical outcome. And I think ultimately, that's ultimately what we would like to do is to be able to sort of make these connections. But even if you look at the pharmacodynamic markers, you need a certain number of data points that you collect, so you understand what trends are to actually get a good sense of what it is you're looking at. The individual data points, I think, are tricky, particularly early on and can be misleading. So we're not planning to actually come early with data from BOBCAT that doesn't make sense because I think the data probably would be not interpretable as much as we can get excited about individual patients and individual observations. So we're planning to come towards the year-end, but we're not expecting to come earlier than that because I don't think it's helpful. Salim Syed: Okay. And same on LUMINA, I presume there'd be no potential early disclosure here that's open label. Christian Itin: Well, it's open label, but it's also a pivotal study. So the thing you don't want to do is you don't want to actually start to put information out that may actually impact the trial itself. And that's particularly tricky in single-arm studies and open-label studies. So that's something you absolutely would not do. And remember, we didn't do -- we didn't do that with the FELIX study either. Because you start to risk actually the integrity of the study. Operator: Our next question comes from Matt Phipps with William Blair. Matthew Phipps: On the progressive MS study, you were kind of hitting on this, but just, I guess, a follow-up. Stanford recently presented data on 6 patients at ACTRIMS. And a couple of patients maybe saw some improvements by 6 months in ES scores and CSF oligoclonal bands. I guess any thoughts on this data and then how that makes you think about what you could present at BOBCAT later this year? And then for AUTO8 and AL amyloidosis, similarly, I mean, cilta-cel has shown very high response rates in that setting. What do you think the CD19 aspect of AUTO8 gets you as far as differentiation from cilta-cel? Christian Itin: Yes. Very good questions. Thanks, Matt. So with regards to the data that was presented at ACTRIMS from the Stanford team, I think overall, encouraging data. They're showing certain correlations between pharmacodynamic markers, and there's early observations on the disease score in these patients. The challenge, and this is goes back to the answer I gave to Salim before, the challenge is that obviously part of those disease scores also include patient assessment and physician assessment, which obviously can be more subjective. And that actually creates some of the challenges in the interpretability of that data, particularly if you look at it early on. Overall, what you look -- what you'd like to see is probably some congruence between pharmacodynamic activity and some early indication of activity. And we think that stage, we're probably going to reach sometime next year in '27 with a longer-term follow-up and more stability in the data. I think early on, you'd be looking more at some of the pharmacodynamic markers and general presence and product properties, persistence, presence of the product in CSS, those types of assessments that you'd be looking at and then obviously, B-cell depletion data and so on. But I think in terms of going from there forward and sort of concluding whether or not you might actually have the type of clinical outcome, I think, would be premature in the early time point I think we get a better sense for that during the course of next year, but it takes a longer observation time to start to be able to have put some weight on that. What was encouraging with the Stanford data was it suggested that the patients did improve. But again, it's early data and it's early days, but definitely worthwhile, obviously, pursuing and frankly, figuring it out. And then with regards to the ALARIC data, so that's obviously light chain amyloidosis, predominantly a plasma cell disorder. And what we're looking at there is we're actually looking predominantly at the action of the BCMA component of the product. And then we're going to see whether or not the CD19 component adds to that or not. But the fundamental activity, we expect, obviously, very clearly to be driven by the BCMA either predominantly or maybe even exclusively. Operator: Our next question comes from Roger Song with Jefferies. Unknown Analyst: This is [ Fiona ] up for Roger. Congrats on the quarter. So I understand that you will shift to a positive gross margin this year. And how should we think about the near-term on involvement of gross margin once it turns positive? And with your partnership with Soliris platform early this year, how quickly can this automated platform be integrated into your commercial supply chain? And what's the magnitude of cost reduction do you expect from this approach? Christian Itin: Yes. Very good questions. Thank you. So let me start out with just -- what we're doing in order to actually drive down overall production costs and also with that improve gross margins for the product. The 2 key areas. One is quite obvious, which is you run more products through the infrastructure. And with that, the fixed cost obviously can be broken down to a large number, a larger number of products. And with that, the contribution of fixed costs becomes reduced on a product per product basis. That's very straightforward. The second aspect, which is really critical, though, is that we're also doing a lot of work in optimizing the operating model that we have in our facility and really are optimizing every step along the way. And between those 2 elements, the optimization on the one hand and the higher level of volume through the facility, we actually can drive the cost down substantially over time. Overall, that is going to be the key trajectory we're going to be on and will be the key driver to get us to an economically attractive place. The Soliris opportunity is obviously one where we do a feasibility study to see what the comparability of the data between the 2 different manufacturing setups, which is from an operating setup slightly different. But obviously, the biology that you're running is the same biology in the 2 systems. For us, the particular interest is actually in -- for situations where we might actually have to scale substantially because of a new indication that we might be able to unlock that may require us to actually set up a substantially larger manufacturing capacity. And so the -- when we look at Solaris, this is much more an ability to scale to a substantially higher level of volume rather than actually to drive down costs. the primary focus is actually on the ability to scale. And the reason why we're looking into it is that we obviously do not know where the out where we're going to come out on some of the new indications, particularly also on MS, but assume a positive outcome in MS, that could actually drive substantial demand and substantial need to be able to stand up capacity. And that is sort of the context under which we're actually looking at this, and we're looking doing the feasibility work because we believe that could be an attractive way to actually scale and scale in an economical way. It doesn't actually take anything away from what we're doing at our own facility at the Nucleus facility, which is obviously really focused on delivering for the ALL patients and the smaller subsets of the autoimmune patients, which is what the facility is designed to support. Operator: Our next question comes from Yanan Zhu with Wells Fargo. Yanan Zhu: Just maybe a follow-up to the primary MS study questions earlier. The study has 3 dose cohorts at the year-end readout, can you talk about how many dose cohorts could we expect and whether a signal of efficacy can be discerned from kind of dose response on some of the metrics? And if you could be a little more specific on powerful success, that would be very helpful. And I have a follow-up as well. Christian Itin: Okay. Thanks for joining Yanan and all really good questions. Obviously, this is an exploratory study, which means that we expect this is a study where we will actually learn quite a bit along the way. We've designed it as a dose escalation study. What we do know is that the product obviously does give us an ability to penetrate the blood-brain barrier and be active in the brain. We've seen that with acute leukemia patients with CNS involvement. We've seen it also in primary CNS lymphoma patients. So we know the product has the right properties. It has an ability to do that. What the sort of the appropriate dose level is, is something we're evaluating in this study. We started at 100 million cell dose. We have an ability to either step up or step down, both is possible. And obviously, one of the key things we're going to be looking at is the presence of CAR T cells in CSF as sort of a measure of the ability to actually cross the blood-brain barrier and going to the compartment that we know that systemically applied therapeutics typically cannot actually get to and typically cannot be active in. So that's where the mechanism helps a lot and gives us sort of a differentiation here. Now in terms of where -- what we're sort of working through is obviously working through the dose levels. We need to have with each one, I think, a reasonable level of follow-up. So by the end of the year, I think it would be really very early data from our initial dose cohort to get a feel for what that data might look like. And it will be, as I indicated, predominantly around the product properties in terms of expansion, the safety profile, obviously, the ability to sort of actually access the CSF -- and then I think, additional sort of typical pharmacodynamic markers, including B-cell depletion and so on. And then we're going to obviously record all the typical other parameters that you can record both biochemicals, imaging parameters. And we'll see whether there's any correlation between any of these parameters. I think it will be very -- it will be too early to actually understand where there are true connections and where there's a link to outcome. I think that is just not enough observation time. But we believe as we go through the course of next year that, that we start to get to a place where we actually have a longer observation time with that have an opportunity to start looking more at clinical impact and hopefully can put more emphasis, but also more trust in the data that we're collecting on the clinical side, just given the inherent variability that, that data can actually represent. So that's where we are. So it will be very -- an early peak, but then the much more relevant data during the course of 2027. Yanan Zhu: Great. That's super helpful. Then on the B-ALL launch for AUCATZYL, can you comment on whether there's any use in earlier line setting such as MRD-positive consolidation? And also, we see there is a Sloan Kettering ITT that just opened for MRD-negative consolidation. Can you share your thoughts on how that could be leveraged in expanding the opportunity? Christian Itin: Right. So in terms of the actual use, current use, what we're seeing is that -- and this was what was presented at the ASTCT meeting, and Laurie will talk more specifically to it. But what we're seeing is similar to what we've seen with other products in the relapsed/refractory setting that patients can be included that actually have mineral residual disease or low disease burden at the time of inclusion. They're still relapsed/refractory. So it's the same setting, but it's basically inclusion at a time when the disease hasn't actually grown quite to the level of morphological disease. So that we do see in the data, we see maybe about 1/3 of the patients, give or take, in that bucket, which is frankly what you would expect to see. This is the standard of care. This is the way these patients are being assessed and the intervention is done when you see when you have evidence of relapse. And as I mentioned, none of the physicians will wait for things to get worse for a patient when they already have evidence of the disease coming back. So we do see that, which is very expected in terms of the real-world setting. I don't think we have patients that actually are in a frontline MRD setting at this point. I don't think we do. But that's something that we'll need to sort of look at and sort of see more kind of data coming back from the Consortium to see whether indeed that might happen over time. It's not something that we expect to see for the time being. Now what you've picked up with the memorial entry in clinicaltrial.gov is a trial that's done in connection with other centers across the U.S. and there's a second study as well in the U.S. that are currently looking for as an investigator-sponsored studies where those investigators are interested in exploring the use of obe-cel in frontline patients that have gone through the initial frontline treatment and then actually have either evidence or no evidence of disease in the studies where it differ in terms of their designs in that regard to then do a consolidation, but do, in essence, have an ability and look at a population or patients that were treated not for the full extent of frontline treatment, which is like an 18-months treatment with quite a range of therapeutics and then at the end, put the CAR T, but rather actually look at an abbreviated initial therapy and aim for a definitive consolidation. That's the thought process that these investigators have sort of brought forward and what they're interested in looking at. And also it's an area we're very interested in. And from a fundamental perspective, certainly if you think about it from a patient perspective, would be desirable to find therapies that actually can actually reduce the overall treatment time and reduce the overall amount of toxicity that the patients do get exposed, particularly in the frontline treatment. So we understand that there could be real benefit in those settings. And I think we'll learn from those investigators experience, and we'll get a sense for the profile of the product in those patients. Operator: Our next question comes from Emily Bodnar with H.C. Wainwright. Emily Bodnar: I guess how much additional follow-up and durability data should we expect from the CARSLYLE trial later this year for the 50 million and 100 million cell doses? And what are you kind of looking to see to gain additional confidence in the LUMINA trial? Christian Itin: Yes. Thanks a lot for joining, Emily. So the CARSLYLE study, I did mention we had 8.8 months of follow-up for the data cut at ASH. I would assume for that -- and that's the initial cohort of the 50 million cohort. I would assume we have 12 more months between 6 and 12 more months, depending when the exact data count happens. So we're looking at somewhere in the range of 1.5 years to close to -- well, probably around 1.5 years of follow-up for the 50 million cohort. And the 100 million cohort will probably be just under probably a year of follow-up at that point in time and probably half a year follow-up for the adolescent patients. So that's kind of the ballpark in terms of follow-up that we expect. And in terms of the LUMINA study, the difference with the LUMINA study is that the population is slightly different. In the CARSLYLE study, it was SLE patients with organ involvement. Happens to be that the vast majority of these SLE patients had pretty significant kidney damage and kidney involvement. So they had a lupus nephritis component to their disease. What we're having here in the LUMINA study is more precisely defined the population and it's defined by the prior lines of treatment that the patients went through. In this -- in the LUMINA case, it's a CD20 or other B-cell depleting antibodies and calcineurin inhibitors being after those [ 2 lines ]. And at that point in time, you actually get sort of outside the approved therapeutics from a label perspective. And so it's more defined, it's more defined population. And then there's obviously a range of kidney -- level of kidney damage and a requirement for the inflammatory process to be ongoing. So indeed, this type of an approach has an ability to improve the outcome. So it's a different definition of the patients. Obviously, very similar overall properties, but it's a different way of defining the patient population as the basis to then actually have a definable primary endpoint that would be interpretable from a pivotal perspective. Operator: Ladies and gentlemen, we've reached the conclusion of the Q&A portion of today's conference. I'd like to turn the call back to Christian for any further remarks. Christian Itin: Well, first of all, thanks, everybody, for joining. We're looking forward to hopefully seeing or hearing from most of you on April 8 when we have the KOLs talk to us about the ALL disease setting of the opportunities. And obviously, after that, it's not far out, and we're going to be meeting again for the Q1. So thank you very much for joining today, and I wish you all a good time. Operator: Thank you, ladies and gentlemen. This does conclude today's presentation. We thank you for your participation. You may now disconnect, and have a wonderful day.
Operator: Good afternoon. Welcome to the Meitu 2025 Annual Results Presentation. We provide English simultaneous interpretation. If you'd like to listen to the interpretation, please log in through Zoom and click the Interpretation icon, select English channel. If you do not click on this channel, you will not hear the simultaneous interpretation. Today, the leaders participating include Mr. Xinhong Wu, Founder, Chairman and CEO of Meitu. Zeyuan Wu: Greetings. Operator: CFO and Company Secretary of Meitu, Mr. Gary Ngan; CPO and President of the Imaging Products Division, Mr. Chen Jianyi. A warm reminder, we include predictive statements, and many risk factors that we may not control may influence these predictive statements. Online participants, you need to rename and add your real name and affiliation name. Before giving your question during the Q&A session, please first clarify your affiliation and your real name. You may also provide your questions through audio or text in the comments section. Firstly, we provide information about our company. Zeyuan Wu: Investors, analysts and audiences, thank you for your participation. Before we formally start, I would like to extend about the announcement yesterday on behalf of the company. We found that some part of the results were published on social media. We investigated immediately after ensuring we found there may be some misoperations and functions in the process and some information was published on the account, and the responsible person deleted immediately. We took two effective matters. First, we deleted all content on the platform, and we applied for the suspension in the Hong Kong Stock Exchange. What's more? Relative information was just shortly spread on March 25th, and we ensure the smooth function on 26th. We feel sorry for all the inconveniences caused to our investors. Thank you all for joining today's earnings conference. Over the past few months, as generative AI technology has been evolving rapidly, there are various debates around the future of the AI industry. As you may have seen in the opening video through the QR code of -- that made the fastest moving trains, for example, from single model approach to model-agnostic strategy from AI-based apps to AI agents, from subscription to consuming tokens, from the form of our team, from mature teams to AI-driven teams. We reached a strong momentum. The adjusted net profit attributable to owners of the company grew 64.7% year-over-year to RMB 907 million (sic) [ RMB 970 million ] exceeding our latest thoughts on the AI applications. First, Meitu is an AI application company focused on the photo and video industry. Based on AI capabilities and efficiency-driven organization, we focus on high-value verticals and build industry-specific AI agent teams to help address users' end-to-end content creation needs, delivering high-quality output. In each specific use case, our AI agent teams are composed of multiple agents with distinct roles. They are responsible for efficiently executing different standardized repetitive tasks. Users can focus on creative ideation and decision making. The core advantage of the AI agent teams lies in their clear division of responsibilities and targeted training. Break down into multiple stages and assign corresponding roles and responsibilities to each agent, so we can ensure the teams perform better. Besides combining years of user insights, accumulated industry know-how and the ability to flexibly deploy models, we constantly translate AI technology into reliable product capability. Additionally, different models have different strengths. There is not a model that can cover all the areas suited for e-commerce styles. Vertical companies combining different models, it will be more common for companies to deploy models. We will focus on more flexible and global things. Centered around it, we will build AI teams meeting industry needs. Now, let me invite our Chief Product Officer, xiaobai, to elaborate on our AI agent teams. Jianyi Chen: Thank you, Xinhong. I will share our thoughts, mainly on how we plan to build the AI agent teams going forward. Firstly, for e-commerce-related content creation, we've been thinking for a long time. We think that we're not limited to e-commerce providers providing integrated method, but rather helping the suppliers to deliver more tangible results. According to what we observed, many of the e-commerce agents can design well-designed photos and images, but that's it. Many e-commerce companies lack the sufficient judgments of market and business, eventually causing the resulting product sales are often falling short of expectations. For instance, on Amazon, a product such as water bottles experience intense competition. For experienced e-commerce providers, we need to avoid the oversaturated competition of product background, such as home and living. Instead, they would pivot to fitness, to outdoor and other high-growth potential segments. So based on this know-how, DesignKit is building an e-commerce design specific AI agent teams. And this new agent team, aside from the original experts that have a good command in design, we have additional roles, such as for the verticals of e-commerce, we have market and data analysts. We have user research experts, copywriters, prompt designers, et cetera, delivering high-quality visual and also establishing a more refined social media commerce video expert team. For instance, the AI marketing strategist, they can serve as Creative Director, helping users to know what to capture, what to market, or we can have AI commercial directors responsible for the storyboard coordination, helping users to address how to present the visuals. We may also have AI audiovisual model experts acting as photographers, lighting specialists, actors, et cetera, helping users with their contents and their materials. Eventually, we have the AI smart editor compiling all of the editing and the distribution and the post-production methods, helping the users to package and publish their products. So what we aim to do for the e-commerce is to transform the visually appealing images to images that drive sales and to e-commerce videos that boost conversion rates. The DesignKit's new agent teams aim to help e-commerce service providers drive and achieve real business results. In addition, aside from DesignKit for Kaipai, for the talking videos, we also hope to create high conversion rate video contents. Based on this goal, we divided the three AI agent teams to assist with our eventual goal. For instance, we have the AI operations team. It helps with the trending topic research, account diagnostics and also content strategies. We also have the AI filming team, helping with the teleprompter assisted filming, the AI avatars, et cetera. We also have AI team helping with the rough and eventual cuts and editing. The entire workflow is coordinated by the AI director agents. Users only need to submit their industry know-how and their demands, and then the AI agent teams will take care of the rest of their work. For example, when an insurance broker asks for a short AI-generated video about pensions insurance, then once receiving the submission, the AI director agent will automatically break down the information and assign it to the corresponding teams, as mentioned before. And within a short time period, it can provide a ready-to-publish marketing video, and it can even generate social media covers and prompts alongside. So for small and medium-sized merchants, the advantage of this AI operations team is a 24/7 content providing team. And we aim for niche sectors, for instance, insurance, beauty solutions, local services, sectors that are heavily reliant on social content for customer acquisition. This not only lowers production costs, but also provides a reliable AI team that can have a high conversion rate, so we can help the suppliers to focus more on creative judgment and business operations. The production handed over more through directions that we have been doing. We have some progress over the past couple of months. For instance, within DesignKit, we already deployed our 4 agents, the e-commerce trial, poster and video agents. From December 2025, the agent function has become a primary driver of our revenue growth on both web and app portals. Our agent has a stable output quality. For instance, DesignKit, web-based DesignKit, it's e-commerce agent roughly has a 50% save rate, where users save at least 1 output per 2 outputs. Now furthermore, once the agent capabilities are integrated into Kaipai more, user experience continues to improve. According to the latest figures, the penetration rate of Kaipai agents have increased to approximately 11%. At the same time, the RoboNeo, from its official launch to current, it has topped the app stores across 26 countries and regions, demonstrating our globalization potential. Last but not least, as you may have noticed, we recently launched the Meitu CLI capabilities on our AI open platforms. Meanwhile, the first group of Meitu AI skills have been officially integrated into the OpenClaw ecosystem, covering personal and commercial use cases in the global photo and video industry. We focus on the core skills. We hope we could have from mature technologies around 8 core capabilities and we transform them into reusable skills. Based on the CloudHub and ACI, we can use Meitu AI's capabilities for photo and video production. We believe as OpenClaw community continues to grow, in the future, users do not need to switch between products. They simply need to have a single command and complete end-to-end creation. This can substantially increase productivity. Now I hand over to Gary to talk about the 2025 financial condition. King Leung Ngan: Thank you, Xinhong and Xiao Bai. In 2025, centered around the two core strategies of productivity and globalization, our operational performance continued to improve with sustained user growth. As of December 2025, our monthly active users grew 3.8% year-on-year to 276 million. Paying subscribers grew 34.1% year-over-year to 16.91 million. Over the past year, we continue to deepen the productivity strategy. As of December last year, paying subscribers of productivity tools grew 67.4% year-on-year, primarily driven by DesignKit and Kaipai, among them. Paying subscribers from international markets doubled, benefiting from the rapid growth of Vmake. Subscription rate for productivity tools reached 9%, an increase of 3.1 percentage points from December 2024. This further validates that with the continual improvement of our products, the output and the output quality, users' willingness to pay is also increasing. At the same time, the increase in subscription rate for productivity tools will help drive the increased proportion of high ARPU paying subscribers, providing support for our future revenue growth. On the globalization strategy front, 2025 was a year of significant milestones. Our MAU from international markets continue to grow, primarily driven by products for leisure. In the second half of 2025, we launched several global viral features, including 3D figurine, AI group photo, and AI snow. Among them, the AI group photo feature helped Meitu app MAU reach a record high and attracted over 3 million new users from the European markets. It also helped Meitu app top the U.S. iOS category chart for the first time. Driven by these features collectively, Meitu app topped the overall app store charts in 52 countries and regions, and the category charts in over 110 countries and regions. With the rollout globally for products, we observed in the second half of last year, paying subscribers in the international markets experience accelerating growth with the majority of new subscribers coming from high ARPU regions with mature subscription habits such as Europe, Americas and East Asia. Recently, in the top 50 global GenAI mobile apps list published by a16z, we ranked first in the photo, video and design category with 4 apps on the list, further solidifying our position as a globally leading AI photo and video application company. Looking ahead, we will continue to strengthen international markets. At the same time, we'll continue to launch highly effective features and optimize recommendation mechanisms, further enhancing users' stickiness. As a result, the oversubscription rate increased to 6.1% in 2025. Currently, the improvement in subscription rate remains our core growth drivers. Besides, with the deepening of our two core strategies, ARPU growth will also gradually become an important growth engine in the coming years. Before I begin sharing the company's financial results, I would like to note that in November 2025, we have officially discontinued the cosmetic supply chain management services, previously under the solutions for beauty industry. Under the IFRS, this business has been classified as a discontinued operation. Therefore, unless otherwise stated, all financial figures and the year-over-year comparisons for FY 2025 presented hereafter are continuing operation basis. In 2025, overall revenue grew by 28.8% year-on-year to RMB 3.86 billion, first largest revenue. Our core business of photo, video and design products grew by 41.6% year-over-year to RMB 2.95 billion. Looking at performance by market. Revenue from international markets grew by 37.4% year-over-year in 2025, outpacing growth rate in Mainland China. Revenue from international markets accounted for 38% of total in 2025, an increase of 2 percentage points compared with the same period last year. From the product perspective, in 2025, revenue from products for leisure and productivity tools accounted for 81% and 19% of overall photo, video and design products revenue, respectively. Advertising next, in 2025, revenue from this part was RMB 840 million, largely in line with 2024. We continue to remain cautiously optimistic about this business, although it is worth noticing that we have pioneered AI-powered creative advertising formats in brand advertisements. Collaborating with international brands such as McDonald's and Visa, this creative solutions have effectively enhanced the social interaction between users and advertisers. Last, revenue from others, which are mainly legacy and non-core businesses, was approximately RMB 62.11 million in 2025. Moving to the cost side, the total cost in 2025 was RMB 1.02 billion, a year-on-year increase of 42%. Specifically, the largest cost item was revenue-sharing fee to payment channels. The cost increases in line with revenue growth from photo, video and design products, rising 43.5% year-on-year, approximately are RMB 620 million. The second largest cost was computing power and cloud-related costs, growing 16.4% year-on-year to RMB 230 million. The third is third-party API costs accounted only middle single digit of total cost of sales because we were able to use the vertical-specific models and fine-tune open source models to fulfill the vast majority of our user demands, reflecting our in-house AI imaging companies. For gross profit, because we discontinued the low-margin cosmetic supply chain management business in 2025, the financial data in 2024 has been restated accordingly. Gross profit in 2025 was RMB 2.84 billion, a year-on-year increase of 24.6%, corresponding to a gross margin of 73.6%. The restated gross margin for 2024 was 76%. On a like-for-like basis, the gross margin decreased slightly, primarily due to two factors: one, the change in the revenue mix. Because the advertisement with high gross margins have decreased slightly and because to support our core imaging businesses and design businesses have continued to grow, the computing and API-related costs have increased compared to 2024. However, as mentioned earlier, thanks to our model-agnostic strategy and proprietary vertical model capabilities, the gross margin of our core business remains healthy and stable and will remain so in the future. On the expenses, selling and marketing roughly accounted for RMB 600 million, a year-on-year increase of 25.5%. The increase in expense was primarily directed to the growth of productivity tools in China and products for leisure and international markets. If we include the portion of combined revenue from photo, video and design products and advertising business, this ratio remained stable at 16% in 2024 and last year. This is consistent with the statistics -- the range, we previously communicated to the market in our earnings. The R&D expenses were RMB 950 million, a year-on-year increase of 3.8%. The relatively modest increase was primarily because the foundational model training costs decreased in 2025 for two reasons. Firstly, our MiracleVision model foundational training was completed roughly in 2024. Secondly, as we're fully committed to the model-agnostic strategy with fine-tuned open source models, proprietary vertical models, and third-party APIs, we delivered high-quality output for users and did not need to invest significantly into training foundational models. If we exclude the expenses related to foundational model training, the overall R&D expenses will increase 14.5% year-on-year, primarily driven by investment in our R&D talents. Looking ahead, we'll continue to optimize resource allocation between proprietary and external models and increase investment in vertical model training and R&D talents, continuing to enhance our product capabilities and competitiveness and delivering the users' diverse needs with precision. Administrative expenses were RMB 450 million, a year-on-year increase of 14%. On profitability, driven by sustained revenue growth, gross profit grew faster than operating expenses. This increased our operating leverage, further enhancing overall profitability. For ease of comparison with last year, the adjusted net profit includes discontinued operations. The 2025 adjusted net profit attributable to owners was around RMB 970 million, year-over-year increase of 64.7%. Under IFRS, our net profit attributable to owners of the company was around RMB 700 million in 2025, lower than around RMB 800 million in 2024. This change was primarily due to two factors. First, in 2024, we completed the disposal of all cryptocurrencies, generating a onetime gain of RMB 640 million, which elevated the prior year comparison base. Second, as we completed the issuance of convertible bonds to Alibaba at the end of 2025, we recognized a onetime noncash expense of approximately RMB 510 million under IFRS. This expense did not result in any actual cash outflow. Both items are non-operating in nature and are not directly related to our business performance. Lastly, I would like to share with you the latest progress on the Alibaba strategic investment and cooperation. On the business side, we are advancing collaboration across multiple fronts, including large model, e-commerce and cloud computing supplier offerings. In particularly on large models, we have deeply embedded, the capabilities of Alibaba's open source model series across multiple scenarios such as image editing and video generation to deliver better user experience. Meanwhile, our technology team and Alibaba's team have maintained close communication on the model training. Finally, as the AI industry continues to evolve rapidly, starting with this year, in addition to our two regular earnings releases each year, we will provide quarterly updates on key operating metrics for our core business. We believe this will further enhance transparency and help the market better understand our operating progress. In addition, we just announced a share buyback plan of up to HKD 300 million, valid for 1 year. This reflects the company's confidence in its future development, as mentioned by Xinhong. The market would consider large model might replace all AI applications. It's obvious in our industry that this might be a misunderstanding. Our growth is also very rapid. So I believe at this time point, it's proper and good for us to do the buyback, plus the 40% proportion. The overall cash return is around 60%. Thank you. Thank you all for participating today. Operator: [Operator Instructions] Unknown Analyst: I'm from [ Pana Internet ]. Congratulations on our performance. Based on the latest statistics, the paying subscribers are slightly lower than the first half of the year and the MAU is slightly lower than those in June. So if you could give us a brief reflection about the AI fragmentation, what are its impacts on your businesses? That's the first question. The second question is how can we better tackle with this decrease in terms of the statistics? Unknown Executive: Actually, we have another perspective. If we put statistics aside, the increase of model capabilities has the influence as positive. It can help us give out some products that develop faster. In terms of DesignKit's growth in the second half of the year, there are positive outcomes. For instance, the AI agent functions. Once it's been rolled out, it gradually spread to all businesses of DesignKits ad was taken up immediately. For Kaipai, for example, subscription penetration rate is really high. And the ARR [indiscernible] abroad is also increasing rapidly. So for us, we actually think from a longer perspective, from a business perspective, the positive outcome of AI agents is immense. As for you, what you saw in terms of the MAUs slight decrease, we've seen similar trends in past years because we need to bear in mind that the MAU is a snapshot of the past month, statistics of the past month. Last year, we had many blockbuster functions that came out in different months. So in December, we happened to have no blockbuster functions. So that's why there is a discrepancy between the statistics and our overall performance. For the actual numbers, the decrease in growth rates, to me, it's not caused by AI or large models or agents. But rather, if we look at it from a Chinese perspective, the products are maturing. So the growth rate with a large proportion and the large foundation would be slightly slower than before. But this is a positive signal because the productivity products or tools worldwide are growing fast. And these kinds of products are at the early stages of their product cycle. Put it in other words, in the second half of 2025, it seems our growth rate is declining. But we need to bear in mind that the products development are maturing from the early stages to the later stages. And we also need to bear in mind that the ARPU ratio with the subscription rates are better than we expected. Recently, we tested some new tools. The ARPU of new tools are already at $50 per month, translating to great average income. So from this perspective, you may think that the growing capabilities of AI is leading to issues. But from our side, we think that the positives outweigh the negative signals. I'm open to suggestions. Operator: We'll move on to the second question. Unknown Analyst: I'm from Morgan Stanley. Two questions. First, I would say about the expectations for the year 2026. Second, agent is integrated into our products. How do you refer to the subscription contribution and what do we have metrics to measure its contribution? Unknown Executive: I'm not talking about too detailed numbers. Also, what I've said before, the overall rate growing in 2026, the top line is basically the same with the 2025, but the underlying or its composition will include more productivity tools globally. In the coming several years, we'll also see a faster growth acceleration. This is the second curve being mature and the rising of the third curve. This might be a direction. The new adjusted net profits attributable to owners will be different. We'll control our expenses better because most of our operating expenses are about staff and personnel. We are actively tackling this problem by using AI to enhance our output. Meanwhile, with the rapid growth of operations, we will not increase the expenses for staff. I think these are positive directions. More about the agents. The final outcome, we felt happy for it because it solved the long-tail needs of many consumers. For example, the e-commerce, previously, the advertising photo or picture, for example, the barbecue oven, you can only use the outdoor backgrounds in the past, but we actually not only use it, we will also need some meat, smokes, flakes, but it's different. It's hard to achieve in the past. With help of the agents, they can have the chance to express more details. Users can express in verbal language and the AI model can translate it into visuals, representations. For example, the cat. Especially, in the past, we have cat models, they are very hard to cooperate. We can only change the background in the past. I think we should have a very cute cat on the cat equipment. So with the AI agent, we can have a very cute cat of specific species. You would also ask, why would you choose Meitu instead of other models? Whether we will be revolutionized by larger models. For the understanding of many vertical scenarios, I think we do better. For example, the cat tower, some cats are not satisfied with what you've chosen for it. So the sellers can better describe the characteristics of their products. For some nuanced parts, we can cooperate with the traditional conventional agent models or style. The user utilization rate is much higher than the general large models. We can tackle some pain points. Another example, Adobe. Why we think it will be revolutionized by AI, because we know the learning threshold is very high. We need to take -- spend months or years to learn to use it. With the help of AI, it could be very fast. This is also in line with our mission. We want you to feel better using targeted models or the subscription rates or selling. I think this is the biggest meaning integrating agent and also the point which satisfied our team. For paid subscription, agent is the top line function of all paid functions. Unknown Analyst: Thank you for your introduction. I'm from [indiscernible] Capital. I would like to ask some questions related to AI. Firstly, as mentioned earlier, the agent function, it has become the main driving factor of Meitu's businesses. So I would like to ask, the agents businesses in terms of the ARPU enhancements, can you elaborate more on the relationship? The second is, in the future, do you hope for the different vertical sectors to set differentiated pricing for the AI agent or the tiered pricing? Another question is that nearly 19% or 20% of the photo and imaging center cost is taken up by the production tools. So as AI becomes more prevalent in the near future, 3 to 5 years, what do you think will be the proportion of the revenue or production tools in terms of the overall revenue? Thirdly, what are your outlooks on the gross profits in the future? Unknown Executive: Because the ARPU rate is mainly provided in the latter half of next year, there will be fluctuations. But if you look at the DesignKit, we already have RMB combo. We did this combo is because we see there is tangible demand among the consumers. We have other combos at 30% to 35% in terms of the pricing. So the total consumption brought by agents is manifested more profoundly across many products. Of course, the increases in ARPU will need time. So in the future, you may see that different products will have more pricier subscription choices. Additionally, in the future, there will be different tiers of basic substitutions. But in different sectors, it will be based on the token consumption. In our prices, we discovered that there are drastic different token consumptions. So we use the appropriate skills choice. For instance, if we do consulting, we know that the consulting prices of different sectors are different. For instance, for high barrier sectors, we need to pay more for consultations. And for the meta prompts for instance, we just mentioned, it's based on sector experience. For the senior practitioners, his or her understanding of the sector have more insights, more personalized insights helping companies to stand out among the homogeneous competition. So that's why we do have the meta prompts and all of the field trial and paid consultations, eventually helping us to gain more insights into how to develop our vertical sectors. So eventually, we base on the different sectors different values and providing more returns for our consumers. In terms of the gross profits, we dropped by 1 to 2 percentage points, but the greatest reason is because of the changes in the revenue mix. Because in the past, advertisement took up a lot. But as advertisements proportion continue to decline, in the short term, the gross profit will decline as well. This year, the advertisement proportion will decrease, but it's already taking up a lower proportion. So its influence on the gross profits will be lower compared to 2025. Additionally, this year, because Apple in China is reducing its fees in China, it's helping with our gross profit. As for your concern, I think you may be concerned about third-party API use and deployments. You may think it influence our gross profits. But at present at least, because we only have a mid-single digit of our third-party API so it won't influence our gross profit that much. Overall, our gross profit will remain stable this year, around higher than 70%. We haven't had the specific statistics for the proportion of production tools in our overall revenue. If we look 5 years into the future, production tools will take up a higher revenue proportion than leisure tools. Put it in this way, production tools as discussed for 2.5 years or 3 years from 2023 until present. Now it takes up around 19% of our overall revenue. But actually, for the vertical sectors, we managed to integrate industry know-how into the products through the AI agents. So there is a scenario that I believe in the future, I think the growth rate will be different from 3 years before. It will be faster. But as for the specific statistics, I have yet to collect them. Operator: Thank you for your question. We will continue with the Q&A. Unknown Analyst: An analyst, Sara. I have two questions. First, as mentioned by the management, the cooperation with Alibaba especially for the products for leisure, what about the user portals who will have more AI-powered phones that would be integrated with many AI-powered functions. So how we see the changes in user portals for products for later? Question two, the productivity tools ARPU is more valuable or promising than of the products for leisure. We are the model-agnostic strategy. We want to build the model to tackle the pain points of users. The models are evolving rapidly. How does the management view the extension of models, this possibility into the photo, video and design vectors? For example, will the foundational large models be extended into the e-commerce area or sector? Unknown Executive: Products for leisure, from the perspective of user, I think we have an advantage because we have an MAU of over 280 million. Many new products of ours published in recent years have performed very good with rapid growth for DesignKit and Kaipai and also Vmake, Wink, we have access advantage. So we can be top-tier players in this sector. Other giants, including the smartphone producers, they, of course, will try new functions related to photo, video and design. It's always a very essential part of them. For example, many smartphone producers focus on the imaging capabilities of the phone. Of course, we feel the challenge. But we will find many corresponding room where they left or they overlooked because there is no one company that could serve the users' all needs. This is a marathon for innovation. We view this trend very objectively. This challenge, in turn, makes us feel the warning and have the spirits to challenge is good. And second question, what about the extension of large models into other sectors, I think the answer is yes, but it's similar to the answer of the first question. No large model companies can solve all factors on use, especially vertical sectors pertaining certain areas. A large amount of energy and expense should be devoted. So at present, we are digging into these perspectives and we saw the things that these models could not do. I believe this is also another marathon of innovation, different ecosystems for models and applications. Models cannot cover all applications. Actually, it's empowering applications. We know we would do something about it. They develop some independent targeted apps or software. For our team, they make us feel pressured and also urge us to increase our competency. Unknown Analyst: I'm from Citibank, Internet analyst, Vicky. I have an AI-related question. I look forward to your thoughts. I don't know what are your thoughts about this. Zeyuan Wu: Indeed, we saw this trend as well. Xiao Bai has elaborated over the AI teams. How we build the teams and how to deliver high-quality results, we also mentioned earlier that the business models have been changing from the subscription to the consumption of tokens. So to deliver high-quality results, so we think there's an opportunity for us. I suppose we roll out some new production tools that have a relatively high barrier, but users are willing to buy because they can deliver high-quality results. As a result, we see our ARPU rates increasing fast, especially production-related. Therefore, in June this year, we will post the Meitu Imaging Festival, and that will be launched, focusing on the AI agent teams' establishment and how to deliver high-quality results for our users. I believe, by then, we will have a better understanding. Jianyi Chen: I would like to add some more thoughts. I think an interesting thing is that there are many store apps through the subscription revenue. So after you subscribe to something, you may not use it for 99% of the time. So that is an issue of overpayment. It can't be like this. So there are many inefficiencies in the previous conventional model. But this cannot be applied to us because, in the past, we've been providing services that needs to be subscribed to be used. We don't have a model where we subscribed and the users do not use it for most of the time. So even though some people regard us as traditional imaging and photo industry, but we actually have some differences in terms of the conversion rate. For the subscription, I think the token consumption, a part of our revenue will be generated by subscription. It's just that in the past, by subscribing, we provide a group of tools. But now by subscribing, we have a bunch of tokens. After you consume all the tokens, you may need to buy higher-tier subscriptions that gives you more tokens. I think for the two models, they are not dichotomous. They are a combination. Operator: Due to the time limit, we will continue with the remaining two questions. Before online questions, we will have another question on site. Unknown Analyst: I'm an analyst, Xixi from [indiscernible]. My first question is that globally, last year, when we're expanding production tools, we mainly focus on vertical sectors,; for instance, the restaurants, et cetera. I wonder, in 2026, do we expand our vertical sectors to more sectors? Secondly, when we look to the production tools of users abroad, their habits may be different from those in China. Thirdly, I would like to ask more about your cooperation with Alibaba. Alibaba's users in terms of production tools, what are the percentage in terms of the contribution to the revenue? In 2026, the driving of production tools mainly come from ARPU or the paying tools. Zeyuan Wu: We're now doing extensions in vertical applications. As you may have seen, you have saw the financial results video and some AI agent studio functions. Besides what's mentioned, we saw very vertical sectors where there are opportunities for us. Under these scenarios, traditional services, they may spend over USD 10,000 to USD 20,000, but we can achieve this with 10% to 20% of that with same or even better quality. There are scenarios like this. Meitu will try to avoid the directions of manage giants, their core paths and strategies, so that we would not be greatly influenced. But we'll try to discover the parts where they may neglect or didn't consider it very important. So actually, we have many opportunities to lead in very vertical sectors. So we may try to avoid some popular or hot choices. For example, we still have a large user base in the off-line market. Traditional expense is high, but now it's just maybe 1% of the previous expense. In detail, I can't expose too much, disclose too much. But you will see our future products. And about the user habits of the productivity tools in international markets, we may observe different vertical scenario preferences and. Last month, our RoboNeo topped in the photo video category in 15 countries, including Brazil. For example, the South American users, they have a strong desire to express on social media. This is different from Asian markets. And we'll do more language and operation support in Southern American market. We cannot express too much about it, but I want to say that we have different orientations and directions. We will segment very carefully and precisely. We will try to serve well. a certain need and extend to more categories and markets. Jianyi Chen: As an additional reminder, as what Xinhong have said, the critical point is that the users demand on visuals because there are different cultures, they're vastly different than us in the past. But now due to the cultural differences, we need to have many different and AI adaptation. For instance, the same e-commerce platform, Chinese users may perform tests. They have less coherence but have more visual stimulation. But for overseas users, they may prefer more simplified accounts that look more high end. So there are great differences. For instance, Brazil, many Brazilian users would like the e-commerce platforms to stand out more. Some countries like light colors, for example. In our main business areas, we have all the compatibilities and adaptations. After the adaptation, we also observe the different subscription habits. For Chinese users, because we would like to subscribe low-cost orders, in China, the per week subscription is more preferred than monthly subscription. But for the U.S. market, the reverse is true because they think weekly subscriptions, it's is hard to experience the value of products in the short run. We need to have a longer time period to understand what values can the product bring. Because they are less sensitive on the price, they hope that they would pay to create value and then decide whether to subscribe. So for us, in the past, many of our products were based on the demand and habits of the Chinese market and then we ready it to the rest of the world. But now we hope we cater to the specific demands of each area in the world. In the past, we may have 100 products in China, but only 50 to 60 overseas. But now we look at the overall demand, and we have products that are 90% available and also 90% available in China and also overseas. That is our biggest change. Operator: And due to the time limit, we will have the last question. If we have investors on site that have questions, please raise your hand. So we'll have a question online from the meeting. Unknown Analyst: First, about the ARPU value. We mentioned we can see increase of the ARPU value. The main drivers are productivity tools in Chinese Mainland and international markets. And also, the third-party CPI are single digits. Which directions we use the third-party API? And why would we consider this of high, low status of proportion? Unknown Executive: Management answers the elevation of ARPU value, the main driver is that the introduction of agent. Many delivery of outputs will consume tokens. After the consumption increases the purchase more expensive packages, due to high-quality, they do not mind that much because this cost is much lower than in the past, nearly 10% or 1%. So the main ARPU growth are contributed by this partner, productivity tools. Products for leisure, I will not consider a dramatic increase in ARPU value. But with the higher proportion of international markets, this part certainly increases, but still not that huge. About the API part, compared with other model companies, you know we pay attention to quality or effector. We have an evaluation team of over 200 people. Many designs are outsourced. They comply to teams, but ultimately it's up to R&D team. But in Meitu, they are competing. If the design team do not consider it good, it's not published or aligned. For example, Xinhong himself also paid great attention to it, one, because the evaluation of the effect of different models. When we come up with a case, we first evaluate all models about their effects and outcomes. For example, 10 models, the winner, does it meet the expectations of the real users? If it's good, we use then the API. But after the competition, if we cannot find a very good winner, we self-develop. So our understanding about the external API, first, we evaluate. And if it meets our standard, we use it or we choose to self-develop. We hope they cooperate and build the industry's top standard. Operator: Thank you for your questions of investors and the detailed response. If you have more demand for our tools for statistics, you may contact the IR teams. Now we'll enter the media Q&A. This session will not have simultaneous interpretation. For the participants on Zoom, you may feel free to log off. Thank you for your participation and attention once again. [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.]
Operator: Good day, and thank you for standing by. Welcome to the metals company Fourth Quarter 2025 Corporate Update Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] Please be advised that today's conference is being recorded. I would like to hand the conference over to your speaker today, Craig Shesky, Please go ahead, sir. Craig Shesky: Thank you very much. Please note that during this call, certain statements made by the company will be forward-looking and based on management's beliefs and assumptions from information available at this time. These statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control. Additionally, please note that the company's actual results may differ materially from those anticipated, and except as required by law, we undertake no obligation to update any forward-looking statement. Our remarks today may also include non-GAAP financial measures, including with respect to free cash flows and additional details regarding these non-GAAP financial measures, including reconciliations to the most directly comparable GAAP financial measures can be found in our slide deck being used with this call. You're welcome to follow along with our slide deck or if joining us by phone, you can access it at any time at investors.metals.co. I'd now like to turn the call over to our Chairman and CEO, Gerard Barron. Gerard, please go ahead. Gerard Barron: Thank you, Craig, and apologies to those on the line who -- we are a few minutes late. We're waiting for a wide across the line. But welcome to you all. And before we get to the path forward, I'd like to take a moment to reflect on our journey over the last year. One year ago to the day in our fourth quarter earnings call, we announced a regulatory pivot that fundamentally changed our company's destiny. Instead of the uncertainty and gridlock of the ISA, we chose the certainty and clarity of the U.S. regulatory regime built upon a long-established legal framework under DSHMRA and catalyzed by the political will of this administration. In April, this political will was made evident by the executive -- President Trump's executive order, unleashing America's offshore critical minerals and resources, which marked America's return to leadership in deep seabed minerals. Some of the directives in this EO have already been delivered, including the modernization of NOAA [Technical Difficulty] Craig Shesky: Gerard, sorry to interrupt. Your line is cutting in and out. Gerard Barron: Road map for [Technical Difficulty] in 2026, we focused on accelerated execution, starting with permitting. Our consolidated application submitted to NOAA in January of this year has been deemed substantially compliant, and we expect our permit to be granted in less than 1 year from today. This permitting clarity also provides confidence to us and our partners to get building in anticipation of commercial production. Offshore, we have reached commercial agreement on key terms with our long-term strategic partner, Allseas, and continue to progress the engineering work for the long lead items for our forthcoming production system, and we expect this agreement to be finalized in the coming days. Onshore, it's also clear that the U.S. wants to dominate the onshore processing and refining polymetallic nodules, establishing a counter to China's stranglehold on the production of critical minerals. To do that will require support from the government itself requisite [Technical Difficulty] at the Port of Brownsville, Texas and have also reached agreement with our partner, Mariana Minerals to progress this feasibility work as part of the TMC owners team, but more on this shortly. Since day 1, we knew success would depend on building a bench of exceptional partners and with the expertise to tackle complex challenges and the conviction to back a new industry. And as this chart shows, we've brought together a strong group of experienced partners across the value chain, each bringing a unique skill set to our vision of reimagining the metals and mining sector. What's changed and what matters is momentum. Many of our existing partners have deepened their commitments, reinforcing their belief in the long-term opportunity. We're also welcoming new partners who share our belief that this industry will be built in the United States. That growing alignment is a clear validation of where this industry is heading. And as I mentioned earlier, we've agreed key commercial terms with Allseas to complete the development and operate the Hidden Gem offshore system, the first ever commercial nodule collection system. The continued strategic alliance, which will be memorized in the coming days, brings together Allseas decades of offshore execution expertise with our proven resource, environmental and processing platform into a single integrated system, designed for a nominal capacity of 3 million wet tonnes per annum using the Hidden Gem, two collector vehicles and a vessel to transfer nodules to bulk carriers for shipment to shore. And Allseas are currently working on key long lead items like the Riser, our launch and recovery systems and the umbilical. We look forward to signing this definitive agreement in the coming days and continue to progress towards system commissioning still targeted for Q4 2027. So one of the key actions outlined in last year's executive order was the directive for various government agencies to identify potential sources of financial support for this industry. And in order to unlock government support for onshore processing, there are a few boxes we must tick, including a site-specific plan and feasibility studies. And to that end, back in December last year, we secured an exclusive right over a potential lease option in the Port of Brownsville, Texas, where near where plans have been recently announced by this administration for the first new U.S. oil refinery in decades underscoring the broader momentum behind strengthening American industrial capacity. We've developed a preliminary master plan and a pre-feasibility study is already underway for a 12 million tonne per annum nodule industrial park. Of course, existing capital-light tolling options are still available to us, and we will not be committing any capital at this time. But I'm certainly excited about what a domestic nodule processing hub can mean for both new partnerships and for our project economics. Processed domestically, our nodule resource could single-handedly solve the American supply chain dependency across 4 key metals. And as I mentioned, one of the requirements to unlocking funding on is the preparation of a feasibility study for a processing plant at a specific site. To that end, we're adding a new strategic partner to our bench in Mariana Minerals. Mariana's CEO, Turner Caldwell speaking at last year's Strategy Day is someone we know well from his time at Tesla, where he headed up global battery metal supply. The Mariana team are pioneers of AI and software approaches to project development and metallurgical processing and have demonstrated their ability to fast-track project execution, which enabled Tesla to build its lithium plant in Texas in less than 2 years. The Mariana team will be joining as part of the TMC owners team, and we already enjoy a good working relationship with their team. Mariana's approach is core to how cutting-edge businesses like SpaceX and others operate. With AI, we think they can move even faster and believe their innovative model offers a faster, more modern approach to reindustrialization. And subject to further definitive agreements, we look forward to exploring how their systems could reduce permitting and construction time lines for a domestic plant while reducing OpEx and increasing recovery of payable metals. In fact, right after this call, our team -- executive team will convene in Texas with the Mariana team for the next week to progress this mission-critical work, which is also a prerequisite for a certain U.S. involvement. I'm also pleased to share that in April, just days away, The Metals Royalty Co. will begin trading on the NASDAQ under the ticker TMCR. A quick refresher formed with the goal of onshoring critical minerals production in the U.S., TMCR has a 2% gross royalty on our NORI area, resulting from an agreement we signed with Low Carbon Royalties in 2023, and we retain the right to repurchase up to 75% of that royalty over time at a capped return, which could potentially reduce the royalty to just 0.5% of 1%. The TMC also maintains a 25% equity stake in TMCR. Many TMCR faces will be familiar to our followers, including the current and former Board members, Michael Hess and Brian Paes-Braga, and with their backing and a strong team behind them, we see TMCR as a strategic vehicle, which can potentially provide future options for capital and sizable project finance. I'd now like to turn the call over to Craig to discuss some industry updates, our regulatory path ahead and our financials. Craig Shesky: Thanks, Gerard. One quick note that we shared actually in recent weeks in our social accounts. We recently joined the Defense Industrial based Consortium, DIBC, partnership within the Department of [indiscernible] and investment prioritization direct [Technical Difficulty] of our capabilities. This initiative gives the government the tools that need to provide with commercial solutions that can help close supply chain vulnerabilities and strengthen the defense industrial base. And of course, critical minerals and seabed are focused for the U.S. and allies. And over the past year, we've seen investors and operators effectively vote with their feet, gravitating toward regulatory frameworks that offer clarity and a credible path to commercialization. While the ISA remains in gridlock, the U.S. has emerged as a leading jurisdiction and certain allies are relying upon the U.S. and certain areas of expertise to develop seabed resources. This shift is being echoed at the government level, while in March, the U.S. and Japan announced a new critical minerals action plan with an explicit focus on accelerating cooperation on commercially viable deep sea mining. And against this backdrop, we remain the only seabed mineral developer with SEC compliant mineral reserves, which is the clearest definition of commercial viability, positioning us at the forefront of this emerging industry. In January, NOAA finalized revisions to accelerate permitting under the Deep Seabed Hard Minerals Resources Act, introducing a consolidated application process that meaningfully streamlines the path to commercial recovery. And TMC moved quickly to take advantage of that clarity, submitting the first consolidated application under this new framework. This application expands our expected commercial recovery area from 25,000 square kilometers to approximately 65,000 square kilometers and is designed to significantly reduce permitting time lines. Importantly, it reflects the strength of our technical readiness and our ability to meet NOAA requirements for commercial scale operations. We see this as a clear signal that the U.S. regulatory path is active, predictable and capable of supporting responsible development. And now with more than 10 applications in the system, it is evident that the broader industry is aligning around the U.S. framework. And last time we updated you, we are progressing systematically through the NOAA permitting pathway, and that remains the case today even under this new consolidated path. With the consolidated application now active under NOAA's new rule, we have greater clarity on the process ahead and a clear line of sight on the key milestones required for final approval. Our experience over the last year, particularly through NOAA's review of our exploration licenses, has provided valuable insight into the process and expectations for both TMC USA and NOAA. We announced on March 9th that we passed the first of these milestones with NOAA determining our application to be substantially compliant and the next potential milestone being full compliance. Based on this progress and what we've learned, we now expect the grant of our commercial recovery permit within the next 12 months. Now to get to this point, it's taken over $700 million and hundreds of research days at sea, and we are now nearing the completion of our environmental impact statement, and our EIA is complete. Informed by the largest environmental data set in history, over a petabyte in size, this comprehensive document reflects 15 years of scientific research conducted alongside leading institutions and demonstrates our ability to responsibly collect nodules using modern systems designed to maximize efficiency while minimizing environmental impact. Put simply, better science leads to better design and better design leads to better environmental impacts. For those with a keen eye on our social media, you may have noticed that we've begun sharing key findings from our EIA publicly during a new video series, highlighting how our data addresses environmental concerns and how innovation has reduced our environmental footprint. I encourage you all to check this out, and you can click on the PDF of this posted on our website to get to those videos directly or we encourage you to follow TMC on our social accounts, including Twitter and LinkedIn. We look forward to our EIS being made available for public comments soon as per NOAA's transparent and accountable process. And as many of you know, and there may be some on the call who are with us in the room, we published a pre-feasibility study and initial assessment alongside our Strategy Day in New York last August. Covering our first production area, the PFS documented world-first reserves for a nodule project, demonstrating clear commercial viability. Our initial assessments covered everything else that you see in royal blue amongst our contract areas on this page. Keep in mind that neither of these comprehensive studies, which were signed off by multiple independent qualified persons, cover additional ground over which we now have priority right through the U.S. process. This is represented in the lighter gray on this page. Given the proximity of these areas to those covered in our published technical studies, we do believe that these areas support significant exploration upside. So at current metal prices, shifting to project economics, it's clear that these projects are incredibly valuable. And if you combine the $5.5 billion net present value of our pre-feasibility study and the $18.1 billion NPV for the initial assessment, you arrive at a total estimated resource of $23.6 billion. Over the life of both projects on an undiscounted basis, the study's outlined revenue of approximately $369 billion, EBITDA in excess of $200 billion and a position in the first quartile of the cost curve as laid out in our PFS. However, despite the clear value of this high-quality and abundant resource and our expected low-cost positioning, our valuation does remain below of comparable peer developers and explorers. On the left side of this page, you'll see the TMC valuation example where we're trading at about 8% of our underlying net present value, well below peer averages for explorers and developers and certainly below the average of nearly 1x NAV for nickel and copper producers. So as we march toward a permitting and -- clear permitting path and commercial production, we are looking forward to a significant re-rating in this valuation story. On to liquidity, TMC reported year-end 2025 cash balance of $117.6 million, and we expect at month end for March 31, 2026, to report approximately $110 million in cash. TMC liquidity, defined as cash plus borrowing capacity on our unsecured credit facility stood at $162 million at year-end 2025 and is approximately $150 million more, and is expected to be approximately $154 million around month end March 31, 2026. And this means we have no imminent need to raise funds in the public markets. As discussed in our last several quarterly conference calls, however, we are filing a new Form S-3 shelf registration statement in conjunction with our upcoming 10-K as a matter of good corporate housekeeping, and we do intend at some point in the future to refresh our ATM. However, there has been no ATM use by the company since April of 2025. On to our financial results. In the fourth quarter of 2025, TMC reported a net loss of $40.4 million or $0.08 per share compared to a net loss of $16.1 million or $0.04 per share for the same period 2024. The net loss for the fourth quarter of 2025 included exploration and evaluation expenses of $10.6 million versus $8.3 million in the fourth quarter of 2024. General and administrative expenses, or G&A, of $34.1 million versus $8.1 million G&A in the comparable quarter last year and a credit of $4.3 million from other nonoperating items versus a credit of $0.3 million from other nonoperating items in Q4 2024. Exploration and evaluation expenses increased by $2.3 million in the fourth quarter of 2025 compared to the same period in 2024, primarily resulting from an increase in share-based compensation due to accelerated amortization of awards granted in the third quarter of 2025, partially offset by lower mining, technological and process development costs resulting from decreased engineering work. G&A expenses increased by $26 million in the fourth quarter of 2025 compared to the same period in 2024, reflecting an increase in share-based compensation due to the accelerated amortization of awards granted to directors and officers in the third quarter of 2025 and an increase in legal, consulting and personnel costs. Other nonoperating items that reduced the net loss in Q4 2025 included higher interest income generated from our increased cash balances and a gain resulting from the dilution of our ownership interest in The Metals Royalty Co. as it completed a private placement to third parties at a price well in excess of book value. On free cash flow, the free cash outflow for the fourth quarter of 2025, was $11.5 million compared to $13.8 million for the fourth quarter of 2024. Net cash used in operating activities was $11.4 million compared to $13.8 million for the fourth quarter of 2024, primarily due to lower personnel and environmental payments, coupled with the interest earned on the higher cash balance in 2025 and partially offset by higher legal payments. Focusing on the full year basis for the cash flow. On a full year basis, free cash outflow for 2025 was $43.1 million compared to $44 million in 2024. Net cash used in operating activities was $42.9 million compared to $43.5 million in 2024, reflecting lower environmental and mining technological payments and interest earned on the higher cash balance in 2025, partially offset by higher underutilization fees paid on the unsecured credit facilities, timing of payment on regulatory fees and higher legal payments. Free cash flow is a non-GAAP measure, and I would point you to the non-GAAP reconciliation included in the slide deck. We believe that our cash on hand will be sufficient to meet our working capital and capital expenditure requirements for at least the next 12 months from today. Looking at the balance sheet over the course of 2025, there was a significant increase in the cash balance as the following funds were received: $85.2 million from the Korea Zinc investment, $41.2 million from other registered direct offerings, including the Hess family investment, $14.8 million from ATM use and $27 million from the exercise of various stock options and warrants. A portion of these proceeds was used to repay the $7.5 million Allseas working capital loan, along with other outstanding interest thereon as well as a $4.3 million draw on the ERAS/Barron unsecured credit facility. Our accounts payable and accrued liabilities as at December 31, 2025, was $46 million and includes $34 million owed to Allseas for various services provided, the majority of which can be settled in equity. The $131 million increase in royalty liability was the result of the change in fair value following the company's release of two economic studies in August 2025, which increased the value of the NORI project. The significant increase in the warrant liability over 2025 was due to the increase in the fair value of private warrants, which reflected the increase -- significant increase in our share price. With that, operator, we'd now like to open the call up for some Q&A. Operator: [Operator Instructions] Our first question will come from the line of Heiko Ihle with H.C. Wainwright. Heiko Ihle: Can you guys hear me? Craig Shesky: Good morning, Heiko. Yes, we can. Gerard Barron: Good morning, Heiko, yes. Heiko Ihle: I'm very intrigued by those negotiations for the module processing and refining hub in Brownsville, obviously, given recent geopolitical risk factors that have just been going up quite a bit and just in general uncertainties that are going on, I think this might be quite interesting. A couple of things on that. Can you walk us through what you see an impact with the shipping expenses if this Brownsville hub goes ahead and maybe quantify it? Gerard Barron: Sure. I think the -- look, there are many exciting options about bringing material straight to the U.S. and shipping is one of them. Energy costs, of course, is another because the biggest input into our cost base when we process nodules is energy. And we applaud this administration for realizing that abundant energy leads to prosperity. And that's -- there's no better example of that than the U.S. compared to some other markets. And it's our estimate that you can actually process nodules cheaper in the site where we've located, Brownsville, Texas compared to China or Indonesia or Japan because of energy costs. And so -- but shipping is also better as well. And it does mean having to bring them through the Panama Canal. And it will also -- the site we've chosen does have some deepwater berths available to it. They won't take the biggest ships that are available and that we'd like to use, but in time, we think they can. And -- but no firm numbers, but improvements to be made. Heiko Ihle: And then I know it's early, but can you walk me through -- and you may not even have all these answers yet. But can you walk me through key permits and time lines you think we need to build all this infrastructure, please? Craig Shesky: Yes. It's important to note, Heiko, too. I mean, what we're beginning here is site-specific feasibility work. At the same time, what I can say is that the particular site we're looking at does have many permits. We continue to have continued discussions, very positive discussions with Governor Abbott's office in Texas and other agencies there. But it's important to note, a lot of this is going to be for a prerequisite of us making plans and moving forward, going to be dependent on some of the support we get at the federal level. So really, the key permit here is the grant of a commercial recovery permit by NOAA. And certainly, when we're talking to various agencies and cabinet departments, it is that permit that would unlock, we think, a lot of the support and potential investment for a facility like this. And one of the reasons I think that you're seeing TMC engage in some of this work on feasibility as well as us alongside our partner, Allseas, progress engineering work and beginning to think about ordering these long lead time items is due to our confidence in the grant of that commercial recovery permit in a timely manner. Operator: Our next question will come from the line of Matthew O'Keefe with Cantor Fitzgerald. Matthew O'Keefe: Yes, just a question. I want to follow up on Heiko's Texas question there. You are working on a feasibility study there. It sounds like Mariana is going to be a part of that. What's the timing on getting that done? And will we get to see sort of the results of that? Gerard Barron: Yes, sure. Well, certainly, Mariana will be playing an important role as part of our owners team. We already have Hatch working on the refresh of that -- of the PFS, which is based on bringing all those numbers to a Brownsville site. But we anticipate -- and that will be ready very soon. But we also anticipate well before the end of the year, having a, I guess, in the old language, a BFS on what we're planning to put on the ground in Texas. And so the date that has been talked about is end of October, and so not far away. And we certainly expect Hatch and others to be involved in that as well. Matthew O'Keefe: And that's a good group. And then is that going to be a hydromet facility? Or are you going to look at an option of doing sort of the RCEF front end like you're going to be doing in Japan? Gerard Barron: Yes, that's the exciting part. For the last -- since -- in fact, since Dr. Jeffrey Donald joined our group and pivoted us back to more of a pyro front end, that's where we've been building lots of expertise on how we get raw nodules into those intermediate products. And the plan is to build the pyro in Brownsville, if we were to go down that pathway. We're very fortunate that we have an amazing technical partner in Japan that we continue to have a great working relationship with. And -- but boy, a nickel refinery, a nickel processing plant hasn't been built in 80 years yet here in America, yet the demand for nickel is going at an increasing clip. We know it's needed to make every ton of stainless steel. We know it's used in super alloys. We know it's used across AI and data centers and military uses and electrification. And so the uses and the demand for it is going up, yet we import 100% of our nickel. So something is not kind of a fit there, Matt. So there's an opportunity, I guess. And we just see that this might be that moment where the administration says, yes, we want to fix that problem. Matthew O'Keefe: Yes. No, for sure. That's why I was kind of asking, it seems like a pretty exciting turn and would love to see the numbers on that. More on that, just switching off the processing back to the recovery. You said you're sort of getting long lead time items, I'm assuming for Hidden Gem and the whole -- that whole process. So what would you anticipate -- assuming you get your permit within 12 months, what would you anticipate the timing to get Hidden Gem back on the water? And do you foresee it being as is or with additional collector capacity? Gerard Barron: Yes. We are still standing by our guidance of commissioning Q4 next year. And it will -- we've elected to run with a 2-collector model. And so that is -- basically gives us the opportunity to get out on the water. I guess that will be early '28. And we'll kick off with one collector in production, but we'll soon move to a second collector being in production as well. And so as you well know, we have a production boat that is production ready now just on a production number that's not high enough. And so we want to see a higher production number because the more tonnes you amortize over the cost of the floating steel above, the better the economics. And I think we proved in 2022 that we can do this reliably at commercial scale. So now it's about making money. Craig Shesky: It's important to note, Matt, too, the connective tissue for the ramp-up offshore, but then also what the potential processing and refining plans might be onshore. Certainly, this administration wants to be able to say, if we can bring this back domestically, it's helpful to be able to do it during this administration. And the way you do that is ramp up in relatively bite-sized amounts, starting, let's say, with production capacity that could handle nodules coming from a vessel like the Hidden Gem, which has 3 million tons per annum nominal capacity. So kind of matching as best we can ramp up for both the offshore production and then having a home for the processing and refining of those nodules is certainly part of the work that we and our team of engineers are doing in the coming months. Matthew O'Keefe: All right. And if I may just ask one more question. On the permitting process, not so much the process, you've made that pretty clear. One of the -- under the NOAA process, there is an additional piece of ground that wasn't covered by the PFS. It wasn't covered by the initial assessment that you've added. I'm just curious sort of why and what your plans are for that? I mean, can you really do any work on that in the near term? And is it infringing on anyone else's claims that might be under the previous permit regime? Gerard Barron: Yes. Look, it was just a natural fit. It was fitting between 2 blocks that we had hold over. And at the end of the day, we will -- while we're out there, continue to take observations of that. And I guess what we'll aim to prove it's a continuous piece of ground, and it doesn't require any particular environmental work done on it. And so -- and we imagine that once production starts out there that there'll be more collaboration between some of the license holders as well. And I think no doubt, there will be some people that end up being granted licenses who don't have production vessels and/or who want help getting their applications through the permitting process. And as you know, we probably know more about that than anyone on this planet. And we're certainly getting a lot of inbound into how we might be willing to collaborate with some players. And I -- and, you know, we see this as preproduction. I think it's -- we want to see more people in production out there. But what I'm pretty certain no one is planning to do is to put plans for a processing plant on the ground anywhere. I see a lot of applicants starting to talk about them being successful at moving to the first phase. We know from that journey, there's a lot of road left in front of them, and we'll be here to help them and maybe supply services to them along the way. And -- but in the meantime, to fully explore just how committed this administration is to bringing a processing plant so we can bring nodes straight to the U.S.A. Craig Shesky: I think we're going to, Michelle, take a few questions potentially from our chat. So there's a question from Jakob Stanski. We mentioned government support is needed for the U.S.-based processing plant. And can we clarify what type of support this means, financial permitting or otherwise? It's a good question, and I think the answer is all of the above. Certainly, as we noted earlier, progressing the commercial recovery permit is the most important prerequisite. We also, of course, would rely upon both at the federal state and local levels, what we think are very supportive administrations to help really make some of these plans a reality. But again, the prerequisite for a lot of this work is site-specific feasibility work. So ensuring that we get that right and are doing it at a place like the Port of Brownsville, where we have truly everything that we need to stand up a potential nodule ecosystem that's going to be critical in our decision to push forward on this. And we do have really the unique ability with this resource of maintaining capital-light options for the processing. So it's not like most ore bodies where you have no choice but to build processing and refining close to where the ore body is. We have flexibility here in the nature of this nodule resource and that you can collect them and ship them really North, South, East or West, but it's the desire of this administration to change the game and kind of release themselves from the stranglehold that China has had on the critical metals. And to do that, as Gerard noted, it's not just a TMC story. So we have the resource and we have the capability to help do this. But we're making all of the decisions, obviously, with the benefit of our shareholders in mind and making sure that we are not pushing forward on anything without a very nondilutive financing plan that we expect would be supported by the government, assuming that we would want to take the next step. There is another question here from Jameson Irwin, to what extent are your systems being designed or evaluated for dual-use capabilities with U.S. Defense or autonomous underwater operations? Gerard, maybe if you want to weigh in a bit on that, too, but it is a good point to raise it. We saw a piece from CNN in Montego Bay over the last few weeks that traveled pretty far, noting the fact that Chinese ambitions in this space are focused offshore very much on the dual-use capability between some of the military uses for the stuff that they're working on, along with deep sea mining. One of the interesting things that we're looking at on the onshore side is the fact that the flow sheets that we and Hatch and Mariana are developing and working through certainly are the types of things that could lead to processing and refining capabilities that aren't just limited to nodules over the long term. But Gerard, I'm not sure if you have any other color on that point. Gerard Barron: Look, I think there are some exciting areas for collaboration, and I wouldn't rule them out. Craig Shesky: I see one more question on the Hidden Gem. Looking at sort of the investment or acquisition of a second vessel like the Hidden Gem, what would be planned before that? Who might manufacture it? Who would the partners be on that front? Gerard Barron: Well, taking a converted drillship and making it fit for picking up nodules proved to be a pretty efficient move. And there's an abundance of those vessels. I saw Transocean recently scrapped 4 of them for quite cheap money. And so that's an option. And we are -- we do have inbound inquiry from people who have vessels who would like to use them. Of course, the vessel is the first step. The operator is the important one. And just to be clear, Allseas want to operate more vessels in the CCZ, and we want them to operate more vessels for us in this area. And so -- and obviously, there are efficiencies in having similar type vessels from a parts, from administration perspective. And so stand by. Craig Shesky: Operator, any other questions on the phone line? Operator: I'm showing no further questions on the phone lines. Craig Shesky: Okay. Gerard, perhaps over to you. Gerard Barron: Well, yes, yes. Well, thank you, everyone. We've got a lot of very long-term shareholders who have been supporting us since our go public in 2021 and of course, before that, when we were deep green. And it's exciting to see the direction the business is heading. It was exciting to report some of those updates today. It's frustrating not being able to give more regular updates, but we have to be very sensitive in how we message that. To the team and our partners, thank you for an enormous heavy lift from everyone who works at TMC. It's a very dedicated, hard-working team, and it's an honor to work alongside you all. And to our shareholders, thank you for being there and coming with us on this journey and look forward to keeping you updated as updates become available. Over and out. Operator: Thank you. This concludes today's conference call. Thank you for participating, and you may now disconnect. Everyone, have a great day.
Operator: Greetings, and welcome to the Carnival Corporation First Quarter 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Beth Roberts, SVP, Investor Relations. Thank you, Beth. You may begin. Beth Roberts: Thank you. Good morning, and welcome to our first quarter 2026 earnings conference call. I'm joined today by our CEO, Josh Weinstein; our CFO, David Bernstein; and our Chair, Micky Arison. Before we begin, please note that some of our remarks on this call will be forward-looking. Therefore, I will refer you to today's press release and our filings with the SEC for additional information on factors and risks that could cause actual results to differ from our expectations. We will be referencing certain non-GAAP financial measures, including yields, cruise costs without fuel, EBITDA, net income, ROIC and related statistics, all of which are on a net basis or adjusted as defined, unless otherwise stated. A reconciliation to U.S. GAAP is included in our earnings press release and our investor presentation. References to ticket prices, yields and cruise costs without fuel are in constant currency, unless we note otherwise. Please visit our corporate website where our earnings press release and investor presentation can be found. With that, I'd like to turn the call over to Josh. Josh Weinstein: Thanks, Beth. Good morning, everyone, and thank you for joining us today. Before we begin, I do want to acknowledge the ongoing conflict in the Middle East and the profound human impact it's having on so many people. Our thoughts are with the brave men and women of our armed forces, with all those affected, and with the countless families and communities facing hardship during this time. Like so many around the world, we remain hopeful for a resolution that brings relief to those impacted and a lasting peace to the region. Turning to our business. We are off to an excellent start to the year. First quarter results came in ahead of guidance, thanks to higher yields and better cost performance, reflecting healthy fundamentals and solid execution across the business. Close-in demand remained robust, guests continued to spend more onboard and pricing strengthened, enabling us to outperform our December guidance and deliver record first quarter revenues, net yields, operating income, EBITDA and customer deposits. We're seeing this momentum continue in onboard and pre-cruise sales. Guests are engaging earlier in the vacation journey, purchasing more inclusive packages, excursions and other experiences before they even step on board. That trend is contributing to higher onboard revenue and reflects the value guests place on the experiences our cruise lines deliver. We're also seeing it in our bookings. Bookings for current year sailings increased 10% year-over-year, adding to our record book position for the remainder of the year at historically high prices. With nearly 85% of 2026 already on the books and less inventory available than this time last year, we remain well positioned to keep improving yields as the year unfolds. Cumulative future year bookings also reached a first quarter record, adding to our continued confidence in the trajectory of the business. And as a result, we are seeing it in our customer deposits, which reached a new first quarter record of almost $8 billion, surpassing last year's high watermark by nearly 10%. Now what stands out most is that we're achieving all of this against such an unpredictable macroeconomic and geopolitical backdrop. It says a great deal about the demand we continue to see across our portfolio of world-class cruise lines, about the team's ability to execute on our long-term strategy and about the progress we've made in positioning the business to perform through a wide range of environments. This start to the year also supports increasing our full year outlook operationally by approximately $150 million compared to our December view. That improvement helps absorb a $500 million fuel headwind albeit that is against a substantial EBITDA forecast of $7 billion, which David will walk you through in more detail. This quarter and our outlook are further evidence of how far this business has come over the last several years. Over that time, we have restructured the organization, reconstituted the global leadership of the corporation and our cruise lines, actively managed the portfolio and its assets and sharpened our commercial operations. We have also just begun to better harness the power of our unmatched Caribbean and Alaskan destination footprints, improve pricing, fortify the balance sheet and embed greater rigor across the organization. As you know, thanks to those efforts, last year, we surpassed our SEA Change objectives in roughly half the originally outlined time frame. We more than doubled our ROIC, delivered our highest unit EBITDA in nearly 2 decades and meaningfully reduced our greenhouse gas intensity rate, all of which built momentum and, more importantly, reinforced that our approach is working. With this robust foundation in place, we are focused on the next chapter of value creation for Carnival. So today, we are introducing PROPEL: Powering Growth & Returns, Responsibly. By 2029, we are targeting return on invested capital above 16%, earnings per share growth of more than 50% versus 2025 and the distribution of more than 40% of our cash from operations to shareholders, or approximately $14 billion. At its core, PROPEL is about converting strong and growing demand into higher returns, earnings and cash flow while maintaining disciplined capacity growth and a strong balance sheet. That we see 4 primary drivers underpinning these targets. First, yield expansion. A continued focus on high-quality execution across our commercial operations will drive even more growth in same-ship demand, strong pricing, increased onboard spend and earlier guest engagement throughout the booking journey. These trends are already evident in our current performance and give us confidence in our ability to drive sustained yield improvement. Second, disciplined capacity growth and high-returning capital allocation. Our capacity growth remains intentionally measured with only 3 ships scheduled to enter service during the PROPEL period. At the same time, we'll be investing in return-generating modernization programs across many of our cruise lines, building on the success we are already seeing from AIDA Evolution. And the second cruise line announcing its program will be just next month, so stay tuned. Third, further monetizing our destination portfolio. We're expanding and enhancing our unique destination assets, including Celebration Key, Grand Bahama, RelaxAway, Half Moon Cay and Isla Tropicale, Roatan, along with our unrivaled Alaska land footprint to deliver differentiated guest experiences while generating attractive incremental returns. Fourth, continued cost discipline. We remain hyper-focused on maintaining our industry-leading cost structure and driving operational efficiencies across the P&L. And all of this is supported by a phenomenal team and advancing technologies to enhance revenue and improve efficiency. Importantly, these PROPEL targets will not come at the expense of financial strength, corporate responsibility or investing in our future. We are targeting net debt-to-EBITDA of 2.75x and a reduction in greenhouse gas intensity of more than 25% versus 2019 levels. For us, returns, resilience and environmental stewardship go hand in hand. And further, our growing cash flow will enable us to meet these targets while reinvesting over $15 billion back into the business over this time frame. With greater financial flexibility, we have the capacity to invest in our growth, to achieve our leverage target to grow our recently reinstated dividend and to return excess capital through an opportunistic buyback program, beginning with a $2.5 billion authorization announced today. This is a balanced approach, investing for growth, increasing shareholder returns and doing so in a way that supports the long-term earnings power of our business. Accelerating returns is a natural result of that strategy and a reflection of the attractive fundamentals of our business. Our capacity growth remains measured while demand continues to expand as cruising becomes even more mainstream, as consumers are choosing to spend more of their hard-earned money on well-deserved and much-needed vacations, and as we remain underpenetrated relative to the broader vacation market. We are well positioned with a strategy that is grounded, focused, diversified across our portfolio and built for consistent execution over the long term. As we continue to monitor developments in the Middle East, we remain focused on executing on that strategy and delivering for our guests, for our shareholders and our other stakeholders. While external conditions will continue to evolve, what gives us confidence is our ability to deliver exceptional vacation experiences, operate efficiently, allocate capital with discipline and grow in a measured way. Now none of this progress happens without the dedication of our global team, the best in all of travel and leisure. I want to thank our more than 160,000 team members, both ship and shore, for their hard work in delivering these first quarter results. They go above and beyond every day to deliver unforgettable happiness to our guests by providing them with extraordinary cruise vacations while honoring the integrity of every place we visit, life we touch and ocean we sail. I also want to thank our travel agent partners, our loyal guests, our investors, our destination partners and all of our stakeholders for their continued support. With that, I'll turn the call over to David to walk you through the quarter and our guidance in more detail. David Bernstein: Thank you, Josh. I'll start today with a summary of our first quarter 2026 results, then I'll provide color on our full year March guidance and finish up with some additional insights into PROPEL. Once again, we delivered record first quarter operating results with strong execution, resulting in us beating guidance on revenue, costs and net income. Net income of $275 million was more than 55% higher than the prior year and exceeded our December guidance by $40 million or $0.03 per share. The outperformance versus December guidance was driven by 3 factors. First, revenue favorability contributed $0.04 per share as yields were up 2.7% versus the prior year on top of the more than 7% increase in the first quarter last year. This was over 100 basis points better than our December guidance, driven by continued strong close-in demand which drove higher ticket prices and stronger onboard spending. Yield improvement was driven by increases on both sides of the Atlantic. Second, cruise costs without fuel per available lower berth day, or ALBD, were up 5.3% versus the prior year. This is more than 0.5 point better than our December guidance and contributed $0.01 per share. This benefit was driven by cost-saving initiatives that we firmed up during the quarter. Third, the remaining $0.02 per share of operational favorability came from improvements in depreciation expense, net interest expense and fuel consumption, where we delivered a 4.7% year-over-year reduction. Total first quarter operational improvements of $0.07 per share are fully reflected in our full year guidance. However, those first quarter operational improvements were partially offset by the unfavorable impact of fuel price and currency costing $0.04 per share. Turning now to our full year March guidance. Our full year guidance calls for earnings per share of $2.21. This includes the first quarter operational improvement of $0.07 per share as well as an additional $0.04 per share of improvement in depreciation expense, fuel consumption, net interest expense and income tax expense over the remaining 3 quarters of 2026. However, that $0.11 per share operational improvement for 2026 will be more than offset by a $0.38 per share headwind from higher fuel prices driven by recent geopolitical events and reflected in our March guidance. Given the recent spike in volatility in fuel prices, we believe it is reasonable to assume some moderation over the balance of the year rather than base our guidance on current elevated spot prices. As a result, our guidance assumes the purchase price of fuel for the month of March and early April, Brent averaging $90 per barrel for the remainder of April and May, Brent averaging $85 per barrel for the third quarter and Brent averaging $80 per barrel for the fourth quarter. A 10% change in our fuel cost per metric ton, excluding emission allowances, for the remainder of the year impacts our bottom line by $160 million or $0.11 per share. Turning now to yield growth. Our March guidance assumes yield growth of approximately 2.75%, which is 25 basis points better than our December guidance and fully reflects the first quarter yield improvement. Importantly, our yield assumptions for the balance of 2026 remain unchanged from our December guidance. Yield growth versus 2025 reflects both higher ticket prices and continued strength in onboard spending. It is also worth noting that full year 2026 yield growth is approximately 3.25% on a normalized basis, excluding the previously disclosed impact of the summer 2025 close-in decision to redeploy away from the planned first quarter 2026 Arabian Gulf voyages and the impacts of loyalty program accounting for Carnival Cruise Line. Cruise costs without fuel per ALBD are now expected to be up approximately 3.1%, which is 15 basis points better than our December guidance and reflects the first quarter improvement. Like yields, our cruise costs assumptions for the balance of 2026 remain unchanged from our December guidance. On a normalized basis, cruise costs without fuel per ALBD are up just 2.3% after factoring in the partial year of operating expenses associated with Celebration Key, Grand Bahama and RelaxAway, Half Moon Cay as well as the timing of certain expenses between the years. In addition, you will see that our cost growth decelerates from the first half of 2026 to the second half. The main drivers of the deceleration are the sliding of some costs from the fourth quarter of 2025 to the first half of 2026, which will impact our first half, second half comparison, as we indicated on the December earnings call. The full year operation of Celebration Key, Grand Bahama, which opened in July 2025, will also impact our first half, second half comparison. This comparison is also affected by the seasonalization of advertising and repair and maintenance spending. I will close with a few additional thoughts on PROPEL. As Josh said, at its core, PROPEL is about converting strong and growing demand into higher returns and stronger operating cash flow while maintaining disciplined capacity growth and a strong balance sheet. Our confidence in achieving our PROPEL targets is grounded in the same strategies, priorities and disciplined execution that have delivered strong results and momentum in recent years. It is also supported by realistic assumptions and performance metrics that give us confidence in the path ahead. From 2026 through 2029, we expect moderate yield growth on a CAGR basis and low single-digit CAGR growth in cruise costs, excluding fuel per available lower berth day. Because we expect yield growth to grow faster than costs, we believe this will drive significant margin expansion. Achieving these targets will require heightened cost discipline and a focus on further strengthening our industry-leading cost structure. We will drive operational efficiencies and realize scale benefits within ship operating expenses and G&A through technology and sourcing, resulting in decelerating cost growth throughout the period. While it is true we are announcing PROPEL at a time of heightened volatility, these targets are about the long-term trajectory of our business, for which I have great optimism. And I say that based on very relevant experience. During my time at Carnival, we have managed through so many challenges, 9/11, the global financial crisis, the Arab Spring uprisings, COVID and the Ukraine war, just to name a few. And we have always come away demonstrating our ability to execute and achieve new record results while building resilience and growing stronger. I expect no less as we look ahead to our future. Operator, we're now ready to open the call for questions. Operator: [Operator Instructions] Our first question today is coming from Robin Farley of UBS. Robin Farley: I wonder if you could just give us a little insight into when you were thinking about your long-term targets. Did anything change from 4 weeks ago aside from obviously the changes in fuel? Just wondering how anything in the last month would have impacted your longer term, the other indicators. And then just as a follow-up on the share repurchase, if you could just spell out a little clearly what dividend and share repurchase over the next 3 years. I mean I think I can back into the math from what your dividends are and your total capital return. It's just a significant step-up from what you had done pre-COVID. So I just want to make sure that we're thinking about that right. Josh Weinstein: So first, sorry for the technical delays. We got hung up on, which is not good when you're the speakers. So with respect to the long-term targets, I mean, at the end of the day, they're long-term targets and we have a lot of confidence in our ability to deliver over that period. With respect to the current situation and what its impact could be, I'm not going to speculate on how it's going to play out, but we do have very minimal exposure to that region. We didn't have any this year because of the decisions we took and we've already made that decision for next year. And we have the ability to move our assets as everybody knows. So we feel very good about the long-term trajectory. We certainly didn't just do it based on fuel prices from 2025. We thought about this and stress-tested it in various scenarios and it's something that we do believe strongly that we can deliver. With respect to the capital allocation, remember if you think about what the world looked like 10 years ago versus where we are today, our profile is very, very different. We've got no ships this year. We've got one ship a year thereafter. We are generating a lot more cash than we used to. And even with the spending that we're investing, as we noted, in our materials, in ourselves, which is quite important, including the destination strategy and revitalization plans for our brands, it still leaves us with a tremendous amount of free cash flow that we can give back. And we will do just that. And you should expect both the dividend and the initial authorization of $2.5 billion. Those are starting points, and we'll progress from there. Operator: Our next question is coming from Steve Wieczynski of Stifel. Steven Wieczynski: Congrats, Josh, on the strong results here. So I guess, first of all, it seems like the booking environment remains very healthy at this point. But Josh, wondering if you could maybe walk us through what you've seen from a booking perspective for both your North American and your EAA brands. I guess what I'm trying to understand here is if there's been any material differences in the bookings across your brands. And then also maybe you've seen any changes in your cancellation rates as we head into the summer, specifically around I assume it would probably be European cruises this summer. Josh Weinstein: Yes. So let me start with the cancellation question. We're really not seeing anything significant to talk about with respect to cancellation trends. Our onboard spend have been consistently strong as we got out of Q1 and headed into Q2. So with respect to the last 3 weeks, I'd say as -- feels like d j vu, like last year. People see what's going on. There is a lack of understanding about what it means for the world, what it means for me personally, and then life normalizes. And we're in the process of life normalizing over this period. We've seen -- it's not surprising that if you think about potential impact and how people are thinking about things, to the extent that we're talking about sailings that are Eastern Mediterranean, that's got a different profile than Western Mediterranean. That's got a different profile from Northern Europe and then obviously Caribbean, Alaska, Australia. So overall, we're actually pretty pleased with how things have been progressing. Certainly volumes have been stronger for places like Alaska and the Caribbean. But it's not like there's just this line around Europe. I mean Northern Europe is going quite well. We've made progress even with our Eastern European sailings when it comes to the book percentage that we're at today versus where we are a few weeks ago. Would it have been higher and more activity had all of this not happened? Absolutely. But one of the strategies that we had going into wave was pull forward the occupancy, pull forward our bookings. And we did just that. So we entered into this period with a nice amount of headroom, which we've maintained overall. So there's going to be ins and outs as we move through this. And I'm sure there's going to be reverberations that we don't know about yet, but the teams are managing to the curve and being reactive because the world is pretty reactive right now. Steven Wieczynski: Okay. Got you. And then second question, Josh, if I could ask one about PROPEL. If we think about the target of greater than 50% EPS growth from '25 through '29, so simple math is going to say, okay, 2025 adjusted EPS, I think, was whatever it was, $2.25, I think. That would say 2029 EPS should be at a worst-case greater than $3.38, $3.40, somewhere in that range. I guess with 2026 EPS now taking a pretty significant step backwards just because of fuel, is it fair to kind of assume that you guys feel pretty comfortable that you'll be able to absorb pretty much higher fuel prices over a longer period of time? Am I kind of thinking about that the right way? Josh Weinstein: Yes, I think that's right. Over a longer period of time, we'll take what the world has and we'll perform in any environment at the end of the day. So clearly, we'd be performing better if fuel was back at $60, $70, but we don't plan our lives around a world where fuel stays at $60 to $70. That's why our focus forever, and will continue to be forever, is use less because whatever the price is, if we use less, we do better. And if you think about our trajectory on our consumption, if you look at the per unit consumption decreases that we've had across the fleet, if you go back to where we were in 2019 versus where we are in 2026, we're saving this year alone about $650 million. If you go back just to 2023 and you look at where we are today, that alone is $250 million, thanks to the consumption savings that we are hyper-focused on and we'll continue to do that. Operator: Our next question is coming from Matthew Boss of JPMorgan. Matthew Boss: Great. So Josh, maybe could you elaborate on the curve and your comments on bookings well into 2028? Maybe if you could just speak to pricing power or areas of opportunity that you see across the portfolio today. Josh Weinstein: I want to make sure I understand your question. So can you say it a different way? Matthew Boss: Yes. Maybe if you could just elaborate on the strength on further out bookings. I think you cited well into 2028 and just where you see the greatest areas of pricing power across the portfolio. And I know we've talked about your portfolio approach and how that separates you from some of your peers in the industry. Josh Weinstein: Yes, I mean, I think the answer is yes. We've seen the trajectory of our brands in a pretty holistic way, leaning forward across the board when it comes to lengthening the booking curve. So it's almost uniform that people are at the far end of their booking curve. So everybody's been taking opportunities to really put things out for sale with more lead time, driving further sales and managing the curves. I don't know if I'd say differently than they used to. It's really just evolving. We've got tools that we've invested in to help us be better at our jobs in that respect. We've got -- we've brought in a lot of folks over the last few years that have great capability that are leading teams of revenue managers that are really pushing the envelope. And I think overall, we are becoming more mainstream, right? We're becoming more mainstream as a product. Our loyal guests really enjoy what they get with us and know to book in advance as far as they can so they get the best of whatever they want for their particular vacation. So I think it's all the blocking and tackling that we have been working with our teams around the world around those brands to push things forward. And it is -- when we talk about bookings, we're not just -- internally, we're not just looking at this quarter. We're not just looking at full year. What are our targets for '27, which I'm not going to tell you, what are our targets for '28? How far are we going? And are we getting the right balance, right? I mean we don't want to be 100% booked on day 1 that we put things on for sale. So there is art and science behind it, but everybody's been working hard to maximize the revenue. Matthew Boss: And then maybe, David, could you outline the drivers of ROIC above 16% in the PROPEL plan, meaning opportunities you see remaining across the portfolio, just how you're thinking about net yields relative to low- to mid-single digits historically? David Bernstein: As I said in the prepared remarks, our PROPEL model and the 16% was built off moderate yield growth and low-single-digit cost growth. And there's clearly, as Josh talked about, further out bookings and the revenue management, and I won't repeat all the things he said. There's clearly upside opportunity on both the revenue and the onboard areas to drive the ROIC even higher than 16%. That's not a cap. It's just a target for 2019 (sic) [ 2029 ] and beyond. Operator: The next question is coming from Xian Siew of BNP Paribas. Xian Siew Hew Sam: Maybe just on the 2Q guidance, you did 2.7% net yield growth in 1Q and 2Q is guided at 2%. Maybe just can you talk about any reasons 2Q should maybe take a little bit of a step back? Because it sounds like underlying, there's -- demand is quite strong. Josh Weinstein: I mean honestly, our first quarter yield guidance was less than 2%. We were pretty clear that when we were kind of coming around the table again to think about the rest of the year, we kept things fairly consistent given all the noise and all the background. So there's -- every period's got differences based on dry docks, based on what day of the week the bookings, the sailings end, et cetera. But we feel that 2% is where we were and where we are, and we always try to exceed. Xian Siew Hew Sam: Okay. Great. And then maybe just on the follow-up for longer-term outlook for net yield, you kind of mentioned moderate yield growth. Could you maybe talk about what do you think is the biggest kind of drivers within that? How do we think about the building blocks, if it's the ship kind of revamps, the islands? Like, what do you think is kind of the biggest kind of drivers within that? Josh Weinstein: Well, I don't think if we're going to quantify, the biggest drivers are not going to be the revamps. I don't think the biggest drivers are going to be the destinations. I think they're going to absolutely be accretive, but those are fairly isolated ship-by-ship things that are going to be nicely supportive of the yield growth. What's really going to drive us forward is incremental improvement in the commercial space, right, in the marketing, in the revenue management, in utilization of technology that we're already utilizing to be better at lead generation, better at conversion, better at personalization, better at driving earlier engagement with booked guests so that they are booking not just the ticket, but the packages and bundles and all the experiences that we have to offer on board. So the good thing is, if you think about where we are now versus where we were when I was kind of talking about this stuff 3 years ago, I think we've got a track record of leaning into those things and getting better every day. And not only do we have, I think, just an amazing team and amazing leaders, many of whom are new versus where we were 3 years ago, but the technology advancements to supercharge this only are going in one direction. So I think that's really where the broad-based improvements are going to be, which then get [ bolstered ] by the investments we've been making in the destinations and will continue to do so. And as you said, the refurbishments. Operator: Our next question is coming from Brandt Montour of Barclays. Brandt Montour: Congratulations on getting the buyback announcement today. I have a question on technology to kind of stay with that thread, Josh. How do you think about the opportunity to do more direct integrations with AI and LLM companies out there that do travel? And just given sort of the inherent complexity of the cruise product for most first-time cruisers, does that have the potential to fundamentally change the way consumers find their way to cruises? Josh Weinstein: I think it already is, right, because of the number of folks that utilize, whether it's ChatGPT or Gemini, Claude, I mean, you name it. I mean the whole nature of our interaction with the guests and how to get to our -- either our websites or our trade partners to come sail with us are in flight. I do think -- and so the teams have been working for a while now and will continue to do that on optimizing how we show up in those AI engines as opposed to the old days where we were just talking about Google search. I think the thing that's probably going to be a little slower for the cruise industry because of what you said versus what you see in places like Walmart and things that are a little bit more easy to navigate and easy to know what you're looking for and find it at the price that it's listed for is we are more complicated. There is no doubt. We're not a commodity. We are an experience. And so I'm sure it will come at some point, but we'll be on the tail end of that versus what we're already starting to see in select types of retail experiences. And I think with respect to our travel agents, we've been saying this forever, they are an incredibly important piece of our business. I don't expect that to change anytime soon. They are great at providing newcomers access to us. And they too, just like we are and just like every other company is, are working on, what does it mean to be a travel agent in a world of AI and optimizing their operations around that too? So I think it's going to lift -- a tide that's going to lift all boats. Brandt Montour: That's really helpful thoughts there. A different question would be on the longer-term targets. You just gave a great rundown, Josh, of how you think you're going to be able to drive yield growth. But just sort of honing in on your ship orders, 3 years ago, I think we all kind of thought that you'd see this -- lower, less ship orders, 1 to 2 per year. You're doing 1 per year. It looks like you guys are doubling down on that for the next sort of period of time. When you take this model out, obviously your fleet age will start to stand out against peers. And I want to know if you think that the industry has changed or your business has changed and that doesn't matter as much anymore? Josh Weinstein: I mean for those on the call that got to experience us going on the AIDA ship that came out of the AIDA Evolution program, an 18-year-old ship can look and feel like a 1-year-old ship and be maintained in that condition. So I don't think getting older in and of itself is going to be a driver of our ability to execute on our revenue strategy. I was, I am and I continue -- will be for looking forward to be of the belief that by having very measured capacity growth, we really get to focus on improving the underlying business and keep focused on that. And there is a tremendous amount of opportunity to do that. And yes, newbuilds are great, but we've got 96 ships, right? Newbuilds are not in the grand scheme of things. The thing in any couple of years or a few year period is going to lift us up. What's going to lift us up is the 96 ships. And we have every intention of keeping this fleet going for a nice time while we do introduce new capacity over time in a measured way. So I don't know if that answers your question, but I feel that the approach has been working and will continue to work. These are very long-term assets that people enjoy. And some of the best yields and some of the best NPS we get are on some of our older ships. Operator: Our next question is coming from Trey Bowers of Wells Fargo. Raymond Bowers: Thanks for the color earlier in the call about what you guys are kind of seeing in the Med and Europe given the conflict, but it seems like we could take out of that, that maybe some of the non-European trends, are they coming in even better than you might have expected? And maybe in that, could you just break down kind of what you're seeing in the Caribbean and maybe Alaska? Josh Weinstein: First thing I'd say is it is early days, right? We're literally a few weeks into something that has been completely unexpected, and it's working its way through the global backdrop. So yes, Caribbean's been a bit stronger. Alaska has been strong and it continues to be strong. We've been very pleased for a very long time about how Alaska for 2026 was shaping up. I'd be saying the same thing if we were having a call at the end of February. And with respect to Europe, I mean, we are very well booked in Europe to begin with. And so like I said, we had been pushing to really produce a good occupancy advantage and we did that. There is absolutely not the pace that we would have expected over the last few weeks versus a world where this wasn't happening in the backdrop, but not to an extent that there's much to talk about, just an extent that, yes, things have shifted a little bit here and there. And I have no idea how it's going to play out. Now cards on the table. I don't know. So we'll have to see how this develops, and we'll respond accordingly. Raymond Bowers: Yes, fair. And I have to ask, David, when we go through these periods of fuel spikes like this, and when and if things settle down, does this kind of maybe reintroduce the idea of just trying to smooth fuel prices a little bit through reintroducing a hedging program at some point? David Bernstein: Yes. No, thank you. So listen, we think about that question all the time, regardless of the situation and circumstance when we talk about it. But at the moment, you know what we've done over the past decade, and we'll continue to evaluate and rethink it. Josh Weinstein: I lost a bet. It took us until 10:46 for someone to ask about fuel hedging. Operator: Our next question is coming from Ben Chaiken of Mizuho. Benjamin Chaiken: Maybe on free cash flow, the $14 billion is very compelling. I think you framed it as 40% of operating cash flow. Does that -- if I'm not mistaken, does that kind of signal that you think about capital return and free cash flow independently? In other words, capital return in any year is agnostic of the CapEx in that year. And maybe along the same lines, for the implied buyback portion of that $14 billion, do you expect that to be smooth or will you be opportunistic? And then one follow-up. David Bernstein: Yes. So from an -- we do expect to be opportunistic in terms of the stock buybacks. We've said that repeatedly. As Josh said, we're starting with $2.5 billion. And clearly, over this period with $14 billion of expected shareholder returns, there'll be additional stock buybacks. In terms of the allocation, you got to remember that our CapEx is reasonably predictable over time because we have laid out one ship per year. And remember, we're only talking about '26 through '29 here. So it's one ship a year. Our non-newbuild CapEx also has some level of predictability, although we don't know the exact number every single year. This year it's $2.4 billion. And so as a result of that, we were able to triangulate into 40% of cash from operations, or more than 40% of cash from operations being returned to shareholders. And it's a combination of the reinvestment in the business, as Josh said, the $15 billion, and $14 billion -- more than $14 billion probably going to shareholders. That's the way we think about it as opposed to because of the predictability. Benjamin Chaiken: Okay. Got it. And then, David, in the past you've talked about there being more costs within NCC this year versus CapEx. You didn't necessarily talk about it on this call, but I think over the last 6, 12 months you've brought it up. Have you kind of contemplated this anymore, meaning is '26 an anomaly? Or is the level of cost attribution between OpEx and CapEx the right way to think -- for this year, the right way to think about it moving forward? David Bernstein: Yes. So you're referring to the dry dock expense where I had indicated in December that the total dry dock -- total spending on dry dock was flat, but there was a different allocation between the costs. That's something that we're going to have to look at every single year based off of the accounting rules and what can get capitalized. So stay tuned until -- for our December guidance. But we haven't, of course, we're just beginning to work through the 2027 capital expenditure plan and dry dock schedule. So there's a lot more for us to evaluate before we can give that answer. Benjamin Chaiken: Was there something unique that you're doing this year on the dry docks? I appreciate it moves year-to-year, but just to maybe double-click there. David Bernstein: Yes. There wasn't anything in particular that was unique. Remember, in total, the dry dock expense, and I mean, we're talking about well over $1 billion between all the ships in the year. And so a very small movement of even 1% or 2% between CapEx and expense can have an impact on the percentage increase of net cruise costs without fuel. And that's what it was. It was just a couple of percent movement which had a -- I think it was a 0.6% impact on the net cruise costs without fuel. Operator: Our next question is coming from Conor Cunningham of Melius Research. Conor Cunningham: Just on the -- so I understand that you're 85% booked for 2026, but just around fuel recapture a little bit, on the remaining 15%, does your pricing algorithms immediately kick in? And then in the same context as that, do you worry about demand destruction at all just because some of your competitors obviously do hedge and you guys don't? And like, does that put you at a disadvantage as a result on the pricing side? Josh Weinstein: Yes. So the answer is with respect to how we manage our revenue, the price of fuel is somewhat irrelevant. And certainly immediate swings are irrelevant. We price as much as the market can bear. We price as much as we -- as our guest base and potential guest base is willing to pay. And if they were willing to pay $10 more because of fuel, they should just be willing to pay $10 more. And so it is a little bit separated. Now clearly, when we do our itinerary planning and long-term planning, the price of fuel is a very big factor in how we set the itineraries and getting the balance right between the revenue that we'll generate and the cost that we incur. But with respect to how we manage the business day-to-day, now, I mean, we're really trying to maximize. And we're talking about $7 billion of EBITDA. So I don't see a disadvantage one way or another with respect to the price of fuel at any one given time. People don't tell us we got a great advantage when we're not hedged and the price is low. So this kind of conversation, we only talk about this when fuel goes in one way and not the other. I do think, I'll go back to what I was saying before, the focus on consumption is really, when you think about the long-term trajectory of our business and the long-term trajectory of our earnings power, using less is the only solution to the price of fuel. And that $650 million that I said, between 2019 and this year, the savings that we'll get in this year alone because of the consumption savings, that's nicely higher than the over $500 million impact we're seeing because of the spike in fuel. So that will remain our focus. Now I don't take away from what David said. We'll always look at it, right? And the world can change and we could take a different view in the future, but that's not the focus. The focus for the health of the long-term business is to use less. Conor Cunningham: Totally appreciate that. And I hate to ask another fuel-related question. Just given the -- like, I mean, if you look at your current pricing for fuel right now, it is obviously below current spot, and it's below the forward curve. And I totally appreciate it's impossible to factor like where that's all going. But like, why use those numbers? Why not assume something higher and then kind of if it comes in better, great. Just the idea around where you're marking oil at today in general? Josh Weinstein: We literally set our guidance on Monday and that was the curve on Monday. We rounded, but that was the curve on Monday. Since then it's gone up, it's gone down. It will continue to change. We tried to give you information so people can model whatever you believe or whatever is happening, but we just had to draw a line in the sand sometime and just move forward. David Bernstein: Yes, we gave you the sensitivity. Conor Cunningham: Well, if you know where it is next week, let me know. Josh Weinstein: Yes. If I know where it is next week, I'm retiring because I know the future and I can make a lot of money doing a lot of things. And I'm not the person that was betting on the prediction market in advance of all the stuff that's going on. Operator: Our next question is coming from Chris Stathoulopoulos of SIG. Christopher Stathoulopoulos: Josh, you've been in this seat now for a few years. You've navigated some difficult landscapes. I've always said with a lot of confidence and transparency. But one of your peers in the travel space is, I guess, giving some straight talk around what an extended period of elevated energy prices might mean. So you've gotten around Russia, Ukraine, tariffs, Liberation Day, other things. Walk us through, I guess, your plan. So in the short term, you're talking about lower consumption. Longer term though, if we're in a period of 16, 24 months of $100-plus oil, just how should we understand, I guess, internally? What are the areas of focus? How should we think about your ability to respond via pricing and perhaps changing itineraries and the like? Just want to understand, like, I guess the mid- to longer-term playbook in an extended or elevated energy cycle. Josh Weinstein: Sure. Yes. So I'd say, from a consumption standpoint, you've got, as you said, shorter term and longer term. Shorter term, there's still things that we can do on balance that will improve our consumption savings and really being even more maniacal about simple things that can save a lot of money with respect to how we're managing the sailing times and making sure we get in just to the port right in time and leave on time that cuts your fuel usage and how we manage the HVAC. I mean all those things, there's still opportunity to, like I said, be more focused. On the longer term, yes, we absolutely have the ability to change itineraries, to make decisions about number of ports that will stop off at particular -- in particular future scenarios. I would say we have been really strategic in thinking about the fuel side of our investments in our destinations in the Caribbean. And we are looking to -- and we have been looking to create a bit of a strategic fence for ourselves where we have great opportunities to go to great places that are very, very close to the home ports that we sail from. And things like Celebration Key and the pier that's going up now at RelaxAway are incredibly useful. We also have things in the pipeline on the investment side which we call -- we've already cycled through our Service Power Package 1, which cuts a lot of consumption on the hotel side. We already have our plans for Service Power Package 2, and we are incredibly bullish on that. And if it's warranted, we can always speed that up and get even more consumption savings. I don't -- I will be honest with you, though. I don't know how to respond to your question in total because I don't know what the world looks like in a year if fuel is at $110 and what that means. I just don't know. I would remind everybody that we have a lot of things going for us when it comes to what it is that we have to offer. Number one, we are still a huge value gap to land. We provide experiences at a much lower price point than people can find on land. And if people are looking to stretch their dollar further, it goes further with us. Second, we do make it convenient for people to get on our ships. About 50% of the folks that travel with us drive to get there. And that is incredibly powerful if people are looking to avoid cost, cost of air. So we will continue to, as you said, navigate challenges as they come. And I think over the last, call it, 5, 6 years, we have shown how much agility and nimbleness we've got and ingenuity to overcome some pretty significant things and come out stronger. Oh, you have one more? This might be the last question though. Go ahead. Christopher Stathoulopoulos: All right. Well, wanted to give you 2 things. So we can do our math on what it means for implied EPS growth through '29 off of the new guide. But if you could talk a little bit more about how, I guess, things like YODA and AI. I know there was an earlier question in AI, but I have been getting some questions on how AI might perhaps unbundle and take away some potential pricing power that you've been able to extract, if you will, because of this frictionless approach or bundling around purchasing. And then also, there was a chart back in your SEA Change deck from a few years ago that had future state capacity by brand, and I wonder if we're at a point where -- I think it was 30% plus for Carnival Corp where that is contemplated similar-ish level for PROPEL by '29. Realize there's a lot there. Maybe if you just want to talk about, I guess AI or... Josh Weinstein: I got to be honest with you, and I apologize. I didn't understand either question. So... Christopher Stathoulopoulos: Okay. Well, maybe if you could talk about -- you've talked about the moderate yield growth. And in the past, you've done a lot of -- you've spoken about YODA and how that differentiates what you do at the core. And there's been some questions around AI, which perhaps is maybe at conflict with that. And then on the actual capacity by brand, back in the SEA Change slide, you had future state, which was '26. I'm assuming that FY '29 contemplates a similar sort of distribution of capacity by brand type. Josh Weinstein: Okay. So as far as the AI goes, I think I understand where you're going. I mean AI has the opportunity to certainly be a disruptor in society in a lot of different ways. AI also has an opportunity to be harnessed for the benefit of supercharging what we do, including how we manage YODA. I mean we're already starting to utilize some pretty advanced technology in how we operate our business on the revenue side. And I think it's still early days. So I think the whole world is going to move at pace, taking advantage of what technology is going to do for businesses and for consumers. With respect to the capacity, are you asking basically whether our brand mix is going to be relatively consistent for 2029 versus where we are now? Christopher Stathoulopoulos: Yes. Josh Weinstein: Got it. So I mean, yes, I mean, more or less. I mean you've got the road map, right, which is really there's just effectively 2.5 ships in that period that are going to Carnival. So Carnival will be a bit heavier weighted in '29 versus where we are today because they're the only ones that have ships on order over this PROPEL period, and then we start introducing some for AIDA. And then obviously, we will order more ships for the 2030s. It will come at some point and we'll share that with you when there's something to share. But it's all going to be in the vein of intentionally measured capacity growth. So I apologize again for the delay in getting to the Q&A session, but I do appreciate the questions. And thanks to everybody for joining. Be safe, and we'll talk to you next quarter. Operator: Ladies and gentlemen, this concludes today's event. You may disconnect your lines at this time or log off the webcast and enjoy the rest of your 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.
Operator: Good day, and thank you for standing by. Welcome to the fourth quarter and full year 2025 Legence Corp. Class A Common stock earnings conference call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Son Vann, Vice President, Finance and Investor Relations. Please go ahead. Son Vann: Thank you, Daniel, and good morning, everyone. Welcome to Legence Corp. Class A Common stock’s fourth quarter 2025 earnings call. With me today are Jeffrey Sprau, Chief Executive Officer; Stephen Butz, Chief Financial Officer; and Steve Hansen, Chief Operating Officer. This morning, we issued a press release that covers our fourth quarter and full year 2025 results and posted a slide presentation that accompanies the earnings release. All materials can be found on the Investors section of the company’s website, wearelegence.com. Before we begin, I want to remind you that comments made during this call contain certain forward-looking statements and are subject to risks and uncertainties, including those identified in our Risk Factors contained in our SEC filings. Our actual results could differ materially, and we undertake no obligation to update any such forward-looking statements. During this call, we will refer to certain non-GAAP financial measures which should not be considered in isolation from or as substitutes for measures prepared in accordance with generally accepted accounting principles. Please refer to our quarterly earnings presentation for reconciliations of these non-GAAP measures to the most directly comparable GAAP measures. With that, let me turn the call over to Jeff. Jeffrey Sprau: Thank you, Son, and thanks everyone for joining today to discuss our fourth quarter performance and current outlook for the business. I will also briefly cover a few other topics, including our integration efforts of the Bowers Group, the tuck-in acquisition we made earlier this month of Metrix, an engineering firm in the Seattle, Washington area, and provide an update on our growing craft labor force. First off, our fourth quarter results. Now Stephen will go into greater detail, but at a high level, we delivered an incredibly strong fourth quarter which was well ahead of our prior guidance. Total revenues grew by 35% to a quarterly record of $738 million, and most of our revenue growth was organic with contributions from both segments. Adjusted EBITDA grew 53% as EBITDA margins expanded by approximately 140 basis points. For the year, revenues grew by 22% and adjusted EBITDA by 30%. Most impressively, total backlog and awards grew by 49% year over year and 20% from just the end of the third quarter 2025. Backlog growth was essentially all organic and came on top of the aforementioned record revenue quarter. This translated to a book-to-bill ratio for the three months ended December 2025 of 1.9 times, an acceleration from what was already a robust third quarter book-to-bill of 1.5. Both segments saw strong total backlog growth. Year over year, Engineering and Consulting backlog rose by 6% driven by state and local governments, along with contributions from hospitals and data center clients. Our Installation and Maintenance segment grew by 66% driven by data center and technology clients in particular, for fabrication demand of our direct liquid-to-chip technical cooling systems. Outside of what is already in our backlog, we expect strong installation and fabrication demand to continue well beyond 2026. Now to give you a sense of our planning horizon, we are in discussions with certain data center clients for deliveries that extend into 2029. I should mention this fabrication demand is on top of the day-in, day-out installation and retrofit work we do in existing data center facilities built over the past twenty plus years. Okay. Shifting our attention to Bowers and how the integration process is going. As a reminder, Bowers is one of the premier mechanical contractors in the Northern Virginia DC Metro Area, home to the world’s largest installed base of data center capacity. They are one of the key contractors that have contributed to the region’s data center buildout since their first data center project for Amazon way back in 1999. With Bowers, we are now able to expand our mechanical capabilities into this critical region, broaden our customer base, and add roughly 50% to our fabrication footprint. This is in addition to the cross-selling opportunities that are now available with our existing engineering and electrical contracting presence in the region. When we announced the acquisition last November, we thought it would take until mid first quarter to clear regulatory approval. We are actually delighted that the approval came sooner than expected which allowed us to close on January 2. Since closing, we have been focused on critical integration workstreams to establish a secure, standardized operating base that aligns with our safety procedures, processes, controls, communications, and financial rigor. Our leadership team has also put in a lot of effort to build a solid foundation of trust with the roughly 2,000 employees of Bowers. We have been involved in several joint sessions to discuss operational alignment and opportunity reviews. I personally came away from those interactions with even greater conviction of what an incredible addition Bowers is for Legence Corp. Class A Common stock and our shareholders. Our first quarter 2026 results will include a full quarter’s contribution from Bowers as well as partial contribution from a really nice tuck-in acquisition of an engineering firm, Metrix, based near Seattle, Washington that we closed on March 1. Metrix is highly complementary with our existing engineering team in the area and has a solid base of clients that skew towards the education market, and they operate with a really strong margin profile. There is great cultural alignment with a very talented group of engineers, led by a motivated leadership team that is excited to join Legence Corp. Class A Common stock. I want to publicly welcome Metrix to the Legence Corp. Class A Common stock organization and look forward to working together to better serve our clients. One final point before handing the call over to Stephen. It is around our labor force, specifically on the contracting side. At the end of 2025, we employed almost 4,500 unionized craftsmen and women. This is up from 3,800 at September and 3,400 at June. Now with the addition of 1,700 union craftspeople from Bowers at the beginning of the year, and growing our existing workforce throughout this year, we currently have approximately 6,600 skilled craftspeople. Now we recognize there are pockets of tightness in various labor markets from time to time, and highly skilled labor will always be in demand. That said, as a company, we are fortunate in that we have not experienced any significant labor constraints that would impact our ability to execute on our commitments or cause us to pass on attractive new business opportunities. Our ability to add roughly a thousand craftspeople to our workforce, almost a third of our base during the second half of last year, reflects the general availability of union labor in our markets. It also reflects who we are as a preferred and safety-first employer and how we attract and retain people. As a unionized organization on the contracting side, our retention rate is extremely high. Workers are attracted to Legence Corp. Class A Common stock because we invest in our people with training and advanced tools to make them more safe and efficient. They also see our growing backlog with blue-chip customers and feel confident that there is a continuation of work after each project. As a result, we have great relations with the unions that we partner with; Legence Corp. Class A Common stock is typically one of the top union employers in the markets where we operate. Now as someone who has run other companies that employ both nonunion and union workers, there are clear benefits to being unionized and we are in a strong competitive position due to our skilled field workforce. With that, let me turn the call over to Stephen. Stephen Butz: Thank you, Jeff, and good morning, everyone. For the remainder of our call, I will begin with a review of fourth quarter 2025 results in comparison to 2024, as well as a review of our full year 2025 performance. Following my review of our historical results, I will make some brief remarks about our current guidance, discuss our balance sheet and liquidity position at year-end, and pro forma for the acquisition of the Bowers Group. We will close out with a few additional comments on the recent tuck-in acquisition of Metrix before handing the call back to Jeff. Starting with our fourth quarter 2025 results, we generated revenue of $738 million, an increase of $189 million, or 35%, from the year-ago quarter. The overwhelming majority of this increase was organic, with both segments contributing to the strong growth rate. Breaking down quarterly revenue growth at the segment level, starting with Engineering and Consulting, segment revenue increased by 10% to $173 million, most of which was organic growth. Growth was driven by program and project management services, particularly with hospitality and entertainment and education clients. Engineering and design revenues were essentially flat as higher demand from life science and healthcare and hospitality and entertainment clients was offset by lower revenues from data center and technology and education clients. Moving to Installation and Maintenance, segment revenue of $565 million increased by a very robust 44% versus the year-ago quarter, almost all of which was organic. Installation and fabrication services accounted for the majority of the segment growth, increasing by 53% driven largely by demand across high growth industries, including from data centers and technology and life sciences and healthcare clients. As Jeff mentioned, a good portion of the demand growth is for our direct liquid-to-chip technical cooling system we fabricate in our shops and ship to data centers across the United States. When we include the latest backlog additions, we will be shipping our cooling systems to data center locations in Iowa, Ohio, Utah, Georgia, and Texas, as well as Arizona, where we also do the installation. Maintenance and service revenue also increased at a low double-digit pace of 11%, rebounding from the slower growth that we experienced in maintenance and service in 2025. For the full year 2025, consolidated revenue was $2.6 billion, up 22% from 2024 levels. Engineering and Consulting segment revenues grew by 21%, driven in part by the full-year impact of acquisitions completed in 2024 and partial-year impact of acquisitions completed in late 2025. Installation and Maintenance segment revenues grew by 22%, almost all of which was organic, driven by greater demand for installation and fabrication services primarily from data centers and technology, and life science and healthcare clients. Turning to gross profit, consolidated gross profit for the fourth quarter 2025 increased by 31% to approximately $147 million. Our reported gross profit includes noncash stock-based compensation expense related to legacy profit interest units. While this expense burdens the income statement at Legence Corp. Class A Common stock, the payment of this expense is borne by entities outside Legence Corp. Class A Common stock, essentially the legacy pre-IPO shareholders. The settlement of this expense does not impact Legence Corp. Class A Common stock either in the form of cash outlay or the issuance of additional common shares. Additionally, because these profit interest units are marked to market, fluctuations in our stock price can lead to significant volatility in this expense line. As such, we have included in our press release a table reconciling our GAAP gross profit to adjusted gross profit, which excludes this expense related to these legacy profit interests the company does not bear the burden of. We believe this information will provide additional insight into our underlying operational trends. So with all that said, adjusted gross profit totaled approximately $157 million for an adjusted gross margin of 21.2% for the fourth quarter 2025, up from approximately $112 million and 20.5% in the fourth quarter 2024. The improvement in adjusted gross margin was primarily due to higher gross margins in the Installation and Maintenance segment, despite lower Engineering and Consulting margins and a revenue mix shift toward the I&M segment. Delving further into margins at the segment level, fourth quarter 2025 Engineering and Consulting adjusted gross margin was 30.9%, down from 32.6% in the year-ago quarter. The decline was mainly driven by a revenue mix shift towards the program and project management service line, which generates a lower margin profile than engineering and design, as well as slightly lower margins within the program and project management service line on project mix. Installation and Maintenance adjusted gross margin was 18.3%, up from 15.6% in the year-ago quarter. Adjusted gross margin improvement was driven by strong project execution within the installation and fabrication service line, partially offset by a higher revenue mix from the installation and fabrication service line, which carries a lower margin profile than maintenance and service activities. For the full year 2025, consolidated gross profit was $536 million, up 24% from 2024 levels. Excluding stock-based comp expense from the legacy profit interest, adjusted gross profit of $550 million with adjusted gross margin of 21.6% increased from full year 2024 adjusted gross profit of $432 million and adjusted gross margin of 20.6%. Higher adjusted gross margin was primarily due to stronger margins at the Installation and Maintenance segment. Turning to selling, general, and administrative expense, fourth quarter 2025 SG&A totaled approximately $115 million compared to $63 million in the year-ago period. Included in the fourth quarter 2025 SG&A was $36.4 million of stock-based compensation, of which $34.4 million was related to the legacy profit interest. SG&A also includes other adjusted EBITDA add-back items, such as acquisition and strategic initiative expenses. Backing out these items in both quarters, our adjusted SG&A for the fourth quarter 2025 was approximately $75 million, up from $59 million in the year-ago quarter, though lower as a percentage of revenue at 10.1% in the fourth quarter 2025 versus 10.8% in the year-ago quarter. The increase in adjusted SG&A expense was primarily driven by increased headcount, compensation costs, IT software, and professional fees related to both supporting our robust revenue growth and our operations as a public company. For the full year 2025, adjusted SG&A was $267 million, or 10.5% of revenue, essentially the same percentage of revenue as in 2024, despite now in 2025 being publicly traded. All in all, we generated adjusted EBITDA of $87 million in the fourth quarter 2025, an increase of 53% from fourth quarter 2024 levels. Adjusted EBITDA margin for the fourth quarter 2025 improved by approximately 140 basis points to 11.8% compared to the year-ago quarter. For the full year 2025, we generated adjusted EBITDA of approximately $299 million, up 30% from year-ago levels, with adjusted EBITDA margins of 11.7% which improved by approximately 80 basis points compared to 2024 levels. Depreciation and amortization totaled $28.7 million in the fourth quarter 2025, down slightly from $29.9 million from the year-ago quarter. The quarter also included a noncash charge of approximately $27.4 million to impair goodwill and related intangible and long-life assets at one of our smaller business units in the Engineering segment. This particular business unit supports customer energy-related initiatives focused on improving facility efficiency and sustainability. It is largely a success fee-based business that has very long lead times between pipeline to revenue recognition. With the passage of the one big beautiful bill last year, while there may have been some beneficial impacts, the shorter-cycle project led to a period of transition and uncertainty for commercial renewables, including solar, which is the focus of this particular entity. We elected to write off the goodwill of that entity to reflect the uncertainty around our current ability to forecast cash flow for that business unit. Interest expense of $13.6 million for the fourth quarter 2025 decreased by $12.7 million from a year ago, primarily due to lower average debt balance than the year-ago period. We also reported $6.7 million of other expenses in the fourth quarter 2025. Approximately $3.8 million of other expense is related to a tax indemnity receivable asset, which expired toward the end of last year. That was related to a prior acquisition. The expiration of that indemnity requires us to record a noncash pretax expense. There is an offsetting tax liability against that receivable that also expired, which reduced our income tax expense provision by an identical amount. Again, there is no net income statement impact. However, these offsetting amounts are on different financial statement line items. Please note that this could impact our fourth quarter results for the next few years as each portion of this tax indemnity receivable expires. Also included in other expense is $2.9 million related to an adjustment of our tax receivable agreement, or TRA, liability for a change in our pretax earnings mix by state. Turning to income tax, we had income tax expense of $2,022,200,000 for the full year 2025, despite incurring a book loss. There are a large number of expense items that led to a fourth quarter and full year book loss for Legence Corp. Class A Common stock that are not deductible for income tax purposes, such as certain amortization expenses, the goodwill impairment charge, and certain other corporate expenses, as well as some of our interest expense. Cash taxes for 2025 totaled $16.4 million. For 2026, we estimate our effective tax rate, or ETR, to be in the mid 30% to 40% range, and to incur cash taxes in the low $30 million range. Beyond 2026, we expect our ETR to gradually gravitate toward 30%. However, in any given year, our ETR will be impacted by any discrete items that may not be deductible for tax purposes. Lastly, our cash tax payments exclude any payments related to the TRA. We expect to make a payment on the TRA in early 2027 in the mid-single million dollar range, related to 2025 income. Switching gears to backlog, at the end of the year, our consolidated backlog and awards totaled $3.7 billion, up nearly 50% from year-ago levels and 20% sequentially. Almost all of this growth was organic, as the two tuck-in acquisitions completed last quarter only accounted for about $20 million of the $609,000,000 in backlog and awards growth during the fourth quarter 2025. Our consolidated book-to-bill ratio was a very robust 1.9 times for the quarter and 1.6 times for the full year 2025. We experienced backlog and awards growth in both segments. Installation and Maintenance grew by 66% year over year and 24% sequentially. As you might expect, much of this growth was with data center and technology clients. While much of the press on backlog growth will likely go to the installation side of our business, our Engineering and Consulting backlog grew at a healthy 16% clip year over year and 11% sequentially. This growth occurred across several end markets: state and local government, life science and healthcare, and data centers and technology. While our backlog and awards at year-end 2025 does not include Bowers, I want to provide you with some preliminary figures on their backlog and awards. They wrapped up 2025 with $1.5 billion in backlog and awards, up from the $1.3 billion at September 2025. Turning now to our guidance, we are establishing first quarter 2026 guidance for consolidated revenue of between $925 million and $950 million and adjusted EBITDA between $90 million and $100 million. Our first quarter guidance includes a full quarter contribution from Bowers. For full year 2026, we are increasing our revenue guidance to a range of $3.7 billion to $3.9 billion. This represents an increase from the initial 2026 revenue guidance range of $3,475,000,000 to $3,757,250,000 that we presented during our third quarter report in mid-November, which figures included a full year of Bowers. We are also increasing our full year 2026 EBITDA guidance to a range of $400 million to $430 million. This represents an upward revision to our prior guidance of $370 million to $400 million. A key driver of the upward guidance revision for 2026 is to reflect the strong backlog and awards growth that we experienced in the fourth quarter 2025. Now just a few other housekeeping items to help with your modeling efforts. Interest expense, net of interest income, for the first quarter is expected to be in the $15 million range with full year 2026 in the high $50 million range. Depreciation and amortization for the first quarter is expected to be in the $45 million range with full year 2026 D&A in the $170 million to $180 million range. In terms of capital spending, full year 2026 is estimated to total $65 million. Approximately two-thirds of the 2026 CapEx forecast is for growth. A portion of this growth CapEx is for fabrication capacity expansion in Colorado and to finish out our previously announced capacity expansion at our other facilities. Once completed, we will have just under 1.3 million square feet of fabrication capacity, including the 372,000 square feet of capacity that came with the Bowers acquisition. Now to our balance sheet, liquidity, and leverage. We ended the year with a cash balance of $230 million, up from $176 million at September, as we benefited from strong operating performance and continued to emphasize working capital management. Total liquidity increased to $424 million at quarter-end, up $164 million from September, reflecting both our higher cash balance and the revolver upsize that we completed last October. Total debt at year-end was largely unchanged at $825 million from the 09/30/2025 level. Based on our last twelve months adjusted EBITDA, our net leverage ratio declined to 2.0 times, down from 2.4 times at September. Our year-end balance sheet does not, however, include the impacts from the Bowers acquisition, which occurred on January 2. On a pro forma basis for Bowers, our net debt balance would have totaled a little over $1 billion, equating to a pro forma net leverage ratio of approximately 2.4 times, flat with third quarter level, despite the acquisition. As Jeff mentioned, we closed on a nice tuck-in acquisition of an engineering firm in the Seattle, Washington area, which complements our existing engineering business and broadens the client base in the region. Total purchase price was a little over $30 million, of which about 25% was paid in equity. The acquisition multiple was broadly in line with many of our past transactions for engineering firms of this size. This concludes my prepared remarks, and now I will turn the call back to Jeff. Jeffrey Sprau: Hey, thanks, Stephen. In closing and before we get to the Q&A, our fourth quarter results capped a very strong year for Legence Corp. Class A Common stock, marked by robust growth in backlog, revenue, and adjusted EBITDA, with most of this growth organic. We also made significant progress by deleveraging our balance sheet and adding to our liquidity, using 100% of the proceeds from our IPO in September to pay down debt, adding capacity to our existing credit and term loan facilities, focusing on improving our working capital management, and, of course, benefiting from our strong operating results throughout 2025. All of this tremendous performance is a direct result of our amazing 9,000 employees who wake up every single day with the goal of delivering exceptional solutions for our customers, colleagues, and communities. Now heading into 2026, our outlook reflects the strong fundamentals that are driving growth in our core businesses, as well as the addition of Bowers and our other recent tuck-in acquisitions. Now a lot of press coverage goes to the incredible demand in the data center market, and we are certainly participating in that megatrend. But we also really like the balance from our portfolio of life science, hospitals, education, and other end markets that are also growing and continue to provide a large, diverse base of clients to work with. So with that, we will now open the call up to questions. Operator? Operator: We will now open for questions. Please press star 11 to ask a question and wait for your name to be announced. In the interest of time, we ask that you please limit yourselves to one question and one follow-up. Our first question comes from Joseph Osha with Guggenheim Partners. Your line is open. Joseph Osha: Thank you. Good morning, everyone. Congratulations on the strong results. Jeffrey Sprau: Thank you. Thanks, Joe. Joseph Osha: You talked a lot about how your craft labor force availability is allowing you to, you know, take work even at very tight markets like data centers, which is great. I am wondering if you are seeing any other challenges in that market, in particular as it relates to, you know, your customers’ availability of material or other things, or whether you are seeing those projects able to proceed on a timely basis for the most part? Thank you. Steve Hansen: Yes. Great question. To date, we have not seen a supply chain issue that is pushing schedules out. Data center clients and our blue-chip clients, they are looking far into the future at materials they need and working with us upfront to make sure that material chain that we are working within is also available. So to date, no, we have not. Joseph Osha: Okay. Thanks. I have lots of other questions, but I will step back in the queue. Steve Hansen: Thanks, Joe. Operator: Thank you. Our next question comes from Adam Bubes with Goldman Sachs. Your line is open. Adam Bubes: Hi, good morning. Jeffrey Sprau: Good morning. Adam Bubes: Data center technology revenue, I think, was up 80% year over year. Can you just help us parse out that performance? How much was fabrication versus installation growth? And then in 2026, can you just talk about your expectations for the growth trajectory of the data center fabrication business specifically? Stephen Butz: Sure. We are growing both our installation at a nice clip at data centers where we are completing the whole for the mechanical or electrical services, but also the fabrication is growing, probably at an even higher rate as we are participating in buildout in these rural areas where we do not have an installation footprint. Just to give you a sense, even though we do not break out the fabrication-only revenue, it is a proportion of our I&M segment revenue. In 2024, it would have been a mid-single-digit percentage of our revenue with fab-only work, whereas it was a mid-teens percentage in 2025 with fab-only. So it is growing at a higher rate, as you would expect given where many of these data centers are being built. We expect that to probably tick up a bit in 2026, but maybe not quite as much as you would expect because as we bring in Bowers, historically almost all of their fab capacity is going for their installation jobs and not serving other markets. So that is probably an opportunity as we get further into 2027 and beyond. Adam Bubes: Got it. That is helpful. And then backlog, at pretty robust levels, are you seeing any changes in the duration of backlog? And can you just talk about how much is expected to burn over the next twelve months? Stephen Butz: Yes. That is a great question. We are seeing, in a positive way, an elongation of that backlog driven by a couple of factors. Obviously, with the ongoing boom in data centers, there are just longer lead times and also larger projects. Larger projects, obviously, take a little bit longer to burn than smaller projects. So those are some of the factors. We expect to burn a little bit over half of our backlog in 2026. And then, of course, the majority of the remainder would be in 2027, but we also have backlog extending into 2028, and not an insignificant portion. So we have visibility through our backlog and awards of revenue going out much further than we ever would have in the past. Adam Bubes: Great. Thanks so much. Operator: Thank you. Our next question comes from Sharif Elma Grabid with BTIG. Your line is open. Sharif Elma Grabid: Good morning. Thanks for taking my question. Pretty impressive beat this quarter. Can you shed some light on how much of Q4 revenue was driven by the backlog versus book-and-ship type orders that might have come in intra-quarter? And how you see the business mix evolving over the last few months? Thank you. Stephen Butz: Yes. There is certainly a bit of both, probably more from backlog and just really exceptional performance on larger projects, favorable project closeout, increasing proportion of the fab work that we have discussed. But certainly some quick-hitting jobs that provided some upside to the quarter also contributed to the beat versus our expectation in November. Does that answer your question? Sharif Elma Grabid: Yes, it does. Thank you, Stephen. Stephen Butz: Okay. Thank you. Operator: Thank you. Our next question comes from Brian Brophy with Stifel. Your line is open. Brian Brophy: Yes, thanks. Good morning, everybody. Appreciate taking the question. Nice quarter. Just had one on I&M gross margins. Obviously, they are a little bit better than folks were expecting. You mentioned some strong execution benefits in the comments, but any other color on what drove the strength there? Was there any improvement that was more of a onetime benefit? And how should we be thinking about sustainability of gross margins into 2026? Thanks. Stephen Butz: Yes, it is a great question, and we are certainly optimistic about our ability to continue to have this exceptional performance. But, of course, we do not want to get ahead of ourselves on the guidance. We have had two exceptional quarters in a row from a project execution perspective, and so we are not going to forecast that level of beat every quarter. But there again, I think I mentioned the increased proportion of fab-only, which tends to get a little bit higher margin on the fabrication-only business as opposed to the full install jobs, which are much bigger and tend to be much bigger in scope, bigger revenue opportunity. But, also, as we continue to complete more and more of these larger data center jobs, the work is similar, and so we are probably benefiting from that as well—just that additional experience in the area. Brian Brophy: Understood. That is helpful. And then there was a comment made in the opening comments on having some visibility into 2029 on the data center side. Just any more color on that comment and what you are seeing there, and to what extent are you getting some commitments from some of your hyperscaler customers on projects looking out that far? Thanks. Steve Hansen: Yes. As we mentioned earlier, around the supply chain question, hyperscalers and developers are looking further out in getting commitments to build, and we have worked really hard with them. The earlier we are in with them, the better we can help them plan and manage and mitigate risk from supply. And so we are having more and more conversations with them on projects being built all over the place, and, as Stephen said earlier, some of these projects are just getting bigger in scale, and they have to plan further out. So we are well into 2029 in conversation. Brian Brophy: Appreciate it. I will pass it on. Operator: Thank you. Our next question comes from Michael Dudas with Vertical Research Partners. Your line is open. Michael Dudas: Yes. Good Friday morning, gentlemen. Steve Hansen: Morning. Michael Dudas: As you are taking a look at the non-data center technology side of the business, you highlighted a few times in your prepared remarks about diversity and the opportunities there. As you look to 2026 and into 2027, is it a normal growth rate relative to what you have seen? Is it accelerating? Is there any areas—certainly, there is a lot of visibility in life science and healthcare, a lot of press releases on that front. But it also seems like the education and state and local could be very helpful. So how contributory will that be relative to your prior expectations going into 2026 on your outlook? Thank you. Jeffrey Sprau: Yes. It is a great question. I will start, and my colleagues will chime in. We certainly like the long-term macro tailwinds from an onshoring and reshoring perspective on manufacturing. It certainly also applies to the life sciences space. We like—and I think we are seeing some green shoots, if you will, on the biotech lab space as existing square footage gets absorbed, and that turns into ultimately new demand for us from a tenant buildout perspective. And then I think we always have loved education because the installed base is so massive, and there is always a need to improve the performance of existing schools, whether it is primary schools, K-12 schools, or higher education from an R&D and STEM perspective. And that really fits right into our wheelhouse of having this holistic view of design-build in most facilities. And finally, this increase in price or expense related to electricity helps from an energy-efficiency return on investment perspective. Essentially, the math is easier as energy becomes more expensive, which is a demand driver for us. Now, how do we turn that into a hard number in terms of expected growth rates from before versus today? I will sort of pass the mic to Steve and Stephen to try to take those vague comments and boil them down into a more specific number. Stephen Butz: Yes. No, Jeff, you nailed it on those trends that are impacting our results. The reshoring is definitely a longer-term impact and something that we have probably talked about in past meetings with you all—that we really see that having more of an impact as we get further and further into the decade. There are a lot of these big projects like semiconductor fabs with just multiyear planning cycles. And so we are seeing now benefits from reshoring that started at the time of COVID. Of course, there have been a lot of reshoring announcements with some of the administration’s policies that we have seen in 2025 and 2026. And so we are obviously optimistic that that is going to provide some nice uplift as we get into 2027 and beyond. Michael Dudas: Said. Thank you, gentlemen. Operator: Thank you. Our next question comes from Derek Soderberg with Cantor Fitzgerald. Your line is open. Derek Soderberg: Yes. Thanks for taking my question. On your proprietary software, Trove, the real-time data evaluation software, to what degree is software now contributing to revenue? And is it a mandatory pull-through for some of your larger data center installations? Thanks. Jeffrey Sprau: Yes. That is a great question, Derek. Trove is really focused on the commercial real estate market, and it is a tool that we use internally to do analysis of portfolios of buildings for building owners to sort of rack and stack and prioritize capital improvements to improve the performance of their buildings. It also is, at times, used by customers who want to sort of DIY that same analysis. We are happy to do it either way. That said, in either scenario, that really has a de minimis impact on our revenue. It is really part of our bundled solution that we sell to the large global property managers in the world. Derek Soderberg: Got it. Thanks, guys. Operator: Thank you. Our next question comes from Chris Sung with Wolfe Research. Your line is open. Chris Sung: Hey, good morning, guys. Thanks for taking my question. Maybe just asking on the data center deliveries in 2029 a little bit differently. Are the data center opportunities for 2029 onwards, or are there still hyperscalers bookings for 2026, 2027, 2028 from your data centers? Thanks. Steve Hansen: Yes. No, we are still looking at opportunities before that timeline—2026, 2027, 2028 as well. I think the key point is the relationship has allowed us to get further into the planning weeds with our client base and get a much better view of what is coming in the future. Chris Sung: Great. Thanks. And just on a follow-up on the backlog growth, how much reflects new customers versus existing customers? Stephen Butz: Yes. We do not have a breakdown of that handy, but certainly we are continuing to win larger and larger awards with our existing clients, and we are continuing to see new clients, even new blue-chip clients. Often, those initial awards are probably smaller than the awards that we see from our existing clients, but as we execute, we would expect those to grow over time. Chris Sung: Thanks, Stephen. Thanks, Jeff. Operator: Thank you. Our next question comes from Joseph Osha with Guggenheim Partners. Your line is open. Joseph Osha: I made it back. This is a bit of a geeky question. We have heard a lot about the shift to 800-volt DC in data centers. I am wondering if you all have encountered any of those yet. Steve Hansen: Yes. We have not. And really that shift will not affect our work that we do for them. The conveyance of material and everything else that we are doing—that should be a big driver for us. Our electrical installation team will see some of that, but we have not really seen that prevalent in the market yet. Joseph Osha: Okay. Thank you very much. Operator: Thank you. Our next question comes from Oliver Davies with Rothschild and Co, Redburn. Oliver Davies: Yeah. Hi, guys. Just one for me. So I guess, obviously, very strong Q1 guide, you know, even on an organic basis. So can you sort of discuss how you expect the cadence of organic growth to progress through the rest of the year? Stephen Butz: Yes. We do not have huge seasonality in our business, though we do have some. We tend to peak in the second and third quarters, and it is really driven primarily by our program and project management business. If you look at the disaggregation of revenues, a lot of that business is in the education end market, which really tends to peak in the summer months. There may be some pockets of seasonality elsewhere in the business, but that is the pocket that I would highlight as being most significant. Oliver Davies: Okay. Thanks. Operator: I am showing no further questions at this time. I would now like to turn it back to Son Vann for closing remarks. Son Vann: Thanks, Daniel, and thanks, everyone, for attending our fourth quarter 2025 earnings call. A recording of this call will be available on our website in a few hours. We look forward to updating you again on our next earnings call. Thank you everyone again, and have a great weekend. This concludes today’s conference call. Thank you for participating. You may now disconnect.
Operator: Hello, ladies and gentlemen. Thank you for standing by for 51Talk Online Education Group's Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Today's conference call is being recorded. I will now turn the call over to your host, Mr. David Chung, Investor Relations for the company. Please go ahead, David. David Chung: Hello, everyone, and welcome to the fourth quarter 2025 earnings conference call of 51Talk. The company's results were issued by Newswire services earlier today and are posted online. You can download the earnings press release and sign up for the company's distribution list by visiting ir.51talk.com. Mr. Jack Huang, our CEO; and Ms. Cindy Tang, our CFO, will begin with some prepared remarks. Following the prepared remarks, there will be a Q&A session. Before we continue, please note that the discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's results may be materially different from the views expressed today. Further information regarding this and other risks and uncertainties is included in the company's Form 20-F and other public filings as filed with the U.S. Securities and Exchange Commission. The company does not assume any obligation to update any forward-looking statements, except as required under the applicable law. Please also note that earnings press release and this conference call include discussion of unaudited GAAP financial information as well as unaudited non-GAAP financial measures. 51Talk's press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures. I will now turn the call over to our CEO, Jack Huang. Jack, please go ahead. Jiajia Huang: Okay. Thank you, David. Hello, everyone. Thank you very much for joining our conference call today. 2025 has been a transformational year for 51Talk as we began to reap the rewards of our strategic investments made over the past several years. Full year gross billings reached USD 127.6 million, representing a year-over-year growth of 83.4%, while net revenues grew 88.6% year-over-year to USD 95.6 million. These results may mark a significant milestone as gross billings surpassed and net revenues approached the USD 100 million threshold for the first time since we embarked on our global expansion strategy, providing compelling validation that our business model can scale effectively on a global basis. Net operating cash inflow also surpassed the USD 10 million mark, reaching USD 11.8 million in 2025, further evidence that we are building a sustainable and scalable business model. Looking ahead to 2026, we are committed to expand our growth trajectory based on the foundation we built over the past years. We are focused on consolidating the transformational gains of the past year and further enhancing our user experience. With that, I will now turn the call over to Cindy, our CFO. Chun Tang: Thank you, Jack. Now let me walk you through our fourth quarter financial details. Net revenue for the fourth quarter was USD 30.6 million, an 88.6% increase from the same quarter last year, largely driven by the increase of active students with attended lesson consumption. Gross margin for the fourth quarter was 72.4%. Gross billings grew by 72.0% from the same quarter last year to USD 36.8 million. Q4 operating expenses were USD 27.4 million, an increase of 103.6% compared to the same quarter last year. Specifically, this has been driven by Q4 sales and marketing expenses of USD 20.4 million, a 101.6% increase from the same quarter last year, primarily attributable to the rise in marketing and branding expenses resulting from intensified marketing and branding activities as well as higher sales personnel costs related to increases in the number of sales and marketing personnel. Q4 product development expenses were USD 1.6 million, a 72.2% increase from the same quarter last year. Finally, Q4 general and administrative expenses were USD 5.4 million, a 123.9% increase from the same quarter last year. Overall, Q4 operating loss was USD 5.2 million, while net loss attributable to the company's ordinary shareholders was USD 6.5 million, a 504.3% and 368.8% increase from the same quarter last year, respectively. Q4 GAAP and non-GAAP earnings per ADS were negative USD 1.08 and USD 1.03, respectively. The company's total cash, cash equivalents and time deposits were USD 39.0 million at the end of the fourth quarter. Advances from students were USD 76.6 million at the end of the fourth quarter. Looking forward to the first quarter of 2026, we currently expect the net gross billings to be between USD 29.0 million and USD 31.0 million. The above outlook is based on our current market conditions and reflect the company's current and preliminary estimate of the market and operating conditions and customer demand, which are all subject to change. This concludes our prepared remarks. We will now open the line for questions. Operator, please go ahead. Operator: [Operator Instructions] The first question today comes from Christo Lee with China Merchants. Christo Lee: So I have 2 questions. The first one is, can you give us an update on how the conflict in the Middle East is affecting your operations? And what's the revenue exposure? And how should we think about the risk to the business? And my second question is, can you share with us any guidance or outlook for this year? Jiajia Huang: Okay. Thank you very much for your questions. So let's start from the first question. This is a fair question in this timing. So our answer is our operations right now in the Middle East are normal and the markets we serve are not the war parties to the conflict and our teams on the ground are safe and operational. Where we have seen some impact is around the travel restrictions in the region. Beyond that, we are mindful that the rising tensions do affect the sentiment of the people, both among local -- our local employees and our customers. On the employee side, we have strong local leadership and will be adaptive. We are managing the customer side proactively, and we are confident to navigate potential fluctuation of customer sentiment. Beyond this, I want to explain more about the Q1 seasonality, which is the Ramadan, with this Ramadan falling from February 18 to March 19 this year, squarely across most of the quarter. And after that, after the Ramadan was about nearly 1 week of the Eid. So we anticipated the natural shift in terms of the lesson activity as we do every year in Q1, and we have planned accordingly. So let's move on to the next question about the guidance or outlook for 2026. First of all, I want to say that we are not usually providing official full year guidance, but we can give investors a sense of direction. So we have confidence that in 2026, our gross billings, net revenues and operating cash flow will all continue to grow healthily. In 2025, we made significant front-loaded investments in new markets, in technology, in our teams. In 2026, we expect to harvest those investments. We will also be focused on improving the unit economies across every market we operate in. So we expect our cash-generating capability to remain robust over the course of the year. Thank you. Operator: [Operator Instructions] There are no further questions at this call. I'd like to turn the call back over to the company for closing remarks. David Chung: Thank you once again for joining us today. If you have further questions, please contact 51Talk's Investor Relations through the contact information provided on our website. Thank you, and goodbye. Operator: This concludes the conference call. You may now disconnect your lines. Thank you.