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Andrew Coombs: Good morning, everybody, and welcome to today's presentation of Sirius Real Estate's Interim Results for the Period Ending September 2025. My name is Andrew Coombs. I'm the Chief Executive Officer of the Sirius Group, and I'm joined this morning by Chris Bowman, who is the Group Chief Financial Officer of Sirius Real Estate. Together, we will take you through this morning's presentation. As you all know, we are an on-balance sheet, best-in-class owner and operator of mixed-use light industrial business parks on the edge of key towns in Germany and the United Kingdom. Please remember that Sirius operates in both the German and the U.K. markets under the brand of Sirius in Germany and BizSpace in the U.K. The group currently operates over EUR 3 billion of property, 90% of which is wholly owned by the group. This consists of 160 sites in total, 77 in the U.K., 76 in Germany and 7 sites within the Titanium joint venture in Germany. Let's now turn to Page 4 and look at the highlights for the period. The Sirius Group is a rigorous, well-run and very importantly, growing organization. We have proved the resilience and the reliability of the business model during COVID, during the gas crisis in Germany and most recently, through a period of rising interest rates in Europe and the U.K., during which we have successfully protected valuations in spite of yield expansion. In that time, we have continuously, without exception, grown our revenues. We have continually, without exception, increased our dividend payments. And as I said, we have made sure that the value of our properties goes up, not down. In the period to September '25, we successfully grew like-for-like rent roll by more than 5%. And as a result of the acquisitions in the period, we have grown the total rent roll by more than 15%. We have done this by maintaining occupancy in Germany and increasing it by just over 1% in the U.K. And we've increased like-for-like pricing in both markets by more than 4%. As a result of this, we are announcing a dividend of EUR 0.0318, which at per share level is a year-on-year increase of 4%. So let me now ask you to turn to Page 5, and Chris will take us through the income statement. Chris Bowman: Thank you, Andrew. Good morning, everybody. As Andrew said, over the next 4 pages, I will run through some of the highlights of the P&L and also the balance sheet, just picking out some of the key items. So on Page 5, just starting at the top, very pleased that the -- that increasing like-for-like rent roll of 5.2% has underpinned growth in rental income of 7.7% for the first half versus the first half last year. So you can see there, we've achieved EUR 112.6 million of rental income. That has translated to a 4.9% increase in net operating income. As I've mentioned in the past, as we have acquired assets, we're in acquisition mode, very active acquisition mode. As we've acquired assets, some of those assets tend to have higher service charge leakage than in our existing core portfolio. So there is a small drag, which we turn around relatively quickly on service charge costs that you can see there. That is obviously upside for the future to come through. Looking down at EBITDA, you can see of that 7.7% top line, we've achieved 9.7% increase in EBITDA. So very pleased to achieve some operating leverage there. As we grow the asset base, and we grow the income base, we are keeping a very tight control of our costs and to then improve our margins. Specifically within that corporate costs and overheads dropping from 24.8% to 22.7%. We have been very careful from a headcount perspective and found efficiencies. We've also tightened up and had various initiatives internally to improve our cash collection that has allowed us to be tighter on provisioning and again, has provided upside there. Moving on. I'm going to be -- unfortunately, I'm going to continue to talk about headwinds of finance cost, unfortunately, for the next 2 or 3 years. We do have the finance cost headwind that we continue to outrun. So you can see there our net finance expense goes from EUR 6.3 million to EUR 9.4 million, and -- but still, we more than have outrun that with the growth in -- at the EBITDA level to achieve an FFO, up 6.6% of EUR 64.7 million. As I think those of you know us already, FFO is what we -- is our core target in the business. It's the cash flow, it's the profitability of the business that we really focus on. We are an operationally focused business. We are not trying to guess the property markets or play valuation yields. We're focused on providing profits -- growing profits to provide growing dividends. So very pleased to achieve that 6.6% increase in FFO. I've included the detail all the way down to profit after tax on this page because there are three items that I think need further explanation. One, headwind, and two, tailwinds. So within the foreign exchange, you can see there EUR 14.3 million, there is a EUR 14.2 million of that is what is classed as a realized FX loss, which relates to sterling cash balances, which we held at the beginning of the period in anticipation of that cash being placed into U.K. assets -- U.K. investments. So it was a very busy first half for acquisitions. We acquired over EUR 200 million worth of property in the U.K. We held the appropriate level of cash in sterling to do that. When that cash converted from the cash line into the investment properties line, it was mark-to-market at the FX at that moment. So it is -- unfortunately, it does all flow all the way through EPRA earnings. So you'll see it, but it is a one-off, and I'll happily take questions further on that. On the upside, we have EUR 14.4 million of valuation gain. So that is purely for the first half. I would expect to achieve better than that in the second half. But again, that's with virtually no yield contraction. We'll come on and talk about later. That's really valuing the increase in rent roll that we've achieved. And then further down the page, you can see the profit after tax is materially up 56.8% at EUR 87 million. And part of the fiscal stimulus that Germany is -- has enacted is the reduction in the corporation tax rate from 15% to 10%. That goes down by 1% a year from 2028. What that means is that our deferred tax liabilities on the gains in our property portfolio reduce. So you can see there's a EUR 29.8 million reduction in deferred tax liabilities that flows through the P&L and hence drives that profit after tax number up. Going over the page to Page 6, just reflecting that on a per share basis. We have the EUR 98 million of NOI converts to EUR 0.0652 per share. These numbers all still have the impact of the additional shares that came into the share count from July '24 equity raise. So prior year, there was a weighted average number of shares, now this is on the full number of shares that is outstanding. And the interest and current tax equates together to EUR 10.8 million. That's a EUR 0.72 cost line gets us to the EUR 0.043 of FFO. Below the FFO line, really the thing I would flag is that EUR 14.2 million foreign currency translation that then has an impact on the adjusted earnings and EPRA earnings, but as I say, is noncash. If you look at our cash flow statement, our operating cash flow broadly correlates with the FFO. We have paid out in dividend EUR 0.0318 or proposing to pay out EUR 0.0318, as Andrew said, up 4%. That equates to a 74% payout ratio for the first half. That will start to transition down going forward, and we will settle around 70% payout ratio in the next 3 to 4 years as we go through the financing windows. On to Page 7, just looking at the balance sheet. At the top line, you can see that our investment properties have increased by EUR 300 million. So within that, you have the EUR 295 million of acquisitions that we actually completed on in the period. You've got EUR 14.4 million of valuation gain across the group and then a disposal of some smaller sites in the U.K. is the balance. The cash balance has come down to EUR 424.9 million, of which EUR 389 million is ours, excluding the deposits of tenants. The EUR 179.9 million movement is net of the bond tax that we did in the period of EUR 105 million. And then on the bottom half of the balance sheet, really, the only thing to flag there is that the debt outstanding is at EUR 1.416 billion. Bear in mind that we have the repayment of the June '26 bond coming up for EUR 400 million, hence, why the cash balances are relatively inflated and also the debt balance is relatively inflated as well, but those two net each other off. Just a reminder, we also put in place EUR 150 million RCF during the period, which provides that liquidity to repay that debt. Looking down NAV, reported NAV is up 0.8%, benefiting from that valuation gain. Adjusted NAV is down 0.9%, roughly EUR 0.011. Again, there is a foreign exchange unrealized currency translation there of EUR 29 million, which in simple terms is just converting our U.K. assets into our reporting currency of euros. Bear in mind that if you then convert the entire NAV back to sterling, our sterling is up on a sterling base -- our NAV is up. On to Page 8, just quickly just running through the waterfall of NAV from EPRA at each end from March to September. I think EPRA NAV going from EUR 117.6, we target ourselves on adjusted NAV, EUR 118.89. As I say, the EUR 0.02 headwind is the unrealized FX of EUR 29 million. We achieved EUR 27.5 million recurring profit after tax in Germany. We had EUR 17.7 million upside in valuation in the German portfolio as well as then EUR 19 million of profit after tax in the U.K., which is EUR 1.27, a small valuation loss after CapEx of EUR 2.2 million in the U.K. Net of the dividend gets you back down to EUR 117.84. So really, the delta in there, the movement is the FX, which without the FX, we would have been up in NAV terms. I'll hand over to Andrew on Page 9. Andrew Coombs: So Page 9 deals with the organic growth in Germany. And just before I delve into the numbers, let me give you a little bit of the narrative because if I cast my mind back to the beginning of the period, the first quarter of this financial year, so April starting quarter, it's easy to forget that the German government had only just taken power in April of this year. And I think it's probably fair to say that the new government was still establishing itself and certainly hadn't gained any momentum at that point. And we certainly felt that in the trading. The first quarter of this year in Germany was a tough quarter. We made our numbers, but the effort and the workload that we had to put in to achieve that was certainly much greater than it normally is. We saw the momentum start to establish itself in the second quarter. And I'm pleased to tell you the 6 weeks following the end of the period, we very much feel that, that momentum is gathering pace. I would describe Germany, at the moment, is in a transitionary phase. And it's quite confusing because when you look at numbers like the numbers on German manufacturing, you don't see any substantial increase at this point in time. Lots of people, therefore, turn around and say, what's happening in Germany and are things good in Germany. What we see on the ground is we see reorganization. So we see factories stopping production. We see things being reorganized. And they're typically being reorganized towards defense. But the problem right now is that you have to stop producing what you produce in your factory in order to strip it out and prepare the production lines to produce defense-related items. And that's what I mean by a transitionary phase. And that's why the production numbers are going down. But what is happening is the preparation is being laid for -- in a couple of quarters' time, those production lines to be up and running and operating not just one shift as we often see here in the U.K., but typically a continental shift pattern of three shifts every 24 hours, at least six days a week. So what we believe is that Germany is preparing to substantially increase its output. We've seen this before in previous years. We've seen it where they've used in the past, furlough or kurzarbeit as they call it in Germany, where suddenly what happens is the economy appears to flip. Some have called it in the past, the German economic miracle. It's no miracle at all. It's Germans preparing before they flip the switch. That is exactly what we see happening in Germany at the moment. And in that period, what we were able to do is we were able to grow the like-for-like rent roll by EUR 7.2 million, so 5.3%. We were also able to increase the overall annualized rent roll by 12%. But the difference between that 5.3% and the 12% is, of course, acquisitions. We were able to increase pricing by 4.7%. Would you believe it? That's a little bit more than we wanted to do. We are in an occupancy-led strategy here. What that means is that we want to control our pricing to about 4% and get the rest of the effect out of increase in occupancy. When you've got a workforce who've been used to putting prices up, not only do you have to get your processes and your systems to do the right thing, you've got to get people to do what is the opposite of what we've been asking them to do for years, which is put prices up by less. And actually, in that regard, we slightly failed because our occupancy remained constant and price, we were aiming for 4%, price nearly hit 5%. You can see that in doing that, what we did is we had to lower our move-in rate, and what we achieved was a move-in rate that was just marginally higher than the move-out rate. So move-in at EUR 7.66 versus move-out at EUR 7.52. But all of that was successful in lifting the underlying like-for-like rate per square meter in the portfolio as a whole from EUR 7.38 per square meter per month to EUR 7.73 per square meter per month. So a delicate balance largely due to the first quarter, but successful in as much as we continue to push rate up in the portfolio. And in doing so, we've been able to make sure that we at least maintain our occupancies. We go across the page, and we look at that rent roll movement, you can see the EUR 7.2 million is reflected in the difference between EUR 135.3 million and EUR 142.5 million. What we faced was EUR 19.5 million of move-outs and the way in which we compensated for that was really the EUR 6.2 million of CapEx-assisted move-ins together with the EUR 14.1 million like-for-like move-ins. Those two gave us a total of EUR 20.3 million, so EUR 800,000 above the move-out effect. And then the uplifts, the pricing at 4.7% gave us 6.4%, and that 6.4% together with the 0.8% gets you to the 7.2%. But really, the exciting thing is those acquisitions in the right-hand column. And bear in mind, the last EUR 40 million of acquisitions in Germany that completed only last week, not included in these numbers. But what you've got is you've got over EUR 9 million of second half effect to come from those acquisitions. That EUR 9 million will build closer to EUR 10 million. So that's a EUR 20 million annualized effect that's going to bake through into next year's numbers. Now half of it will get eradicated by increased interest rate, and Chris will talk about that. But we've got sufficient acquisitive growth here to be able to deal with the increased interest and still have EUR 10 million of FFO growth. Put on top of that, the 5% organic growth. And I hope what you can see is rather than using interest rate increases as an excuse to go backwards, what we've been able to do through careful planning and careful execution over the last 18 months is put ourselves in a position where we can outgrow next year's problem. If I go across to the following page, we can talk about valuations. So the first thing that I would draw your attention to is on the right-hand side above the total assets black headline, net yield shift of 1 bp. That shift is the yield coming in, not going out. Why the valuers would have bought us in by 1 bp, I cannot imagine, but I would suggest it is a signal. And the signal is clearly that the direction of travel is that the yield is shifting in, in Germany, not out. Clearly, it's made very little, if any, difference because we started in March '25 with a valuation of EUR 1.890 billion, and we get to September '25 on EUR 1.921 billion, clearly, a EUR 31 million shift there. That EUR 31 million shift comes from EUR 2.3 million of additional rent roll valued at a gross yield of 7.4%. And what you can see in the bottom right-hand corner of this page is you can see after the acquisitions that we're talking about have been made, the yield at a gross level goes up slightly and the capital value per square meter goes down. That is because we are buying vacancy. That is because we are buying lesser quality rent roll because that is exactly our runway to put our machine across the top of it and improve it. So the reason that you are seeing that gross yield go out is because of the opportunity that we're buying and the belief that we can do something with that opportunity by putting it over our platform. If I go across to the inquiry stats, what we can see here is the number of sales, the number of customers we have acquired is 3% down. The sales volume that we've acquired compared to same period last year is 2.5% down. However, what we are pleased about is sales conversion is at 14.6%, up from 12.8% and close to our long chased target of 15% sales conversion. We are at last beginning to hit those numbers on a regular basis. What this shows is it shows the pain in quarter 1 of the first half, and it shows our ability to work the platform harder in the form of sales conversion in order to make what we've got count and drop more frequently to the bottom line. So this reflects the first quarter, but it also reflects the strength of the platform to deal with issues as and when they arise. If we go across to some of the acquisitions, I'm not going to go through every single one because they've been covered previously in lots of different announcements. But I draw your attention to Dresden. Dresden is, we think, one of Germany's best kept secrets. Silicon Saxony, where there is the most incredible amount of inward and foreign investment going in. Tim Lecky and I were in Dresden a few weeks ago. What did we count something like 17 cranes on the horizon and not 17 static cranes, 17 working cranes within the eye line in Silicon Saxony building things. Lubeck. Lubeck is in the area that benefits from the biggest infrastructure spend that is currently going on in Germany. And if we go across the page, we see Dresden again, no surprise. And we see Feldkirchen on the right, just outside Munich. This is an asset where 1/3 of the rent roll is a defense supplier, a defense supplier who specializes in the manufacture and development of optical devices, most notably night vision technologies for the military. If I go across to Page 15, let me hand across or hand over to Chris. Chris Bowman: Thanks, Andrew. And so just on Page 15, I just thought it would be good to update everyone on the current status of the portfolio and also on the next 2 pages on CapEx as well. Really, Page 15, I think, is the kind of secret sauce in Sirius for the growth of Sirius. That is how do we take the Sirius platform, put it to work on our property portfolio and take assets which have value creation opportunity and capitalize on that value. How do we create that value for shareholders? Now we break down our portfolio into the 2 buckets of value-add and mature. You can see there that the -- roughly speaking, it's 1/3 mature, 2/3 value add. And really, the value-add piece is the piece where we go to work on these assets to essentially try and mature them to try and put them into the mature bucket. And what -- why do we do that? We do that because of the opportunity to drive value. So you can see the average yield -- gross yield is 6.8% on our mature assets, 7.9% on our value add. Importantly, the gap between net and gross yield, the leakage on service charge is 90 bps on value add versus 30 bps on mature and also how the valuers then value that greater income and better performance. On average, we are at EUR 1,277 capital value per square meter in the mature versus EUR 868 in the value add. You can see what we have to achieve to get from one to the other in terms of occupancy, on average, 78.9% versus 94% and also the upside from rate. So by improving our assets that have this opportunity in them, we get many benefits, not only additional rent roll, but how -- but also then better net operating income because better management in terms of property expenses. We get valued better by the valuers. And obviously, we've achieved higher rate as we improve the quality of the site as well. It becomes an ever-improving cycle essentially on those assets as we improve them. Now we have overall 336,000 square meters of vacancy to power the growth in the business. On average, we typically look to improve roughly 100,000 square meters a year. That links into our CapEx plans each year. And so you have at least a 3-year runway of growth in the business. And obviously, as we're acquisitive at the moment, we are continually replenishing that opportunity. Over the page, just looking at where we are really putting capital to work to help on that journey from value-add to mature. In the first half, we have invested EUR 18.6 million in our CapEx programs, roughly split 2/3 Germany, 1/3 U.K. The value-add CapEx is that piece of the pie that really generates the high returns. We put a minimum 30% return on investment. So that's cash return on what we spend. So we're looking for a 3-year payback on incremental rental income from all of our value-add CapEx spend. You can see again, it's split roughly 2/3 Germany, 1/3 U.K. On the right-hand side, you can see some of the pictures of where we've actually put that capital to work. Bottom right, Vantage Point, when the range -- when we moved the range out of Vantage Point, essentially, there was three large halls left for us to tackle. We have already refurbished one of those halls. We put EUR 1.5 million of CapEx into that hall, and we have let it to Big Doug, which was an existing tenant on the site. I think for those of you who have been to Vantage Point, I remember we visited them before they were moving into the new space. Pleased to say they have now moved in. And the effect of that EUR 1.5 million spend allowed us to achieve double the rate on that space that it previously was achieving. New builds, we are in a cycle here where we have just finished the new builds at Gartenfeld. So on the top right there, you can see 1 of the 3 halls we built at Gartenfeld. So just EUR 800,000 went into just final completion of that hall. We've rented all three of those halls at Gartenfeld at far better rates than we expected. And then from a works perspective, just under EUR 10 million spend on works. So we keep a very, very tight lid on our -- that's essentially the maintenance CapEx. That's often the likes of renewing lifts, for instance, that type of spend. But within there, there is EUR 2 million of spend on ESG, which is principally PV solar in Germany as well as EUR 2 million in the U.K., which relates to EPCs and our continuing drive towards C and B. Over the page, Page 17, just to -- I've rolled this forward essentially. So I'm looking back over the last three years, what is our spend, and how are we performing. We have put 293,000 square meters of vacancy. We have put CapEx into value-add CapEx. That equates to EUR 31 million of spend, on average, EUR 106 per square meter. So this is not what I'd describe as kind of high-risk CapEx. We're not -- as a norm, we're not completely rebuilding or knocking down space. We are typically refurbishing space. The most complicated it tends to get is subdivision and the fire safety regulations that come with that. But it's very much low-risk and low-cost refurbishment. We've achieved EUR 12.7 million of rent improvement of that. So -- and at the moment, the occupancy is 74%. That continues to build as the CapEx we've spent in the most recent period, some of that space continues to be let up. And we're achieving rates of EUR 4.91, which gives us a return on investment of 41% cash return. Just conscious of time, move on to Slide 18. As I say, new builds, we have just come to the end of the A, B and C halls at Gartenfeld, and I would highlight that we've achieved a yield on cost there of 9% on a site which is valued at 5.5%. So obviously, as that income is valued at 5.5%, we've achieved 21% IRR on those developments, which is on surplus land at Gartenfeld. In the pipeline, there is an additional EUR 25 million of projects. That's spread across. There's a site in Dresden -- there's two sites in Dresden where we have opportunity for development. And there is also another space at Gartenfeld as well where there is further development. I'll hand back to Andrew to talk about U.K. Andrew Coombs: Okay. I've got switching to U.K. mode now and think about the U.K. picture, which is a different picture from the picture I described in Germany. So let's start firstly with the annualized rent roll. The annualized rent roll, which obviously benefited from acquisitions. Many of you have seen Hartlebury, was up 21%. 5.1% of that comes from the like-for-like rent roll. And as you can see, what happened here was we were more successful in convincing our sales force to be able to lower price and in doing so, raise occupancy by 1.2%. However, you've got a slightly different situation here with your move-ins and your move-outs. We actually dipped below the move-out rate on the move-ins, but we were still successful in that equation in terms of lifting the like-for-like underlying rate in the portfolio by 4.1%, namely from 14.38p (sic) [ GBP 14.38 ] per square foot to GBP 14.97. How did we do that? Well, we did that with our expansion initiatives. As you can see, what happened is we had 344,000 square foot move out, 302,000 move in. But what we were also able to do is to work the existing base of customers to get some of them to take more space and some of them to take more products. So we've had to work very hard here in the U.K. in order to be able to get that 1% of occupancy and also to be able to not just maintain, but increase price by at least 4%. That 4% is important because we know inflation in the U.K. isn't as much as 4% at the moment, but it could be soon. And we don't want to be caught out by that. We don't want to be trying to catch the inflation. We want to make sure that we are in a process in the U.K., where we're always ahead of inflation in terms of the way in which we manage that rent roll of customers. So rate per square foot is up by 4.1%. Move-outs are at GBP 18.44, which is 57p or 3% lower than the move-outs. That's had about a 1% overall effect because your new business affects about 1/3 of your total. It's your renewals that affect typically the other 2/3. And what we're seeing in the U.K. in contrast to Germany is we're seeing the U.K. get harder. Germany is getting easier. U.K. is getting harder. We are not panicking about that. We believe that the platform in the U.K. is now well enough developed and strong enough to be able to overcome that market effect, and that's exactly what you're seeing in the figures on this page in front of you now. If we look at the way it's built, you can see GBP 59.3 million rent roll moves in September '25 to GBP 60.4 million. You can see that the move-outs and move-ins that the move-outs are not quite covered by the move-ins. But look, that pricing uplift of GBP 3.8 million becomes so, so important because that's what gives you the final edge. And then if you look at acquisitions, GBP 14.4 million coming from acquisitions. As you know, in the last 6 months, the acquisitions have been slightly more weighted to the U.K. than Germany. That will change now going forward. We are going to be looking at a predominantly German-only effort, at least until May, June of next year. If we have a look at what that looks like in a valuation perspective, net yield shift of 4 bps. Well, that's going out, not coming in. So again, the 4 bps don't really make much difference, but the signal from the values is that -- in the U.K. yields continue to widen. If we look at the bottom right-hand corner and you see the assets being included not just on a like-for-like basis, but the acquisitions that have been made in the period, you see the opposite to what I described in Germany. You see a gross yield coming in to 12.3%. At March 25, it was 14.1%. And you see the net yield coming in from 9.5% to 8.8%. That is reflective of the quality of assets we've been buying in the U.K. When you think about Hartlebury, when you think about Vantage, when you think about Chalcroft, I could go on. We have consistently been buying higher quality assets than the assets we inherited when we bought the business. They typically have longer lease lengths. That's not long lease lengths. That's longer lease lengths. So what we're doing in the acquisition program that we've conducted thus far in the U.K. that we are going to be pausing on until at least June of next year. What we've done is actively gone out to increase the overall quality of the portfolio, and that's reflected by what you see in the bottom right-hand corner. If we go across the page, what we can see in the U.K. is we've been able to attract more inquiries. A little bit deceiving there because we're not passive. It's not like we just sit there and say, what does the market give us in inquiries. We have worked much, much harder to acquire more inquiries that we've -- then been able to convert into sales. Please don't look at these numbers and think U.K. market is going up, because this lead flow reflects what is happening when you just passively sit there and try and collect whatever the market gives you. These numbers are misleading if you read them like this. We have had to work a lot harder to increase that inquiry flow in the U.K. If we go across to the acquisitions, I've talked about Hartlebury in the middle here. Bedford on the left-hand side, interesting enough, 1/3 of the rent roll in Bedford is underpinned by a company that manufactures parts for ejector seats for the defense industry. In fact, they make parts for the ejector seats in the F-35, Typhoon Eurofighter. So when you see these orders being announced by U.K. defense industry, that factory is one of the beneficiary of those orders. Chalcroft, I'm delighted to tell you that we've had very strong interest from a major supermarket. So Chalcroft next door to it has got hundreds of new houses currently being built. And we're in advanced discussions with a major supermarket to develop on the front land of that site, one of the big four supermarkets to serve that residential area. So call that a stroke of luck, call it whatever you like, but that's going to be quite good for us. Let me hand over to Chris. Chris Bowman: So I don't intend to -- just on Page 24, I won't go through these line by line, but I think the highlights, obviously, on -- in aggregate, we have acquired an 8.1% gross yield. You've seen earlier that our existing portfolio is valued around 7.4, 7.5, and in aggregate, we have acquired EUR 338 million, of which EUR 295 million completed in the period. Feldkirchen just at the bottom there in November, completed last week. So that is also now on balance sheet. I think if you look at timing, then just to reiterate Andrew's point earlier, the majority of these acquisitions actually completed towards the end of the first half. So really, that annualized rental income of EUR 25.8 million has yet to actually flow through into the P&L, but there is significant growth to come through, which is in the tank for future periods. On the disposals, Pfungstadt, we have notarized the recycling of that asset, EUR 30 million in Germany, that completes at the end of this financial year, so at the end of March for EUR 30 million. Just to head off, I'm sure I got a question on Tyseley, why have we sold an asset in Tyseley at 16.6% gross yield. There was also significant maintenance cost there and getting straight to the point, it needed a new roof, which would have been an additional EUR 3 million spend. So from a business planning perspective, it made sense to realize that asset at this time. And it's also linked to the continued consolidation of the U.K. portfolio. We're just looking to exit some of the non-core smaller assets, and you'll continue to see us do that. Page 25. Andrew Coombs: Okay, folks. So just before I introduce Page 5 (sic) [ Page 25, ] let me remind you that we are currently within our stated mission to get to EUR 150 million. And according to consensus, we should get there at the end of the '28 year. We obviously want to do it earlier, but we should get there at the end of the '28 year. Now if you look at this page on the left-hand side, it picks stuff up at the end of the financial year last year, so March '25, when we did EUR 123 million of FFO. As you know, consensus is that we'll do north of EUR 133 million this year, and we are trading in line with those expectations. So when you come out of this year at EUR 133 million, looking at doing something beginning with EUR 140 million next year, you then need to start thinking beyond your EUR 150 million goal. There is no point in a long-term business like property or wait until you get there and then go, let's pause, congratulate ourselves, start again after we've had a holiday and a bit of a break because you lose the momentum. You've got to start thinking far enough ahead about what you do now that determines your result in 3 years' time. Think about it, we buy a property now. And in some cases, it becomes -- you really get into the value add next year. But in a lot of cases, it takes 2 or 3 years to get into that sweet spot of value creation. And therefore, unless you're thinking about it now, you're not going to be there in 3 years' time. So it should be no surprise that now that we are in the EUR 133 million a year, moving into the EUR 140 million-something a year, that what we do is we start to plan beyond the EUR 150 million. And this is not just for shareholders. This is internally in the company. We are having meetings with people, and we're saying, what's next? Are we properly resourced? Do we have the right sites? So what you're seeing for the first time on this page is you're seeing us publicly talk about the next leg of the journey. Now beyond the EUR 150 million, the ambition will be EUR 200 million. But the first leg of the journey from EUR 150 million to EUR 200 million will be the leg to EUR 175 million, and that's what you see laid out here. And one of the things that you should take great comfort from is if you look at that pillar that says EUR 40 million, well, half of that is already done. Half of that has been executed, closed off, in the bag, in our control. What we need to focus on is the other half of it. And this EUR 175 million, when we get to this EUR 175 million, this should be driving a dividend at roughly a 70% payout ratio, a dividend that's somewhere in the region of about EUR 0.075. So at the moment, we're heading towards EUR 0.064. This EUR 175 million takes you to EUR 0.075. Now it does matter the detail of how you get there. But at the moment, it kind of doesn't because at the moment, it's about the aspiration. It's about the mindset. It's about the shape of your thinking to be pushing towards that EUR 175 million, to be able to realize the value creation and the value benefits that come from that. And that's why we're laying it out in public because we've already started to talk about it internally and plan for it. But what you should take some comfort from is the mindset of this company is to grow. And in spite of the headwinds that Chris has spoken about, those headwinds are not a reason for us to stop. They are a reason for us to accelerate. They are a reason for us to expand our thinking because if we're going to achieve the growth trajectory that we're used to, we need to think beyond the problem of the finance headwinds, which I hope we've demonstrated thus far, we are capable of overcoming. Let me turn to the next page and let Chris take you through financing. Chris Bowman: So yes, just on Page 26, just on financing, just as a reminder, on the balance sheet, we have EUR 1.21 billion of unsecured borrowings. That is in 3 bonds. So June '26, EUR 400 million comes due. That is essentially refinanced. We have the cash plus RCF to be able to repay that, and we have that cash earmarked for that. So that is done. November '28, we have EUR 465 million outstanding at a 1.75%. That is our last refinancing of what I call legacy debt. It's been great. It's been fantastic, but we need to take that journey back up to market. So EUR 465 million comes due in November '28. I would guide you now to we will refinance that in autumn of '27. And that is factored into all of our forecasting, et cetera, to still outrun that, still grow FFO and get through that journey. January '32, we have EUR 350 million outstanding at 4%. That was a bond we issued in January this year for which we had around EUR 2 billion of demand. So we've got great support from the debt capital markets. And obviously, we also tapped the '28 bond in the summer for EUR 105 million. Again, great support for that issuance. We do remain below a benchmark issuer. So we're having investment-grade rating that was reaffirmed by Fitch. But in the bond markets, over EUR 500 million gets you to benchmark issuer size. The reason I flagged that is because at the point that we become a benchmark issuer, you should expect our marginal cost to start coming in a little bit as well as we essentially become an issuer that investors need to look at as we go into those indices. On the secured side, EUR 232 million with Berlin Hyp and Deutsche pbb that is secured out to 2030 on a portfolio of German assets at 4.25%. Net LTV is up at 38.3% at the period end, reflecting the acquisition activity during the period. Interest cover over 4.5x. Net debt- to-EBITDA 6.7x, well below 8x where we target. As I say, we also signed a EUR 150 million RCF in the period with BNP, HSBC and ABN AMRO. There is an accordion feature in there to be able to increase it by another EUR 100 million. I have verbal indications of wanting to do that from banks. So we are in a strong position liquidity-wise. And as well, as I said, we have a bond tap in the period. Page 27. I'll just summarize before handing over to Andrew to conclude. So I think what have we seen in this period, we've seen fantastic strong organic growth as well as acquisitive growth that is in the tank, which has partly come through in the period, but will really start to accelerate our performance in the second half and beyond. So 6.6% FFO growth, underpinned by that 5.2% like-for-like rent roll, but the 15.2% increase in total rent roll gives you the marker as to where we are heading. U.K. and Germany, both performing well as discussed. And acquisitions, we've touched on. We've increased the dividend by 4%. That is ahead of expectations. I think the market was only expecting between 1% and 2%. I think you should take that as a sign of confidence from Andrew and I and also our Board in the future performance of this company. We want to continue to focus on generating cash flow, which we reward shareholders with through dividends. So I'd guide you to that kind of level of increase going forward as well. We're in a strong position on the balance sheet side, EUR 389 million of unrestricted cash plus the RCF that's undrawn, 38% LTV, and we've touched on the bond and RCF earlier. I'll hand over to Andrew on 28. Andrew Coombs: Okay. So really, the sort of second and third point here are all about the 5% growth. I just want to sort of cover something that I think is quite important because the group continues to trade in line with management expectations for the full year, but the cynics around the table might possibly look at the 5.2% like-for-like growth and compare it to the same period last year at 5.5% and think actually, it's less than it was this time last year. And of course, factually, you'd be absolutely correct. I wouldn't draw a great deal from that at all because when we say that we're trading in line with expectations, we mean we're trading in line with expectations. And I would draw your attention to the half year in 2022, where in the first half of the year, we achieved 2.4% like-for-like growth. But what actually happened when we looked at the full year is we came out at nearly 6.5%. What we always do is try and make sure that our problems are stacked into the first half. If we have a lease that is a big move-out that's due to go on March 31st, we'll try and push it years before it happens into April. When we're signing something new, if we know that it's a high proportion of a site, we will tend to make sure that the lease can only terminate in the first half of the year. We deliberately try and stack our problems into the first half to get a better and accelerating run in the second half. And if you look historically at our performance in H2 versus H1, you will see time and time again that our momentum accelerates in the second half. We would plan to be somewhere in between that 6% to 7% like-for-like for the year, probably somewhere around the midrange of that. Please do not think that because we're 5.2% this year and 5.5% last year, that there is some kind of slowing effect here. That is not what we are seeing, particularly given the momentum that we're anticipating in Germany. We accept things are going to get more difficult in the U.K., but we believe that will be balanced out in Germany. And please let's not forget that what we have done here in this last 6 months is not just gone out and acquired EUR 340 million of property, but we have continued to operate the company and do so well with a decent set of numbers. So one has not distracted the other. We have demonstrated the ability of the portfolio to do both and to do both well. And what I'd like to finish on is the 10-year track record of performance and growth where this company is concerned, and particularly at the top, the dividend, where we are now paying our 24th consecutive increase in dividend. And as Andrew Jones would say, dividend aristocracy is, I think, 25 years of progressively increasing dividend. We are now reaching the halfway point on that journey. Thank you very much. Happy to answer any questions people may have. Timothy Leckie: Tim Leckie, Panmure Liberum. Just two questions. I think one for Andrew, one for Chris. Andrew, the 15% sales conversion from inquiries, what's behind that? Is 15% the number you -- is that a final point, or do we push on? What is your thinking there? And then after that, for Chris, you mentioned the margin improvement once you hit the EUR 500 million. Could you just perhaps remind us where you see your current spread, and what the improvement might be at that higher volume? Andrew Coombs: So when we consistently get to 15%, yes, we definitely will push higher. When I started this company, sales conversion was less than 3%. And when we started to target over 10%, there was almost rebellion because people said it's impossible. We're now touching 15%. And once we get above 15%, that target will increase. How have we done that? Well, we've done that by working out the component parts that make up sales conversion. And despite it not being broken, taking them apart, dismantling them and looking at every individual piece and working out how we can do it better. And specifically, the piece that we are doing better that is improving our sales conversion is self-storage. And what we have worked out, and I'm not suggesting that we worked out a better way of selling self-storage and self-storage specialists, not at all. But we have worked out a better way of doing it than we've been doing it in the past. And that is beginning to have a material difference on the overall sales conversion of everything we sell. Chris Bowman: Chris here, on the margin, if I just take 5 years -- 5-year money, for instance, in the bond market, we are -- because we are sub-benchmark and the margin has tended to move around a little bit in the range of 160 to 190, and it's been particularly volatile over the last week or 2, given macro. I think the opportunity for us once we're into benchmark is to be at least probably 10 basis points tighter, but also less volatile. So -- and we will, I would expect, start to come in towards the lower end of that margin range. So that's the margin over 5-year swaps. Thomas Musson: It's Tom Musson at Berenberg. Yes, just again, a question on conversion as it relates to the U.K. business, which I think is slightly under 9%. Have you got the same 15% conversion target for the U.K. as well? And is sort of achieving that a realistic prospect over time, or are there perhaps any sort of structural differences between the platforms, and how they operate in the two different geographies? And then the second question, now that the U.K. business is larger and so FX becomes more of a consideration, would you consider using hedging instruments going forward? Andrew Coombs: I take the first part if you take the second. So firstly, the U.K. business has a 10% target. We didn't get to 15% from 3% in Germany by saying the target is 15%. We got there in incremental steps, and we broke the journey down. And we're into the journey to 10% with the U.K. business. The U.K. market is a different market from the German market. The U.K. market is more intermediated. And from that perspective, getting control of initial inquiry is more competitive than it is in Germany. But interestingly enough, the U.K. inquiry market is changing, and it's changing faster than it's changing in Germany. And it's changing specifically and faster because of the use of AI. So what other operators may or may not realize is 25% of the property-based Google traffic of 12 months ago is now going through AI. And what that means is that a broker's life, particularly a web broker, is much, much harder. What that means is whereas web brokers used to spend time talking to customers, customers are spending much less time talking to brokers and more time talking to AI. And when I say talking, I mean talking. Instead of typing and tapping into a screen, people are talking to their phones and the AI mechanisms are bringing back the kind of conversation that normally would have happened in a call center broker-type environment. So that whole thing in the U.K. is shifting. The only piece that isn't shifting is pay-per-click, PPC, because AI is not touching PPC at the moment because it's not tried to monetize itself. And what you really need to be doing if you are a smart operator that wants to keep control of your inquiry flow is you need to start understanding this because this is now moving, and it's changing the passage of an inquiry, particularly inquiries for flexible space, an inquiry that instead of going through a web broker is going through, not in every case, but in 1 in 4 cases, going through AI. And you've got to work out how you deal with that because that is going to change the marketplace. So of course, we're concerned about getting to 10%, et cetera. But actually, in the U.K., what we're more concerned about is how we continue to capture inquiries because prospective inquiries of a certain size are now more interested in talking to an AI machine than they are talking to a broker or a call center. Still predominantly the broker and the call center has control, but that control is tipping out of the brokers' and the providers' interest and towards what I call mechanical AI systems. And we're going to need to know how to compete with that. So that will come to Germany, but it hasn't started to touch that market properly yet. You can see it much more clearly in the U.K. market. And that's why I say, don't be confused about the fact that our inquiry numbers are going up. Our inquiry numbers are going up, not because we're sitting there, our inquiry numbers are going up because we're going out and working other channels and doing things whereby we can take control earlier on rather than watch AI steal the bread from our table. Chris? Chris Bowman: Okay. I've spent a lot of time on investigating hedging and my conclusion is that it's brought with danger. So -- and it's a drug which once we -- if we got into, it will be very hard to come off. So I think to manufacture hedging, be it buy forward euros, let's, for instance, say, buy forward the entire U.K. portfolio to fix the value at the end of the financial year, for instance, and at that point, I would have to realize at the end of the financial year, a gain or loss on the portfolio on that forward, and I'd have to almost certainly roll that hedge, and there'll be a significant cost to putting that hedge in place. And ultimately, we are a business exposed to two markets. So I'd be trying to manufacture the exposure to the U.K. out of the balance sheet when in reality, we are exposed to two different markets. So going and putting in place some sort of derivatives to try and manage hedging, I've seen lots of CFOs get into all sorts of trouble trying to go down that road. And I don't want to be sitting here talking about the mark-to-market of derivative instruments every time I come and talk to you. So we have a shareholder base, which is spread across euro, sterling, rand, and I'm sure some are dollar-denominated as well. So investors who invest in us, I largely leave it to them to deal with hedging. Now the only structural piece of hedging that could, at some point, make sense is simply to put sterling debt into the balance sheet. So match the debt with the asset base. And I completely understand that challenge and that question. There's two points I'd say. Number one, in euro terms, we are still maturing on the balance sheet as an issuer in the debt capital market. So there is still upside in terms of the cost of our euro-denominated debt versus in sterling, we are certainly subscale to go into the debt capital markets for debt. So we will be forced down the secured lending route, which obviously creates much less flexibility from a balance sheet perspective. And obviously, the difference in cost between euro and sterling, I'm sure, has probably blown out even further in the last few days, but was 200 basis points. Let's say, it's between 200 and 250 basis points. There is a funding benefit to us through the FFO, and we are ultimately cash flow focused from an FFO perspective. And what I'd also say is then when you look at the portfolio, we're split, I think, 71%, 29% at the moment between Germany, U.K. With the acquisition activity that we expect going forward, which we expect to be more German focused, that balance will start to push more towards Germany again. So we will continue to be very much a minority exposed to the U.K. So I think my answer is no. I'm not going to get down the kind of manufacturing hedging. At some point in the future, it will make sense to put sterling leverage in, but we're on a journey at the moment. And I know it's difficult at the moment given the FX effects that you see on the balance sheet that -- to sort of have a knee-jerk reaction and say, "Oh, we must hedge." I think that's brought with danger. We're not going to go there. Matthew Saperia: It's Matt Saperia from Peel Hunt. I'm also going to ask one question to each of you, if I can. Andrew, I think on Slide 9, you talked about the 4.7% like-for-like rate growth as a failure and -- as much as it was above the 4% that you were targeting. Are you going to ask your colleagues to do things differently going forward, or are you still happy for them to push rate ahead of what you might be targeting when it comes to new demand? Andrew Coombs: Well, specifically, what we are saying more in the U.K. than in Germany is we need to increase our sales volume. And if we have to reduce price within certain parameters and corridors to do so, that's what we must do. And what we're seeing is we're seeing a lot of people sort of nod to that, but then kind of still favor price over occupancy. And therein lies our challenge because I think as things tighten in the U.K., what we're seeing is we're seeing tenants look for smaller spaces than they normally would. And what that means is we have to win more customers than we normally would to maintain and increase our occupancy. And to do that, you either have to get more inquiries and/or you have to improve your sales conversion. And one of, not the only thing, but one of the ways you improve sales conversion is loosen on price a little. Now all of that is in a very controlled environment, where we make sure that people can't lower the price so much that we start to bring the average rate per square meter or square foot in the U.K. of the portfolio down. But whereas we used to be in a very nice world where you just said, as long as you sell higher than they move out, it all works. Now you're having to operate in a corridor whereby you do sometimes have to sell at lower than the move-out rate, and you better make absolutely sure that you can make up for that in your renewals and expansions. Otherwise, you're going to start ticking the average rate per square meter of your portfolio down. So this is quite a delicate area. And in the U.K. rather than Germany, this is going to get kind of more detailed going forward. And some of that is because the average size that people in the U.K. are inquiring about is getting smaller. So what you have to do is work the platform harder to get more customers. So this is not a sort of -- you set it and leave it for 6 months, this is daily management. We have a professional sales force that's properly trained in specific methods with specific processes and systems that are managed on a daily basis, and we're continually pushing buttons and pulling levers where this is concerned. It's quite intense. Matthew Saperia: And Chris, on Slide 18, you talked about a EUR 25 million potential future new build program. Chris Bowman: Yes. Matthew Saperia: Two parts. One is sort of what time frame are you talking about? And the second part, I'm assuming that's not exhaustive across the whole portfolio. There must be... Chris Bowman: No, no, no. So that's specifically four opportunities, that is one at Gartenfeld, two at Klipphausen and one at Dresden site, MicroPolis. The Gartenfeld opportunity new build is likely to tangibly start in the new year. The Dresden MicroPolis site is probably going to depend on -- not necessarily a firm pre-let, but at least some very strong indication. And the Klipphausen site, I think we've talked about Klipphausen in the past, it's been a sort of poster child for us of success, and we have development land around the existing site, which we acquired at the time of original acquisition, and there is opportunity to build additional production holes there. Net-net, I think I'd guide you to the EUR 25 million of opportunities, you're probably looking at EUR 10 million per year actually coming through. So it is a separate bucket to our business as usual CapEx. It's capital that has to compete with acquisitions for use essentially. Sarim Chaudhry: Sarim Chaudhry from Jefferies. Just a quick one. I think this is for Chris. On the divi, you got mid-70s payout and then you doing medium-term guidance of 70%. I think previously when we've spoken, that was going to be in the mid-60s. So what's that change? Chris Bowman: So we absolutely still have the aim to be at 65% payout ratio of FFO. And the model being 65% payout ratio plus the CapEx broadly equates to FFO as a whole. So we are, therefore, self-sustaining as a business. Actually, we are getting tighter and tighter on CapEx. So actually, we do have a little bit of headroom from CapEx versus dividend there. But we also flexed the payout ratio between 65% and 75% off the back of the fund raise, the equity fund raise last year and prior year to reflect the short-term dilution to FFO per share as we put the capital to work. So at the moment, you're essentially at kind of max. You're about 74% payout ratio. You should see that come down even at the end of the year, and you should see it come down and settle around 70%. What I'd also then say is that I think we are so confident and the Board is so confident about the growth prospects of the business going forward that we're also mindful that we're having to go through the financing headwinds as well over the next 3 years. So we are flexing within that 65% to 75% and saying that we want to settle around 70%, and we'll get there over the next 18 months, and we're happy, comfortable staying there through out to FY '29. On that chart, you saw the waterfall to get from EUR 123 million to our new target of EUR 175 million. The additional interest expense of EUR 34 million is all of the additional interest expense. So that is the journey of refinancing done. And in fact, there is an additional small amount of additional debt in there as well. So that is -- there is no more kind of headwinds to come beyond that essentially. And then obviously, once that journey is done, the results will be free to really outperform. Andrew Coombs: So can I just pick up on that because there's nothing new in this. We have always, for over a decade, operated in that 65% to 75%. We've always made sure that when we are facing things like deployment of capital, other types of headwinds that we flex up to 75%, knowing that we can come back down to 65% again. We're doing exactly the same. The difference is what we are saying is that we recognize that we are unlikely to get back down to the 65% until such time as we've overcome that interest rate challenge. And that ultimately won't be until the year ending March '29 because in December '28, we have another low interest bond to overcome. So realistically, we're going to be in that 70% to 75% corridor until we overcome that second bond. But once we do, the growth profile of this business will no longer have the headwinds. So therefore, you will really see the top come off it, and we'll then be able to return back to 65% in a very -- whereas to try and do it in this period, we think that that's unnecessarily kind of ambitious in terms of getting back to that 65%. So we're operating in the same way as we've operated for a very, very long time. We're just trying to give guidance to say, in the past, we've got down to 65% like really quickly. Because of these successive headwinds, we are probably going to be in that 70% to 75% bracket until we get to '29 and then we can put it back down to 65%. Still a very well-covered dividend. Maxwell Nimmo: Just a quick follow-up question. I think you talked -- sorry, it's Max Nimmo at Deutsche Numis. You talked a bit about the U.K. previously and saying we kind of just need to wait until we get through the budget. But it sounds like from what you're saying now that it's actually a bit more of a longer-term structural issue that's harder -- and so investment in this market is unlikely to be until, I think you said, next summer and that... Andrew Coombs: Let me tell you why that's changed. That's changed as a result of Thursday of last week. It's changed because what we can all see now is the leadership of the current government is under threat. And I don't care if they all came out and said, we've made friends, and we're all going to live happily ever after and not stab each other in the back. I won't believe it until I see the results of the May elections next year. And that roughly coincides with the announcement of our end of year results. So I'm not saying that we might not make the odd exception for a very small amount of money if it was something to do with defense or self-storage in the U.K. But unless it's in like a really exciting vertical for an amazing price, as far as I'm concerned, we are paused in the U.K. now until we understand the political outcome until at least the middle of next year. Clear? Maxwell Nimmo: Very clear, year. Andrew Coombs: Folks, thank you very much indeed.
Nini Arshakuni: Welcome to Lion Finance's Third Quarter results call. My name is Nini Arshakuni. I'm Head of Investor Relations, and I will be the moderator for today's call. I'm joined on this call by Archil Gachechiladze, our Group CEO; Hovhannes Toroyan, who's the Chief Financial Officer of Ameriabank, our banking subsidiary in Armenia; and Akaki Liqokeli, our Group Economist, who will be covering the macro. We're pleased to report another set of solid results for the quarter with very strong customer franchise growth across our business operations in Georgia and Armenia. Our loan book grew 22% in constant currency. It was even more -- with even stronger growth in the Armenia operations. Overall, our profit for the quarter amounted to GEL 547 million, an 8% increase versus the prior year. Return on average equity stood at solid 28%. Cost to income was 35.3%, an improvement versus the prior quarter. And our cost of credit risk ratio was 0.5%, and we maintained robust asset quality across the whole business. Before we dive into the details of these results, we'll first start with the macroeconomic developments, and Akaki will kick off, and then we'll hear from Archil and Hovhannes. And in the end, we'll open the floor for questions. Akaki, now you can start the macro part, and let's move on. Akaki Liqokeli: Thank you, Nini. Hello, everyone. I will be presenting the macroeconomic update for our core markets, Georgia and Armenia. Let's start with growth performance. In the first 9 months of the year, both economies delivered solid growth numbers, supported by robust domestic demand and resilient external sector inflows. Accordingly, we have maintained our full year real GDP growth forecast for 2025 at 7.5% for Georgia and 5% for Armenia. That said, the uncertainty around the baseline remains elevated due to geopolitical instability in the region and domestic political tensions. Nevertheless, the demonstrated resilience of the economies, along with continued improvements in relations between Armenia and Azerbaijan has strengthened the outlook. And we have revised our expectation for 2026, is the strong growth will persist at 6% real GDP growth in Georgia and 5.5% growth in Armenia. Importantly, our projections are in line with the latest IMF forecast, which place Georgia and Armenia among the top performers in the region in terms of average real GDP growth over the next 5 years. Turning to the composition of growth. Both economies have increasingly shifted to domestic demand drivers, particularly consumption, which is supported by sustained increases in household income from employment and remittances. And ongoing fiscal expansion in Armenia is also helping in this regard. Investment spending is also contributing positively, aided by ongoing public infrastructure projects. External sector inflows are also contributing to growth. The income from exports, tourism and remittances is increasing at a solid pace in Georgia. We also see that the inflows have gained momentum in Armenia after one-off highs registered last year. Also, the nontravel export of services, particularly IT and transport, demonstrate solid growth and contributing to overall hard currency inflows. The strength of inflows is supporting the stability of local currencies as well. Georgian lari and Armenian dram have been broadly stable against the U.S. dollar over the last 2 years in contrast to most peer currencies. The real exchange rates are also adjusting smoothly after strong depreciations in previous years. This is working through lower inflation with no impact on nominal exchange rates. We expect GEL and Armenian dram to remain stable over the medium term, supported by solid macro fundamentals and prudent policies. Exchange rate stability is also essential for keeping inflation low and stable, which we have observed in both countries in recent years. However, more recently, we have seen some uptick in inflation in Georgia, where the headline number was 5.2% year-on-year in October. This is mostly driven by price increases on several food items from last year's low levels. And we expect this to be temporary and short-lived as inflation expectations remain well anchored as reflected in low core inflation numbers and the National Bank of Georgia maintains moderately tight monetary policy with the refinancing rate at 8%. In 2026, as inflation pressures ease, we see scope for 0.5 percentage point cut -- rate cut by the NBG. On the Armenian side, the inflation is more stable, and refinancing rate is slightly lower at 6.75%. In 2026, we also expect a limited space for cuts within 25, 50 basis points. The central banks of Georgian and Armenia have been also very active in foreign currency purchases this year. And as a result, there is -- official reserve levels have reached record high numbers. And they are also converging toward the minimum adequacy levels. According to our estimates, [ $6 billion ] will be sufficient to reach the debt level in Georgia and [ $5 billion ] in Armenia, and those levels are quite realistic to be achieved in the following year. Strong reserve positions are essential for macroeconomic stability as well as fiscal discipline that we also observe in both countries. Georgia remains on a consolidation path with tightly managed fiscal deficit within 3% of GDP and also the government targets to reduce further the debt level below 35% of GDP. On the Armenian side, the temporary increase in spending needs has led to somewhat elevated budget deficits in the following years. But notably, this is -- more spending is going to CapEx projects, and the government is committed to maintain the public debt below 55% of GDP, and this is also supported by ongoing IMF arrangements. Lastly, a few words about the banking sectors, which benefit from favorable macroeconomic conditions in both countries. Lending growth has converged to the nominal economic growth in Georgia. And in Armenia, we also see some moderation to more sustainable levels as the mortgage subsidy program is phasing out. Loan dollarization has been stable after substantial decreases in previous years, which contribute to lower exposure to exchange rate risk and the asset quality remains solid with Armenia and Georgia among the top countries in the region in terms of low nonperforming loans according to IMF. So this concludes my part. Back to you, Nini. Nini Arshakuni: Thank you, Akaki. Now we'll move to discussing our performance in Georgia and Armenia separately, and Archil will first start with Georgian operations and strategic highlights, and then we'll move to Armenia. Archil Gachechiladze: Hello, everyone. Thank you for joining the call. Let me share the presentation. Nini, can you see me share the screen? Nini Arshakuni: We see the screen. We don't see -- yes, now we see the presentation. Archil Gachechiladze: Excellent. So thank you again for joining the earnings call. We will discuss some of the numbers here. So I will present the operating parameters of our Georgia subsidiary, then Hovhannes will present the Armenia side, and then I'll summarize in terms of the overall revenue numbers and costs and so forth. So the Georgian subsidiary had a very good showing of return on equity of 32% with 16% year-on-year growth in loans and 14% in deposits as well as continuing to increase its retail coverage with retail monthly active users achieving 1.74 million users, up by almost 15% year-on-year. Just a kind reminder basically that our mobile application retail as well as business is basically financial superapp with a lot of different capabilities, including not only daily banking and multicurrency accounts attached to a single card and so forth, but peer-to-peer payment and bill split and so forth as well as fractional trading on U.S. markets, low-cost fractional trading and many other capabilities. And for that reason and not just that, but as our overall digital capabilities of the bank, we have been recognized second time in a row by Global Finance as the Best Digital Bank in the World, and in the run-up to this competition for the best in the world, there were some big global names, including Revolut and others. So it's -- I would like to congratulate our team behind this effort. And it is a nice achievement and recognition for our bank to have that given that our home markets are rather small on a global scale. So what we see here is that we are going from strength to strength in terms of the monthly active users. You can see this number here, the middle gray line, which is up by 14.7% that I already mentioned. And the daily engagement is very good. Basically, it's about 50% now, which is very strong. What's also notable is that our business users are growing year-on-year monthly active user of our business mobile application is up 19%, which is quite incredible. In terms of the shares sold digitally, we have achieved a new high of 70%, which is very good. So more and more of our loans and deposits and cards and other packages are acquired fully digitally. And on top of that, our NPS score, we achieved a new high of 74% -- not percent, 74, I apologize, in terms of the NPS showing, which shows you the strength of our franchise and the satisfaction of our customers with our services and daily banking that they do. That has translated into a 21% increase in terms of volumes of payments, that's POS terminals and e-commerce with a slight pickup in the market share year-on-year. Some people have asked the question in terms of this used to be 57%, that's restated to exclude peer-to-peer payment that went through the card rails, but that's not really an acquiring business. So we excluded that. And if you restated it for longer term, that's -- those are the numbers. In terms of number of people using -- unit individuals using our cards, year-on-year, it's up by 13.9%. So given our high penetration, it's an incredible number, well above 1.5 million now. And so it's 2.5% up Q-over-Q. Loan growth was 16.5%, constant currency, 16.1% and a quarterly number of 3.6% on a constant currency basis, which is very strong showing the markets growing about 13%. Deposit was up also by 14%, a slight bump on a quarterly basis. Capital position remains strong. CET1 and Tier 1 is a big focus, obviously, because the sub debt is widely available for a number of providers. So it's more tightly managed. But this is plenty of capital. And as a reminder, we target a management buffer of 1.5% above the minimum requirement. We can go slightly lower, if need be, but basically, that provides a slightly higher cushion that we target. Now I would like to ask Hovhannes to step in and present the shiny results that Ameriabank has. Hovhannes Toroyan: Can you see my screen? Nini Arshakuni: Yes, Hovhannes. Yes. Hovhannes Toroyan: Yes. Perfect. Thank you, everyone, for your time. For the Armenian operations, I want to mention that our profit grew 22% year-over-year to reach GEL 111.5 million. Our return on equity also improved quarter versus quarter to reach 21.8%. As Archil already mentioned, both loan and deposit portfolios grew at significant rates, namely loan book grew 36.5 percentage point in constant currency basis and deposit portfolio grew 28.6% again, in constant currency basis. We continue our expansion in terms of acquiring more customers. And here, you can see that both total customer base, monthly active customers as well as MAU/DAUs are increasing pretty solidly, and I'll be talking about it on the next slides. Here, again, likewise, we're working on developing superapp locally that is becoming more and more popular. Indeed, the usage of our mobile application that is called MyAmeria has increased more than 60%. That is also remarkable given the high penetration that we have in the local market. And there, we have several different features, more than actually 100 new features introduced during this quarter. And we also introduced our loyalty program that we hope will tie up our customers with us in the long term. As we spoke last quarter, we have launched MyAmeriaStar, this is application for kids, 2 quarters ago. And we can be very happy that it's gaining more and more popularity among children and is serving to become a financial educational platform for a number of kids in Armenia. In terms of digital usage, as I mentioned, if you look on our growth on an annual basis, it's mostly at or about 60% for both MAU and DAU, and we are very also happy and proud to share that also our digital uptake has improved more than 5 percentage point quarter-over-quarter. That is also remarkable given this very rapid growth of the number of customers that we have, number of MAU and DAU. Here, I also want to mention that we have been doing a number of campaigns to attract new-to-bank customers as well as to activate the customer base that we have. And we are offering a number of perks and benefits to our customer base. So when we'll be talking about fees and commissions, the costs on there are running a bit faster related to card transactions due to the campaigns that we are doing. For the loan and deposit portfolio, again, we have remarkable results, 36.9% on loans. It's very important to note that the growth is very balanced, both on the corporate and retail side. Also, just to remind that last year, we had elevated demand for the mortgages due to this tax rebate program. I want to mention that on one hand, the growth pace of the mortgages has decreased, but it's higher than whatever we had in 2023 and 2022. So there is a very healthy growth continuing in this market. So we have no fears about any potential bubbles in this sector. As for the deposits, again, 28.8% growth year-over-year. And here, I also want to mark another milestone agreement that we announced very recently with another DFI, EBRD. We have been very active with our DFI partners to attract more liabilities to support our long-term growth. As for the capital position and liquidity position, I'm very happy to also mention that there is improvement in both areas. Our headroom versus requirements has improved versus quarter 2. Also, the Central Bank of Armenia has made -- officially introduced the changes to the local regulation, where in line with a couple of other changes. Now banks can do perpetual bonds as part of their regulatory equity. Also, there is significant improvement in our liquidity ratio. You can see 202% and 121% for NFSR and LCR ratios. So we are standing very sound, both in terms of capital position as well as liquidity. Our NPS has also further improved to 77.4. It's 1.4 percentage point increase versus previous year-end. And obviously, with the remarkable growth rates of the loans and deposits, our market share both for loans and deposits has increased by 1.6 percentage point. So as we announced earlier, we see significant untapped market opportunities, and we will be working towards increasing our market share in the local market. With this, I can conclude and pass the floor back to Nini. Thank you. Nini Arshakuni: Thank you, Hovhannes. And I'll now hand it over to Archil for the overall group overview. Archil Gachechiladze: Congratulations to the whole Armenian team. I think it's incredible results in terms of balance sheet growth, but also in terms of the -- fundamentally, our coverage and rolling out of our retail products and enhancing monthly active users there. So with 300,000 people using our products there monthly, that's about 10% of the population. In Georgia, we're covering 45%. So there's plenty of opportunity to grow and roll out our daily banking excellent services to more and more clients. So in terms of how this translates into the overall numbers, you can say that our operating income grew by 15.6%. And you see an equal distribution of 13.4% in Georgia and 21.3% in Armenia. In terms of the net interest income, the growth was stronger than the overall revenue, which was 18.4% in Georgia and 30% in Armenia, so translating into 21% growth of net interest income year-over-year. And net noninterest income was rather subdued, and we have discussed it in our results as well, and I'll go into detail in terms of FX and non-FX numbers on the next slide. So net fee and commission income grew by only 4.8% for the overall group. In Georgia, it was 8.6%. Last quarter, I said in Georgia would be high single digits. So that's more or less what we have there. And in Armenia, it was down by 17.8%, largely due to the massive spending on the client acquisition and reactivation that Hovhannes mentioned as well. In net FX, it has been largely flat, slight decrease in Georgia, 3.3% year-over-year, partly due to the stability of the currency. So this line of revenue is more juicy when there's more volatility in the currency. In both markets, the stability has been there because basically, there's a strong inflow into the country and both national banks are basically providing the lower target basically through which they're not allowing the currency to get stronger, but they are refilling the reserves, which -- that kind of stability is not great for us, obviously. But overall, it's still solid numbers. Operating expenses were up 17.1%, about 15.4% and 16.6% in Georgia and Armenia, and the other business was a bit slightly higher. But overall, Q-over-Q, there was a slight improvement in cost-to-income, but year-over-year slight [ decrease ] from 34.8% blended to 35.3% blended. That remains our focus. And from next year, we should expect neutral to positive operating jaws. Loan portfolio growth and deposit portfolio growth for both countries were very positive in this quarter. In Georgia, we grew by 16.1% in constant currency year-over-year and in Armenia was incredible 36.5%. And as Hovhannes has mentioned, it was well distributed between retail and corporate. So it's all very good and strong growth in deposits as well. So all in all, that -- yes, one other good news was that as we deployed more liquidity in Georgia, we had a slight pickup in the net interest margin in Georgia and a 10 basis point pickup in Armenia as well. And so all in all, it translated into an increase of 20 basis points Q-over-Q, which was welcome news. Cost of credit was 0.5%, and that's more closer to the normal levels. And we guide between 80 and 100 basis points through the cycle, but we are in a good benign environment. So that's what it is. We had a slight pickup in NPL ratios, which was mostly on the SME side, reclassifying some small hotels, mainly in the regions that have not performed very well. There's no systemic underlying issue in any of these segments there. So that's about that. So the profit was up by 7.5% year-over-year, although that basically does not show the fundamental pre-provision size of the business grew about 15%, which is something that we focus on as well. Return on equity is 27.8%. All in all, strong showing. We are announcing a dividend -- quarterly dividend of GEL 2.65 per share as well as recommending to do the buybacks of GEL 51.5 million for this quarter, and it's a buyback and cancellation, as you know. And you see over the last 5 years how the number of share has been reducing because of this type of capital returns that we do. This is what we promised to do, and we are continuing to do that. I'll wrap it up here and open for Q&A. Nini, anything to add? Nini Arshakuni: Yes, we can start the Q&A, nothing to add. So to ask questions, please use the Raise hand button or the Q&A chat, and please introduce yourself when you speak. So we have the first question from Jens Ehrenberg and let me bring him on the line. Jens Ehrenberg: I hope you can hear me all right. A couple of questions from my side. And sorry, I should have introduced myself. It's Jens Ehrenberg from Cavendish. Firstly, I suppose looking at loan book growth, which has been pretty strong across both markets. Are there any key growth levers you'd look at over the next 12 to 18 months that we should be mindful of? Then secondly, just on the level of NIMs. I mean it's great to see how robust they've been in the quarter. I suppose in the face of uncertainty around global rates, how should we think about this going forward? Are you sort of confident in the stability of those margins? Or is there anything we should be mindful of? And finally, more on the sort of digital side of things, particularly on the retail side. Thinking back to sort of the time of the demerger, to what extent do you believe that, I suppose the market actually appreciates the franchise value that you've built on the back of the digital retail offering? Archil Gachechiladze: So thank you. So for loan growth, I'll say Georgia and then maybe Hovhannes can cover the Armenian side. So we guide -- we don't guide Georgia separately, but our expectation is between 10% and 12%, 13% medium term, although as long as the growth of the Georgian economy remains above 5%, which is the medium to long term expectation of Georgian growth, not long term, but medium term, that allows us to grow faster than that. So we have been able to grow -- as the market grows at 13%, we have been able to grow at 16%. There's no particular sites other than -- so retail and corporate, both are growing very strongly. SME has not been growing strongly. It's high single digit there. And we are in discussion with policymakers how to support SME growth, SME loan growth there. But in terms of Georgian corporates are in excellent shape. They've delevered as the denominator of the economy overall grew their profitability as well as margins were in excellent shape over the last 3, 5 years. So they're delevered and able to invest in many different sectors. Energy remains a big sector that should attract a lot of investment over the next 3 years in Georgia. So -- and consumer is still growing very well because the income levels have been growing at double digits 5 years in a row, 5 years, every year, double digit, which is excellent growth that we are seeing. And Hovhannes, do you want to say about loan growth in Armenia and then I'll switch to NIM? Why don't you cover NIM as well in Armenia and then I'll turn to Georgian side. Hovhannes Toroyan: Sure. Yes. Absolutely. So for the loan growth, we do anticipate for the market like lower double-digit growth for the next couple of years. For Ameriabank, our estimate is to keep it between 15% and 20%, maybe a bit higher for the initial years and then going slightly lower towards like 3, 4 years horizon. But we should be able to keep it between 15% and 20% growth for the next 3 to 4 years. As for NIM, we do think that the level of the NIM where we are is fairly stable. So we do not anticipate any sharp changes either way, either up or down. So there could be 10, 15 basis point change over time. But overall, we think this is -- in terms of midterm, this is -- this could be a guiding figure for the management. Archil Gachechiladze: Thank you, Hovhannes. I'm a bit more optimistic on the loan growth side. As long as we grow on retail side as we want to, I think it should provide 20-plus percent growth, but we'll see. On the NIM, in Georgia, it's broadly stable. We are in a good shape there. I don't expect any major changes. Obviously, this business just happens. So we'll see [Technical Difficulty] there is no reason to expect a particular movement there. On the franchise value side, you're absolutely right. So a lot of people are focused on book multiple because there's this understanding that banking is all about the balance sheet play and somebody can bring a couple of billion dollars and recreate this franchise. And I don't think that is right. I mean when there's the front end, it's not just the balance sheet, the front end, which basically -- that's why I focus so much on the NPS, on the top of mind, most trusted bank. So this shows the stickiness of the customer revenue and so forth, which translate then into growth [indiscernible], but also, it's the stickiness of such revenue. And unfortunately, the market has not given us credit for it because we're still trading around 5x P/E, while historically, we used to trade at 8, 9, sometimes 10x. And if you ask me, and maybe that's subjective, but also objective measures show that we are in the best shape in terms of the franchise quality that we have ever been on the Georgian side, and now it's joined with Armenia, it's getting better and going from strength to strength there as well. So unfortunately, not yet appreciated, but hopefully, it's coming, right? There were a few questions typed into the Q&A side. Nini, do you want to cover those? Nini Arshakuni: Yes. So maybe if we kind of categorize them, there are 2 questions on the market shares. For -- on the Armenian side, basically, the question is what percent market share is attainable in the next few years? And then for Georgia, the question is, given already large market share, how much more market share could be BOG gain in the next few years? So maybe we'll cover the market share questions first. Archil Gachechiladze: I can cover both, Hovhannes, sorry. In Georgia, regulator has basically said that they would like to keep the concentration constant and not increase it too much, i.e. below 40%. So we have basically -- so there's more capital requirement as we go above 40% in deposits, which we are currently -- we have about 50 basis points extra for that. So we intend to keep it just under 40%, a slight percentage or 2% gain still available on the loan side. So there's not much to gain there, a little bit. But in Armenia, we would like to grow towards 30% and slightly above that over the next few years. So that the scale advantage that we currently have actually translates into good advantage in cost-to-income ratio as well. Nini Arshakuni: Okay. Then [ Mike Gabon ] has a few questions. One is if we can give more color into the potential perpetual bond issuance from Armenia? Archil Gachechiladze: Hovhannes, do you want to say anything? But be aware of the public market rules there. Hovhannes Toroyan: Sure. So we have not formally yet discussed and approved internally. So I would really prefer to refrain from giving any guidance, but we will definitely -- I mean, we have been working with some of the bankers to understand actually [Technical Difficulty] market opportunities. And also, we clearly understand our needs. I just can say that this is very good tool to improve the efficiency and cost structure of the equity. And we are actually seriously considering that opportunity. But once approved by our ALCO committee and then by the Board, I think after that, we can disclose more. Nini Arshakuni: Thank you, Hovhannes. So another question is from Mike Gabon as well on the Bank of Georgia's recent eurobond issuance. The question is if -- why did we issue this 3-year bond if we have so much capital and why in Georgian lari and why 11.5%, which Mike thinks is a high rate? So [indiscernible]. Archil, can you take it? Archil Gachechiladze: Yes. I think lari instrument has not been present on the local -- on the international market for some time. So I agree that 11.5% was a bit disappointing. But it's unfortunate that the people have not been looking at the lari's strength for a long time because there was no instrument, lari instrument outstanding. So that's partly due to the fact of the high interest. But we would like to have some public financing available in U.S. dollar as well as lari. There's no need for U.S. dollar at this point. But in lari, there was need. So that's why we raised it. Given how we are deploying it, we thought it was a good idea. So I don't know what you are referring to. So if we didn't think it was a good idea, we would not raise it, but we think it's a good idea. And it does help us to de-dollarize the balance sheet, which has a marginal improvement on the liquidity requirement as well. So that helps as well overall, which every time you de-dollarize either because of funding basically or the loans, then it helps you with the lower liquidity requirement. So marginal side is pretty good. It provides longer-term value as well, 3 years is better than most of the deposit, which is either current or 1 year. Nini, next question. Nini Arshakuni: Yes. So the next 2 questions come from [indiscernible] Capital. The first is, please comment on the fee and commission income Q-over-Q decline and outlook for the next several quarters. Maybe we'll take that first. And then the second is on the operating leverage. You mentioned positive operating leverage effects ahead. Could you guide us a bit with what cost -- with respect to cost-to-income ratio for GFS and AFS. Archil Gachechiladze: Yes. So on the fee and commission income, so basically, we will have improvement. It was not decline. It was a small increase, 3.8%. But we should be in Georgian side, growing double digit in the fourth quarter and then going forward, we should -- that should stick. In Armenia, it's a bit more bumpy, could be given the fact that we are in a very high expansion period of grabbing new clients and so forth. So there should be improvement, but we don't provide more guidance than that. And the same is true for cost-to-income as well. So we are guiding either neutral or positive or slightly positive operating jaws for next year, but we don't want to provide more breakdown than that. Nini Arshakuni: Thank you, Archil. So now we have a raised hand from Simon Nellis from Citi. So I'll let him talk. Simon Nellis: I was hoping you could elaborate a bit more on what was driving the margin expansion in Georgia, I think, a little bit over the quarter in Armenia as well. I know you're guiding for broadly stable margins, but can you kind of give us some thoughts longer term about the sensitivity of your margin in both markets to rates, which might come down, I guess? And what is your rate view kind of going forward over the next 12 to 24 months? Archil Gachechiladze: Yes. Let me do that on the Georgian side. So basically, I'll start with the last one. So first -- sorry. First was deploying higher liquidity. So we had slightly higher liquidity than normal. And as we were deploying it, we thought that it would translate into a slight pickup. So there was a pretty simple exercise there. Our -- in the mix, we have slightly higher consumer. So consumer is growing slightly more than other stuff. So that's also helping the margin. So that's why it's north of 6% instead of historically lower. So if you rewind 5, 10 years before, sometimes we have had it at 7%, 8%, but then we have had it just about 5% as well. Right now, it's 6%, partly due to the mix and high interest rate environment. Now talking about interest rates, as our Chief Economist, shared with you, we expect around 50 basis point reduction at the end of 2026 in lari. And that should be either neutral or maybe 10 basis point reduction over time. So initially, it's slightly positive, in fact, because we have short term and fixed lari is more of the assets, are in fixed short term than the funding. So that, in fact, has a slight pickup of 10 basis points or so. But then over time, it neutralizes up. And in Armenia, Hovhannes, do you want to say a few things? Hovhannes Toroyan: In Armenia, we also have a short position on interest rate on the FX. So technically, the decrease of the rates of USD or euro LIBOR will affect slightly positively, but that's not going to be anything significant because we do not really keep a very big position, I mean, open position. As for the NIM, yes, we did have a 0.1 percentage point improvement in NIM. But here, we again are guiding it to be flat in the Q4 and probably in the next couple of quarters. This was due to a slight increase in the yield of the loans. But at the same time, we also note that short term, our cost of funding has gone up slightly, and that was mainly driven by our attraction of DFI funding. That is slightly more expensive as of today. But given the long tenure of those facilities, we have estimated that through the lifetime, the average cost of that fund will be slightly lower than the local borrowing. So we are currently paying a bit more than the local market, but with the expectation to be paying less within the expectation that the rates will go down. Nini Arshakuni: Let's see. So we have one question from [indiscernible] on the Georgian business. What is your market share in private banking affluent retail in Georgia? And asking specifically about retail deposit market share. And how much is the share of these deposits in your total deposit base? And what is the dollar... Archil Gachechiladze: Yes, it's -- we cannot exactly measure the market share, but my estimate is somewhere between 45% plus/minus. And in terms of the total share, I don't remember. So we'll probably have to get back to you. So there's the solo, which is upper premium segment, which is substantial, and we do disclose. But in terms of what you are asking for, I think it's more like wealth management. I'm not sure we disclose the breakdown of that, but we can get back to you on that. In terms of how much we are paying, it's the average deposit cost, I also don't remember. We'll need to provide that to you. Nini Arshakuni: So overall, part of the cost in Georgian operations cost of client deposits in foreign currency is 1.4%, but that's blended across all segments. Archil Gachechiladze: Correct. Nini Arshakuni: I see Jens' hand, but he might have just forgotten to -- yes, he put it down. Let's see what else. Then we have one raised hand from [indiscernible] think from Armenia, but let's see if -- [ Gohar ], do you have a question? Maybe it's accidental. Archil Gachechiladze: There are a few questions from Mike Gabon that are in Q&A. Do you want to cover those? Nini Arshakuni: Yes. Let's see. Questions on Armenia. Is there a higher regulatory capital requirement on foreign currency in Armenia? That's probably for Hovhannes. And also, is there any notable inflows, outflows of foreign currency into and out of Armenia? Hovhannes Toroyan: We do have higher capital requirement for FX-denominated loans, and that has been enforced from 2004. So it's not new to us. On average, I would say, because there are different weights, risk weights for different asset classes, but most of the FX-denominated assets have approximately 50% more capital requirement or their risk weights are about 50% higher. And the second part was about the cap... Nini Arshakuni: About the foreign currency inflows in and out of Armenia. Any notable foreign currency inflows happening in and out of Armenia? Hovhannes Toroyan: Yes. I think Akaki also presented that when we look at the remittances, for instance, I mean, there is very healthy growth in Armenia. If I'm not mistaken, it's about 16% year-over-year. And that positive trend is continuing both in 2025 and was also there in 2024. Nini Arshakuni: Hovhannes, and then the clarifying question was that the cap -- Mike was asking about the cap, any cap on deposits in foreign currency or any additional requirements? Hovhannes Toroyan: There is no any capital requirement for FX-denominated deposits, but there is a higher regulatory cost in terms of higher required reserves for foreign currency-denominated deposits regardless where they're attracted from. And now with these new changes to the regulation, the Central Bank of Armenia is also introducing higher requirements for concentrated attractions for our customers in terms of calculation of NSFR and LCR, probability of the outflow. But again, we did our internal analysis. And due to this increased requirement to this concentrated means, the requirement for liquidity position for Ameriabank will not change. That is very immaterial change. So we're going to be, as I presented, well above the required thresholds. Nini Arshakuni: Okay. Thank you, Hovhannes. Another question is regarding the potential M&A opportunities, if we can comment on any potential M&A plans and if we have any interest in Central Asia, I think that's the question in summary. Archil Gachechiladze: There's no comment that we can provide in terms of our expansion, but we are scanning the market, and that would be East Europe -- Central and Eastern Europe, Southeast Europe, Central Asia, mainly 2 countries, which is Kazakhstan, Uzbekistan, we're always looking. But we are concentrated on top banks, top 3, maybe top 5 for larger banks. We don't like turnaround stories. We like stories where we can enhance and so forth. So there's no immediate update there. Should I cover the next one? [ Bruno Berry ] is asking about capital distribution. Nini Arshakuni: Yes. So the range of 30%, 50%, which is our medium -- like the target, where do we expect it to be in the near term? And what are our thoughts regarding the split between dividends and buybacks? Archil Gachechiladze: We expect it to be in low 30s as we guided a couple of years ago for 2, 3 years. And that's because the growth, we remain on the higher side, and we have been growing more than our medium guidance, medium-term guidance. So that's why we are deploying capital there. And in terms of the split of capital returns, roughly 2/3, 1/3 has been dividend and buybacks, and we'll probably stick to that. Nini Arshakuni: The next question is from Ben Maher on the line. Benjamin Maher: Can you hear me? Nini Arshakuni: Yes. Benjamin Maher: Just a quick one on -- I think you mentioned some regulatory changes in Armenia. I'm interested if you have any -- do you expect any further regulatory changes or any headwinds as we move into next year across Georgia or Armenia? Any color would be helpful. Hovhannes Toroyan: There's nothing material coming up in Armenia. Archil Gachechiladze: There's nothing immediate in Georgia, either. There's plenty of discussion in terms of open banking and how this is affecting and encouraging fintechs and so forth, but there's no particular big change right now. Nini Arshakuni: No more questions. Archil Gachechiladze: So with that, thank you very much for joining our quarterly call. Third quarter was a record high. This is the first time that we made more than $200 million equivalent, right? Nini, maybe you correct me if I'm wrong. But I think it was the first time and given the fact that we'll be growing quarter-by-quarter, hopefully, we can deliver value to our shareholders. Armenia remains a very strong case and prospects there are also very positive, medium- to long-term prospects given the fact that Azerbaijan and Turkish borders remain closed while there's an in-principle agreement already to open those up, but this will take time, a few months but less than a year, hopefully. And that means that the economy will open up with plenty of opportunities that will emerge, and we are very well placed there to fund and provide funding for growth to go there. And Georgia remains and continues to be a very strong economy. So more and more people appreciate how strong the economy and numbers have been. As you can see, the growth has been good, high single digit. Inflation is under control. CPI picked up, but core inflation remains at 2.4%. And all of this basically translates into a strong economy, people benefiting with average incomes growing double digit, and all of this is reflected in our strength. And Georgia, so on the macro side, it's a very good story. On the franchise value, I think we are stronger than we've ever been. So we are very well placed to benefit from this medium-term wave, which is called investment in the middle corridor, be it through this highway being discussed from Azerbaijan to Armenia or being through a more established Georgian route. In both cases, we're very well placed to benefit from this medium-term movement. And all of that, I think, will translate into long-term value creation. So thank you for joining this call, and we look forward to seeing you in one quarter. Nini Arshakuni: Thank you, and take care. Bye.
Operator: Good day, and thank you for standing by. Welcome to the Subsea 7 Q3 2025 Results Conference Call. [Operator Instructions]. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Katherine Tonks. Please go ahead. Katherine Tonks: Welcome, everyone. Thank you for joining us. With me on the call today are John Evans, our CEO; Mark Foley, our CFO; and Stuart Fitzgerald, CEO of Seaway 7. The results press release is available to download on our website, along with the slides that we'll be using during today's call. Please note that some of the information discussed on the call today will include forward-looking statements that reflect our current views. These statements involve risks and uncertainties that may cause actual results or trends to differ materially from our forecast. For more information, please refer to the risk factors discussed in our annual report or in today's quarterly press release. I'll now turn it over to John. John Evans: Thank you, Katherine, and good afternoon, everyone. I will start with a summary of the quarter before passing over to Mark for more details of the financial results. Turning to Slide 3. Subsea 7 delivered third quarter adjusted EBITDA of $407 million, representing 27% growth year-on-year, and a margin of 22%. The increase in our profitability reflects strong project execution as well as the continued high-grading of our backlog. As Mark will discuss, we now expect to exceed our prior guidance for 2025 and to deliver continued momentum into 2026. Order intake was high in the quarter, at $3.8 billion, resulting in a book-to-bill of 2.1x for the quarter and 1.4x for the first 9 months of the year. Our backlog reached a record high, close to $14 billion. Slide 4 shows the backlogs of both Subsea and Conventional and Renewables, which continue to increase in quality as we completed work won before 2022 and shift our focus to contracts with more favorable terms. We have a combined backlog for execution in 2026 of $6 billion, giving us over 80% visibility on next year's revenue. And now I'll pass over to Mark to run through the financial results. Mark Foley: Thank you, John, and good afternoon, everyone. I'll provide selective commentary on group, Subsea and Conventional and Renewables' financial performance in the third quarter before turning to the cash flow and financial guidance for 2025 and 2026. Slide 5 summarizes the group's revenue and adjusted EBITDA results for the third quarter, set in the context of recent quarterly performance. In the third quarter, revenue was $1.8 billion, in line with the high levels reported in the same quarter of the prior year. Adjusted EBITDA of $407 million, increased by 27% compared with the prior year period. And margin expanded by 460 basis points, to 22%. Net income was $109 million following depreciation and amortization of $175 million, net foreign exchange losses of $38 million, which were driven by noncash embedded derivatives. Net finance costs of $12 million. And taxation of $73 million. I'll cover the salient points concerning business unit performance in the next few slides. Slide 6 presents the key metrics for Subsea and Conventional. Revenue in the third quarter was $1.5 billion, representing growth of 6% year-on-year as high activity levels continued in Brazil, Türkiye and Norway. Adjusted EBITDA was $368 million, equating to a margin of 24%, an increase of 680 basis points from the same quarter last year. The margin improvement was underpinned by strong execution performance and high vessel utilization as well as the continued rebalancing of our portfolio towards projects with improved risk and reward characteristics. The results of Subsea and Conventional include an $11 million net income contribution from OneSubsea, in line with our expectations. Net operating income was $228 million, nearly 80% higher than the prior year period, equating to a net operating income margin of 15.1%. Selected Renewables performance metrics are shown on Slide 7. Revenue in the third quarter was $302 million, a reduction of 19% when compared with the high levels reported in the prior year period, which were driven by elevated activity in Taiwan, while in line with the second quarter of 2025. Activity progressed during the quarter at Dogger Bank C and East Anglia THREE in the U.K and at Revolution in the U.S. after a delayed start. Adjusted EBITDA was $52 million, equating to a margin of 17%, up 70 basis points from the same quarter last year. Net operating income was $21 million, representing a margin of 7%. Slide 8 shows the cash bridge for the third quarter. Net cash generated from operating activities was $283 million, which included an expected unfavorable movement in working capital of $82 million. Capital expenditure was $47 million, mainly associated with maintenance on vessels and equipment. Net cash used in financing activities was $123 million, which included lease payments of $79 million. At the end of the quarter, cash and cash equivalents increased by $132 million, to $546 million. Net debt was $505 million, including lease liabilities of $421 million, equating to a modest net debt to last 12 months adjusted EBITDA of 0.4x. The group had liquidity of $1.1 billion on the 30th of September. On the 6th of November, the company paid the second and last of its SEK 6.5 per share dividends to shareholders. Shareholders' returns this year represented solely by dividends amounted to approximately $376 million. To conclude the financials, we turn to Slide 7 -- sorry, Slide 9. We have refined certain guidance metrics for 2025. I will highlight the following favorable notable revisions. The upper and lower ends of revenue guidance have been narrowed by $100 million as we now expect revenue to be between $6.9 billion and $7.1 billion in the full year 2025. Given strong results in the first 9 months of the year, combined with high visibility and confidence in our execution performance, we have increased our guidance for adjusted EBITDA margin in 2025 to be between 20% and 21% from between 18% to 20%. We have also reduced our guidance for capital expenditure to a range from $300 million to $320 million. This reflects our continued focus on capital discipline as well as a rephasing of some cash capital expenditure from this year into 2026. Today, as is customary for Subsea 7 at the third quarter, we introduced initial guidance for next year. In 2026, we expect the group to continue to deliver growth in revenue and adjusted EBITDA. We anticipate revenue to be within a range from $7 billion to $7.4 billion with an adjusted EBITDA margin of approximately 22%. Capital expenditure is forecast to be between $350 million and $380 million, which includes rephasing of some capital expenditure from 2025, as mentioned some moments ago. Our confidence in this guidance is underpinned by the quality of our backlog which gives us over 80% visibility on revenue as well as the continued high tendering activity and the attractiveness of the prospects pipeline. I will now pass you back to John. John Evans: Thank you, Mark. On the next 2 slides, we have a couple of highlights from our portfolio of technology-led solutions. On Slide 10, we'll take a look at 4insights, developed by our 4Subsea business in Norway. 4insight is software that combines real-time data from vessels and weather feeds and uses advanced algorithms to automate operating decisions on board. The result is an extension of the windows of operability of our vessels and increased performance in project delivery through a reduction in the cost and schedule risks associated with waiting on weather. By automating the decision-making process, 4insight also enhances collaboration between marine and project crews and maximizes the efficiency of our operations. The software has been rolled out across part of our fleet and has received excellent feedback from our offshore and onshore teams. In 2025 to date, it has added 35 days of operation to Seven Vega, an uplift of over 10% compared to our standard planning assumptions. Our second highlight slide focuses on our unique bundle pipeline technology. Last quarter, we touched on this when we discussed our activity at Yggdrasil in Norway, which included the launch of a large bundle during the summer. By combining active heating, flow lines and the control systems into one towable bundle, we reduce the complexity of the Subsea architecture and offer a cost-effective alternative to traditional models. The solution requires the use of our proprietary lining as well as highly specialized welding from our team in Wick in Scotland. Subsea 7 is the only contractor with a proven track record of delivering production system bundles with over 90 installations to date. Repeat orders from clients, including Aker BP, BP, Chevron, Equinor and Shell, are a testament to the success of this unique solution and more broadly to the innovative solutions offered by Subsea 7's advanced engineering and fabrication capabilities. Now on to a review of our prospects on Slide 12 and 13. In Subsea, tendering activities remain high across our key regions with a combined prospect value of around $21 billion. Most of the projects on this map are long-cycle deepwater developments with favorable economics. Many carry strategic significance to both the operators and their host nations. They will be sanctioned based on a view of commodity prices beyond the next 5 years, sheltering them from the change in spot price of oil and gas. Overall, we are confident in the long-term outlook of our Subsea business with demand for our technology-led solutions expected to remain at high levels. On next slide, we have a summary of the fixed offshore wind projects that could bid in the U.K.'s Allocation Round 7, AR7. Whilst the maximum strike price of GBP 113 per megawatt hour was well received, the recently announced budget for AR7 was lower than hopeful by the industry. As I said last quarter, the U.K. is the largest single market in global offshore wind sector outside China. And with a number of other markets showing slower-than-anticipated growth, the ultimate outcome of the AR7 process will be a key driver for the medium-term momentum in the industry. Subsea 7 continues to support a number of key clients to optimize the AR7 developments whilst remaining selective in the contracts we pursue to safeguard our future profitability. To conclude, we'll turn to our final slide on Page 14. Subsea 7 finished the third quarter of 2025 with a record backlog of firm orders valued at nearly $14 billion. We've increased our guidance for 2025 and our guidance for continued growth in 2026 demonstrates our confidence in the outlook. Looking further ahead, we have a high conviction in the resilience of deepwater Subsea market and combined with a differentiated offering and a strong track record of delivery, this positions Subsea 7 for success. And with that, we'll be happy to take your questions. Operator: [Operator Instructions] We will take our first question, and the question comes from the line of Sebastian Erskine from Rothschild & Co Redburn. Sebastian Erskine: Congratulations on the results today and great to see the backlog at a record level. I'd like to just follow up on the Renewables business. So I guess we can expect a seasonal uplift in Renewables margins in 4Q, which is consistent with the new guide. But how should we think about the original kind of 14% to 16% EBITDA margin guidance into '26? And I guess linked to this, I mean, you mentioned it in the prepared remarks, but could you provide an update on the time lines associated with Allocation Round 7 as there appears to be some stalling progress? So yes, it would be great to get your thinking on that. John Evans: I'll ask Stuart to answer both those questions, please. Stuart Fitzgerald: Yes. So I can answer on the guidance first. So we're maintaining that guidance going forward into 2026. Also, worthwhile to comment about backlog position in terms of visibility through '26 and into '27 is particularly strong. Then on to the Allocation Round 7. So submissions from the developers in terms of the different projects that they put into the allocation round has been happening over the last week. So that milestone is essentially complete as we understand it, and the results of that to be announced around mid-January. So the next key milestone in the time line here is a mid-January announcement of outcomes. But the submissions to the best of our knowledge, are now made. Sebastian Erskine: Appreciate that, Stuart. And just if I can put another question, and I appreciate -- difficult one on the merger. We've seen the admission of kind of several interested third parties into the Brazilian antitrust process. Can you give us an update on that process and when we might expect to hear some ruling from CADE, if you're able to shed any light on that? And any other updates on the kind of geographies that you're submitting to, that would be helpful. John Evans: Yes, I'll take those. As we've said many times on these calls, we won't be giving a sort of blow-by-blow account here, but let's stand back. When we announced the merger, initially with the signing of the MoU at the end of February, we targeted the second half of 2026, full completion. The CADE process is following the steps that we had expected it to follow. We make our submissions. Interested parties then identify themselves as interested parties. There is also a wider market consultation, including suppliers, our peers and our clients, and that process is underway. We will then have an opportunity to discuss with CADE our responses to the different topics that are raised. And then CADE will go into their review process next year. So we continue to believe that the time line for the merger and the critical path is through CADE and Brazil, should allow us to complete by the second half of 2026. Operator: We will take our next question. The next question comes from the line of Victoria McCulloch from RBC. Victoria McCulloch: Starting as well on Renewables. Can you just talk about the contribution for 2026? I appreciate you don't give it specifically, but on the basis of Stuart's commentary, should we then see the driver for the growth coming from the Subsea and Conventional business? And then, John, maybe a bit sort of larger sort of picture -- views. Can you give us a bit of color about how you've seen the tendering pipeline and engagement with your customers over the last 3 months? It remains a fairly unpredictable macro environment, but it would be interesting to hear the conversations you're having with the engagement you have with customers. John Evans: Yes. Just to take the Renewables, Stuart was clear that we are comfortable with a guidance range of 14% to 16% EBITDA in Renewables in 2026. And as he says, he has a high coverage of work already on the books. So again, I don't think we will give any further information on that, Victoria, but we're comfortable that we have a good position in Renewables in '26, and as Stuart alluded to, also going into 2027. So for us, it's more about what it is in '28 and '29, and AR7 will be part of understanding that in the first quarter of next year. Coming to client interactions, I was down in Brazil at Rio OTC about 3 weeks ago. We've had a number of client discussions, which, as you'd expect, continue. We're seeing very little change in our clients' views. They are clear that they've got a number of large Subsea projects out there for bid or to be bid. The dialogue is all around timing of their bids, timing of their projects, what early commitments do they need to make, vessels availability. It's the traditional questions that we get in a busy market, Victoria. In Brazil, discussions with Petrobras. We expect to see the Petrobras' 5-year plan, announced in the next week or so, continued focus on Subsea projects being the main engine and the main driver for Petrobras. So their conversations are clear. A lot of other clients are about some big opportunities that they see. We're bidding work in Namibia. We're bidding work in Mozambique. And these were countries that weren't on our radar screen a couple of years ago. And down in Türkiye, in the first week in December. And again, that's about our ships are going in to do Phase 2. As you're aware, we picked up Phase 3, but there are other phases of Sakarya to come as well. And we continue to work with Equinor as planned on the developments of Wisting and Bay du Nord. The 2 big developments, one in the north of Norway, one in Canada. And they're quietly going on exactly as we had planned with Equinor that we'd be working with them, looking at multiple different scenarios. So long story short, we're not seeing a real change. And the other thing that we touched on in the last quarter was the pleasant surprise to see a number of new projects coming into Norway. The project with ConocoPhillips, which we expect to get sanctioned here at the end of the year. So there are very creative projects out there with a number of clients, and we remain confident. The only geography where that is not the case is the U.K., but I think everybody is clear that unless something changes in next month's budget, probably the U.K. is a bit out of sorts with the rest of the world. Victoria McCulloch: And maybe just a follow-up on that is, it was interesting to hear, obviously, you've shown us a lots about the pipeline bundles that you've done for Yggdrasil, for Aker BP and how that's optimizing the CapEx and OpEx for your customer. I guess, how much, I guess, new ideas in AI are customers looking for and sort of new wins from that? Because I guess, AI is such a massive theme globally, but how much of that is part of conversations in terms of they're trying to get economics better because of AI? John Evans: Yes. Our clients are always interested. Yggdrasil is an interesting example that we're using every single technology Subsea 7 has got, that huge greenfield development. We've got bundles in there. We've got traditional relay in there. We've got heated pipelines. We've got cool pipelines in the system. We've got everything in there. So that's why the customers come to us, is that we have a full toolkit, a full technology capability. If we come on to 4insight. 4insight is a form of AI technology that uses real-time data, analyzes huge volumes of data to give our offshore crews clarity as to what's going to happen in the next 24 hours and how they should think about whether we continue into the good weather, or do we stop, do we start and such like. Historically, that's all been done in a very static mode. Before we go offshore, we plan different scenarios. We take the scenarios out there. We have a book which tells us what we can and can't do. And if we're inside the parameters, we can work if we're outside the parameters. What 4insight has been is, say, let's take the actual parameters we got here and the actual parameters forecast and what you've had in the last 24 hours and exactly which way the weather is hitting the ship directionally and such like and can we continue pipeline. And again, as I said in my prepared remarks, we are finding some significant improvements. So it's a combination of the portfolio of technologies we've got, a real productivity to also just challenge the norms. We're also doing quite a bit of work with some of the regulators and some of the certifying authorities on how we run our DP vessels. dynamic position, rules were written in the 1980s when fuel was free. Nobody worried about emissions. And therefore, today, we are now finding different ways to run these ships, but we need the codes to change to do that. That allows us to improve our fuel efficiency, which our clients pay for, also reduces our emissions, but we need the codes to change to reflect that what was good in the '80s doesn't necessarily have to follow in the 2025 that we're in. So there's a lot of great things happening, Victoria, a lot of great engagement with our clients and with it, with every client on those type of technologies. So it's a good place that the industry is in. And as we know, deepwater subsea is one of the lowest cost per barrels lifted of any form of oil or gas out there. So I think we're in the right place at the right time. Operator: We will take our next question, and the question comes from the line of Kevin Roger from Kepler Cheuvreux. Kevin Roger: The first one is maybe in 2 way because when I look at the backlog execution for 2026, you are telling us that roughly your visibility is up by 13%, but the top line guidance imply only 3% growth in '26 versus '25. So can you give us a bit of color on that why the backlog for execution is up 13%, but the top line guidance is up by 3%? Is it related to the fleet utilization rate that is at the end already fully booked? Just to understand the rationale around the top line. And the second one, John, you roughly mentioned it, big project from Equinor for 2026. There has been some noise notably this morning saying that Equinor is currently hitting the market for fabrication tools. So just to understand on your side, would it be a kind of full scope, or then it will be phase by phase, meaning that for '26, it will be more than $1 billion as you have identified the projects in the pipeline or a smaller phase because that's going to be done in different phases? John Evans: Yes. The backlog in 2026, I guess, which just reflects the fact that we're in a very busy market, and clients have committed to us earlier. We have a finite capacity, which is why the revenue doesn't grow as much. We would expect, of course, next year to have 100% backlog by the end of the year. So it's more of a timing question, Kevin. A lot of our clients have engaged with us early, and that's been going for a number of years now, making commitments to make sure that they have capacity available as they go into '26 and '27. So it's just a timing disconnect more than anything, not a fundamental issue. This quarter, we're running at 87% utilization. We're getting towards the highest end of what we can do, and we've discussed that a number of times on this call. The key to us is post-merger is to reduce the amount of transits between projects and such like. That's one of the real attractions for a number of our clients, is that there are more days available if you don't move these assets around. But at the moment, we've got the fleet that we've got. We know very well where they're going to be placed next year. So I don't see it as a disconnect. The revenue will be the revenue in the range that we've given. And the backlog is just higher than we would normally expect. But equally, in my memory, when the market gets busy, people secure their assets earlier. Taking your second question, Bay du Nord is a project that for us is done seasonally over multiple seasons, and we won't be offshore until later on this decade, and that's always been the case. And because of the weather conditions out there, we can do about 100 days per year. So it's a multiyear project. And next year, we'll continue to be in this work mode that we're in, which is working with Equinor on the field layouts and allowing them to go through their different decision gates, DG2 and DG3 that they need to go through. So for us, Bay du Nord has continued working with them in the mode that we've been in for a couple of years. And so they will make their key decisions, I suspect, in '27 when they have all their information about their fabrication, their local content as well as the SURF packages. What I would say, I think there's been good work between the SIA and Equinor over a couple of years, and there's been some very interesting thinking about how to phase the project and how it comes together. So coming back to your initial question, Kevin, it was always a phased project because the weather conditions out there and the remoteness of that part of the Atlantic offshore, Canada means that you have to do 100-day slots per year out there. And it's just how you sequence it and how you develop the wells and the reservoir that goes with it is the key to probably unlocking the economics in that field. Operator: Your next question comes from the line of Guilherme Levy from Morgan Stanley. Guilherme Levy: First one, thinking about your guidance, how much would you say the lower figure this year is driven by activity that might have been -- might have slipped into 2026? And if you can perhaps share with us what sort of activity that is? And then thinking about 2026, is this a reasonable level for us to think about your capital needs over the long term? Or is there any nonrecurring factor in the 2026 figures that we have? And then second one, thinking about Brazil. Earlier this year, there was a headline saying that Petrobras was keen to do a long-term lease of a vessel to do the installation of rigid pipes in the [ Pre-Salt ] itself. Do you feel like this is a live discussion? Are they actively looking to do that? Or do you feel like that was just a headline that didn't really evolve over the course of the year? John Evans: I guess the question -- the first question asking about the sort of guidance between this year and next year on revenue and such like. You're very familiar with our projects. They work on a percentage of completeness at the end of -- completion at the end of each year. It varies big projects, a couple of percentage have quite a large influence on dollars. There's nothing to be concerned about. It's just how the different sequences of our projects are coming into play. In terms of 2026, as I answered Kevin previously, we're reasonably clear on how it will fit together. We've given you a range of revenues that we are comfortable with giving the market here, a high level of visibility as to how that fits and even the work that isn't in the backlog yet, we're pretty clear in our minds how that will sort of come together. And of course, as we've done consistently, if things change, we will give the market an update on each quarter as we see changes. Lastly, Petrobras are talking to the market about potentially the long-term lease of a rigid pipelay ship. Interesting enough, we had a contract many years ago, in 2012 to 2017, to do exactly the same, which was called hybrid steel, which was a contract that Subsea 7 had with Petrobras. So I'm old enough to know what those looks like, and we've done it before. Again, when Petrobras comes to the market, we will respond, and we'd be interested in that. But you just need to remember that the time scale is probably 4 or 5 major projects that need a pipelay each. So again, if they go down this path -- and I do understand. We've been speaking to them. This is about the timing of the arrivals of the FPSO, and the challenges of how you run different projects with different time scales with different arrivals of FPSOs. So maybe the hangoffs of the riser with a vessel more akin to a PLSV, which is more of a day rate contract where they can control it that way. So I understand fully the logic. It makes a lot of sense, and we will certainly be interested in the opportunity set should that come to the market next year. Guilherme Levy: The first one, sorry, I was actually just referring to your new CapEx guidance. So yes, just thinking about your 2026 CapEx guidance, is there any reason why 2027 should be materially different from that? Mark Foley: It really is a function of the vessels that have to go through their obligatory dry docking. So as you know, depending on where they are in the cycle, our CapEx increases and decreases. The majority of our CapEx is directed towards vessels and equipment. So I think we provided updated guidance for this year, slightly lower, driven by really strict capital discipline within the organization as well as a late phasing, a displacement of certain cash, capital expenditure into 2026 and then an amount that we've guided to for next year. So again, it will vary year-on-year depending upon the requirements of the vessels as well as the opportunities that we see in terms of growth, capital expenditure around minor modifications, around supplementary additions to equipment, et cetera. So hopefully, that provides some additional color. Operator: Your next question comes from the line of Alejandra Magana from JPMorgan. Alejandra Magana: On your SURF and Conventional margin strength, can you give us a sense of how much of the uplift reflects execution outperformance versus the roll-off of older, lower-margin projects? And how much reflects structurally better commercial terms or pricing power on more recent awards? And as the 2026 backlog converts, how do these contracts differ commercially from the ones you've executed this year? John Evans: Okay. I won't go into the margin mix. As I said in my prepared remarks, it's a bit of everything. We are taking less projects, taken before 2022 into the portfolio this year, and there are none of those as we get into next year. As we discussed very openly on this market, each project is bid individually and therefore, then there is a mixture of margins in each of the different projects. Sometimes some projects suit us because the availability of equipment, timing and clients' decision-making, potential delays in other projects. So again, there's quite a complex mix in that. And lastly, as we've discussed, we've had very good execution throughout this year, and I'm very pleased with the execution that we've got. So when all these things come together, we get a very good margin in the business. But we won't discuss the segregation of those items. As we go into 2026, again, it's about the stack of projects that we've got in there. There is nothing pre-'22 in the mix. So it's the packages of work that we brought in over the last 3 years at the various stages that give us the margin that we expect to see next year. And so we have given you clarity through the guidance as to what revenue range, and we expect to be at around 22% next year EBITDA on the portfolio that we've got. And just to close out on that, we're reasonably confident in that because we've got over 80% of that margin already in the books. And as I touched on earlier, I'm reasonably sure I know how the remaining 20% will fit. The remaining 20% part of that is elements such as call-off agreements we have with a number of clients where we're already under contract. We know what the margin is, but we haven't received the call offers yet. So confidence level is pretty high here. And we'll just get into '26 and let it run and see how it goes from there. Alejandra Magana: Very clear. And then on the new Brazil PLSV contracts, can you give us a sense of how the new rates compare with prior agreements? Do you expect a step-up in PLSV earnings over the next few years? John Evans: Yes. So they were bid a year ago. That is information where if you go through the press releases that we've released and our competitors have released, it's all public information. You can -- you know that each contract is roughly 1,000 days. So they were better than we had for certain, and all 4 PLSVs are now on the new contracts. Just last week, the fourth of our PLSVs went on their new agreements. So next year, part of the uplift in our margin is around the fact that the mix of work that we've got next year, as we discussed earlier, is a better mix. So the PLSVs are public domain information. So if you go back and dig through those, you can work the figures out from where we were and where we are now. Operator: [Operator Instructions]. Your next question comes from the line of Erik Aspen Fossa from SB1 Markets. Erik Aspen Fossa: I have 2 questions at least. First for you, John. I think the understanding so far has been that we should expect a slight increase in activity from '25 to '26. And I'm just wondering how we should think about this into 2027 on a stand-alone basis for Subsea 7? Is there still room for further increases, for example, through fleet optimization and other such things? Or are we kind of plateauing now in terms of how much you can do with the fleet that you have? John Evans: Okay, Eric, I think what's interesting for us is that we have a very strong backlog for '27. If you just look at the data we got $3.8 billion of backlog for 2027, which is a very good place for us to be looking this far ahead. There are some changes that we're doing next year. It's also about how we upgrade the margins in our projects. There has been some work that we've been doing, for example, on some Jones Act work that we won't continue next year. So we'll return those chartered vessels to the owners because we can't get the margins that we expect. We've returned the Champion in the Middle East. And so for us, it's also about just being very, very selective about which assets we deploy, how we deploy them and the returns that we get, and the risks that we take to earn those returns. So there is room for improvement. There's always room. But now it's about taking the asset base that we've got, as Mark said, being pretty brutal about what it's doing, where it's working, what it's returning for us. So you will see some changes in the fleet next year, some -- actually reductions in the size of our fleet next year whilst we're increasing the revenue. That's our task at the moment, is to maximize what we have in the cycles that we work in, Eric. Erik Aspen Fossa: I think you also sort of started to answer my second question, and that was on the lease costs that decreased, slightly now this quarter. And I'm just wondering how we should view that into 2026, should it come down because of what you actually just explained now, John? Mark Foley: Yes, Eric. We will see a directional downward movement in lease liability cash impact in 2026 as a result of releasing some of the lease vessels that we have in the portfolio today. As you know, out of the 41 vessels, we have 11 leased vessels, and some of those will be going back at the end of the charter period to the owners. Erik Aspen Fossa: Was that just the Jones Act vessels, or are there any other vessels? Mark Foley: All the vessels fleet, Eric. John Evans: Yes. So I discussed the Champion, it was leased, and that was in the Middle East. That has already come back. There will be a couple of Jones Act vessels going back, and there will be at least one -- further one going back, but we're not ready to include that at the moment. But that's the direction of travel, as Mark is saying, that we're working our way through, making sure that if we bring additional tonnage in, first of all, is it adding value in the portfolio and can we -- what we're trying to do here is to grow the revenue, but also make sure we maintain the margin. So that's what this fine-tuning that we're doing is about. But that also brings our lease obligation line down, which again, I know has a lot of high focus in the market as well. Erik Aspen Fossa: Just lastly, could you give some sort of indication on kind of the level that we could think about next year on the lease payments? Mark Foley: It will be notably lower than we have incurred so far this year, Eric. I think we've spoken about it every quarter. We'll probably just be under $300 million cash out this year, principal plus interest, and we've given a flavor of the vessels that, all other things being equal, we'll leave the fleet. I'll allow you to apply your assumptions in terms of what that means around impact -- favorable impact to cash. Operator: This concludes today's question-and-answer session. I'll now hand back to John Evans for closing remarks. John Evans: Well, thank you very much for joining us. We have an interesting story to tell, and we appreciate your continued support and the questions that you ask and the papers that you publish about Subsea 7. We have a very good year ahead of us, I believe, in 2026. We tried to frame that for you and try to give you information to allow you to model it and look ahead. And we continue to be in some very positive discussions. Stuart has also been very open about the opportunity sets in Renewables in '28 and '29, which will become clearer in Q1 next year. So hopefully, when we meet with our Q4 results at the end of February, early March time, we will be able to give you more updates on how we see AR7 and what that means for Seaway 7. So as ever, thank you very much for your support and your questions, and we shall see you again soon. Thank you. Goodbye. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: Good morning, and welcome to Cadeler's Third Quarter 2025 Earnings Presentation. Presenting today are Mikkel Gleerup, Chief Executive Officer; and Peter Brogaard, Chief Financial Officer. Please be reminded that the presenters' remarks today will include forward-looking statements. Actual results may differ materially from those contemplated. The risks and uncertainties that could cause Cadeler's results to differ materially from today's forward-looking statements include those detailed in Cadeler's annual report on Form 20-F on file with the United States Securities and Exchange Commission. Any forward-looking statements made this morning are based on assumptions as of today, and Cadeler undertakes no obligation to update these statements as a result of new information or future events. This morning's presentation includes both IFRS and certain non-IFRS financial measures. A reconciliation of non-IFRS financial measures to the nearest IFRS equivalent is provided in Cadeler's annual report. The annual report and today's earnings presentation are available on Cadeler's website at cadeler.com/investor. We ask that you please hold all questions until the completion of the formal remarks. At which time, you will be given instructions for the question and answer session. As a reminder, this call is being recorded today. If you have any objections, please disconnect at this time. Mikkel Gleerup, you may begin. Mikkel Gleerup: Thank you very much, and welcome to this Q3 presentation from Cadeler. Thanks for everybody who's dialing in for listening to us today. With me today, I have Peter as normal, and Peter will take you through the financial section of the presentation. So just the standard disclaimer. And we can say that this quarter, the highlights of the third quarter of 2025, we can say that it has been financial performance in line with our expectations. We have, in this quarter, also signed the third full scope foundation T&I contract and also 2 turbine installation T&I contracts. We have delivered 3 of our 4 newbuilds scheduled for delivery in 2025 already. And we have the remaining newbuild, the Wind Mover on track for delivery, and she is delivering current expectation within the next couple of weeks. We have had very strong utilization in the third quarter. We have had 92% utilization. And we believe that, as we have always said that, that is a strong measure of our business, and we are working across the globe in both U.S., in Europe and in Asia. And we are continuing with very strong execution. We have the Wind Ally currently mobilizing for the Hornsea 3 foundation T&I project, and we have the Wind Keeper now here in Denmark at Fayard and also upgrading before she is embarking on her long-term contract with Vestas. In terms of commercial highlights of the third quarter 2025, the vessels have been working out there, and we are starting with the Wind Orca that has been performing work on the He Dreiht project for Vestas. The Wind Osprey has done an O&M campaign for Vestas and are now installing a wind turbine installation project on Baltic Power in Poland. Scylla has continued to work on Revolution Wind in the U.S. for Ørsted and Wind Zaratan completed an O&M campaign in Asia and are now getting ready for her next assignments in the next year. The Wind Peak is also continuing to install on the Sofia wind farm owned by RWE where we are working for Siemens Gamesa. Wind Maker is working on Greater Changhua in Asia for Ørsted. And Wind Pace have been executing an O&M campaign basically since she was delivered from the yard, and she's working for GE Vernova. The Wind Keeper, as I said, has arrived in Denmark on schedule and is currently undertaking a complex upgrade scope. And we do believe that we will see her on project in the first quarter next year. Wind Ally delivered 7 weeks ahead of schedule from the yard and sailed directly to the next mobilization port where she's mobilizing all her foundation mission equipment, getting her ready for the Hornsea 3 foundation installation project. Cadeler sits on a significant backlog across key markets, both in U.S. and Asia, but certainly also in Europe. And we have recently disclosed a very large foundation project with an undisclosed client for execution in 2029, which is something that we are very, very pleased with. I think it's a verification of the concept we are running on the foundation side where the biggest clients in our industry, they are coming to us for full T&I on foundation installation, both near term, midterm and also in the longer term. We will continue to work very, very diligently for more foundation work, but also for more WTG work. And as we do that, we will also continue to build Nexra, our O&M vehicle. And we expect that the backlog will continue to be strong across the years that we are sailing through now. The backlog has basically grown since we listed the business, and we are now standing today at a backlog of almost EUR 2.9 billion, where 78% of that has reached FID. We believe that, that is a quality sign that so much of our backlog has reached FID and also that we are continuing to grow the backlog. We have discussed before that we see 2027 and 2028 as years with slightly more competition for the projects and also an expected lower utilization degree on the fleet. But we are, of course, still working very, very hard to continue to get the best projects in these years so we can continue the journey with our fleet, with our company and our people. In terms of the newbuilds out there, we have Wind Mover that are delivering here in Q4 this year. This is the last delivery this year. And when this is delivered, we will have totally taken delivery of 5 vessels this year, including the Wind Keeper, which was an additional delivery this year that was unexpected at the beginning of the year. And it's very, very close to completion, has already completed the sea trials, and we are expecting, as I said before, to deliver the vessel in the next couple of weeks. The Wind Pace is on track. And she -- we expect that she will be floated out of the dry dock here in December 2025 and delivery is still planned for the third quarter 2026, but there are opportunities for us to potentially advance that should the market need that in 2026. On Wind Apex, we still look at the delivery in Q2 2027, and we are following the plan there exactly as on the other vessels. The Wind Keeper, as I said, has arrived at Fayard in Denmark, and we are on schedule. It is a big upgrade scope we are doing on the vessel, but we need to make sure that these vessels operate to catalyst standards from the beginning. We are working with one of our esteemed clients with Vestas, and we want to make sure that Vestas get a real Cadeler experience on the Wind Keeper from the beginning. The primary scope of the Wind Keeper will be O&M services, but with the crane she has and the leg length she has and the carrying capacity she has, she can also embark on installation scopes. For us, it's important that we make sure that we drive a lot of value out of this investment, and we believe that with what we have seen so far that, that is very, very much a strong opportunity for us and for our client in collaboration. At this point, I will hand over to Peter for the financial highlights in this quarter. Peter Hansen: Thank you very much, Mikkel. Yes, financial highlights for Q3. It was a very, very strong quarter that reflects high utilization and cost under control in comparison to last year, of course, we have 3 more vessels in operations, the 2 B Class vessels Wind Peak and Pace and Wind Maker. Revenue was EUR 154.3 million. Equity ratio is still with the more leveraged balance sheet with deliveries and drawdown on our facilities still very solid 47.3%, utilization very high at 92.2%, which is very, very good for the quarter. Market cap EUR 1.4 billion, approximately 3x the guided EBITDA for the year. EBITDA for the quarter, EUR 109.1 million. Cash flow from operation activities, EUR 214 million. And as Mikkel explained, a backlog record high at EUR 2.9 billion, 3 months daily average turnover is EUR 5.4 million. If we look at the P&L for Q3, yes, again, it really reflects that there are more vessels in operations, Wind Peak, Wind Pace, Wind Maker. And it is a picture that we have seen quarter-by-quarter with a very strong results once a vessel goes into operations, our financials take a step up revenue, EUR 154.2 million, and that is due to, of course, the high utilization, but also the additional vessels. Cost of sales under control, EUR 38,000 approximately for the quarter, a little bit up as compared to last year, but also 2 vessels in operations in the U.S. with a little bit of higher OpEx per day, but still below the EUR 14,000 mark per day. SG&A also up due to what we have been communicated for some time now that we are building the organization exactly to what we see now. We have more vessels in operation and also the upcoming foundation projects. EBITDA, as said, is EUR 109 million, which is more than double what we had last year. P&L for the 9 months from the 1st of Jan to 13th of September, it is more or less the same story. In addition to that, you can see that the OpEx for the year is EUR 34,000 per day, which is also reflecting that it is operation under control. As communicated around first half report, we also have received these termination fees for the termination of a long-term agreement on a postponed -- including on a postponed project Hornsea 4. Balance sheet, yes, reflecting the deliveries and we have taken so far this year, 3 new builds and the Wind Keeper. But as said, still equity ratio at a very comfortable level. This is a slide we have shown a couple of times. It really shows that we have sufficient funding to go through the remaining CapEx program we have with the Mover with 2 A Class vessels coming in, in Mover in Q4 '25 and Ace in '26 and Apex in '27. So we have quite a strong balance sheet and cash and liquidity available. And other story here is that we still see a lot of support from the banks. I think it's unchanged strong support we have seen throughout the last couple of years. Apex is not committed financing yet because it's delivered in '27. So we will start financing that one in '26 and have that in place approximately 1 year before delivery in order to not incur too much commitment fees on that one, but we see exactly the same strong support and interest from the banks also for the Apex. This is the financing overview. What is new here is that we had a Wind Keeper bridge facility that we took when we signed the agreement on the acquisition of Wind Keeper, and we have now a Wind Keeper syndicated facility in place to replace that. That was not done by end of Q3, but that is something that has happened subsequently. Full year outlook for '25. We maintain the outlook that we issued around first half year report after the termination of the long-term agreement. Of course, we are way along into the year, and there's not a lot of uncertainties and judgments left. However, we -- what can fluctuate here is how much of the T&I scope of -- on T3 that falls into '25, '26, '27, that is something that can move a little bit, but we maintain the guidance from half year before. Over to you, Mikkel. Mikkel Gleerup: Thank you, Peter. In terms of commercial outlook for the business, I think what we can say in terms of our view on the market, we get a lot of questions on this and rightfully so. We do see a recalibration. We still see strong momentum, especially in the inner years and in the outer years with a period in between where the momentum is weaker. And what do I mean by that? Let me first talk about the inner years. I think it's fair to say that at the moment, there are several projects out there that don't have an installation solution or an O&M solution at the moment, and they are still looking in the market. In '26 and also in '27, it is becoming increasingly difficult to get a solution and especially if that solution is a solution where it's the same vessel that does everything. Of course, if you're willing to piece meal it together, then you can find a solution still. But this is -- this will be the next step. I think '26, close to impossible at the moment. And in '27, it is becoming more and more something that you have to put together to deliver a full solution to clients. So we are seeing that in the middle year, so the second half of '27 and also in '28, that some of the projects there have been shifting to the right. And that means that there are lower-than-expected utilization in this period. But we are still seeing a significant outbuild in '29 and forward. And as we have just shown the market as well, we have signed a big contract for '29, and we see actually that some developers that would like to secure their capacity for this period, the '29, 2030, 2031 period sooner rather than later to not miss out on the capacity in those years. So -- of course, a lot is still pending on the auctions that are coming like auction round 7 and auction round 8. But we do see that also there is support from governments. In Denmark, for example, there have been support on 2 of the offshore projects to make them increasingly attractive to the market. And hence, we also do believe that there will be successful bidding in Denmark around the auction. We believe that it's fundamentally important to say also that even with the adjusted targets, we are still seeing a large outbuild of offshore wind in this decade. And from next decade, we do expect that the curve will increase in its steepness and more will be outbuilt as we come into that area. And as we say at the bottom here, we do expect a vessel undersupply towards the end of the decade and the beginning of the next decade. In terms of capacity and what we see in the market and what others are seeing in the market, we are seeing a different reality from whomever you ask. And we have tried to show here what the various consultants and analysts that are looking at the market. When they look at the worldwide market, excluding China, what are they saying that will be installed before 2031. And no matter what line you're taking here, there is a significant increase from where we are today and to where we will be when we are into the next decade. So I think that Cadeler's focus is to grab the right projects, the best projects and make sure that we are running on as high utilization profile on our vessels as possible. And I think that we -- with the plan that we have laid out also for the middle years, the '27, '28 years that we are on a mission now to close these years in as fast as possible with the best projects possible in these years. It is a fact that there are more competition in '28 than we expected due to missed auction rounds and due to projects being shifted to the right, but it doesn't mean that there's no opportunity. And I think that, that is the important message from us that is that there are opportunities, and we are fighting for those opportunities, and we will continue to do so. Europe will continue to be the leader in the outbuild, but we also do see APAC continuing outbuild and especially Korea is coming in that market in addition to what we have seen in Taiwan and in Japan. Recently, there has also been a European developer signing a development agreement in another Asian country, but we don't believe that, that will have an impact in this decade. We still have the largest fleet in the industry, and we believe that, that fleet and the flexibility, predictability and affordability that it gives our clients is something that they are having a preference for. We are still active in a wide range of tenders across all years out in the future, and we are fighting as hard as we can to make sure that we deliver the best value and the best projects to our investors. That is what we come to work for and what we are fighting for every day. But we do believe that the offering that we can offer to our clients has a value and also something that will drive value for us and our investors. We have also shown on this slide that the supply has gone down since we last addressed the investors in a group setting. The Maersk Offshore Wind vessel, the contract between Maersk and Seatrium was terminated. And hence, at the moment, we do not consider that vessel as being in supply in the market and hence, the supply has gone down. In terms of key investment highlights, as I already said, largest and most versatile and flexible fleet, this enables a lot of different things for our clients, both in terms of cost utilization, efficiency and project derisking. And we see that all of these matters are something that we are currently discussing with clients for current projects, for projects in the near, the mid and the long term. We are active in all of these time lines. We have a highly experienced team, and we have been conservative in how we have grown the team, and that is also why we are confident that we have the right-sized team for what we are seeing in front of us now. We have good relationship with clients and with contacts in general in the industry, and we believe that we are in a very, very good situation in terms of negotiating projects with our clients. We believe we have a resilient global platform. We believe that we are able to spread risk on more units and hence, that we are also both from an operational risk, but also from a, let's say, a market risk in a good position. And we do see also that the O&M market is something that is taking an increased share of the fleet in terms of either campaigns on turbines or ad hoc service work that is needed for main component replacements on the products already installed out in the market. We do see an undersupply of capable vessels, in particular, on foundations in 2029 and WTG vessels from 2030. And that is something we can already start to see now because we are basically bidding some of those projects already now, and we see, as I said, also, a very strong growth in the demand for O&M services. So all in all, with the reality of the middle years, the second half of '27 and '28, we believe that we are in a market that in the short term will be very, very strong and very, very busy where every single vessel day will be captured. Then we are coming into a period of more balanced work and more balanced utilization and then coming into a market again that is picking up in '29 with the projects we currently see out there. We have a strong track record in the capital markets, and we are backed by a record high order backlog of EUR 2.9 billion and we believe that, that order backlog provides a lot of earnings visibility. And as I read in some of the reports this morning that came out, more than EUR 700 million of that is in the next 12 months. So also in terms of what is covered for the next 12 months, we are also in a very, very good position. So I think from that point, very strong near term, slightly weaker middle term and then a pickup again in the longer term. That is what we have for you today. So from this point on, we are happy to take questions. Operator: [Operator Instructions] Our first question is from Martin Huseby Karlsen from DNB. Martin Karlsen: I think you did a pretty good job talking about 2028 being a transition year, but I'm curious to hear a little bit on your confidence level for '29 and '30 seeing higher volumes. Is that related specifically to some events out there? Or is it in general contingent upon more government and political support for offshore wind in Europe? Mikkel Gleerup: Yes. Thank you, Martin. Good question. I think the confidence level is primarily built on the number of projects we are bidding at the moment, but also how our clients are willing to commit to these bids if they can secure capacity. I think that for -- obviously, something like the U.K. round 7 auction, I know that the budget was for some in the market lower than what was expected. But I still believe that with the budget, a significant amount of projects can be approved. And for us, it's about being involved in the right projects, but also a general belief from the projects that are currently tendering in those years and willing to commit to those years, we form an overall view that we see and especially on '29 on foundations that there is or will be potentially a situation where not everybody can be served in that year. Martin Karlsen: Good. And then as a follow-up, in terms of positioning Cadeler for the next, call it, next couple of years in terms of backlog, '28 looks maybe to be a little bit challenging. But when you get into '29 and '30 and there is quite a lot of uncertainty in the industry as a whole, could you talk a little bit to how you perceive or get comments from clients with respect to your positioning, having a large fleet of vessels and also being able to do both foundations and turbine versus some of the single or 2 vessel companies out there? Mikkel Gleerup: Yes. I think that, that is something that is certainly valued highly by the clients that there is a degree of predictability and safety in the supply side because I think that even for a year like '28 where some developers, they have one project to execute, it is very, very important that, that project goes to plan. And I think that we see that -- and we also feel very much from the conversations we have with our clients that it is a lot around our ability to deliver, our ability to guarantee vessel and potentially backup vessels if something should go wrong, that matters more than anything else. We oftentimes get the question, how much do you discuss price with your clients? And I would actually still say that price is not the main thing that we are discussing with our clients, whereas it is true that there is, of course, more pressure in '28 because we are more fighting for fewer projects. So that's a natural function. But I think that there are realities on both sides of that. So I think, firstly, it depends a lot on which developer are we talking to. And secondly, also what kind of project is it that they want to execute. But particularly on the foundation side, it's a confidence in the delivery. And on the WTG side, it's also this whole, how can we back up around the turbine OEMs should they have problems, for example. So I think that those are things that we are discussing. Martin Karlsen: And you touched a little bit on it, my next question in your answer already. But in terms of pricing, there's been at least from the outside, pretty solid pricing for '26, '27 execution, then you announced recently work for '29, '30, which also seem to be at a good pricing. Can you kind of help us understand that in the context of '28 demand looking a little bit softer? Mikkel Gleerup: And I think again, it depends a lot where you're looking. If you're looking in Asia, I think that we are still seeing a tighter supply and demand balance even in '28 compared to rest of the world. But I would say in Europe, we are seeing that in '28, the prices are slightly more under pressure, and you need to be sharper in order to secure projects there. So in '28, I would argue that price is a matter because obviously, if you have a project in 2028, you also know that there are more companies that can do it for you than currently there are projects. And hence, that drives, if not a downward pressure on the prices, then at least a stabilization of prices at least. But I think that it is an overall evaluation criteria. It's -- as I've said before, it's hard to evaluate it on a daily rate basis. So I cannot tell you that it has gone down from this to this. But I think it's more for the overall view on the project, but it doesn't mean that it's not still something that is attractive for us to do. Operator: Our next question is from Jamie Franklin from Jefferies. Jamie Franklin: So firstly, just focusing on 4Q. You mentioned obviously that Hornsea 3 is probably the biggest variable in terms of where you end up within your full year guidance range. Could you maybe just give us a bit more color on the scope currently being worked on Hornsea 3? And then as you move into 2026, what is your kind of current expectation in terms of timing for first monopile installation, please? And then the second question is just for Peter. In terms of the cash flow for 4Q, can you give us any indication of what to expect in terms of working capital, a pretty decent inflow in 3Q? Should we expect that again in 4Q? And similarly, on CapEx, what are kind of the main components to expect in 4Q? Is it just a final installment of Wind Mover? Or are there going to be some Wind Keeper upgrade CapEx as well? Peter Hansen: Yes. If we take the last question first. Thank you, Jamie. CapEx Q4, that is, of course, the Mover. And then it's mission equipment on Wind Ally, I think. And then, of course, what is also coming every quarter is these capitalized borrowing costs. But on these 2, it will be around EUR 320 million so around that, but predominantly coming from the move of working capital. Of course, Q3 is a little bit of a special quarter for working capital because it goes down significantly due to that we have received the termination fees on long-term agreement cancellation that was sitting as an asset at the half year, end of June, and we received the money in Q3. So there was an inflow there. If you isolate that, it's pretty much the same picture we will see in Q4 as we have seen in Q3. We have modest growth in working capital or same level. That is what we see. What we are seeing on -- the transport and installation scope, we are doing in '26, that is, of course, the planning and engineering, but we're also starting on the transportation scope in Q4. So that is what we see the first monopile -- maybe you can answer that... Mikkel Gleerup: Yes. I can answer that, we are not allowed to tell you because it's Ørsted that is having that under their announcement criteria, so to speak. So we are not allowed to guide you towards when the first pile is in the water. What I can say is that we are absolutely on plan on Hornsea 3 and that we follow all our planned deliveries on target and on budget at this stage, which is very, very pleasing because, of course, at this stage, we have delivered many of the engineering scopes that we have been working on for years and years. And this includes the transportation frames for the secondary steel, the transportation frames for the piles, the mission equipment for the vessel and the vessel is mobilizing at the moment. At the same time, we are preparing 2 ports, the Port of Tyne for secondary steel where the Wind Orca will operate from and Tees work where the Wind Ally will work from loading out piles. So a lot of things are going on. And we consider at the moment that we are in full execution on Hornsea 3. But of course, the Ally will come in, in the first quarter next year and start preparing for installation of piles, but the exact dates and targets and all of that is not something we are allowed to discuss in the public domain. Operator: Our next question is from Daniel Haugland from ABG Sundal Collier. Daniel Vårdal Haugland: Good to see you and congrats on a good report. So I have a couple of questions. The first one is on the contract, the EUR 500 million contract you announced recently. Are you kind of able to give any indication of a rough kind of percentage split of how much is related to the T&I services and how much is the installation that is... Mikkel Gleerup: Unfortunately, we're not -- it forms part of an auction for the client, and hence, we are not allowed to divide it out any more than we are at this stage. We will do that whenever we pass certain milestones. But at this stage, we are not allowed to do that. Daniel Vårdal Haugland: Okay. That's okay. And then my second question is, given that you're now kind of ramping up revenues from foundations into 2026, will you start kind of a segment reporting, splitting out the 2 different ones at some point? Or will you kind of just continue on the way you've already been reporting? Peter Hansen: We have no plans to show segment reporting on that. Daniel Vårdal Haugland: Okay. And then on kind of the commercial outlook, I see that you're still expecting vessel undersupply towards the end of the decade. So I was wondering, could you maybe explain a little bit more on that, Mikkel, because as you said, demand looks to be shifting to the right. So are you expecting anything to happen on supply as well? Or are you just saying that demand will still grow enough in, say, 2029 and '30 to still create an undersupply? Mikkel Gleerup: Yes. As I said to Martin, when he asked the same question, I think that we are getting this confidence from the projects we are bidding and also the clients that are willing to put money where their mouth is, so to speak, on their projects. And that is for us a good indication that these projects are something that they are betting on at least and in terms of undersupply, I think we have said for a few quarters now that we think that most of the analysts they are getting the supply side wrong, both on the WTG and on the foundation installation and that too much is counted on the supply side. And I think that the future will show how that will work out. But as I think that has been said from our side before, whether or not there is an over or undersupply, we believe that the best assets in the industry drive so much efficiency on a project that it will always be the best solution to go with the best asset. So in terms of fall height, we believe that we are in a good position with the assets we have, not for every single project in the world, but for, let's say, a standard offshore wind project at utility scale, we believe that there is a strong benefit and a strong efficiency gain in taking the best asset for the project. So I think that it's a combination of these things that we, in general, think that most analysts get the supply side slightly wrong. And we think also that the clients are much more, let's say, active and committing to the years '29, 2030, 2031 and then what I said around fall height. Operator: Our next question is from Andreas [indiscernible] from SB1 Market. [Operator Instructions] Andreas, we are unable to hear you right now. Apologies. We seem to be having some technical difficulties. That is our final question for today. So if you -- we would like to hand back to Mikkel Gleerup for any closing remarks. Mikkel Gleerup: Yes. Thank you. Just wanted to say thanks for listening in to this quarterly presentation. We are looking forward to come back to you with the fourth quarter and the year presentation also with more details on the Hornsea 3 because at that point in time, we will have a lot of exciting stuff to show you. So -- yes. Wait out for that. It will be interesting. There's a lot of exciting things going on at the moment, and we're looking forward to also announce the delivery of the Wind Mover in the not-so-distant future. Thank you very much for listening in and reach out to us if there's any follow-up questions that is better handled on a one-to-one basis. Thank you.
Louise Curran: Good morning, everyone. I'm Louise Curran, Head of Investor Relations at Johnson Matthey, and a very warm welcome this morning to our half year results presentation. Thank you, everyone, for coming along to the Andaz today, and welcome to those joining on the webcast as well. A little bit of admin before we start, if you could please turn your phones off or on to silent. And I'll point your attention to the cautionary statement. I'm very pleased today to welcome Liam Condon, Chief Executive Officer; and Richard Pike, our CFO. In terms of agenda, we'll follow the usual format. Liam will run you through an overview. Richard will then take you through the financial results, and then Liam will cover our strategic progress in the half. And we'll, of course, leave plenty of time at the end for Q&A, both in the room and then on the webcast. And with that, I'll hand over to Liam. Liam Condon: and big congratulations to you on your new role. And a big thanks also to your predecessor, Martin Dunwoodie, who've done great work for us. A warm welcome to everybody here in the Andaz Hotel. I'm really happy there's so many people here, so we can get some heat into the room because it was a very cold morning. And a warm welcome to everybody who's joining us online today. So I'm just going to hit some of the highlights of the half and then talk about some of the key priorities that we're working on that we're going to give you more color on throughout the presentation today. So first of all, I think the standout was the underlying operating performance increasing by 38%, an 11% increase in Clean Air and a 33% increase in Platinum Group Metals. So in the environment we're in, I think, a very strong overall performance and a good indication of the progress we're making here. Secondly, -- and Richard will talk extensively about this. You will see very good progress on our implementation of our new cash-focused business model. We had a significant cash outflow in the first half of last year. This time around, you will see a -- not a significant, you'll see a significant turnaround and a small inflow. So that's quite a big movement. And there is a lot more to come in the second half and then, of course, in the subsequent years. And the building blocks behind that, Richard is going to talk to you about. And the third point, which is very important as well, the sale of Catalyst Technologies to Honeywell is on track. We had said that, that will close in the first half, calendar half of '26, and that remains the case. And once we close that deal, as we said, we'll be returning GBP 1.4 billion to shareholders upon closure. A final point I'd make is we did -- we have made some announcements this morning around organizational changes. And I'm sure we'll -- I'll be talking a little bit about this later on, what the rationale behind that is. I'll make it clear for the purpose of today's presentation, Richard is in his CFO role only. When we get to the Q&A, you can gladly ask him about his motivation for the new role going forward. But first and foremost, it's the CFO role for today's presentation. So a couple of the top or a few of the top priorities that we have for the next 6 months for the full year and then subsequently and just the progress we're making around that. I've already mentioned the sale of Catalyst Technologies, and we'll unpick that a little bit later on. So what still needs to happen. But here, we're fully on track for that closing in the first half of calendar '26. Second one, we've spoken extensively about our ambition to significantly increase the margin of Clean Air. And here, you can see, again, very strong progress, a 200 basis point increase in the margin for Clean Air, an increase in absolute profitability. So despite declining volumes, this is a really strong performance and leaves us completely on track for our target of 14% to 15% margin of -- by the full year this year. And with that, on track for our ambition '27-'28 of getting to basically 16% to 18% margin. Very strong performance from Platinum Group Metal Services with 33% increase in underlying operating profit. This was clearly helped also by Platinum Group Metal pricing, the trading business -- but it's also refining, which has been doing well. And it's also efficiencies, which is where we've simply been running the business more efficiently. So a strong underlying performance here. Our new PGM refinery, which is a huge investment. And I think against the background of the importance of critical minerals, it's hard to underestimate how important this is, both for JM, I think the U.K. and globally. This is the world's biggest refining plant for platinum group metals that we're building in Royston out beside Cambridge. This is on track to start commissioning in -- by March of 2026. It's a very big capital project. It's about GBP 350 million capital expenditure here. And we do have a small delay of a few months. But because we have our ongoing refinery, our old refinery, our 60-year refinery, still running in parallel, this has no impact on our guidance or our ability to deliver to our customers. So in the bigger context, it's a smaller delay, but important to flag it, but it's a few months. On Hydrogen Technologies, we are on track. And again, this is now almost end of November. We're very much on track for breaking even by the end -- or have run rate breakeven by March '26. This is something that we had committed to, and we have line of sight of that. And we're confirming that again today. I think there was some skepticism that we might get there, but we absolutely have line of sight to that. And that's why we are reconfirming that we will break even with that business or have run rate breakeven by March '26. And then the final point, and again, Richard will talk to this extensively, is the significant improvement in free cash flow and the building blocks going forward to give you that confidence that we will be generating GBP 250 million free cash flow going forward on a consistent basis. And what's behind that, Richard will explain. So they're kind of the highlights. We'll unpick different elements of this as we go through the presentation. But first, I think it would be helpful to go through the detail of the half year results, and then I'll come back and share some more color on these strategic priorities. And with that, Richard, over to you. Richard Pike: Thanks, Liam. Good morning, everybody. So building on Liam's introduction, just to remind everybody, we've now treated Catalyst Technologies discontinued. So the results that we'll present are excluding CT. Obviously, still a very much an integral part of the group until we affect the sale to Honeywell, but all the numbers in here are talking about essentially the remaining business going forward. So as Liam said, I think we're really pleased with this in terms of -- against the targets we set out in May, actually, we think we've made really strong progress pretty much across the board against where we said we would focus. So you can see that despite sales being modestly down as a result of primarily Clean Air volume decline, basically, you're seeing strong improvement in underlying operating profit significantly because we're focusing on the things that are within our control. That feeds through to earnings per share. And to my mind, and I will, as Liam said, spend quite a bit of time on this. I think for me, possibly, despite those headline operating profit numbers, which I think are really quite impressive in the current environment, I think the free cash flow focus in the modest time we've actually started to shift gear on this is moving very well in the right direction. Our net debt is up. That's primarily because CT had cash outflow in the first half and the dividend. So -- and we've also had a significant stock build in our U.S. refinery because we took it down for a maintenance shut in October. So despite the stock build and despite metal prices being higher, I actually think this is all quite a good news story, and I'll talk about how that's going to play through in the second half. As a result of which we're maintaining our dividend at 22p per share. In terms of looking at the P&L, I mean, I've just touched on the highlights there. The only real thing I go to draw out is the interest charge you can see is higher year-on-year. That's because we had a couple of one-off nonrecurring items in the prior year. This level of interest charge gives you a feel for the run rate of where interest cost is on an ongoing basis. Coming down to the businesses. So in Clean Air, pretty much if you look across the piece in terms of how we're performing. LDD pretty much in line with market. Europe has been difficult for us this year, but pretty much in line. LDG, worse than market. But if you recall, several years ago, we made a shift from gasoline towards diesel to the primary focus. So we came out of a number of those. We've had platforms that were on running off over time, and this is the picture you're seeing that running off. In more recent times, we had an increased focus primarily towards hybrid. You've seen that in some announcements, but they take a while to come through. So sort of you've got a gap between when we announce something and it's in the numbers. So there's no surprises in here from our point of view. And actually, HDD, we're actually start ahead of the market. So in the area that we consider is likely to continue to grow going forward and where we're strongest in terms of market share and positioning, we're actually doing better than the market as well. Over and above the sales position, basically, what you can see here is the strong focus on our costs. I said basically the full year, if you looked at our plan to get us from the sort of 12% last year into the mid-teens this year, a lot of that will be about overhead reduction. You can see that coming through in terms of the margin improvement. Also the operational excellence, commercial excellence, those areas are getting more ingrained in the organization. So I think this gives us a strong belief that actually we're heading towards that 16% to 18% margin range. PGMS, good half. We had a weak first half last year. We have been benefited from higher metal prices this year versus last year. And actually, it's been a more volatile trading environment. So the trading side of our business benefits when it's more volatile. So those things have been through, but pleased there in terms of year-on-year improvement. And there's a lot of focus at the moment. Liam touched on, obviously, the build of our 3CR facility. That's critical for us going forward. We've still got a couple of years of running this old asset. So focusing on consistency of operations and actually maintaining our assets in a reliable fashion as possible is really key to Liam's point around delivering for our customers. That's where the strong focus is in the side of the business. Hydrogen, as Liam just said, you can see here improvement year-on-year in terms of the run rate. For those eagle eye of you, you'll notice that our losses in the first half of this year are higher than the second half of last year. That's because we have a weighting in terms of when we recognize our revenues, it's second half weighted. And so we've got line of sight, very clear line of sight in terms of our contractual position with our customers, see what's coming through, hence real confidence about that getting to a breakeven run rate by the end of the year. And as I said, despite actually the profit number being in really good shape, this is probably where I'm most pleased actually in the first half. So you can see, obviously, with a starting point of profit improvement, that's a good starting point for our cash generation. But the really important thing here is that movement in working capital. And these things take a while to bed down. I talked at the year-end about the fact that actually, there's quite a lot of areas which are not rocket science. But in an organization that's not particularly being cash orientated, some of these things are sort of ingrained processes that need to change. And we've started with payables. I'll come back to that. There's more to do on receivables and inventory. Some of those things take longer. But actually, what you can see here is actually a shift in focus. There's still a lot to do here. This is nowhere near job done. It's a modest cash inflow in the first half. But given we have circa GBP 200 million of stock build associated with the refinery shutdown in October, and we've had higher metal prices, I actually think this is really positive because that stock build will unwind in the second half, and we've got ongoing focus in other areas. So to touch on those actions, particularly around the cash side of the to actually replicate the CT profits that sort of lost with the sale, we've said that we need to take a significant amount of overhead out. We used to be a much bigger group. We still have some overhead that sort of reflects the situation of the legacy of us being a bigger group. We're losing CT, a much more simple group. And actually, our overheads need to reflect that. We're making progress. And a decent chunk of that is on the Clean Air side. We talked about the fact that the most of the difference between the 12% last year and 14% to 15% this year was going to be about overhead reduction. You can see that actually Clean Air is already delivering on that and more to come in the second half. And a similar amount is coming through on the group side of things. And as Liam will come back to the organizational structure, as we simplify our group structure, simplify the way in which we run things, that will feed through to greater levels of overhead reduction going forward. CapEx, we're still at elevated levels, and that's going to continue through this year and next year, primarily because of 3CR, but also other areas within PGMS infrastructure, which feed into 3CR. And so our target of getting down to GBP 120 million, which is close to depreciation, we're on track for, but you're going to see that higher level of CapEx. And that's why, to a certain extent, not just that reason, but why it's quite important we're focusing on working capital in the near term because that working capital saving offsets some of that higher CapEx in the next couple of years. If you think about all of this coming together, what we said at the year-end was we'll sell CT, well on track, as Liam said, and he'll come back to that. Basically Clean Air, get it to 16% to 18% margin, well on track, get 3CR built. Yes, we've had a couple of hiccups, if you like. So we had industrial action with one of our contractors. And that's led to lack of productivity in terms of the people on site. So that pushes out the schedule and so on and so forth. I think what's been really important since the summer, our team where we changed the number of members, the general contractor and the subcontractor with in distraction have worked really hard to get to a schedule that everybody believes in, the detailed level of work that underpins that, everybody signed off on. Everybody is holding hands and actually intent actually we're really confident about the plan we've got in place. And if we actually generate the working capital improvements we promised for the next couple of years, that will actually underpin our cash generation while we're still spending more CapEx to then get to a situation of lower CapEx going forward, which underpins why we get to the GBP 250 million of sustainable cash flow from '27, '28. We've talked about this a few times, but just to reiterate on the shareholder return side, on the GBP 1.4 billion that we're returning, I spoke to pretty much every shareholder through the year-end process about where preference was. I think everybody recognizes that whilst there might be a preference in some areas for share buybacks, it would take us about 6 years to return this through share buybacks. So that's not realistic. So the majority is going to come back through a special dividend with the share consolidation and then the balance going back through share buybacks probably during the course of calendar '26. And then ongoing from '26, '27 onwards, we promised about GBP 200 million of returns from there. Depending on how the share buybacks play out, share consolidation and so forth, they also determine how many shares we have an issue and things. But I think you're looking at a situation where we'd like to have about 1/3 dividend, 2/3 share buybacks from '26, '27 onwards. And then outlook for the year, my last slide, basically. We're in good shape. We're very much expecting to deliver on our promises for the full year. PGMS will be down year-on-year in the second half. We've touched on this before. There's low metal recoveries, there's higher maintenance costs given the age of the asset, but nothing different to what we actually said at the year-end. So we feel we're in good shape for the year. We feel we're in good shape in terms of delivering on our '27, '28 targets. And on that, I'll hand back to Liam to give you a bit more detail. Thank you. Liam Condon: Great. Thanks a lot, Richard. So if we jump in on the strategic topics, the first one, which is top of mind is probably the Catalyst Technology sale. So what still needs to happen on this? Well, we have a binding sales and purchase agreement with Honeywell, which is publicly available, where also what needs to happen is listed in that document. But in essence, it's 2 things. One is the regulatory approvals. We need regulatory approval in 12 jurisdictions. We have 11 and the 12th is progressing smoothly as planned. So we believe that's very much on track. And then there's the carve-out, which is 2 elements. This is basically the legal reorganizations which is very much on track. And then the transitional service agreements and long-term supply agreements to ensure that customers and employees are looked after, and that's all very much on track as well. So they are the 2 big elements that need to happen for us to close. And then based on where we are today and the very good collaboration with Honeywell, our expectation is, as we have previously stated, that we will close in the first half calendar of '26. I think it's important to note that the business has been -- had a weaker performance or the CT business had a weaker performance versus prior year, significantly weaker. This is completely market related. And if we look at it from a market share point of view, the CT business has maintained market share in every key market and in some instances, even improved the overall market share. So the underlying performance from a market point of view is very good. It's just the market is pretty weak right now. We have continued to win new significant new sustainability-related projects. These are typically in the sustainable aviation fuel space. So the pipeline remains very, very robust. And with that, the growth outlook for that business remains very strong. So that's the overall situation for Catalyst Technologies and the sale to Honeywell, which is very much on track. Now if we go to new JM then without CT, we had outlined previously what we're really doing here is focusing on our core competency of Platinum Group Metals. This is what this company has done for over 200 years. We would consider ourselves world champions as far as Platinum Group Metals is concerned. We don't think there's anybody who can manufacture, trade and recycle as well as we can, and that's what we're really known for. And we build businesses that typically use Platinum Group Metals, and there are multiple applications. The biggest is, of course, Clean Air, catalytic converters. But within the PGM business, there's many other industries that are served and serviced by the PGM business. And as we outlined, we have a big opportunity now with a more streamlined group to run the business much more efficiently. To be very honest, we don't -- you don't need a big corporate center if you have 2 businesses that are very closely interlinked with each other, the PGM and the Clean Air business. So -- and I'll explain this a little bit later when we talk about organizational design, there's plenty of opportunities for us here to further streamline how we run the business to be simply more successful in the market. Now if we go to the first of the big businesses in here. Just a reminder again of our ambition, we said by '27, '28, we want to achieve at least GBP 2 billion in sales and a 16% to 18% margin. You'll recall in 2022, we were at a margin of 8.7%. This half, you can see that we're up to 12.4%. -- so a really significant jump in the last few years. And we have line of sight to the 14% to 15%. And with that, we think from a trajectory point of view, we're very much on track here. Now if we have a look at how we're doing from a winning point of view, and Richard explained a little bit what's happening in the market. Question is that kind of at least GBP 2 billion, what's the confidence level? Well, at least 90% of that business has already been won. So that, I think, should underpin our confidence in this business. So very strong overall win rates. And what's, I think, been really encouraging recently because we've been focusing on the hybrid space, we've actually started winning business with leading Chinese OEMs who are typically the leading hybrid players. And if you can win with a Chinese OEM in China, then your -- both your technology and your cost must be really good. And this is not just servicing then the Chinese market. This is also for export to the rest of the world. So this is actually a significant step forward and gives us a lot of confidence in the portfolio and again, our ability to win in this space. Lots of progress on partnerships with our strategic customers. And the point that I won't elaborate on much this year, but right now, but rather talk about it more extensively at the full year results. We do have a small kind of almost like a start-up business within Clean Air. And I think there's a general perception that Clean Air is maybe sunset industry sunset business. But there are elements that are growing, like, for example, the hybrid business, like, for example, the heavy-duty diesel business. But there's also something what we call Clean Air Solutions, which is using the core emissions technology of Clean Air for nonautomotive type use cases, typically stationary use cases. And one -- and the example that's mentioned here is we've just won several multiyear contracts for emission control technology for engine systems for data centers. And of course, data centers is a hyper growth area right now. Most of those data centers are fueled by fossil fuels. So they require emission control technology. Otherwise, you're going to have toxic fumes. And that's where our core competence is again. So this is an area that's growing, and we'll unpick that further at full year. But I just want to highlight, there's -- within Clean Air, there's enough opportunity in here to give us a lot of confidence about the targets that we've set for '27, '28. Now beyond winning commercially, we do continue to drive efficiency. This is really important for us. This is also why our margin has been improving. There's been a significant reduction in overheads, especially SG&A, some R&D as well. And as we do that and as we're winning business, I think where we're really encouraged is our Net Promoter Score has actually increased significantly. This is almost unheard of that the Net Promoter Score is up 15 points. This means at a point in time where we are improving our profitability, our customers are thinking more highly of us. That's not necessarily to be taken for granted. And it's really a sign of how much value the commercial teams together with the tech teams are adding for our customers. So I think really strong progress here. And we will continue on the journey of footprint optimization. When we started in '22, we had 50 production lines. We're down to 21 now. And that journey of consolidation between production lines and site consolidation will continue, and it continues at the pace that the market is evolving. The market evolves faster in a certain direction, we can move faster from consolidation or we move slower. So we just adapt to what's happening in the market. But all of this gives us, again, the strong confidence that we can -- we'll get the margin up to 16% to 18% by '27, '28. So that's Clean Air. If we go to Platinum Group Metals, -- and again, in a world that's very concerned about critical minerals, this is a jewel in the crown, I think, for the U.K., but for -- basically from a global point of view to have the know-how and portfolio and the people that we have for this business, very profitable business that has a big moat around it. And we've given out the targets, the guidance, GBP 450 million sales by '27, '28 and a circa 30% operating margin. You can see there's 3 parts to this business. In essence, it's producing products, so typically alloys, anything that uses PGMs for multiple different industrial and other applications might be for life science, might be for defense. There's many different use cases, and we produce products often customized for our customers then. We also refine. We're the world's biggest refiner and recycler. And again, this -- the vast majority of that happens in the U.K. currently with a very old refinery and in future with a brand spanking new refinery, which will be absolutely state-of-the-art. There will be nothing else out there in the world like what we will have then when this is complete, which is relatively soon. And we also have a trading business. So we buy and sell and manage metals on behalf of our customers. And that's important because this stuff is super valuable. A normal -- an average industrial company doesn't really have the infrastructure from a security and a logistical point of view to actually manage precious metals. We have all of that. And this, again, this is a service component that we offer for our customers. So fantastic business. I mentioned both myself and Richard have mentioned how important the new refinery is. And we're very -- we're on track now to start commissioning by March of '26. This is really important. Richard already elaborated, there was some industrial action that's cost us a few months. But it means we will still be fully operational within the calendar year '27. And to underpin that confidence about being fully operational, we also have a clear plan to start decommissioning the old refinery within '27 as well. So by the end of '27, we'll start decommissioning the old refinery. And we always said we would only start decommissioning when we're 100% certain that the new refinery is up and running. And from everything that we can see today, we have complete line of sight of that. As Richard said, we have our best teams on this. Everyone has joined hands. It's got the utmost focus, and we're very confident about the schedule that's in place now. And thankfully, we still have the old refinery to keep supplying customers as long as this one is not up and running, but it will be up and running in calendar '27. And the old one, we will then start to take down. So that's the overall situation for 3CR, and that's why we're very confident that this will be a big, big benefit for us going forward. Now besides the business, I mentioned earlier on that we have an opportunity to basically streamline how we run the business. And again, if you think about the situation, CT is moving out. With Clean Air and PGMs, we have 2 businesses that are intricately linked through Platinum Group Metals. They all use lots of Platinum Group Metals. We manufacture products. We also recycle products on behalf of our customers. We manage their metals. So there's a lot of synergy in here. So we gave a lot of thought together with our Board about how we could set ourselves up for success in the future and really accelerate progress. And what we've agreed on is a new streamlined organizational model. So we're moving away from divisions and sectors with individual CEOs. And given that we'll only have 2 businesses that are intricately linked, we're going to move to an operating model where we have one Chief Operating Officer who can ensure that we're tapping into all the synergies across those businesses. And basically, we'll move from 9 people on the Executive Committee down to 6. And I think this is -- it's a good reflection if you think where our business was and is, it will be a smaller business going forward. So the streamlining should really start at the top. This is a team that's been working together very intensively and very successfully, particularly since this summer on developing the new strategy, the new JM going forward. We have a lot of fun together. And based on kind of how we're all interacting with each other and looking at the strengths of different people, what we've decided is Richard will become the Chief Operating Officer. And for those of you who are not so familiar with Richard's extensive curriculum vitae, he has a lot of experience running operations in other industrial companies, both on the manufacturing and the recycling side. He's super passionate about operations. He loves getting into the detail. And he wants to make sure that we can deliver on all these cash commitments that we're making. So he wants to be on the front line managing this. So we think this is a great move. And we're really lucky within JM that we have Alastair Judge, who many of you possibly know. Alastair is the current Head of Strategy and Operations. Alastair used to be the Interim CEO for Clean Air. So he knows Clean Air intricately, and he used to be the CEO for Platinum Group Metals. So there's nobody who kind of knows the business better than Alastair. What's important is Alastair is also a chartered management accountant. And for the vast majority of his working life, he's worked in financial roles. He was intricately involved in -- together with the entire team in developing the cash-focused business model going forward. So we think it's a great combination to have Alastair as the new CFO, Richard as the COO and then everybody else on the team who's a fantastic team, all working really closely together to deliver on our commitments. So we're absolutely convinced that this organizational model will help us to accelerate progress, and this is the way we're going. Maybe on that, because we have Anish with us here today in the audience, let me say Anish will be leaving. There was an announcement made today. Anish is taking up a great new role. He'll become Group CEO in another company. And that's a fantastic development. I'm super happy, Anish, for you personally. Anish has really strengthened Clean Air. And I think the most important thing Anish has done, he's developed a great team. There is a fantastic team within Clean Air. They're all ready to step up and they're all ready to support Richard. So I think this is -- for all of us, it's actually a really good news story. So big thanks to you, Anish, on behalf of everything that you have done for us. What's not on here is CT. The CT CEO will continue to report to me directly, but this is the new JM going forward. So will not be a member of this executive team and will continue to report to me as long as CT is within JM, which is up until the first half of the calendar year '26. So I hope that's relatively clear. Now this team also is -- has been placing a lot of emphasis on developing the right culture for us to be able to succeed with our commitments. And just to give you a few data points on how we're doing on that front, this is really important for us that we have a culture that really enables implementation of the strategy and not one that's holding us back. For us and particularly, I think anybody in the process-related industry, what's really important, everything starts with safety. Every meeting starts with a safety moment, really important for us. But it goes deeper at JM when we think about safety, it's about looking after each other. It's about taking pride in your workplace. It's about caring. And if you're -- I just have a fundamental belief if your safety stats are improving, probably your culture is going in the right direction. It's a sign that people care. It's a sign that they're looking out for each other. It's a sign they're taking more pride in their work. That's really important. And we've seen a significant improvement in our safety stats. We know we still have a long way to go. We need to continuously improve here, but it's important that we're seeing progress, and we are seeing progress here. Second one, and I've already mentioned Clean Air. It's not just Clean Air, all of our businesses. We've seen a significant improvement in customer satisfaction as measured by Net Promoter Score. Again, 13 points up for JM in total. That's an almost unheard of increase. in a very difficult market environment where everybody is dealing with lots of issues, our customers are thinking much more highly of us because they can see the value that we bring to them. So -- and this is really important for us that we have the customers front and foremost, we track this rigorously. Third point, data point, also super important, employee engagement, which is typically an early indicator of performance. There's usually a lag between where your engagement is and then how your performance turns out. And typically, when you have lots of change, external change, internal change, your employee engagement will drop typically. We've actually seen -- we've just measured this in October. We do this every 6 months. And we've seen another good increase in employee engagement. And this is over 80% of all of our employees reply to this survey. So this is a really big population and a good increase in engagement. So again, these are all data points that tell you something is improving and give us confidence that we can continue to drive performance. We've aligned incentives. We never had targets for cash in the past. We always -- it was always underlying OP and margin where typically and sometimes sales would typically be the KPIs we would use. Now we also have clear targets and incentives for cash so that people have skin in the game for what we have committed to externally. And that, we believe, is also helping us drive performance, which you can see then in the results that we've delivered in the first half. So just a reminder of what you can expect from us by '27, '28, at least mid-single-digit CAGR in pro forma operating profit going forward for which we're very much on track then this year so far. Annualized free cash flow of at least GBP 250 million and returns, as Richard outlined, returns to shareholders of at least GBP 200 million per annum. So that's what you can expect from us. Tracking progress, as usual, we give some milestones that hopefully enable you beyond the financial reporting just to be able to hold our feet to the fire because we need to do that for ourselves, but we want to be transparent about it. These are the areas that we think matter the most. And we give you a kind of a traffic light, and we'll do this every half year. And whenever there's any significant change to any of these variables, we will update you. As you can see, everything is on track. We've put the refinery on yellow because we have a few months delay. But again, this has no impact whatsoever on our guidance or our financials because we have the ongoing refinery, which will ensure that our customers continue to be supplied. So that's overall the strategic milestones. We'll continue to update you on that. And then just in summary, again, we think we've had a good start with the new model, significant increase in profitability, turnaround in cash with lots more to come and the sale of Catalyst Technologies on track. And we believe the organizational changes we're making will actually help us accelerate progress. So we have a lot to do. We have a lot to look forward to. And now we look forward to your questions. Thank you very much. Louise Curran: So thank you, Liam and Richard, for the presentation. We'll firstly take questions from the room, and then we'll move to questions from the webcast. [Operator Instructions] So Geoff? Geoffery Haire: It's Geoff Haire from UBS. Just first of all, on the ramp-up cost that you sort of alluded to back in May this year for the new refinery, I think you said it would be about GBP 20 million to GBP 30 million. Could you give us an update on what that would be now that you've got more line of sight as it were to when that refinery is coming online? Richard Pike: Still similar, Geoff. I mean, basically increased maintenance costs, dual running, lower metal and that sort of order. So in terms of what we set out in May, that's still sort of trajectory we're looking at. Geoffery Haire: Okay. And the second question I just wanted to ask was, and I don't want this to sound shirlish, but obviously, you've done a lot of work on working capital. Why has that not been able to be done before? And also, do you run the risk that you're working your inventory levels are too low for what you need to produce within the business? How do you manage that risk? Richard Pike: Yes. Look, this has been a growth-focused business. Actually, if you look at where over time, the capital has been deployed, where people have been focused in growth. And generally, when you actually focus on growth, you're actually growing working capital. It's not been focused as much on net cash generation. So to be fair to people, when you target a particular way and that's what we focused on, there are other things that you don't focus on. Now whether we should or shouldn't, it's sort of a bit irrelevant because you can't change the past. What I would say is there is a significant opportunity. [indiscernible] opportunity in payables because we've been paying people too quickly, actually and sometimes ahead of when we actually needed to. There's a significant opportunity in receivables because we've actually been collecting monies too slowly, and we carry far too much inventory. So we're way off a situation where we're potentially driving this to levels that are unsustainable. We actually -- we're only scratching the surface today. Louise Curran: Tristan? Tristan Lamotte: Tristan Lamotte, Deutsche Bank. was wondering a question on PGMS. Could you talk through conditions in -- currently in PGMS and why it would be down in H2? And I'm particularly interested in volumes and feedstock availability. And then linked to that, what kind of PGMS trajectory do you see in the next few years? And is there any change to that trajectory at all with the plant pushout? Richard Pike: We are seeing higher metal prices. So that feeds through in terms of underlying refining performance and to our trading side and that's because of increased volatility in the trading environment, our trading business makes more money when the environment is volatile. So that's benefiting. On the flip side, we have had one of the large mines in the U.S. that's closed. So therefore, there's been lower volumes on the refining side. But as I've also mentioned, because we're actually in a transition phase through to getting 3 built, we have got dual running costs. We've got lower metal recoveries because we've recovered metal over time. And I mentioned at the full year, we had a very strong second half last year, particularly because of metals and other one-off items. So once you've had a one-off item, it doesn't necessarily repeat, that means the following year, it will be down. So the fact that we've got higher running costs and lower one-offs is actually feeding into the second half. But it's exactly the same as what we said in the year-end. We said we'd actually dip before we actually came back. So you've got a decline trajectory through to '26, '27 and then recovery from '27, '28 forward as we get the new refinery up and running. Tristan Lamotte: And then -- I'm not sure if that's working. Yes. And then on exceptionals, just generally at a kind of group level, are you expecting that level to stay similar to H1 and H2? And does that come down into next year? Or what kind of trajectory are you seeing on that? Richard Pike: Yes. There's 2 real items Andre on non-underlying items. One is the costs associating with reducing overheads, i.e., losing people. And the other is the ongoing Clean Air footprint consolidation. So as we take lines out and take sites out, the cost of closure. Those costs you can see in the first half in terms of key categories, that will continue in the second half and continue into next year. And I indicated at the full year that if we're taking around about GBP 100 million of overhead out, that actually you'll be looking at a similar level of costs associated with that as well as Clean Air. So you'll see not exactly like-for-like, but you'll see that sort of overall level across the next couple of years. Louise Curran: I think the next question from Alex. Alexandro da Silva O'Hanlon: Congratulations on a strong first half. Alex O'Hanlon from Panmure Liberum. Just a couple of questions from me. The first is kind of on culture. Obviously, going through quite a big transition at the moment. And you pointed to the engagement score being like kind of upticking a little bit. Just kind of interested in kind of what you're doing to manage that culture during quite a big transition and how you are kind of confident that you can keep that high, that engagement score. Liam Condon: Yes. Thanks a lot, Alex. So we've actually spent a lot of time with leadership explaining we need people to be talking to people. When you've got this much change going on, what you don't want to be doing is communicating through slides and just webcast. We need line managers to be talking to their people to be listening to what their concerns are, taking them seriously and then working on an action plan to address those concerns. So very specifically, one of the elements we track is -- and we can see this from a people management point of view, has there been follow-up related to the engagement survey? Have your actions been -- have your concerns been taken seriously. And we can track literally across the board where it's working, where it's not working and where it's not working well, we then intervene with the line manager and give them support. And if they're not able to come along with the journey, then, of course, we have to take other consequences. But it's really about strong people leadership, listening to concerns, putting an action plan in place. so that people can see their issues are being dealt with and not some generic 40,000-foot kind of strategic stuff, but the issues that they're dealing with on the front line. So we place a lot of attention on that. I think that's the single biggest issue that we can do. And the second one would be everything related to safety because people can understand it's really important that everyone can go home safely to their families every day. And the amount of attention we put on that is quite exceptional. We dedicate a whole -- apart from the fact that every meeting starts with safety every time religiously, we dedicate an entire day every year where we shut down everything and just go through a whole raft of safety measures and trainings. And then we -- throughout the year, we'll have various elements around that as well. So I think it's just walking the talk really and showing people that we care and that with that, they should care too. And I think that's working. Alexandro da Silva O'Hanlon: Perfect. The second question was just on the GBP 2 billion of sales for Clean Air in '27, '28. Obviously, you've got kind of 90% of that in orders already, the same as at the full year. I think at the analyst call at the full year, you mentioned that there are tenders out that could even see you get up to 100%. So I'm just interested in how should we think about that number moving forward? Is it going to be kind of lumpy? Or should it kind of gradually tick up over the next couple of years? Liam Condon: Should the 90% go up to -- yes, yes. Yes, it -- I mean -- I think it's a good one to hand over to Anish just to give a bit of flavor on what kind of contracts we've been winning recently that are not yet in the 90%. So the 90% for sure, increases significantly going forward, but the quality of those wins, I think, is quite exceptional. Maybe, Anish, you can share just some examples of that. Anish Taneja: Yes, of course. Good morning, everyone. And I think it's a fantastic question. With me moving on, I can speak more openly, obviously. So there's one recommendation I want to give you when you look at the businesses. 90% of the GBP 2 billion already won is a great number. But to look at the quality behind it is absolutely crucial because when you look to the automotive environment today, not every tender has the same value in the future because you got to make sure that you win with the winners in the right markets. So let me give you an example with a brand that is clearly going to win in the next 10 years in South America, that's a better tender than maybe with a smaller brand in Europe because it just gives you more run rate, it gives you higher margins, it gives you a longer runway. So when we assess the quality of what we have won, we always look to how long is the contract in which market are we winning? What's the regulations there? How long will combustion engines be surviving in that market? And how is that OEM positioned to be a real winner. So that's the first thing. And then I can tell you the good situation that you have at GM right now is when you have won 90% already today, the total sales funnel is obviously above 100%. So theoretically, you could make it to even more than the GBP 2 billion. But obviously, you're not going to win everything in the funnel. But I can tell you, we are going to win some stuff in the funnel. For example, we have just received verbally the confirmation that we've won a huge LDG tender in Europe with a very big OEM, which is going to give us access to 20% of the hybrid market in Europe. That's going to be huge. So when that's confirmed in writing, I'm sure my colleagues, and it's my farewell present to Richard, will talk to you about that, and it's going to uplift that number. So that's how you have to see it. Louise Curran: We'll just check any more questions in the room. Just wait for the microphone. Thank you. Unknown Analyst: Just a quick question on the -- you mentioned the new contracts for data centers. It might be too early to share, but is there a rough value of those contracts you could share? And I just wondered if that's a new sort of start-up business, does it have any initial margin erosion impact? Or is that one you hit the ground running minutes? Liam Condon: Yes. So we're not sharing the financials now, but we will at full year simply because we want to have a bit more meat on the bones, to be very honest. Although this is a nascent business, it's using the core footprint of Clean Air. So there's no additional investment required in that regard. And this is not something that would be dilutive on the margin. So it's an area that we think is hyper attractive for us. But we'd simply like to have a bit more -- we'd like to show a fuller picture. And right now, it's more or less saying we're actually, we're winning contracts in this space. Multiyear means 5- to 10-year contracts. And what's kind of behind that from a financial point of view, we'll unpick further full year. Louise Curran: Any more questions in the room? So in which case, we'll move to the webcast. So sticking with PGMS, there's a question from Chetan Udeshi from JPMorgan. I think probably, Liam, you referenced the growing importance of critical metals. Are you seeing any change in customer behavior in terms of how they deal with PGM services? Is this business moving to a long-term take-or-pay contract? Can it reduce the lumpiness in earnings in this business? Liam Condon: Yes. We're both looking who's best to answer. It's a very -- maybe I'll start, Richard, and then you chime in. So de facto, we're not seeing -- and there's various moving parts when you think about PGMs. We're not seeing a significant change in customer behavior because these are precious metals. They've always been precious metals. It's just the focus on them has ramped up considerably. I think going forward, there's a keener awareness of where PGMs are actually sourced from. So for example, there is an ongoing discussion in the U.S., a very active live discussion that palladium being sourced from Russia should have significant tariffs on it, which is not the -- or should be sanctioned, which is not the case today. There is a body in the U.S. who has found that there has been some dumping going on there. And if that is the case and palladium is then sanctioned, Russian-sourced palladium is sanctioned in the U.S. that will have an impact in the market. It doesn't impact us because we have -- we do not source any palladium from Russia. That is not the case with all of our competitors. So there is a stronger focus on the source of PGMs going forward. The fact that recycled PGMs have close to zero carbon footprint is something that customers like. They just haven't been willing to pay for it previously. I think as carbon pricing ramps up going forward, that will become more of a topic as well. But the fact though, we don't get a premium because the product is recycled. It's a globally traded product. There's one price as opposed to a differentiation between a lower zero carbon source of PGMs and something where there's a much stronger carbon footprint. So overall, I think from a contractual point of view, we are having discussions and have been having discussions with customers about a fee-for-service type of a model as opposed to just taking a percentage of the value of whatever it is that we're recycling. If you move to a fee-for-service model, that would reduce volatility. That's always a commercial negotiation where there's -- it can go either way. Some customers want that type of a service, some don't. So we make it very much customer dependent, but that's the way we think about it. I don't know, Richard, if there's anything to add to that? Richard Pike: Just try not to replicate anything Liam said, but just for anybody who's less familiar with PGMS, the 3 bits of this business. There's a refining operation where we refine our customers' metal. So it's really, really important that they trust what we do that we take their metal and return as much PGM content as is possible. When I was at the PGM week in New York a couple of months ago, I saw 12 of our top 20 customers. That came out really strong. And obviously, we've been in this industry for 200 years. And the trust in JM, which is fundamentally important. It is -- we are a commodity refiner, so cost per unit is important, but trust in what we do is really important. And I think we stand out there. We have a products business. So we turn PGMs into products. That we do a whole variety of things for our customers. And actually, we're actually, I think, more inventive than others. Quite often, if we see things go away, we're quite often better at providing solutions than that keeps people coming back. And then we have a trading business where I mentioned both metal price and volatility is quite important. Liam talked a little bit about contractual situation. But if you look at the volatility, to Chetan's question, the volatility of returns is primarily about PGM prices, these commodities. So you can't fully get away from that because of commodity and prices will go up and down. What we can do is smooth things. And so as prices have been at 12-, 13-year highs recently, we have looked to lock in a bit more of next year's and the year after's pricing. But that's -- you can only smooth things. Taking a hedge is a gamble because at the end of the day, things can go up or down. So we can remove to some degree, some of the volatility, but you can't remove it entirely. What we can do is we can ensure that we've got consistent refining operations and actually ensure we deliver for our customers on time and deliver their promises. But actually, we've got our cost base in the right place to ensure that we're as competitive as anybody else, and then we manage our commercial situation where we smooth that volatility over time. And those are things that we're looking at in the underlying business model. Louise Curran: The next question, sticking with PGM Services is from Adrian Hammond from Standard Bank Securities. Could you please give some color on autocat recycling volumes? Are volumes still subdued? And how does this differ regionally? Richard Pike: Yes, they are still subdued at the end of the day, although the penetration of electric vehicles has slowed, it's still an increasing space. We have seen down. We haven't seen it come back yet. We do expect to see some degree of recovery there, but it's not feeding through in the market just yet. Liam Condon: Yes. And maybe to add to it, I mean, we had been expecting for some time that the U.S. would bounce back from a kind of recycling point of view on the autocat side. And it hasn't -- so far, it hasn't. And there was kind of -- what we were hearing anecdotally was with pricing where it was, there wasn't enough of an incentive to actually encourage more recycling. With prices where they are now, what we're hearing is the incentive has definitely increased to actually start recycling more. So we've got anecdotal evidence that things are starting to move in the U.S., but we'd like to see it in hard data before we would say it's real. Louise Curran: The next question is on Clean Air from Chetan Udeshi from JPMorgan. Have you seen any shift in Clean Air volume momentum in the current quarter? There were some concerns that there might have been some prebuild in the supply chain ahead of U.S. tariffs. Liam Condon: Do you want -- Anish, do you want to -- here you go. Anish Taneja: Very clear answer, no. So there has nothing been like that. Maybe as a little explanation, you know that we are winning our business, as Richard has described perfectly, very long before we actually produce, which is actually an opportunity for us and not a risk. We can talk about pricing excellence in that time with our customers. Lots of topics there where we can uplift the price. And then the second thing is as we are delivering to Cannes that supply chain is hold very tight. There's opportunities we have taken now on the working capital side. There's more opportunities there for GM in the future. So that's very, very good, organized, very good process and the risk of high inventory builds before certain effects, for example, summer breaks or factories or tariffs or anything has not happened. Louise Curran: Thanks, Anish. The next question now is around Catalyst Technologies from Ella Harvey at Lombard Odier. How does the weaker performance in the segment impact the sale? Liam Condon: Thanks, Ella. So as outlined, the conditions for the sale are related to regulatory approval and to the carve-out, both of which are very much on track. So the market performance is not a condition. Louise Curran: I think that's it in terms of webcast questions. So we'll just do a final check in the room. I think that's good. So thank you very much, everyone, in the room and for your attention on the webcast. And hopefully, we'll see as many of you as possible over the next couple of weeks or so as we do roadshows. Thank you very much. Richard Pike: Thanks a lot, everyone. Thank you.
Qazi Qadeer: Hello. Good morning, and welcome, everybody. I'm Qazi Qadeer, Panoro's Chief Financial Officer. Thank you for joining us. This is our third quarter and first 9 months of 2025 trading and results update. We have this morning released a press release and an accompanying presentation, which we'll go through now, which shows the progress we have made during the course of the year. Joining me on this call today are Panoro's Executive Chairman, Julien Balkany; and our Chief Operating Officer and President, Eric d'Argentré. As a reminder, today's conference call contains certain statements that are and may be deemed to be forward-looking statements, which include all statements other than statements of historical fact. Forward-looking statements involve making certain assumptions based on company's experience and perception of historical trends, current conditions, expected future developments and other factors that we believe are appropriate under the circumstances. Although we believe the expectations reflected in the forward-looking statements are reasonable, actual events or results may differ materially from those projected or implied in such forward-looking statements due to unknown or known risks, uncertainties and other factors. And for your reference, our press release is available on our website, panoroenergy.com. Next slide, please. So we have our Chairman, Julien Balkany here, who is going to take you through the key messages. Julien Olivier Balkany: Thank you, Qazi. Good morning, everyone. Before we move to our Q3 results and operational update, I would like to say a few key words on the business, our recent achievement and our objectives. In terms of production and reserves, within the last 5 years, we have rapidly grown through both organic and external growth. And today, we have a stable and well-diversified production and reserve base across three African countries. In 2026, we will actively continue developing our assets at Dussafu with first MaBoMo Phase 2 drilling as well as progressing the Bourdon discovery to FID. Moving on to exploration and appraisal. We have an exciting portfolio that will provide us with some very good catalyst. We have strategically positioned our E&A portfolio with Block EG-23 in Equatorial Guinea and Niosi and Guduma Offshore Gabon close to existing infrastructure, so that in a success case, we can seek to rapidly and cost effectively monetize any discoveries. As an example of this, in the Hibiscus South and other discoveries we made in the last Dussafu drilling campaign where new barrels that were put on stream within 6 months of discovery at a finding and development cost of just $5 per barrel. On the corporate side, I want first to come back and address the recent announcement that our friend and very dear colleague, John Hamilton, long-time Panoro CEO that usually walks you through the quarterly results, has taken a temporary leave of absence for family reasons. John has our full support and best wishes during those difficult times. While John is absent, let me reassure you that under my leadership, we have an extremely talented, focused and committed management that provide continuity in the delivery of our strategy and an entire team of colleagues who are experts in their respective fields and very excited by the potential of our assets. It brings me now to Panoro DNA that has been acquisition, which has, over the years, played a major role in our growth story. In order for us to achieve our ambition and increase our size and scale, we will remain focused on M&A opportunities and are constantly evaluating new accretive deals that would deliver immediate free cash flow to the company and create shareholder value. Our successful bond issuance last year has diversified our access to capital and support our overall growth strategy. Underpinning all this and our core objective remain to maximize shareholder return. And I clearly want to reemphasize that shareholder return is at the center of all decision-making in Panoro. Since March 2023, including to the declared cash distribution of NOK 80 million, we have returned in total around 33%, 1/3 of our current market cap, to shareholders. It demonstrates our strong commitment to create value for all our shareholders while maintaining a very disciplined approach. I would now hand back over to Qazi, who will take you through our Q3 results. Qazi Qadeer: Thank you very much, Julien. And on this slide, you will see that we have assembled the highlights for this quarter and the year-to-date numbers. For the first 9 months, we are showing a revenue of almost $150 million and EBITDA of $70 million. CapEx is just under $30 million, the majority of which was incurred in the early part of 2025 in relation to the successful bolt-on discovery offshore Gabon. Then we have the third quarter revenue, which was $63.5 million, EBITDA of $19.3 million. It should be noted that Q3 EBITDA includes a noncash effect of negative $14 million worth of inventory movement arising from the expensing of Q2 inventory buildup, which was lifted and sold in Q3. So you would expect to see swings like that if liftings happen quarter-on-quarter. On the balance sheet, we have around $44 million in cash at bank at September 30, $150 million of gross debt, and net debt to trailing 12-month EBITDA ratio of about 1.04x. We have maintained a very solid and good balance sheet throughout this period. On the right, we have announced a quarterly cash distribution of NOK 80 million, which will be paid as a return of paid-in capital. Once paid, that will bring us to a cumulative cash distribution of NOK 660 million since March 2023. And including all share buybacks to date, we have returned approximately NOK 790 million to the shareholders, which, again, as Julien mentioned earlier, around 33% of our current market cap. On the next slide, that builds up our distributions for 2025. We have followed our policy for the calendar year 2025 to distribute NOK 80 million quarterly in cash distributions, and that honors our commitment what we set out at the start of the year. Year-to-date, we have purchased NOK 83 million worth of our own shares from the market as of close yesterday. We have been out of the market in the recent weeks because of close periods, but we still have some room left this year. If you look at the right, we have a limit of NOK 500 million of total distributions in the calendar year 2025, which is about $45 million. It's a key figure that we distribute in Norwegian kronas. As you can see, we have some headroom over the remainder of the year and have adhered to our quarterly schedule, again, underlining our commitment to shareholder distributions. This covers a bit of production update. In terms of group production, we break it down by quarter, so everybody can see that what is going on at our assets and broader trends over time. Dussafu continues to perform brilliantly with all wells available and performing in line or even ahead of expectations. The Q3 rate doesn't quite tell the story, as in the period, the operator successfully completed 3 weeks of planned annual maintenance, which limited production availability to about 80% in the quarter. You can see in the graph what impact this has on our group production in the gray shaded box. Tunisia has been quite steady. But in EG, the previously communicated downtime at the Ceiba field has impacted group production over the last 2 quarters. As a result, we expect group production for full year 2025 to average slightly below 11,000 barrels of oil per day. CapEx guidance for 2025 is unchanged at $40 million for the full year. On the next slide, we'll talk about the liftings a little bit. Those that are familiar with our business know that while we produce oil every day, we do not sell oil every day. It is sell in -- sold in parcels over different dates throughout the course of the year. We keep this slide updated each quarter and refine as necessary what's the logistical and commercial factors that drive our lifting allocation firm up. Our lifting in the first 3 quarters have been in line with our expectations. The first 9 months, we have lifted and sold just over 2 million barrels at an average realized oil price of $67.49 per barrel. In Q3, we realized a premium of around 1% over the average Brent oil price of the period 863,000 barrels or thereabouts, which is in line with previously communicated guidance at almost $69.5 per barrel. In Q4, we expect to lift around 1.1 million barrels of oil. It could be a bit higher as well, given that we have some inventory available to be lifted at the end of the year. Notwithstanding this, Q4 remains our busiest quarter from a lifting perspective with around 35% -- 2025 liftings occurring in the period. We have already lifted around 950,000 barrels in Gabon during mid-November. So the vast majority of Q4 has already locked in. On the next slide, this is a busy slide, but it summarizes a few key points. But just taking it from the top right, there is a reconciliation on our top left rather, there's a reconciliation of our cash at the start of the year and cash at September. On the left, we show our bond amortization, noting that we do not have any repayment during the year, and it only starts in the late part of 2026. On the right, we have our capital expenditure guidance for the year. As I said, it is going to be in line with previously communicated USD 40 million for the year. As everybody knows, we had a very heavy CapEx last year. This year, it's more around $40 million. We have just spent up to $30 million in September, and we are in line to meet our target of $40 million. I will now hand over to my colleague, Eric d'Argentré, who is going to take you through the operations. Thank you. Eric d'Argentré: Thank you, Qazi, and good morning, everyone. I am Eric d'Argentré, Panoro's CEO and President. I have -- I'm delighted to join Panoro early September, coming from 29 years at Perenco in operational and senior management position globally and in particular across Africa. So I am indeed very familiar with Panoro area of operations. This being said, on Dussafu operation update. So as Qazi mentioned, the production delivery remains strong and steady since the beginning of the year. And the 3 weeks annual maintenance operation on Dussafu was very well executed by the operator BW Energy in time with no extra days, but it does impact indeed the uptime in the period. On the project side, we have FID-ed and already planned mid next year, the exciting MaBoMo Phase 2 development coming around June '26. That will be a four-well drilling campaign, horizontal wells with long drain as we successfully did in the past. So applying the same techniques and strategy for those four wells. This -- those four wells will bring us back to the maximum surface capacity in terms of production on the MaBoMo and Adolo FPSO. The other exciting news on the Dussafu block is the Bourdon discovery. You heard about it earlier this year. This is roughly 50 million barrel in place and 25 million barrels to be recoverables. We are maturing with BW Energy, the FID for this project. The full development plan will include a first phase with three wells being drilled from a platform or a jack-up conversion and the pipeline to tie back to the existing facilities. And that will come in future and help us to extend the production plateau at the Dussafu block. And there is other exciting prospect around the Dussafu area, which we will come in the next slide. Again, you have heard about Niosi and Guduma block in the past. This is clearly a potential to repeat the Dussafu success story. And I'm very excited to say that we have started the seismic survey, which we discussed in the past this week on Niosi and Guduma as well as on Dussafu. We have two area of interest, which you can see on the slide in blue gray. One, including the top corner of the Dussafu block on the east part, where the seismic will help us to understand better and map better the Walt Whitman discovery and other prospects in the area, as well as the Niosi area, which you don't need to be a subsurface expert to realize that the Niosi area of interest is very well positioned between the Dussafu field and the Etame field operated by VAALCO in a very well-known and productive petroleum system here. So the partnership of BW Energy, VAALCO and Panoro is very well positioned in terms of knowledge in the area, and there is no better joint venture to understand the potential of Niosi and Guduma field. Next, please. Okay. On Equatorial Guinea operation, we have on Block G, two fields, the Ceiba field and the Okume field, tied back to the FPSO. While the Okume production has delivered as per expectation this year, we have suffered low delivery in Ceiba. This was explained earlier this year due to subsea and equipment issues. The operator, Trident Energy has worked hard and is working hard and diligently to restore production on the Ceiba field. One subsea cluster is already back on production. The second one is in operation. Marine and subsea operations are ongoing as we speak. We expect to have cluster 2 back on production sometime end of November, early December. And the rest of the production will -- should be back online early 2026. Next, please. In Equatorial Guinea, we also have a very exciting and one of our best asset, actually Block EG-23, which is located, as you can see in blue, in between the Niger Delta and the Rio Del Rey in Cameroon. So a very prolific petroleum system, well known, lots of oil and gas fields in the area. And you see Block EG-23 just up north of the Alba field operated by Conoco, which has already delivered above 1 billion barrel as well as the Zafiro prospect -- development with, again, over 1 billion barrel production. So we are at the moment in reprocessing of seismic data on this block. And we should have a better image within mid of 2026. Just a zoom on Block EG-23 and the Estrella discovery, which is a very [ want ], a very important, very much interesting for us. Estrella was -- Estrella-1 was drilled in 2001 and discovered 60 meters of reservoir. The well was tested above 6,700 barrels of oil per day and almost 50 million standard cubic feet of gas. As you can see, it's very close to the Alba infrastructure. It's 7 to 10 kilometers away. So it's an easy tieback and an obvious one, and then going onshore to the Punta Europa gas plant that has spare capacity. And we can see on the map, the dotted line shows you the 20 kilometers radius, which shows that most of the prospect identified and discoveries on our block are within tieback distance. And the idea is once we have one field tied back, then the next one will be in short distance, and we can repeat the same strategy as we've done in South of Gabon. Coming to Tunisia. Tunisia asset, as I mentioned, is producing steadily around 3,500 barrels as of today. So we have seen in the recent months, an increase in production of 10%. I was -- I visited myself the site a couple of weeks ago, and I was very impressed by the dedication of the team in maintenance, integrity and uptime. So we have a good asset base in Tunisia, and we are working on new -- on productive project and investment to increase production and extend the plateau on the TPS asset. Next, please. So as discussed in the previous slides, we have a very exciting pipeline of organic growth within our existing field with robust 2P reserves and a very good above 300% replacement ratio. That's a very good performance. Bourdon discovery will -- is not yet included. But as soon as FID is done, we should be able to book those reserves. We have other 26 million of 2C as of December '24 of discovered resources. And on Block EG-23, you see above 100 million barrel potential which is the Estrella field and other identified prospect I discussed earlier. And we will work towards transforming those 2C into 2P and then in production. On top of the Block EG-23, the Niosi, Guduma and the Dussafu, the EEA has clearly potential to increase substantially our resources. Again, the first step is happening as we speak with the seismic survey on the two exploration blocks, Niosi and Guduma, and that will be -- that will feed the pipeline of organic growth in coming years. Coming back to the key messages, I will leave you with those messages on the screen and move to the Q&A session. Qazi Qadeer: Thank you very much, Eric. We will now take question and answers. If you will be able to raise your hand or post your questions via the chat box on the bottom, which should be available to you. If you have a question, please raise your hand and we'll try to unmute your line and take your questions live. Andrew Dymond: Thank you very much, Qazi. We will now open up to Q&A. The first question has been submitted online. You have honored the quarterly cash distributions for 2025 with the NOK 80 million declared today. Can we expect to see continued buybacks under the program? Julien Olivier Balkany: As mentioned by our CFO, Qazi Qadeer, we have been in close period, and we intend to restart and restore our buyback program when we will be able to do so. We have headroom of just under NOK 100 million under our maximum priority distribution. And once again, our core focus is to deliver shareholder return. Andrew Dymond: Thank you, Julien. The next question is from Christoffer Bachke. Christoffer Bachke: This is Christoffer from Clarksons. So I have two questions today, if I may. The first question relates to Block EG-23, where investors currently seem to assign limited value. Can you comment on how you view the potential of this asset and what strategic options such as partnering, farm down or alternative development pathways you're evaluating for the block going forward? And the second question is on M&A. Given your history and track record on accretive acquisitions, how are you thinking about further growth and M&A at this stage? Eric d'Argentré: Okay. Thank you, Christoffer, for your question. Concerning Block EG-23 we see has presented a lot of potential, not just on Estrella-1 discovery, but on the global picture of this block, which is ideally positioned. We have 80% of the block. We are the operator. We are in Phase 1. We need to get our seismic reprocessed, get -- clarify the volume in place, and then we will most likely be looking for partners. There is already a lot of interest in our block because we believe this is clearly the best block in EG, in shallow water with lots of potential and very close to a infrastructure tieback. So yes, we will be looking for partnership in the future. Julien Olivier Balkany: Thank you, Christoffer. I will address the second part of your question. As I mentioned earlier, M&A has been at the roots of Panoro, it has been part of our DNA. And clearly, in the current oil prices environment, we are remaining focused on M&A opportunities. And we are constantly permanently evaluating, assessing new accretive deals. And those transactions need to be accretive starting day 1 and immediately generate free cash flow for the company to benefit all the shareholders. Andrew Dymond: The next question is from David Messer. Unknown Analyst: Andy, two questions from me. First, on the EG-23 block. From the presentation, you can see there's been a number of smaller oil and gas discoveries. So I suppose my question is why were those discoveries appear to be subscale compared to, I imagine, what the original driller assumed them to be predrill? And why was this block not -- or why were these discoveries not developed since they've been discovered by another operator, maybe? And then just secondly, on Trident and its operational issues. Can you just give me a bit more color on what the facility issues have been on Ceiba and how Trident has gone about ensuring that these are not recurrent operational issues that happen going forward? Eric d'Argentré: Okay. Well, thank you very much. Concerning Block EG -23 and the discoveries of the well drilled. And yes, those wells have indeed penetrated reservoirs, some tested, some not tested. But in fact, it's -- depending on what the previous operators were exploring for, whether they were looking for gas or looking for oil. On the Estrella, for example, it was a gas play with a lot of oil. It was deemed to be marginal at the time versus bigger, what I would call the elephant or the giant field. Estrella might not be a multibillion field, but it's clearly a multi-hundred million in place. And the nearby exploration, the problem is when you have no infrastructure or just one not bad close, it's difficult to make a small discovery commercial. And that's a strategy we will develop in EG-23. Once we have a platform and a mean of evacuation from Estrella, for example, any small discovery not material from major in the past will become clearly material and commercial forest with easy tieback. So that will be a step-out approach from one to the other on EG-23. Just to your second question on Ceiba field. What has been the issue is, as discussed, it was a subsea. In a development like this, you have your well producing to the seabed and from the seabed, you have flow lines or umbilicals, risers going to the surface on your FPSO. It's deep and long. So there is multiphase pumps installed on the seabed, what we call on different clusters with X number of wells arriving at each cluster. And we had a combination of a series of failure of multiphase pump earlier this year, which obviously without the pump, the well cannot deliver to surface. It's too high, okay, with back pressure on the well, without going too technical. So the operator has, with one subsea, worked very hard and diligently to get those multiphase pumps shipped back, turned around and sent back to Equatorial Guinea. The first one has been installed. The second one is on the support vessel with the ROV and should be installed in a couple of weeks, and the third one earlier next year. On the long-term plan with Trident, the operator is looking at a quick turnaround of multiphase pump system with one subsea, but as well with internalizing a bit more the maintenance of the pumps in country. They have done that successfully with one already. So we expect to see a quicker turnaround of any maintenance issue on those subsea equipment. Andrew Dymond: The next question is from Ntebogang Segone. Ntebogang Segone: Can you guys hear me? Eric d'Argentré: We can. Ntebogang Segone: Ntebogang Segone from Investec Bank Limited. I have got a few questions around production. If you could provide us with more color around OpEx per barrel for me. I mean, production, even management is saying that for FY '25, we'll be tracking below guidance. However, if you look at guidance for FY '25 in terms of OpEx per barrel at a consolidated basis, it still remains unchanged. So if you can maybe provide more color on that as to why it is that there is no increase or increase in your OpEx per barrel? And then in relation to the Gabon asset where there's been the 3 weeks planned annual maintenance, how should we then be looking at production, particularly in the fourth quarter? Should we be looking at it relative to operating at similar levels as in 1H 2025? Or will it be tracking below that? And then in relation to CapEx, on the exploration side, I do see that there's a lot of projects that you have in place. I mean, you've got the discovery, the Bourdon discovery coming up. If you could please just provide us with more guidance around how we should look at CapEx from FY '26 as well? Andrew Dymond: Thank you, Ntebogang. Just there's been a couple of questions as well online just about 2026. I mean we issued 2026 guidance once we've been fully through the budgeting cycle with our partners at our assets. So we're going to continue to do that. So as we have always done, we'll be providing 2026 guidance early in the new year. Obviously, Ntebo, I think in terms of the production question that I think we set out, kind of what that impact had in terms of deferring volume in Gabon from the planned maintenance, which was successfully completed in the quarter. If we hadn't had that impact and if you just would look at it on producing days, we'd have been fairly stable. So I think you can extrapolate that sort of into the fourth quarter. I think Tunisia production is pretty stable as well. Equatorial Guinea, as Eric has already gone through, we are seeing some restoration and expect to see that and normalize into Q1 2026. So I think from that, that kind of builds the picture as to the guidance that we've set for the full year at just under 11,000 barrels a day. The capital expenditure at Bourdon, we made the discovery in Q1 of this year. And so there's still a lot of work going on. It's a bit premature to start sort of speculating because there's various concepts under evaluation and it's being matured towards FID. And once we have sort of a firm picture on the basis for FID, we'll obviously communicate that. But what I would say is, look, the intention is to follow the sort of MaBoMo strategy. So as a starting point, you can look at the kind of costs that we've developed and the strategy we've developed the Hibiscus area with the operator. Just on the OpEx per barrel, I mean, obviously, what we try and show there is the actual cost of producing the barrel of oil out of the ground. There are some timing things. So what I'll do with that is I'll -- rather than go into so much detail right now, I'll follow up with you separately, Ntebo. And that will conclude our Q&A for today. Thank you very much, everyone.
Operator: Hello, and welcome to the Third Quarter 2025 Investor Call for Pershing Square. Today's call is being recorded. It is now my pleasure to turn the call over to your host, Bill Ackman, CEO and Portfolio Manager. William Ackman: Thank you, operator. So welcome to the third quarter conference call. We've had a strong year-to-date, certainly through Q3 and even up to the present, north of a 20% return and nicely in excess of the S&P for the year. But despite overall strong performance, we don't get them all perfectly right. So I thought we'd start the call just focusing on a couple of investments that have not performed well this year. And why don't I turn it over to Anthony to talk -- let's talk about Chipotle. Let's start there. Anthony Massaro: Thanks, Bill. So we actually sold our remaining shares in Chipotle this year following the company's third quarter earnings report. This concluded an investment in the company that was over 9 years old. So a very disappointing conclusion to what had long been a very successful investment for us. The stock IRR from our inception to exit was just under 16% versus just over 15% for the S&P 500. But fortunately, we have previously sold 85% of our initial 10% stake in the company at various times over our 9-plus year holding period. That resulted in a realized IRR on the position of just under 22% and $2.4 billion in cumulative profits. So the big question is, obviously, why did we decide to sell the rest of it this year after a stock decline of nearly 50%. So just to give you kind of some context for our thinking, from the first full quarter that Brian Niccol was CEO of Chipotle, that was the second quarter of 2018 through the end of 2024, quarterly same-store sales averaged 9% and no quarter outside of one quarter that was impacted by COVID was below 3%. And if you look under the prior management team, in the 10 years prior to the 2015 food safety scandal that predated our investment, same-store sales also averaged 9%. So as the company started to report weak quarterly same-store sales this year, we believed based on the various sales-driving initiatives they had in the pipeline and also the remarkable long-term historical performance since the company went public, that trends would eventually improve. And unfortunately, underlying trends progressively worsened throughout this year including another step down during the current fourth quarter that was disclosed on the Q3 call. We do believe that macroeconomic weakness amongst low- to middle-income consumers and younger consumers is the primary cause of this same-store sales slowdown as evidenced by similar trends that peers are experiencing. But we don't know how long this weakness is going to last. We don't know if it's going to worsen before it gets better. And it's pretty clear that Chipotle and competitor management teams don't know either. They're doing the right thing by reinvesting in the customer value proposition by not taking price despite mid-single-digit food cost inflation, and they're, therefore, accepting kind of lower near-term margins. But we don't know if this will be sufficient, and there might be more kind of to come there. Year-to-date, of the kind of nearly 50% stock decline, forward earnings are only down 8%. Now that's not good, right, because they're supposed to actually grow. But forward earnings are down 8%, but the PE multiple is down 44%. So the vast majority of the year-to-date stock decline is due to multiple compression. While the current valuation of about 25, 26x forward consensus earnings is cheap if the company can quickly get back to achieving its long-term growth goals, we just didn't have enough confidence to underwrite this at this time. So the business has a high degree of operating leverage. So it's possible that if sales weakness persists for however long it persists, that consensus margin levels will be below even current levels. And this investment now has a much wider range and dispersion of potential outcomes around the company's near- and medium-term earnings power. That's just much wider than we had foreseen at the beginning of the year and frankly, at any time since we own our investment in Chipotle. And this made it a lot more difficult to continue holding the investment despite the fact that the company is now trading at one of its lowest multiples ever. And there's a new CEO running the company since Brian left for Starbucks in August. He's a talented operator, but he's certainly off to a rocky start as a first-time CEO. And in light of this, a return to the company's historical premium valuation multiple is uncertain. We do have tremendous respect for Chipotle, and we wish the company all the best as it navigates what's proven to be quite a challenging environment for them and for the industry. William Ackman: Yes, we wish the company well. We think highly of Scott. We think he's a very good leader. He did a great job running COO of the company for a long period of time. So we wouldn't bet against Chipotle. And maybe someday, we have an opportunity to become a shareholder again. Anthony Massaro: Totally agree. William Ackman: So on the topic of less than successful investments this year, let's talk about Nike and maybe feel free to jump in as well, Manning, if you'd like. But Anthony, go ahead. Anthony Massaro: Sure. So we also exited our investment in Nike Options earlier this month. Unlike Chipotle, Nike was an unsuccessful investment for us. So much shorter holding period. We first invested in the company this time around in June -- or sorry, in the spring of 2024. The cumulative return on Nike since we first invested was negative 30% versus the S&P, which is up 33% and the cumulative P&L was over negative $600 million. So the big mistake here was the initial underwriting. So as we've previously communicated, we underestimated the degree of near-term revenue declines and operating deleverage, aka margin declines that would be necessary to effectuate a turnaround here. So the prior CEO had lost the organizational focus on sport. They overemphasized direct-to-consumer sales at the expense of wholesale relationships, and they failed to create innovative performance products while overproducing big lifestyle franchises, and this really damaged brand heat in the eyes of the consumer. The prior CEO had admitted to kind of these mistakes in early 2024 and outlined a series of corrective actions, which is why we thought that the ship had kind of been set in a better direction, but the magnitude of the corrective actions that were required were far greater than we anticipated. Fortunately, for Nike, the company's controlling shareholder, Phil Knight, and the Board of Directors made the ideal management change in September of 2024 by bringing back long-time Nike veteran, Elliott Hill. We believe Hill is a fantastic CEO. He has an excellent strategy to return to profitable growth by renewing Nike's obsession with sport, accelerating innovation, creating bold marketing and rebuilding wholesale distribution, which he led for a very long time. At the start of this year, we converted our Nike common stock position into a deep-in-the-money call option position. We did this to preserve the upside potential of owning the stock while unlocking capital to make new investments. Since the start of this year, the turnaround is progressing a bit below where we projected for revenues, but materially below for margins. And the reasons for that are twofold. About half of that margin decline versus what we projected at the beginning of the year is due to tariffs, which were new this year and the other half is due to more aggressive clearance activity of legacy inventory. So Nike is down about 17% year-to-date. Most of that is forward earnings, which are down 15% and the multiple is effectively unchanged, down 2%. While we have confidence that Nike has the right CEO and the right strategy, we grew more uncertain of what long-term margins would look like as this year progressed. Can the company really get back to pre-COVID margins in light of tariffs, which don't seem like they're going away anytime soon and in light of the more competitive nature of the industry. It is a more fragmented competitive landscape in athletic footwear and apparel now than it was kind of for most of Nike's history. And to meet our return thresholds for a turnaround at the time of our sale would have required us to assume stabilized margins of at least 13%, which is consistent with what they did pre-COVID. And we didn't have enough confidence to make this assumption kind of in light of these new margin headwinds. We do believe that Nike's turnaround will be successful, but we don't know what success will look like from a margin perspective. The company has articulated confidence in getting back to double-digit margins, very different outcome for shareholders if that's closer to 10% than 13%, 14%. So we have tremendous confidence in Elliott, a tremendous admiration and respect for what he's doing at bringing Nike back to greatness, and we wish him and the team at Nike the best of luck. William Ackman: Obvious question would be with respect to Nike. It's a company we've owned before and got right in the past in a meaningful way. Any sort of overarching lessons from either the Nike or the Chipotle experience that will help us avoid similar mistakes in the future, either a better exit from a Chipotle or a miss -- a better timing on our acquisition of shares of Nike. Anthony Massaro: Yes. Look, I think we're still reflecting on kind of lessons learned, but I think I would point 2 high-level ones, one for each. On Chipotle, I think high PE multiple stocks can be dangerous when things turn. I think that if everything is going right and you have a very proven leader running the company, you can afford to hold it for a while longer. But I think with a high multiple stock, if kind of the trends slow for any reason, it's better to exit faster than to give management the benefit of the doubt. For Nike, I think one lesson that I and we, I think, have learned there is return thresholds for turnaround situations, even if the turnaround doesn't look like initially that it's going to be that severe, should be higher. So I think had we gone in with kind of a higher required -- had we had a higher required IRR for that one, perhaps we would have avoided making the initial investment. William Ackman: Great. Why don't we focus on one other underperformer for the year, and then we'll get to why we're actually having a good year, but I think it's good. Let's focus on the negative first. Universal Music. Let's talk about that. Ryan, go ahead. Ryan Israel: Sure. So Universal Music, the business performance has continued to be strong. In their most recent quarter reported a few weeks ago, the company showed, for example, that revenues grew at about a 10% rate on a constant currency basis and their adjusted EBITDA profit metric actually grew a little bit in excess of that about 12% rate. Those levels of business performance are actually very consistent with what the company has done since we helped facilitate a public listing nearly 4 years ago. So the business performance remains quite strong operationally in our view. But as you mentioned, Bill, the stock has underperformed this year. And in particular, it's really underperformed since the summer. So the share price was in July, a little bit above EUR 28 per share. And as of earlier this week, it was as low as about EUR 21.50, which is about a mid-20s percent decline in the share price. And actually, at one point earlier this week, the company was down to a 20x PE multiple based on consensus analyst earnings for the next year, which is the lowest multiple that the company has ever traded at in our little over 4 years of ownership. And we think the primary reason for the decline in the share price over the summer to now really due to technical factors. So for example, the largest shareholder of the company, the Bollore Group, there was a ruling in July by a French court that they would need to buy out another publicly traded company. And so there was a fear or perception in the marketplace that Bollore, who is the largest owner of UMG would be a forced seller for a chunk of -- a very large chunk of their shareholdings in order to fund this buyout that a French court was requiring. And so that forced seller dynamic, in our view, made it difficult for other people to want to buy the stock ahead of what could be a forced seller in somewhat unknown time frame and potentially unknown quantity. As we transition from that happening in the summer to the fall, the U.S. government shut down. And so the SEC was unable to kind of fulfill any sort of request for a U.S. listing and UMG's example, which we think created potentially further technical headwinds. Stepping back a little bit, our view has been that the business performance remains very strong, as I mentioned on the quarterly basis, this quarter as well as really over the last 4 years. And we think that a share buyback really could address the technical concerns that would have happened. So for example, the market perception that there is a forced seller that could be around the corner, hard to get market participants to want to buy shares in advance of that. Yet if the company is buying their shares, that could provide somewhat of an offset for the technical demand. And in general, for a company that has very strong operational performance, we think a buyback at the lowest multiple that it has traded at for the last 4 years would be a good idea as well. But maybe I can turn it back to you, and you can talk a little bit more about the upcoming U.S. listing. William Ackman: So one of the package of rights we received when we became a shareholder of Universal Music was the ability to catalyze a listing in the U.S. And we felt strongly that it's a U.S. headquartered global business, but half -- even more dominant in the U.S. and a very significant percentage, effectively half of their business is a U.S. company. It is listed in Euronext that has limited the universe of people who can own the stock. Many U.S. investors by mandate are not permitted to own Euronext listed securities. And our view, materially more demand can come into the stock with the U.S. listing. We also think the kind of cadence of quarterly reporting and the kind of information that becomes available when a company is registered in the U.S. will provide -- enable better analyst coverage. The fact that the peers are U.S. listed companies will make, I think, easier, I would say, comparisons and I would say, better understanding of the company. And so we catalyze that listing by exercising our registration rights. Our registration rights require in order for the company to be obligated to register our shares in the U.S. and create a listing here for us to actually sell some stock. So we've agreed to sell $500 million of shares as part of the listing of the company. Now in light of the share price, we are not a -- we're a very reluctant seller, but we believe the value in terms of improved transparency as well as the improvement in the supply-demand dynamic overwhelms the cost to us of selling a portion of our position at the current share price. Now we've approached the company, and we've asked the company to simply seek a listing in the U.S. without the requirement for us to sell stock. At this point, the company has been unwilling to let us withhold the $500 million of stock in the offering. So we're going to go ahead with the offering, selling a portion of our stock at whatever the price is at the time the listing in order to catalyze what we think is a value-creating transaction for the company. Just further to Ryan's point, this is a company -- I've been on the Board -- I was on the Board for a number of years. I think it's an excellent management team that understands the music industry, where there seems to be a gap in understanding is in how the company approaches the capital markets and using -- taking advantage of the company's balance sheet, the free cash flow it generates and optimizing the company's use of capital. This is a business that's not going to require billions and billions of dollars of capital for acquisitions. The company has made that, I think, very clear. The nature of the company's dominant position in the marketplace also makes clear that it's very difficult for the company to do acquisitions of any kind of meaningful size in the industry. So we remain puzzled really as to why the company is not a more aggressive buyer -- or actually why it doesn't buy back stock at all and why in addition to pointing out that the stock is trading at the lowest multiple it traded at, it's also approaching the highest valuation for Spotify, a significant asset on the balance sheet. The company has intelligently held on to it at this point in time. But again, another opportunity for monetization and returning capital to shareholders. So that's our strong view on that topic. Okay. Let's focus to the positive. We are actually having a very good year. Let's talk about our largest investment at this point, Alphabet. And that's Bharath, who's going to take that on. Go ahead, Bharath. Bharath Alamanda: Sure. And maybe to rewind back to when we originally initiated our position in Alphabet more than 2.5 years ago, our investment thesis was that Google's leadership position in AI was being severely underappreciated. And our view then was the company had a unique full stack approach to AI that came with several structural advantages, namely frontier research capabilities, world-class technical infrastructure, scale distribution and the access to immense training data. And you could argue then that the main open question was around execution and whether the company would be able to harness all those inherent competitive strengths into their product road map. I think since we made our investment and one of the reasons the share price has appreciated meaningfully both this year and over the life for our investment, but we still continue to remain very optimistic shareholders, is they've really stepped up to that question and done an excellent job on the execution front and leveraging their strengths. And maybe to just provide a few recent examples of that. Earlier this week, Google released their latest and very widely anticipated Frontier AI model of Gemini 3.0. Not only did it immediately jumped to the top spot on all of the benchmark evaluation leader boards, more notably, they integrated Gemini 3.0 directly into search and the Google apps the same day that it was released, kind of highlighting the company's focus on improving the product velocity. Gemini 3.0 was also led by the DeepMind team, which was a start-up that the company had very presciently acquired all the way back in 2014, and that lab continues to be the leading kind of frontier research lab. On the hardware side, the company has spent the better part of a decade optimizing their technical infrastructure to specifically run machine learning and AI workloads. And as a result of that, they can now run those workloads at sort of industry-leading lowest cost per token. And they've developed their own proprietary TPU semiconductor chips, which has not only reduced their reliance on NVIDIA's GPUs for running internal workloads, but I think what we've seen more so over the last year is they're gaining increasing traction from third-party Google Cloud customers. On the scale distribution front, Google has incredibly valuable digital real estate and consumer mind share. And that's probably best seen through the rollout of AI overviews, which are the summary AI search responses that are directly embedded in search. AI overviews is now being served to more than 2 billion users. And if it were to be considered its own stand-alone app would be by far the most widely used AI app. And then lastly, kind of on the data front, we believe Google's ability to train kind of on a wide corpus of first-party data, including YouTube videos for image and video generation as this is a very valuable long-term differentiator. Tying all those advantages to the operating results, those advantages are now being clearly reflected in the company's ability to grow at scale. So for context, Google generated $100 billion of quarterly revenue in Q3, and those revenues grew at a 15% rate, right? Just their core search and YouTube franchises, despite their maturity, are continuing to grow at a low teens rate, and their cloud business, which is now a very scaled $50 billion run rate business, growing at an incredible 32% rate. So while the share price has appreciated meaningfully this year, we still think that the valuation is quite reasonable in light of the business quality, their leadership position in AI and their ability to continue to grow earnings from this point on at a high teens rate for a very long time. William Ackman: Great. Thank you so much. Why don't we go to Uber, Charles? Charles Korn: Sure. Thanks, Bill. So as a reminder for everyone, we invested in Uber early this year, what we believe was a very highly dislocated valuation with extremely strong fundamental and operational performance overshadowed by concerns regarding disintermediation risk. And big picture, we feel increasingly confident that the market structure is evolving consistent with our underwriting hypothesis. And over the course of 2025, basically, what Uber has done is they've advanced a number of partnerships with various autonomous vehicle and technology companies. And taken together, they're strategically advancing geographically focused commercial pilots with line of sights to thousands of autonomous vehicles covering major metro cities on their network within the coming years. And since our last update, one notable call out is a marquee partnership Uber announced with NVIDIA this past month. The partnership is interesting. It coalesces around NVIDIA's DRIVE AV platform as a reference compute and sensor architecture to make any vehicle an autonomous vehicle, i.e., L4 ready, which enables OEMs and developers to accelerate their AV technologies, respectively. And it offers an extremely credible counterpoint to Waymo and Tesla's respective architecture. So you essentially have what was looking like a potentially 2-player market developing to a credible third alternative, which can help some of these small long tail of AV players kind of accelerate their respective technology developments. And Uber's role here is they're going to be contributing valuable training data to an NVIDIA data factory, which will support a foundational model upon which others can draw. And the partnership overall, it's designed to lower cost of development and accelerate commercialization efforts for our industry participants. Now against this backdrop, Uber continues to operate commercial operations for Waymo in several markets, including exclusively in Austin and Atlanta with strong utilization data reinforcing Uber's unique value proposition. We expect the market structure will continue to evolve over time to maximize vehicle utilization and operating profits. And we believe basically Uber is positioning itself to become a technology and hardware-agnostic partner of choice for the AV ecosystem. Transitioning to discuss operating performance. In short, financial results continue to be excellent. Notwithstanding their market-leading scale, growth is actually accelerating with operational metrics achieving new all-time highs in users, engagement, frequency and trip growth. And so top line results also notably this growth is actually balanced across both the Mobility and Delivery business segments with 19% and 23% growth in the most recent quarter, respectively, which just gives you some scope of the scale and growth here. And that roughly 20% blended bookings growth translates to 33% adjusted EBITDA growth and more than 50% growth in earnings per share as the company is scaling margins off a relatively low base, which is very impressive. Notably, the company is achieving this level of operating -- attractive operating leverage and earnings growth while continuing to make investments to see the next generation of products and geographies, which we believe will sustain Uber's high rate of growth over the coming years. And to just kind of double-click on this concept of investment, so the stock has been relatively weak the last few weeks. And part of this, I think, was actually -- some people may have seen DoorDash, which is a primary competitor in the delivery space, announced an unexpected round of major investments, which caught investors off guard. The stock was down nearly 20% in response to that, and that's their primary competitor in delivery in the United States. So I think there was some concern, is Uber also going to need to make a similar round of investments? Or is the competitive intensity of the business increasing. And our perspective on this is basically DoorDash. They -- basically, the company has grown very rapidly. They're very strong operators, but they didn't have amazing kind of forward-looking vision on the product architecture. And so their technology stack kind of became slightly more outdated at a faster rate than one would anticipate for a newer, relatively speaking company. They've also done a number of acquisitions, and so they're using this as an opportunity to kind of integrate these acquisitions and rebuild their tech stack. But primarily, this seems like it was a miscommunication around the kind of IR and external communications from DoorDash, and we don't think this represents a fundamental shift in the competitive intensity or kind of a desire for DoorDash to lean in. And importantly, we don't think that Uber has to make these same kind of investments. They're making such investments while simultaneously achieving their multiyear financial targets. And so we think this is kind of a unique issue to one of their competitors. And so big picture, taking a step back, Uber is basically trading at a mid-20s multiple today, which we think is an extremely cheap valuation considering their high rate of earnings growth and attractive outlook. William Ackman: When does the Tesla overhang lift, if you will, the fear that Elon will -- there will be 10 million taxis driving around, charging people $5 to go unlimited distances. Charles Korn: What's interesting, what I'd say is a factual statement, right, is that Waymo is far more capable today from a technology standpoint than Tesla, right? Tesla has grand ambitions. But if you just look at the facts, the issue is it's hard to -- it's impossible to scale a business if you don't have unit economics that work, and it's a bit of a catch-22 where until you have a technology, until you have a cost structure that works, you can't scale. So it's hard to say. I think 2026 is likely to be another year of kind of experimentation and kind of evolution rather than revolution. I don't expect to see kind of a major breakthrough. I think the nature, too, of scaling in robotaxis is there's a requirement to kind of validate and evaluate the models you're creating to make sure they're performing in real-world scenarios consistent with your modeled expectations. And that, by its very nature is kind of a slow methodical approach because if you released 100,000 robotaxis without knowing how the models perform in real-world settings, there's real-world consequences and people can die. And I think actually, Elon has been pretty measured and thoughtful around making sure that they are cautious in terms of their rollout of the products to make sure that they're performing as expected. In this regard, we'd say Waymo is clearly -- has best-in-class data, best-in-class disclosure around safety, disengagement, et cetera. I think it will be positive if kind of Tesla demonstrated more of that. Ryan Israel: If I could add maybe one thing to that. I think the Tesla risk or the Tesla overhang is really centered on 2 variables. Number one, that Tesla itself will be the dominant market player in AVs and that if it is the dominant market player in AVs, it will not choose to partner with Uber. And so I think the way that this can resolve itself is that either one of those 2 premises shows to not be correct. So to Charles' point, if there are more AV companies such as Waymo and there's actually a handful of other potential AV companies that are showing very strong progress aside from Waymo, if those companies start to become more dominant in the space and/or they start partnering with Uber, I think the perception will be that this will not be owned by any one company for AVs, and therefore, it would be a much more balanced marketplace, which I think will help resolve some of that overhang. That may be knowable within the next, I would argue, 12 to 24 months, although the timing is a little uncertain. Secondly, to the extent that Tesla does become further along in actually deploying robotaxis at scale, which, to Charles' point, does remain to be seen. They're certainly behind a lot of the targets that they have suggested over the last several years. But once they start scaling up, to the extent they are more willing to talk about partnerships, that could be the other way that this overhang results. So I think there are multiple ways that will become clear over the next year or 2 in which this could resolve in the way that we think, which will ultimately be beneficial for Uber. William Ackman: In short, we basically think the Uber platform is enormously valuable to Tesla and to all the other sort of AV companies and it's becoming even more valuable over time, embedded in the mind share and the consumer experience, a bit like Google's presence in search. Okay. Let's talk Brookfield. Charles, go ahead. Charles Korn: Sure. So Brookfield, they've had a very active 2025 with strong operating performance, significant business building and corporate development activity, particularly in recent months, including the pending acquisition of Just Group, which is a U.K. pension insurer that they're going to be acquiring early next year and the recently announced buy-in of the 26% of Oaktree that they don't already own. To start, maybe I'll provide some perspectives on their financial performance, and I'll focus primarily for now on Brookfield Asset Management or BAM, which is, as a reminder, kind of comprises roughly 75% of the value of BN Corporation, i.e., the parent entity, which we own. BAM is generating very strong results. So they're seeing roughly 15% growth in fee revenues with particularly strong growth in their credit and renewables businesses. In renewables, they closed on their second transition fund earlier this year, which is driving some of that strength. That roughly mid-teens rate of fee revenues is translating into fee earnings growth at a slightly higher kind of 16% to 17% rate, which is basically strong operating leverage on the core BAM business, offset by lower margins at Oaktree, which we think is kind of a transitory development, which will reverse itself next year, setting the stage for even stronger kind of operating leverage. And so as we look to 2026 for BAM, we think they're poised for an excellent year with accelerating organic fundraising, further step-up in capital from BN Wealth Solutions. Again, part of this is that acquisition of Just Group and then efficiencies, which they'll garner from fully consolidating Oaktree within BAM. And so of note also, as you think about BAM for '26, they're going to be in market with multiple flagships next year, including their next-generation infrastructure and private equity funds and their recently launched artificial intelligence fund. And each of these flagships, these are large, chunky $10 billion, $15 billion, $20 billion, $25 billion funds, which drive step function increases in fee-bearing capital, fee revenues and, of course, operating profits. Now moving beyond BAM to the broader kind of Brookfield ecosystem and the cash flow streams that roll up to the parent BN, 2 kind of call outs. So one, carried interest is beginning to meaningfully accelerate at BN, growing roughly 150% the last few quarters off a relatively low base. Earlier this fall, the company provided a forecast for $6 billion of carried interest over the next 3 years, which should begin to meaningfully kind of show up in 2026. It may be somewhat back-end weighted, but it's basically setting the stage for very significant growth next year. And then second, I'd touch on Wealth Solutions, which is their annuities -- primarily the annuities business, that grew 15% this quarter, which was -- saw a strong earnings contribution from the relatively small P&C business they have within their wealth solutions portfolio, which is offset by lower growth in their annuities business. And here, what's happening is we believe they're repositioning the asset book for higher long-term yields, but it's driving some temporary dislocation, which we think will reverse itself in the near term. Taken together, so BN is tracking towards low to mid-teens distributable earnings growth this year, which we believe will meaningfully accelerate next year with step function changes, increasing both the earnings contributions from Wealth Solutions and a step-up in net carried interest realizations. Also of note, the company hosted their Annual Investor Day this past September, and they established a target for nearly $7 of earnings per share in 2030 or 25% compounded growth from here. And in that context, we note that -- we think Brookfield stock is extremely cheap. It's trading at roughly 15x our assessment of forward earnings, and we anticipate accelerated share price performance tracking with kind of the rate of earnings growth we anticipate to see from them over the next few years. William Ackman: Thank you, Charles. So Fannie, Freddie, was it yesterday? It seems like a long time ago that we gave a presentation on our thoughts for a path forward for Fannie and Freddie. The President and members of -- Treasury Secretary and others have talked and posted on Twitter about potential plans for an exit from conservatorship and/or an IPO for Fannie and Freddie. We think someday, a public offering of shares by the government may make sense, but we do think there's an important step that should be taken beforehand. That's a much lower risk alternative. So what we've proposed both privately to the administration, we had the opportunity to share these ideas with the President with Secretary Ludnick, Secretary Bessent as well as Director Pulte in the recent past, which we then shared in a public forum that the administration could get a sense of the market as well as the various commentaries view of this -- of our, let's say, trial balloon is really a very simple next step. If you think about the Trump administration's first term where the President started to put Fannie and Freddie on a path to removal from conservatorship, the most significant step was reversing the theft or stopping the theft, I guess, I would call it, where Secretary Mnuchin basically ended the net worth sweep and allowed these entities to start building capital. That was a very important step for actually reducing risk in our housing finance system, making -- putting Fannie and Freddie in a position where they could, on a stand-alone basis, support the guarantees that they had outstanding. I think that was a critically important step. But we think the next step should be an acknowledgment, really, it's an accounting for the payments that have been made to the government. So basically, U.S. government injected $191 billion into these companies after the financial crisis and extracted an appropriate pound of flesh, which is a 10% return on that capital as well as warrants on 79.9% of both companies. They basically took -- it was a distressed bail out with very onerous terms, the most onerous terms of any of the banking financially related companies, only, I think, tied maybe even -- actually, ultimately, the amended version of AIG, I think, was even less onerous than Fannie and Freddie. Now the administration -- the companies have paid back $301 billion of the original $191 million, which is more than the 10% return they're entitled to. But from an accounting perspective, the preferred remains outstanding on the balance sheet. That's really a function of the net worth sweep previously -- never-seen-before transaction. So what we're recommending is that the payments to the government have to be accounted for. The result would be eliminating the preferred line item from the liability section or the equity section of the company's balance sheet. And the next step, of course, will be exercising the warrants. The government will become now very large shareholders of both companies and then the businesses are in a position to be listed on the New York Stock Exchange. Importantly, we think they should stay in conservatorship. What that means is we're now -- there's literally 0 risk to mortgage rates. The government is still completely in control of both enterprises. And now the necessary next steps can take place over however long they take in a very measured, thoughtful manner. And we believe this accomplishes all of the administration's goals, at least the stated goals of showing how much value has been created for taxpayers. The President did the right thing in not selling these entities in his first term and they've increased in value probably fourfold or so from the $100 billion offer that was apparently made to take these businesses private, I guess. And we think there's still a lot more room to run. So we think it's not a good time to do a public offering of shares because it would be dilutive to the taxpayers' ownership of both entities, but the government will be able to show a mark-to-market value and demonstrate incremental important progress without taking a risk to mortgage rates, and we shall see. The good news is that transaction -- again, the President has got a lot on its plate, and we're approaching Thanksgiving, but it's actually theoretically possible. We've spoken to the exchange about a relisting. They're obviously prepared to do whatever is required to get that done. So it could be a nice Christmas present for the long-suffering shareholders of Fannie and Freddie, which include more recently some institutions. I mean, Pershing Square has been around here a while, but other institutions have bought stock over the course of the past year, and there are literally millions of small shareholders who are cheering for the President to save them, and this would be a very nice Christmas present for that group of owners. Why don't we go to Amazon? Bharath, why don't you update us? Bharath Alamanda: Sure. So earlier this year, we were able to opportunistically build a position in Amazon during the April market drawdown. It's a company we followed for a long time, and I always admired the fact that it operates... William Ackman: What price did we pay in the drawdown? Bharath Alamanda: Our average initial cost was around $175, which is a 25x entry multiple on forward earnings, the lowest multiple that the shares had ever traded at in their history. William Ackman: Thank you. Bharath Alamanda: So yes, it was a company we've been following for a long time, and we always admired the fact that they built and operate 2 of the world's great category-defining franchises between their cloud business, AWS and their e-commerce retail operations. Our view is that both of those businesses are supported by decades-long secular growth trends, occupy dominant positions in their markets and share the kind of core tenets of the Amazon ethos of focusing on the consumer value proposition and leveraging their scale to continue to reinvest and be the low-cost provider. Despite those compelling attributes, there were concerns around the growth trajectory of AWS and then coupled with the broader tariff-related market volatility, that kind of provided us the attractive entry point. And our view was that those concerns underestimated the resiliency of the business model as well as the duration of its growth runway. And while it's still early days, the company's operating results since then have kind of helped validate our thesis. So starting with the Cloud segment, AWS today is a $120 billion business that continues to grow at a high teens rate. And in fact, last quarter, the growth rate accelerated from 17% to 20%. Notably, that impressive growth rate was actually limited by capacity constraints as consumer demand for compute vastly exceeded the pace at which AWS is able to bring new supply online. William Ackman: Is that constraint driven by just the time to build the new facility or GPUs or... Bharath Alamanda: Yes, I think it's a combination of the above. So to that end, the company has been very focused on accelerating that build-out. So in the past 12 months, they brought online 4 gigawatts of power, which is more than any other cloud provider. And for context, Amazon has doubled their data center capacity since 2022 and are on track to double it again by 2027. So in light of the kind of supply-constrained nature of AWS' growth, we actually think those investments today to accelerate the build-out are very efficient and high return use of capital. And then kind of shifting to the retail business, they've seen very minimal, if any, impact from tariffs. And over a longer time frame, we're very encouraged by the potential for significant margin expansion in that segment. So if you were to look at peer margins and adjust for Amazon's business mix as well as taking into account their much higher margin and faster-growing advertising revenue stream, we estimate that Amazon's structural retail margins could be several hundred basis points above the 6.5% margins they're expected to realize in 2025. And in addition to that, they're also extracting a lot of productivity gains from their warehouse automation initiatives and their one-of-a-kind logistics network. And as just a proof point on that latter point, per unit shipping costs have been steadily declining for the last 8 quarters in a row. So stepping back, while it's still early days and while Amazon's share price has appreciated about 30% from our initial cost in April, it still trades at a very attractive multiple relative to peers like Microsoft and Walmart and especially in light of its ability to grow earnings at a nearly 20% rate for the next few years. William Ackman: Thank you. Let's go to Restaurant Brands. Feroz. Feroz Qayyum: Sure. Thanks, Bill. So Restaurant Brands actually continues to execute at a very high level, and its most recent results reinforce both the strength of its brands and the resiliency of its business model in what can only be described as a fairly tough economic backdrop for consumer businesses. During the quarter, the company-wide same-store sales grew at 4%, units grew by 3%, leading to 7% system-wide sales growth and operating income grew by 9%. So looking at their biggest businesses, Tim Hortons in Canada, they increased their same-store sales by about 4%, which outperformed the broader Canadian QSR industry by 3 whole percentage points. This now marks the 18th straight consecutive quarter of positive same-store sales. And that, by the way, has primarily been driven by underlying traffic growth. For several years now, Tim has been laying the groundwork in its Back to Basics plan with new innovation, both in cold beverage as well as afternoon foods while still maintaining their lead and providing good value for consumers in its core beverage, coffee and breakfast segments. Tim Hortons actually is also now growing its unit count in Canada for the first time in years, a market that many consider too mature. And these units are actually a lot more impactful to the company's bottom line than their units abroad because they're obviously higher unit volumes and Tims Canada has higher unit take rates as well. In the international business, same-store sales grew by 6.5%, also above the primary competitor, McDonald's, which has also been the case for actually several quarters now. The company also brought on a new partner to manage the Burger King China business, who will actually invest $350 million into the business shortly, and that will allow that BK China business to double unit counts over the next 5 years, and that will help restaurant brands, the total company achieve their 5% unit growth algorithm in the coming years. At Burger King in the U.S., same-store sales were up about 3%, again, also ahead of burger peers and one -- the results actually have also outperformed the broader U.S. burger category for multiple consecutive quarters. And that's really due to all the initiatives they've done under their Reclaim the Flame program. While investors were worried that competitors are pushing deeper into value, Burger King has actually done a really nice job striking a nice balance between innovation and premium offerings, doing nice tie-ins with movies and also providing everyday value with their Duos and Trios platforms. In what is -- can be best described as a very challenging economic backdrop, as Anthony alluded to, we think Restaurant Brands' results highlight the very nice defensive qualities of its business. So while low-income consumers have pulled back from spending many often skipping breakfast, Restaurant Brands has still continued to grow its sales as it's benefiting from the trade down for middle and higher-income consumers trading down. William Ackman: So are Chipotle customers becoming Burger King customers? Feroz Qayyum: Look, that's a question we've been discussing at length. I'm not sure it's specifically from Chipotle to Burger King, for example. But we do think what's happening, it's really a twin economy. So people that own stocks that are wealthy are doing incredibly well, and they're continuing to spend where they used to. At the same time, the low end of the economy is doing very poorly, and they're basically pulling back. So I think a brand like a Burger King or a Tim Hortons that caters to everyone is benefiting -- obviously losing those low-end customers, but it's benefiting from the mid-end trading down. But the fast casual space broadly, which obviously Chipotle is a member of, is missing that middle sort of demand vacuum where the high end isn't trading down, but the mid-end is trading down to the quick service category broadly. So that's certainly probably happening. What's also notable about restaurant brands is that it's obviously primarily franchise business model. And so it's also not as directly exposed to the labor and cost inflation to the same extent as others. And so thanks to its consistent growth and defensive business model, we expect that Restaurant Brands will actually still grow operating income at 8% this year, which is in line with its long-term algorithm. And the business still trades at a discount to its primary peers. So it's trading at about 17x earnings, whereas McDonald's and Yum! are trading at about 23x next year's earnings. We think a business of this quality with these characteristics should trade at a much higher valuation. So we're optimistic about the prospective returns from here. William Ackman: Okay. Great. So I'll just cover Howard Hughes. The short story here is the underlying real estate business of Howard Hughes is performing extremely well. The company reported an outstanding quarter really on every metric of net operating income, land sales, profits from their MPC business and the appreciation of their existing land portfolio. The management teams at Pershing Square and Howard Hughes are working very well together, which is great. And we are working, as we've publicly disclosed on a transaction to acquire an insurance company that would become really the beginnings of our diversified holding company strategy for the business. Our goal is to complete a transaction as early as the -- at least announce a transaction as early as year-end or perhaps in the early part of the new calendar year. We'll have a lot more to say about that if and when we are successful in completing a transaction that makes sense. But the short version of the story is that, we intend to by a good insurance platform with an excellent management team that can run a profitable insurance operation with Pershing Square managing the assets of that insurance company, I would say, akin to the way that Warren Buffett has managed his insurance company's assets and the way really he's managed the insurance company operations itself. Why don't we go to Hilton? Ryan, why don't you give us an update? I'll just point out, Hilton has been an excellent investment for us over many years now. We have enormous respect for the management team, and it's one of the best businesses that we've ever owned. It's become a smaller part of the portfolio, unfortunately, because -- or fortunately, because everyone else has recognized the qualities of the business. So we still think it's an attractive investment from here, but lower on the IRR thresholds than obviously when we originally acquired our position. But go ahead. Ryan Israel: Yes. So I just wanted to make a quick point that I think this quarter's results are really emblematic of why we think Hilton's business model is unique and incredibly resilient. So for example, the company same-store sales metric RevPAR actually declined about 1.5% this quarter as there were some macro softness, which clearly has impacted some of our restaurant businesses, but that actually impacted some of the travel businesses as well. And typically, what you would expect when a company has declining same-store sales, you would expect a decline in the profitability of the business. Hilton actually grew its adjusted EBITDA, its profit metric, 8% this quarter despite the decline in same-store sales, which is very unique and really reflects the 2 fundamental drivers of the business that are incredibly attractive to us, which are they have an enormous opportunity to grow their unit or hotel count around the world because the brands that they have are able to take advantage of the increased travel trends, and they are better than a lot of the alternative brands. And other people put up the capital for that because it's a good return for them and Hilton is able to earn a very high franchise fee. And that is really adding 6 to 7 points a year of growth to the business, and that's a trend, I think, will continue for a while. And the second factor is just incredibly strong cost control due to just overall great management. So the company is able to really limit the growth in its expenses despite having a very strong steady revenue growth base. So profits still grow even when same-store sales decline, which is a typical anomaly in business, but it's part of Hilton's core model. And then on top of that, this company has just superb capital allocation. So it continues to buy back about 5% of its shares on a year-over-year basis. So with a kind of consistent underlying tax rate, the company would have grown earnings at a low teens percent this quarter despite not growing same-store sales due to some macro softness. And so I think to your point, one of the reasons why we continue to hold Hilton is those unique characteristics where if the business performs in a normal macro environment well, we think there's a clear line of sight to 16%, 17% earnings per share growth annually for a very long time. If the macro is a little weaker and same-store sales don't even grow, we're still able to get pretty comfortably above a 10% rate of earnings per share growth, which is very unique. And so the market has recognized, as you pointed out, that this quality of the business and the growth characteristics should be deserving of a higher multiple, and the company trades at about 30x next year's consensus earnings, which is part of the reason why we've reduced our position is we think that the growth profile will offer us a reasonable return, but there's less opportunity for an accelerated annual return beyond the earnings per share growth when the multiples, I think are reasonable at 30x. But we still think it's very unique and a very strong management team, which is why we continue to hold the position even though it's somewhat smaller as you've been trimming as the share price and the multiple has increased over time. William Ackman: Let's do an interesting compare and contrast. Let's compare Universal Music to Hilton. They have some fairly analogous economic characteristics, and let's compare the trading multiple of one versus the other. And why is Hilton traded at 30x earnings and Universal traded 20 or 21x earnings? Ryan Israel: So I think you're entirely right, which is that while they obviously operate in different industries, the economic characteristics are very similar. They are both royalty-like companies that are very capital-light with very strong operating margins. In Hilton's case, we believe over time, the company is likely to grow at something along the lines of maybe 8% to 10% a year for revenue and that adjusted EBITDA is probably going to grow a little bit in excess of that. Those will sound very similar because that is exactly what UMG is growing at. Its revenue is about 10% right now. William Ackman: And management guidance -- let's stick with the management guidance on those numbers. Ryan Israel: Correct. And that is in line with the guidance over time. So it's interesting that they look incredibly similar on the operational performance, if you will. The key difference, as we pointed out earlier, is UMG has not bought back a single share, whereas Hilton pretty much like clockwork buys back about 5% of its shares. They allocate all of their free cash flow -- the substantial majority of free cash flow to share buybacks. And because of the high margins and the significant degree of predictable revenue growth, they have a nice amount of leverage, which the business can support. And obviously, UMG has an unlevered balance sheet when factoring in its stake in Spotify. I think the U.S. investor base, U.S. listing of Hilton, combined with the capital allocation has given investors a lot of confidence, which has allowed them to price in a multiple of something like 30x. And as we mentioned earlier this week, UMG was trading at 20x, which is a very large gap between the 2 despite very similar economic characteristics and growth characteristics currently. William Ackman: Let's go to Hertz on the other end of the balance sheet spectrum. Feroz Qayyum: Yes. We're not unlevered, in fact, very levered and also has some operational leverage. But look, the interesting thing about Hertz is that it's actually making a lot of progress on its turnaround efforts, and the results in the third quarter showed those. So it was the strongest quarter in years. It actually generated their first positive EPS for the first time in 2 years and they demonstrated meaningful traction on the operational levers that we've discussed previously as our investment thesis. Number one, the fleet refresh. When we invested, they basically had an upside down fleet. Now they've completely refreshed it. The average vehicle in the Hertz fleet is now less than 12 months old. As a result, depreciation per unit per month DPU, which is their metric, was $273 during the quarter, well below their long-term target of $300. And importantly, next year's vehicle purchase negotiations, which some investors are worried about given some of the tariffs and inflation, they're also nearly complete. And the management team is confident that, that will also support strong unit economics with depreciation of less than $300. Operationally, the company is also making big strides. So this quarter, utilization was 84%, the highest level the company has ever delivered since 2018. Revenue per day or RPDs were down low single digits, but they continue to improve and improved in October as the company has been implementing changes and modernizing its pricing systems. On the cost side, they also continuing to make progress through automating processes, lowering headcount and rationalizing some of their footprint. And we expect both SG&A and DOEs, which is their measure for expenses per day to decline from current levels. So the company is well on its way to delivering sort of a mid-single-digit EBITDA margin next year and has line of sight into delivering $1 billion of EBITDA in the coming years. What makes Hertz very interesting from these levels... William Ackman: $1 billion. It means $1 billion of annual? Feroz Qayyum: Exactly. $1 billion of annual EBITDA in the coming years. They have a target for 2027 actually. What makes Hertz really interesting from these levels is that it also has a number of upside levers or call options available to the company. So first, the company has been setting up infrastructure to sell more used cars through its own retail channels as well as its partnerships. The company actually has a partnership with both Amazon as well as Cox, and it's now live with their rent-to-buy program in over 100 cities where you can rent a car, try it out and if you like it, you can buy it. We believe the company can turn this into a meaningful profit center that can lead to structurally lower depreciation costs because obviously, you sell a car to the retail channel at a much higher profit than the wholesale channel. And then it also allows an opportunity for them to sell additional F&I revenues. Second, we believe Hertz also has the potential of being a significant partner to the various mobility companies that are rolling out autonomous vehicles. Hertz has an expertise in vehicle maintenance, servicing, and it has a very significant scale of -- with its parking facilities that make it an ideal partner to help manage as folks try to roll these out. Both these revenue streams have the potential of being large businesses for Hertz in the future and helping it further leverage its fixed cost base and brand. On liquidity, the company is also now in a much stronger position. Recall when we invested, some investors were speculating the company may need to declare bankruptcy again, and that is definitively not the case today. It has more than $2.2 billion of total liquidity. We actually helped facilitate a convertible bond issuance earlier this year and actually increased our exposure to the company. And the company also entered into a capped call transaction, which means that the convertible bonds are not dilutive unless the stock essentially triples from current prices. So with its current liquidity, as I mentioned, of over $2 billion, they have ample liquidity to address their near-term maturities and to help grow their fleet next year, which will again help them lever their fixed cost base. So stepping back, Hertz today is a much more leaner, more efficient company with, frankly, an enviable young fleet that its peers don't have. And on top of the core rental business, the company is also developing multiple new profit streams, as I mentioned, such as the retail used car sales, servicing AVs as well as serving the broader mobility segment. So we continue to believe that Hertz has asymmetric upside from current prices. But obviously, in light of the fact that it's going through an operational turnaround, we have sized this as a smaller investment than our typical holdings. William Ackman: Why is the stock so cheap in light of all of the above? Feroz Qayyum: So it's not immune to some of the consumer issues that we're seeing in the broader space. What's also notable is that the government shutdown has obviously had an impact on travel broadly. And so people are traveling a little bit less. Hertz does benefit to an extent as people have been taking out what are called one-way rentals. So instead of flying, you just take a car. But certainly, I think it's probably a net negative if the consumer environment is weaker and then people are traveling as much. And there's also -- there's been broader concern around RPDs. We think that's a little bit misguided. The way Hertz sort of reports RPDs, it's really burdened by the fact that they have mix towards smaller cars, which certainly have lower prices, but they're EBITDA accretive. And so next year, that should be a tailwind. And candidly, I think these car rental companies are generally misunderstood. There isn't a lot of market cap for long investors to dig into and to get excited. And so both Hertz and Avis have the potential to gather some of these long-only investors as they come out of the turnaround starting next year. And I think Hertz specifically has a very interesting opportunity to grow its EBITDA from basically nothing today to $1 billion in the coming years. William Ackman: Okay. Good. Thanks, Feroz. We've always received questions in advance of the call. We do our best to answer them during the pendency of the call. Just a couple that we didn't kind of get to. One is since both Howard Hughes and the Pershing Square funds are managed by Pershing Square, how should investors think about investing in Howard Hughes versus Pershing Square's core strategy? The answer is these are, I would say, different investments with some overlap. Howard Hughes, of course, the core business today is a master planned community business. It's a business we like. It's a business that we expect to generate a lot of cash over the next years and decades, and we think provides a very good base to build our version of a diversified holding company. With the acquisition of an insurance subsidiary or insurance company that becomes a subsidiary of the company, over time, as that business scales, that will become a more important part of the operation of the company. We intend to manage that insurance company portfolio, the float in U.S. treasuries, the equity and common stocks using the same kind of investment philosophy we have at Pershing Square. So there are clearly some similar elements. But it's an operating company. It's a C-corp. We intend to take the cash that the business generates over time and to deploy that capital in acquiring -- principally controlling interest in most likely private businesses. So the portfolio will look different. It's not a large cap or mega cap minority stake investment vehicle. It will be an operating company that will buy for the very long-term various businesses. Today, you're buying Howard Hughes at about a 15% discount to the price we paid for shares and an even bigger discount to kind of the, I would say, the NAV of the real estate portfolio. So that's a nice place to start an investment. But ultimately, the success of Howard Hughes will depend on how we do with our various initiatives there. I like Howard Hughes a lot, excited about what we're going to do there. An entity where you have -- that's a public company, we have access to the capital markets, may create some flexibility over time for us to do some things that we can't do in the Pershing Square funds. So over time, I would say they will be different entities, but the same investment principles will be applied and shareholder, I would say, orientation will be applied to both. And then I would -- the other thing I would say is that the Pershing Square management team has a very large investment in all of the above. So about approaching 30% of the AUM that we manage today is -- or I guess, 28% or so today is employee capital in the funds. And then on a look-through basis, therefore, the employees own an interest -- a meaningful interest in Howard Hughes. And then on top of that, the Pershing Square management company made a $900 million investment in the company. So we have, I would say, a very high degree of what you might call skin in the game in both the funds as well as Howard Hughes. I think Howard Hughes itself is at this point, still not well recognized. I think if and when we are successful in beginning to make this business look less like a real estate master planned community and more like a diversified holding company, we expect we deliver results and we expect the market to notice. With respect to hedging, our approach, as you likely know, is, one, we pay careful attention to what's going on in the world from a macro perspective, from a geopolitical perspective, from a political perspective, all these things can have an impact on markets. And we focus -- our first priority is what are the risks in the system that could cause a massive market decline. And to the extent we identify risks like that as we did pre-financial crisis or pre-COVID crisis or pre-Fed interest rate inflation, I wouldn't quite call it a crisis, but where the Fed was forced to raise rates very aggressively, we were able to hedge those risks because of the sort of surveillance of what's kind of going on in the world. Today, we really have no hedges in place. We don't try to hedge short-term kind of stock market declines or what some people might think of as a periodic -- the overall multiple, the market is above normal. There are lots of reasons why a market cap weighted index today appropriately should be trading at a higher multiple. If you think back to '09, we didn't warrant businesses, frankly, like NVIDIA, and we didn't have this massive growth driven by a major change in technology. We are seeing interesting places to put capital. We're doing due diligence. And our approach is to -- as we say, we sort of build a library of businesses that we get to know pretty well. Occasionally, new companies emerge, go public, get spun off. We track as many of them as we can in terms of ones that meet our criteria for business quality, and then every once in a while, they get really cheap. Amazon being kind of a recent example of a company we admired for years. It was always a little too expensive, but a business we want to own. And I think we started buying stock at something like $161 a share, which seem to be a really kind of unique opportunity. With that, I just want to thank you for joining the call, and we look forward to updating you. I think our next event will be our Annual Meeting that we will stream at some point in January or an Analyst Day. Thanks so much. Operator: Thank you, everyone. This concludes your conference call for today. You may now disconnect, and have a great day.
Operator: Good day, and welcome to the NetEase Third Quarter 2025 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Brandi Piacente. Please go ahead. Brandi Piacente: Thank you, operator. Please note that today's discussion will contain forward-looking statements relating to the future performance of the company and are intended to qualify for the safe harbor from liability as established by the U.S. Private Securities Litigation Reform Act. Such statements are not guarantees of future performance and are subject to certain risks and uncertainties, assumptions and other factors. Some of these risks are beyond the company's control and could cause actual results to differ materially from those mentioned in today's press release and this discussion. A general discussion of the risk factors that could affect NetEase's business and financial results is included in certain filings of the company with the Securities and Exchange Commission, including its annual report on Form 20-F and in announcements and filings on the Hong Kong Stock Exchange's website. The company does not undertake any obligation to update this forward-looking information, except as required by law. During today's call, management will also discuss certain non-GAAP financial measures for comparison purposes only. For a definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results, please see the third quarter 2025 earnings release issued earlier today. As a reminder, this conference is being recorded. In addition, an investor presentation and a webcast replay of this conference call will be available on the NetEase corporate website at ir.netease.com. Joining us today on the call from NetEase's senior management are Mr. William Ding, Chief Executive Officer; Mr. Zhipeng Hu, Executive Vice President; and Mr. Bill Pang, Vice President of Corporate Development. I will now turn the call over to Bill, who will read the prepared remarks on William's behalf. Bill Pang: Thank you, Brandi, and welcome, everyone, to today's call. Before we begin, I would like to remind everyone that all percentages are based on RMB. The third quarter marked continued momentum and strong execution across our NetEase family. By uniting creativity with exceptional operations, we created more meaningful connections with players, driven by our diverse portfolio of games that expanded our global reach and reignited our player enthusiasm for our key franchises. Total revenues increased 8% year-over-year, reaching RMB 28.4 billion in the third quarter, and revenues from our games and related VAS grew 12% in the third quarter compared with the same period last year. Innovative creativity and long-term operation remain the defining force behind NetEase's ongoing player engagement and global expansion, whether for new launches or established titles. Our teams are dedicated to delivering unexpected gaming experiences and responsive live services that are winning over players worldwide. This strategic creative approach continued to gain traction overseas, amplifying the influence and excitement of multiple games in the third quarter, including our new releases. Destiny: Rising, our new free-to-play mobile sci-fi RPG shooter quickly topped iOS download chart in the United States and other major Western markets following its global launch on August 28. The game has received widespread acclaim, securing leading positions on iOS download chart across nearly 100 markets worldwide, featuring Destiny's iconic powerful game gunplay across diverse mode setting new time line. The game has earned positive feedback from long-time fans, while gaining traction within the broader shooter game community. The excitement continued in China, where Destiny: Rising debuted on October 16 and immediately topped our downloading chart, drawing in players nationwide to experience the streaming shooting action at their fingertips. Marvel Rivals continues to captivate superhero shooter fan base around the world. Kicking off its fourth season on September 12, the game introduced a wealth of refreshing new content, features, special events and team-ups. Following the update, it reached #3 on Steam's global top seller chart. The new map, K'un-Lun: Heart of Heaven transport players to the Asian East, while the debut of Angela and eagerly anticipated Vanguard spurred excitement across the player community. Additionally, inspired by Marvel Animation's Marvel Zombies, a limited time PvE Zombie mode was released, featuring challenging bosses, Zombie Namor and Queen of the Dead just in time for Halloween. Beyond the game, Marvel Rivals Ignite celebrated its grand finals at DreamHack Atlanta, held in collaboration with ESL FACEIT Group. Elite players from around the world showcased their exceptional skills and strategies, drawing massive engagement both on-site and online and reflecting Marvel Rivals growing appeal. As we continue to enrich our global portfolio through diverse partnerships, our original titles are also gaining increasing momentum worldwide. Delivering a distinctive survival open world experience to players globally. Once Human launched engaging updates in the third quarter [ organizing ] its growing global community. On October 30, the game introduced a major new scenario centered on the capture and customization of deviations alongside a significant refresh of the PvP experience that provides more intense combat options. The highly anticipated collaboration event with the global hit game Palworld also went live on the same day, bringing popular pros to a dedicated in-game island, which further invigorated the player community. We recently shared some of our upcoming international expansion plans at worldwide gaming events like Gamescom and Tokyo Game Show 2025, generating even more excitement in the community with engaging player interactions. We exhibited Where Winds Meet at Gamescom 2025, showcasing our creative ambition in cultural storytelling and next-generation Wuxia World building. In China, Where Winds Meet continue to captivate Wuxia fans with its narrative-rich setting, authentic Chinese martial arts theme and innovative gameplay that combines single and multiplayer. Each newly unveiled district not only engages our existing fans, but also attract new players, driving continued growth in both revenue and monthly active users to new highs in the third quarter. On November 14, we brought Where Winds Meet [indiscernible] open-world featuring dynamic combat to the global market on both PC and PlayStation 5. Within just 2 days, we achieved a peak of 190,000 concurrent players, secured the #5 spot among the most played games and #4 position for top seller globally on them. Additionally, it became one of the top 10 bestsellers across the United States, Germany, France and several other regions on PlayStation. This underscores the widespread appeal of our captivating Wuxia universe to an even broader audience. To further enhance community engagement, the mobile version has commenced preregistration and is set to launch soon. Our highly anticipated title, Ananta, also garnered significant attention at the Tokyo Game Show. Players showed enthusiasm for in-depth game trailers and engaging hands-on playcasting. They will draw in by the game's imaginative action design, high-fidelity visuals and modern urban storytelling. Setting a dynamic and immersive city environment, Ananta blends high-energy action with open-world freedom, offering players an experience that goes well beyond conventional gameplay. We are pleased to see mounting excitement and anticipation among this title, including recognition from the Japan Game Award 2025 Future Division, where it was named as one of the most promising upcoming games. Our groundbreaking MMO, Sword of Justice went global across mobile and PC platform on November 7, topping the iOS download chart in multiple regions. The international release included AI-powered MPCs and intelligent face creation system. We showcased this at the Tokyo Game Show in September, highlighting how emerging technologies are reshaping gameplay experiences. Sword of Justice also continued to engage domestic players in the third quarter with its ever-evolving gameplay and rich content. With the global version now live, Swords of Justice is bringing its immersive world and cutting-edge AI enhancement to broader international audience. On top of the new releases we have brought to the international stage, our established games are also gaining steam in multiple regions worldwide. Our realistic car simulation game, Racing Master has continued to gain popularity overseas through localized content, making it highly resonate with players in Japan since it launched there last year. Player engagement spiked in August during its anniversary celebration with carefully designed in-game content, boosting the game's performance in Japan. Exciting e-sports events like the Racing Master 2025 Legendary Cup Finals held in Bangkok in August, brought passionate racers and fans from across Asia together, uniting Racing Master's distinctive global community. As firm believers in live operations, we stay closely attuned to players' evolving expectations across every title, and our domestic games continue to deliver strong performances. Each game update present new opportunities to entertain, engage and grow our communities. This approach continues to resonate with players, driving steady growth across our domestic portfolio for both new titles and games that has been around for decades. Fantasy Westward Journey Online, one of our longest running flagship titles at 22 years and counting, amplifies our dedication to sustain high-quality operations. The game is built around an inclusive ecosystem that allows players of all types to find enjoyment. We continue to inject fresh vitality through new features and mechanics. In July, we launched our innovative unlimited server, which offers classic gameplay under a popular modern model that eliminates the entry barrier of upfront time-based payments. This generated substantial enthusiasm from long-time fans and newcomers alike, significantly boosting player engagement. As a result, it has achieved 4 successive record peaking concurrent player counts since the third quarter, reaching a height of 3.58 million in early November. Fantasy Westward Journey Mobile also continues to evolve as we regularly introduce new features that players love. To meet players' demand, we launched our new casual server, which is designed for fun and streamlined play. It offers Fantasy Westward Journey Mobile's signature gameplay in a lighter format featuring simple progression, low threshold and intuitive controls. With a surge of new and returning players, monthly active users reached a 2-year high in September. Another long beloved MMO, Tianxia, continues to engage its community with deeply resonated updates. In October, we concluded closed beta testing for Tianxia II Classic. This version recreates the game's iconic art style and slower paced gameplay, allowing players to experience its distinctive Chinese cultural event. Meanwhile, the existing Tianxia client will undergo a complete upgrade with player progression seamlessly shared with Tianxia: Wanxiang the brand-new cross-platform client powered by Messiah, our flagship in-house engine. The upgrade will both enhance graphic quality and expand access for players across PC and mobile platforms, allowing them to experience the Messiah universe everywhere. Identity V fan base maintained a high engagement level in the third quarter, supported by our steady cadence of seasonal updates and partnerships. New characters released along with each season update, including Hunter of QS and the Survival of Lanternist in the third quarter, infused new energy into Identity V's distinctive role, reinforcing Identity V as a top destination for asymmetric gameplay fans. In addition, the game's collaboration with the Palace Museum Classic on September '25 added Majestic rooftops of Forbidden City to Identity V's manner, adding a new layer of cultural depth. Eggy Party also experienced robust growth with the third anniversary celebration in July, sparking renewed enthusiasm across the player community. Daily active users exceeded 30 million and average play time hit record high, driving historical engagement level. Two new gameplay modes quickly followed in September. [ Spooky Treasure ] Squad presents an intense extraction experience and Crazy Farm introduces a casual and social farming simulator. Both were highly praised and attractive way of returning users during the National Day holiday. Meanwhile, we continue to evolve Eggy Party's AI-powered AIGC tool, making its map design faster, easier and more enjoyable. We believe that together, these innovations are keeping Eggy Party fresh and its community inspired. Thanks to this ongoing effort, we saw Eggy Party's performance recover to historical peak level in both daily active user and average play time, which we expect will pave the way for smooth development in the coming years. Another example of our player-first philosophy and commitment to innovative high-quality content is Onmyoji, one of China's earliest and most iconic anime style games. On September 10, we launched its ninth anniversary celebration, featuring rich new content and gameplay updates shaped by player feedback. The highlight was a new character Yuki Gozen whose beautifully crafted CG trailer gained widespread attention on social media from both long-time fans and broader anime community. It was broadly inherited for its innovative use of stereoscopic screen and 2D animation tags to create a naked-eye 3D visual effect. With strong community support, Onmyoji quickly entered China's top 10 iOS download chart, demonstrating the vitality of this enduring IP and the strength of our long-term operations. Our commitment to engaging players and continuous innovation is also evident in Naraka: Bladepoint. In the third quarter, we rolled out new heroes and exciting collaborations such as Armor Hero in September and the time-limited return of Nier in October. Naraka: Bladepoint esports present is also growing. The 2025 Naraka: Bladepoint Pro League, NBPL, autumn season marked its first professional league since being selected for the 2026 Aichi-Nagoya Asian Games, culminating its rolling finals in October. Now in its fourth year, NBPL has become the cornerstone of Naraka's esports ecosystem and China's top professional league for the title, driving increasing social media engagement across major platforms. We continue to expand our domestic portfolio with new lighthearted experiences that appeal to a wider range of audience. [indiscernible] our MMO featuring magical heartwarming creatures inspired by Chinese fairy tales, has built a dedicated fan base since its launch in August, designed with a portrait interface for easy one-handed play. The game combines the joy of capturing and nurturing creators with strategic term-based combat and building a homeland for them to thrive in. Backed by our players and supported by world-class partners and global teams, we're building enduring collaborations that keep expanding what's possible in gaming. Blizzard titles continue to elevate the gaming experience for Chinese players. World of Warcraft rolled out updates across both classic and modern servers during the third quarter, sustaining strong engagement among long-time fans and newcomers alike. To further enhance localized experience, the game just launched a highly anticipated China-exclusive Titan Reforged server this week, blending the nostalgia of classic expansions with modern gameplay elements. The new server fulfills players long-awaited expectations and has reignited excitement across the World of Warcraft community. Overwatch 2 has also recently introduced a new Chinese hero, Wuyang, further deepening the game's diverse roster of characters. Meanwhile, Hearthstone celebrated its 11th anniversary, amassing over 100 million registered players in China. A series of special anniversary events drove enthusiastic participations from both loyal fans and newcomers to the game. The Diablo franchise also continued to capture attention. Diablo 2 resurrected, the legendary remaster of the installment that helped define the franchise returned to China on August 27. Newest season released in October pushed the game's daily active player base to record high. In parallel, Diablo IV, the latest blockbuster bringing the series signature dark aesthetics to a new height, were launched in China on December 12. Furthermore, the genre-defining real-time strategy game, Starcraft II, also returned on October 28, triggering excitement among fans. Minecraft China Edition, the localized version of the globally popular sandbox game, reached 1.25 million concurrent players on August 17, an impressive milestone in its eighth year of operation. Committed to nurturing its UGC ecosystem, the game continues to enhance creation tools and expand exposure for community creators, now supporting over 300,000 creators. By delivering enriched locally tailored experiences, Minecraft China Edition has fostered a highly engaged and loyal player community. Beyond above titles, other globally renowned franchises in our portfolio also continue to thrive in China, engaging vast creative community and expanding local ecosystems. Along with our expanding global presence and evolving development capabilities, our domestic community continue to thrive. Regardless of geographies or genre, we'll continue to put player first and work closely with our partners to deliver memorable high-quality experiences across our beloved franchises and existing new titles still yet to come. Turning to Youdao. Youdao continued to solidly execute its AI native strategy in the third quarter with healthy development of both its education and advertising businesses. For learning services, Youdao Lingshi grew gross billing by over 40% year-over-year in the third quarter. Notably, they partnered with the Yau Mathematical Science Center of the Tsinghua University, providing technical support to a platform, which is designed to identify and support mathematically gifted students. The platform is currently being piloted in top-tier schools with a national rollout plan following further refinement. Youdao's online marketing services achieved robust growth in the third quarter. As we advance the use of AI across multiple advertising processes, we further enhanced our expertise in programmatic advertising and influencer marketing campaigns, elevating the efficiency and effectiveness of advertising. For smart devices, we continue to enrich our offerings with technology upgrades. In the third quarter, we launched a new tutoring pen, Youdao Space X, which features a series of intelligent capabilities such as precise scanning for long-form and multi-graphic problems to help students learn more effectively. Turning to Yanxuan. The business continued to perform well across major e-commerce platforms, led by steady development in its core categories such as pet food, home sense and home goods. Propelling technology-driven innovations, Yanxuan's product launches have consistently stood out in the market. Its new pet food product is a refined production process, making it smoother and easier for pets to digest, earning a widespread praise for addressing common digestive issues. Across the NetEase family of businesses, we continue to build on our foundation of creativity, quality and disciplined execution. Looking ahead, we are focused on advancing our development capabilities and global reach, scaling our original IP into lasting franchises and elevating every experience we deliver. Guided by innovation and the trust of our communities, we're shaping a future defined by meaningful growth and enduring impact. That concludes William's comments. I will now provide a brief review of our 2025 third quarter financial results. Given the limited time on today's call, I'll be presenting abbreviated financial highlights. We encourage you to read through our press release issued earlier today for further details. As a reminder, all amounts are in RMB unless otherwise stated. Total net revenue for the third quarter were RMB 28.4 billion or USD 4 billion, representing an 8% increase year-over-year. Total net revenue from our games and related VAS were RMB 23.3 billion, up 12% year-over-year. Specifically, net revenues from online games were RMB 22.8 billion, up 3% quarter-over-quarter and 13% year-over-year. The quarter-over-quarter increase in online games net revenue was due to higher net revenues from self-developed games such as Fantasy Westward Journey Online and Sword of Justice as well as certain licensed games. The year-over-year increase was attributable to higher net revenue from self-developed games such as Fantasy Westward Journey Online, Eggy Party and newly launched Where Winds Meet and Marvel Rivals as well as certain licensed games. Youdao's net revenue reached RMB 1.6 billion, representing a 15% increase quarter-over-quarter, driven by growth in smart devices and online marketing services. Year-over-year revenue rose by 4%, attributed to a higher contribution from online marketing services. NetEase Cloud Music net revenue of RMB 2 billion, stable quarter-over-quarter, but down 2% year-over-year. Notably, revenue from membership subscriptions continued to show healthy growth both sequentially and year-over-year. Revenues from social entertainment services and others, though still lower compared with the same period last year, stabilized quarter-over-quarter. Net revenues for innovative business and others were RMB 1.4 billion, down 15% quarter-over-quarter and 19% year-over-year. The sequential decline was mainly driven by Yanxuan due to its high base during the 618 e-commerce festival. The year-over-year decrease reflected an increase in certain intersegment transaction elimination and to a lesser extent, decreased net revenue from Yanxuan and certain other businesses. Gross profit for the third quarter of 2025 was RMB 18.2 billion, up 10% year-over-year, primarily driven by increased net revenue from online games. This quarter, our total gross profit margin was 64.1%. Looking at our third quarter margin in more detail. Gross profit margin was 69.3% from games and related VAS compared with 68.8% in the same period of last year. The improvement was mainly driven by a higher mix of PC games in China, which typically have higher margins. Our gross profit margin for Youdao was 42.2% compared with 50.2% in the same period last year. The decrease was mainly due to the declined gross profit margin of online marketing services. Gross profit margin for NetEase Cloud Music was 35.4% in the third quarter versus 32.8% in the same period a year ago. The margin improvement was primarily driven by steady growth in our core online music business with lower contributions from social entertainment and other lower-margin services. For innovative business and others, gross profit margin was 43.0% compared with 37.8% in the third quarter of 2024. Despite the impact of intersegment elimination mentioned earlier, the improvement was mainly driven by better margins at Yanxuan and the higher revenue contribution from certain innovative business with relatively stronger margins. The total operating expenses for the third quarter was RMB 10 billion or 36% of our net revenue. Taking a closer look at our cost composition. Our sales and marketing -- our selling and marketing expenses as a percentage of total net revenue were 15.7% compared with 14.5% for the same period last year, primarily due to increased marketing expenditure related to online games. Our R&D expenses maintained stable at 16% of total net revenues in the third quarter compared with 16.9% for the same period last year, reflecting our consistent investment in content creation and product development. The effective tax rate was 13% for the third quarter. As a reminder, the effective tax rate is presented on an accrual basis in accordance with applicable policies and our operations. Our non-GAAP net income attributable to shareholders for the third quarter totaled RMB 9.5 billion or USD 1.3 billion, up 27% year-over-year. Non-GAAP basic earnings per ADS for the quarter was USD 2.09 or USD 0.42 per share. Additionally, our cash position remains robust with net cash of approximately RMB 153.2 billion as of September 30, 2025, compared with RMB 142.1 billion at the end of last quarter. In accordance with our dividend policy, we are pleased to report that our Board of Directors has approved a dividend of USD 0.11 per share or USD 0.57 per ADS. The company announced today that its previously approved share repurchase program of up to USD 5 billion for the company's ADS and other shares in open market or other transactions will be extended for an additional 36 months until January 9, 2029. As of September 30, 2025, approximately 22.1 million ADS has been repurchased under this program for a total cost of approximately USD 2 billion. Thank you for your attention. We would now like to open the call to your questions. Operator, please. Operator: [Operator Instructions] Your first question comes from Xueqing Zhang with CICC. Xueqing Zhang: [Foreign Language] [Interpreted] Congratulations on the third quarter. My question about Fantasy Westward Journey. Given that FWJ PC has consistently set new record for online player count since this summer, we would appreciate that the company is sharing its operational structure for this evergreen title. And we have several follow-up questions on it. Firstly, what's the core driving factors behind the unlimited player server. And secondly, what's the user profile? What's the ratio of retaining players to new players. And lastly, is this model replicable across other flagship titles? William Ding: [Foreign Language] Bill Pang: [Interpreted] Okay. I'll do the translation. The longevity of Fantasy Westward Journey online PC is based on highly stable economic system and unique enriched gaming experiences which are very rare in most other games. Our team has been dedicated to providing sustainable fun experience, stable ecosystem and innovative content. This commitment has been recognized and appreciated by the players as well as we can see from the market. In the unlimited server, we have removed the upfront time-based payment, streamlined the gameplay and systems, offered a lighter gameplay format, while preserving the core designs that has evolved in our classic server over time. Compared with the comprehensive and diverse game experience on the content, unlimited server offers enjoyable experiences in the simple -- more simple direct manner with a smooth learning curve, unlimited server has attracted both many former players back to the game as well as new players. This user demographic of unlimited server actually also benefited the classic server by introducing additional new and returning players. Fantasy Westward Journey online as a legacy game has been operated for 22 years. We remain committed to the innovation and diversified experience to meet -- continues to meet the demand from our community. Looking ahead, we will continue to focus on long-term development, providing our broad player community with various choices in one game. Operator: Your next question comes from Thomas Chong with Jefferies. Thomas Chong: [Interpreted] Can management comment about the gaming trend in China as well as overseas. On the other hand, can management also talk about the overseas expansion strategy? William Ding: [Foreign Language] Bill Pang: [Foreign Language] [Interpreted] Okay. I will do the translation. During our business operations process of doing business in overseas market, we have accumulated successful experiences, which is powered by the strong development capability we have in-house here. For example, in Japan, we have Knives Out as identified been very popular in national network games. And last December, we released Marvel Rivals globally, super successful. And just November 15 this month, we released Where Winds Meet in global markets. And all this product achieved a very good level of success overseas, and we hear a lot of positive feedback from the community as well. In the -- what we see is that in the overseas market, NetEase as one of the most prominent game developing powerhouses in our industry. And we are the only company that bring the purely truly Chinese authentic online games to global market. For example, Where Winds Meet, it's a very Chinese [Technical Difficulty] and we're the only big successful companies that bring this level of authentic experience to the online gamers globally and received very positive feedback. Looking ahead, we believe we have the capability to bring more and more success cases to overseas markets and provide gamers from the globe with more and more high-quality content and services. We have confidence in that. William Ding: [Foreign Language] Bill Pang: [Interpreted] Yes, there are some further comments from William. One is that actually also in this month, we also rolled out our Sword of Justice into the global market. And of course, 3 years ago, we rolled out Naraka: Bladepoint PC on global market. And as you heard, we showed our games to public for both ANANTA and Sea of Remnants. The market has very big expectations. We showed ANANTA game show this year, and it's been named one of the most promising upcoming games by the Japan Games Award 2025 Future division. NetEase, we are based in China, and we are also carving our territory in the global market. That is what we have been doing. We have some successes, and it's -- we're going to keep doing. Operator: Next question comes from Ritchie Sun with HSBC. Ritchie Sun: [Foreign Language] [Interpreted] Regarding Identity V, we have seen the volatility in grossing and DAU in recent months. Can management discuss the reasons behind it and the strategy to improve the performance? Secondly, World of Warcraft and Hearthstone have returned to China for 1 year already and about to face tough comps. Can management discuss the performance metrics now versus 1 year ago and plans to drive sustainable growth in the future? And the Diablo IV is also coming back soon. Can management discuss the monetization potential considering the more intense competition in the ARPG genre? William Ding: [Foreign Language] Bill Pang: [Interpreted] Okay. I will translate this part first. Indeed, it's true that there has been some influence from competing products during the summer holidays, particularly among general users in lower-tier cities. However, we also have noticed that the impact has eased since the start of back-to-school time. And in fact, talking about September, Identity V actually has reached historical high starting from the new semester compared to the same period in previous years. While Q4 historically has never been the peak season for Identity V, the team is focusing on preparing new content and marketing campaigns for the Chinese New Year cycle. During this period, we observed the demand -- the diversified demands on diversified gameplays from community. So we have been preparing more comprehensive and large-scale side game modes while on the other hand, we're also working on the next chapters of the game. William Ding: [Foreign Language] Bill Pang: [Interpreted] Thank you, Yes. As we approach the end of current expansion of World of Warcraft, it is indeed expected to see decline in performance compared to this launch period. Meanwhile, Hearthstone has steady maintained its cadence of expansion updates over the past years. With different operation strategy from the past, the performance of both games actually maintained higher than status than when the operation closed previously. Moving forward, we'll continue to deepen our collaboration to sustain our unique competitive offerings in the China market. And one specific example I want to give here is the Titan Reforged Server for Warcraft. That indeed was initiated by -- together by our Chinese team and the U.S. team. Together, we set the target and designed together and developed specific for this demand and the result is very good. So that is one example to see by working closer together, we can achieve better result compared to the past. Talking about Diablo, Diablo IV has its own unique quality, and we have brand-new business plans in place for it. We believe it will secure its deserved market share and commercial performance in the ARPG segment after launch. In addition, StarCraft II has achieved record high user engagement since its launch, infusing vitality into the RGS genre. Operator: Your next question comes from Alicia Yap with Citigroup. Alicis a Yap: [Foreign Language] [Interpreted] So just wanted to follow up. I think management earlier mentioned ANANTA was recently showcased at the Tokyo Game Show and has a pretty good feedback. So just wanted to know more details about the user feedback. And then how should we think about the market positioning and also the differentiation of this game? And then it also seems that the game included a pretty decent rich content and also the innovative gameplay. So any comments on that? And then are there any updates regarding the next testing timing and also the official launch timing in 2026 that you can share? William Ding: [Foreign Language] Bill Pang: [Interpreted] We showcased the latest update and playtesting of ANANTA at the Tokyo game show, which attracted significant attention on social media across the world, winning one of the most promising upcoming titles by the Japan Game Award 2025 Future Division. We believe with a blend of colorful quality content, innovative monetization strategy as well as our focus on long-term operations we anticipate the game will secure a new position within the industry ecosystem. We're currently planning to further enhance our development process, the development process is on track now, and we'll proceed with testing and launches as scheduled. And when time comes, we have further updates to share. Operator: Your next question comes from Jialong Shi with Nomura. Jialong Shi: [Foreign Language] [Interpreted] We noticed from media, it seems to us the number of new games in your pipeline every year is smaller than in the past few years. If our observation is correct, just wonder what is your current strategy towards launching new games into the market. And if NetEase does not launch as many new games each year, what will be the growth driver for your online gaming business? William Ding: [Foreign Language] Bill Pang: [Interpreted] Okay. I will do the translation. The whole company will be very focused on our success products. And among the already success product, we'll keep refining and keep focusing. We don't want to distract too much focus to charter many, many new products, which we don't have super confidence. For new projects, we will look at product more prudently and more focused, making sure that whatever new product we're building, it has confidence power in the content market. We actually don't see this to contradict with another. We believe being focused is one of the core competence a company needs to have. That's our view. Operator: Our next question comes from Felix Liu with UBS. Felix Liu: [Foreign Language] [Interpreted] My question is on the recent news of organizational changes in your game department. Will these changes impact the near-term operations of the related games? And how does management think about the current organizational structure under the context of your game strategy? And should we expect more changes to come? William Ding: [Foreign Language] Bill Pang: [Interpreted] Okay, I will do the translation. Regarding the recent adjustment and changes, it's part of the company's normal personnel turnover process and has been carried out without impacting daily operations of our game. That's rest assured. The adjustment is aiming to make the operation more focused and efficient, allowing us to concentrate -- keep concentrating on creating enduring high-quality product. For example, for existing evergreen titles, we asked our teams to stay focused continuously refining and optimizing the games. For new titles that show evergreen potentials, we'll allocate sufficient resources to develop them into Evergreen long-lasting successful games. However, for teams that are not keeping pace with the market trends or user demand, we also must trim decisively to make sure a healthy development of our core initiatives. NetEase has been especially for 28 years, and our commitment to creating high-quality products has remained unchanged. We'll allocate more resources to evergreen titles and provide more opportunities to teams who are creative and willing to innovate. Operator: Your next question comes from Lincoln Kong with Goldman Sachs. Lincoln Kong: [Foreign Language] [Interpreted] So my first question is about AI. So we have actually seen some of the games like Eggy Party or Justice Mobile has already integrated with AI applications. So going forward, for our existing portfolio and the new games, how should we think about AI can bring additional opportunities to our gamers? And the second question is in terms of the future new games. Given that the company now focus more on quality of those new games, so how should we think about the potential important game genre going forward? Specifically like for the shooting game genre globally, I think we have seen a rapid growth. So how would NetEase sort of differentiate ourselves in this shooting genre? William Ding: [Foreign Language] Bill Pang: [Interpreted] Okay. I'll do translation. First of all, regarding the question on AI, we have been using AI in development and AI is very important in game development and operation, and we have accumulated tons of hands-on in this area. And compared -- especially compared to many of our peer companies from overseas, we have more hands-on experience in this area. We have deployed massive resources in the research of AI and how to use AI in the process of game development, innovation and operation. Actually, the user experience is the best answer to guide us on how we should deploy technologies. But we don't think we have time here today for the detailed specific user experience explanations. Regarding your next question on the future direction of product, as we explained, we'll focus on the concentrating resources on building really high-quality flagship products, the product that we have conviction on the success. We won't do aggressively blindly open many projects. That's not our direction. We'll be focused on -- we'll do focused targeted approach to the new project. And in the future coming years, we believe NetEase compared to most -- many other companies in our industry globally, we are one of the companies that has clear vision on the future in future products, and we will make ground breakthroughs. Operator: Your next question comes from Yang Liu with Morgan Stanley. Yang Liu: [Foreign Language] [Interpreted] Let me translate my question. My question is about the Sea of Remnants this new game. Could the management share about the R&D development and expected launch timing? And what will be the commercial strategy for this title? And is there any direct peers or competitor for this game? And what NetEase can do to differentiate? William Ding: [Foreign Language] Bill Pang: [Interpreted] I will do the translation. First of all, the Sea of Remnants is a very important product to us. We focus on that very much. The team has very rich development and operational experience in the company. And the game is built on our self-developed game engine will support both PC, mobile and console as well. On the detailed gameplay and content, we believe we have a clear decisions on how to do that. We believe it's going to be a fresh experience in the market. It's going to be a multi-character cultivation kind of type, but not the traditional way. The sailing experience on the ocean as well as the rich combination between characters and classes, we believe it will bring a fresh unexperienced ocean experience to the gamers. Operator: And that concludes the question-and-answer session. I would like to turn the conference back over to Brandi Piacente for any additional or closing remarks. Brandi Piacente: Thank you once again for joining us today. If you have any further questions, please feel free to contact us directly. Have a great day. Thank you. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]
Helen Gordon: So good morning, everyone, and welcome to Grainger's full-year results. Once again, we have delivered an excellent performance as we continue to deliver strong growth in our earnings, in our income and in our margin with high occupancy and a Grainger product, which continues to deliver for customers and shareholders. So the agenda this morning is that I will take you through the highlights, Rob will take you through the financial results, including our compelling growth to come and our conversion to REIT status. And then, I'll go through our investment case, the strength of our market and give you a quick insight into one of our new openings. And I will explain how we're well positioned for the changes to renting that are due to come in from next May and how we are driving shareholder value. We'll then have time for Q&A with members of the senior leadership team. So I'm pleased to tell you that Grainger is now the U.K.'s leading residential REIT. It feels quite good to say that. We are a build-to-rent investor operator with a sector-leading portfolio of high-quality homes in the best location. Our fully integrated operational platform, enhanced by technology, is capable of scaling. And this operational platform gives us a real competitive advantage in a sector with high customer interface and where operational excellence is a barrier to entry. Our investment case of a real estate asset class that delivers inflation linking returns is proven. As you can see here, consistently tracking wage growth and as is our proven strategy, we continue to deliver earnings growth to our shareholders and great homes to our customers. So looking at our earnings growth, we continue to target GBP 60 million of earnings in full year '26 and GBP 72 million by full year '29 and that's a 50% growth from full year '24. There are 2 simple reasons. We have sustainable rental growth outlook, and we have strong underlying fundamentals. And our strong earnings growth will be delivered after absorbing higher interest rates. We're expecting rental growth to continue at 3% to 3.5%. And we have a resilient customer base to support this. We have strong underlying market fundamentals with regulatory certainty and no rent controls and growing demand and constrained supply. We're reducing debt, which Rob will cover later, and we have topline growth, and we are improving margin. So turning now to the highlights of our results. We've delivered another outstanding performance. Our net rental income is up 12%. Our like-for-like rental growth is up 3.6%, and we've delivered 12% earnings growth and 10% dividend growth. And our NTA, our asset value, has remained resilient at 298p per share. We continue to deliver operational excellence. We've delivered high occupancy at 98.1%, and we've secured strong customer retention at 61%. And we have good customer affordability. On average, our customers are paying 28% of their income on rent, which is below the market average. And we are delivering a sector-leading gross to net at 25%. That's a 75% rental margin. So overall, an excellent set of financial and operational results. We continue to optimize our portfolio through sales of older or non-core assets and our investment in our new products. We have recycled GBP 1.9 billion of assets since the start of our strategy, and we've sold GBP 640 million since September '22. We've been selling in line with valuations and proving the accuracy of valuations. And importantly, we have over GBP 900 million in non-core assets to fund our future growth and our deleveraging. We are a highly cash-generative business with over GBP 200 million in operational cash flows each year. And as we recycle out of this low-yielding non-core assets, we secure attractive income accretion. We have a very clear capital allocation strategy. We are always focused on maximizing returns for shareholders. Our current priority is to fund our committed pipeline of GBP 343 million, and there's just GBP 130 million remaining to invest. And it is this committed pipeline, which will deliver our earnings growth to GBP 72 million by full year '29, a 35% increase from today. And as a reminder, a 50% increase from full year '24. Then, we are deleveraging in line with plan. Our debt is fixed at low rates to full year '29. So this deleveraging will support our earnings growth and ensure an optimal capital structure. And as we continue to recycle, we can look at stabilized acquisitions, and we have also our secured and highly attractive, forward-funded and direct development opportunities. So we have further opportunities in our planning and legals pipeline. We have all these opportunities for future growth. And of course, we will assess these against other opportunities to return capital to shareholders. We have a capital allocation strategy delivering for shareholders in the short, in the medium and in the long term. So turning to our portfolio and pipeline, GBP 3.5 billion, that's over 11,000 homes. And our portfolio of regulated tenancies is just over GBP 0.5 billion, and our future pipeline is GBP 1.3 billion. Our committed pipeline is immediate. Of the GBP 343 million, there was only GBP 130 million to invest. And indeed, last week, we completed on 374 homes in Bristol, one of our strongest cities and with more homes being delivered in our pipeline in London and Guildford. We have a highly attractive secured pipeline for further growth, including our strategic JVs, and we have a portfolio of sites going through the planning process. So we have optionality for the future. And we have clear visibility on our earnings growth and our EBITDA margin expansion. Our growth story is compelling. Yes, this is my favorite side. We've delivered extraordinary growth over the last 10 years. We've been consistent in our delivery, growing our net rental income on average 14% per annum. Our EPRA earnings have grown dramatically through the development of our platform and the efficiency it delivers. Our EBITDA margin has improved from 19% to 56%, with more to come. So this momentum is continuing with strong growth in our income, in our earnings and with further EBITDA margin expansion. So in summary, we've delivered a strong performance. Our operational highlights are our conversion to a REIT, 98.1% occupancy achieved, robust rental growth secured at 3.6%. And now, we have the Renters' Rights Bill passed. We have real clarity on our future regulatory environment and no rent controls. We've delivered a strong financial performance, a 12% growth in our net rental income, 12% earnings growth and a strong sales performance and a 10% dividend increase. We have a very clear focus on how to drive returns for our shareholders. We're focused on maintaining occupancy and rental growth. We're focused on delivering strong compounding earnings growth. We're focused on cost efficiency and reducing net debt, and of course, continuing to deliver high-quality homes and great customer service. And I'll now hand over to Rob to take you through the detail. Robert Hudson: Thank you, Helen, and good morning, everybody. Today, I'm going to run through the financial performance for the year and outline the very strong earnings growth that we have to come. FY '25 has been another period of excellent growth, demonstrating Grainger's resilience and our market-leading position. We've continued to deliver a strong operational performance with like-for-like rental growth of 3.6% and occupancy at 98%. Overall, total net rents continued their strong growth, up 12%. This resulted in strong earnings growth with EPRA earnings up 12%, and we're still targeting our GBP 60 million guidance for the coming year and a 35% increase to GBP 72 million by FY '29. Adjusted earnings were broadly flat at GBP 91 million, as the sales profits from our reducing regulated tenancy business are replaced with rental income from our pipeline. Our dividend per share increased by 10% to 8.3p, and EPRA NTA was resilient in the period at 298p. Now, looking at the income statements in more detail. Our overall like-for-like rental growth was strong at 3.6%. Stabilized gross to net was again flat at 25%, demonstrating our ongoing focus on cost efficiency. Overhead costs were up 4% in the year, in line with wage inflation. And looking forward, we're targeting GBP 2 million of cost savings with a GBP 1 million benefit in FY '26. So overall, this will mean that overheads will not grow for the next 2 years. Interest costs increased largely due to lower levels of capitalized interest and a slightly higher average interest rate during the year. EPRA earnings continued their strong growth trajectory, up 12%. And as a reminder, now, we're a REIT, this will be our key earnings metric going forward. As expected, sales profits were lower at GBP 37 million, in line with the reduction in the regulated portfolio size, and our sales are performing well and in line with book. Other adjustments include derivative valuation movements and a fire safety provision, which reflects a revision of cost estimates. Now, looking at the moving parts of our 12% increase in our net rent for the period. Strong occupancy and like-for-like rental growth of 3.6% contributed GBP 2 million. And this was driven by strong performances in both PRS at 3.4%, which is stabilizing back at long-run averages of 3% to 3.5% and our regulated portfolio of 6.6%. The strong lease-up performance of our recent pipeline deliveries has contributed an additional GBP 18 million of net rent. Our asset recycling program offset this growth by GBP 6 million. Looking forward, we'd expect rental growth to continue in line with the long-term average of 3% to 3.5% in FY '26. With the occupational markets back to normalized levels, we expect to see some seasonality in rental growth return with half 2 stronger than half 1 growth. This chart shows the key movements in NTA over the course of the year. Our EPRA NTA was maintained at 298p per share. Net rents and fees added 18p, with overheads and finance costs offsetting this by 11p. Overall, our portfolio valuation for the period was up 0.7%. And the PRS portfolio saw 1.1% valuation growth with ERV growth of 3.2% and a modest outward yield shift on some assets. Valuations on the regs portfolio were down 0.6%, demonstrating their resilience, and further details of the valuation can be seen on Page 45 in the appendices of this presentation. Now, turning to net debt. Net debt was broadly flat during the year at GBP 1.46 billion, in line with our plans. Operational cash flows remained strong with GBP 205 million generated and with disposals contributing GBP 169 million net of fees. The investments in our build-to-rent portfolio has now started to moderate, as we work our way through the committed pipeline, and there was GBP 133 million invested during the year, with a further GBP 130 million spent on the pipeline, and the majority of that being in FY '26. In line with our previously discussed capital allocation strategy, we'll continue to generate sales at current levels. These proceeds will be used to fund the committed pipeline and then go towards lowering leverage by GBP 300 million to GBP 350 million. Going forward, we, therefore, expect net debt to remain broadly flat for the coming year before starting to delever from FY '27. And our balance sheet remains in great shape. Both net debt at GBP 1.46 billion and LTV at 38% were broadly flat over the year, in line with our plans. We maintained strong liquidity and a robust hedging profile with rates fixed in the mid-3% range. As previously highlighted, we plan to reduce our net debt by GBP 300 million to GBP 350 million over the next 4 years, as we continue to sell through our lower-yielding non-core assets. We regard this as very deliverable given our continued strong performance on sales. This will see our net debt, it's around GBP 1.1 billion, and that will equate to around an 8x net debt-to-EBITDA and an LTV of 30%, which we see as the right capital structure in this current interest rate environment. As net debt is brought down over the medium term, this will help mitigate the impact of rising finance costs, as our low rate hedging rolls off, and that ensures continued strong earnings growth. REIT status has been a long-term ambition since the start of our strategy, and I'm pleased to say we successfully converted to a REIT back in September. The benefits to the business of being a REIT are substantial, as we no longer have to pay corporation tax on the profits of our build-to-rent business. And in the first year of FY '26 alone, this is expected to generate GBP 15 million of savings with this increasing as we deliver further growth. We see the resilient growth that our residential business delivers is arguably the perfect fit for the REIT structure with no impact on our business model or our strategy. And we're firmly committed to delivering a strong progressive dividend. Now, we're a REIT, our dividend policy will be to distribute at least 80% of EPRA earnings. In FY '26 and FY '27, we'll have a reg profits top up. Beyond that, we'd expect the dividend to be fully covered by our EPRA earnings. This will see a mid-single-digit growth over the next 4 years, as we absorb the full impact of interest rate increases. As a reminder, beyond the higher interest rate headwind, we're a business that will deliver strong organic earnings and dividend growth of around 5%, simply as a result of our 3% to 3.5% rental growth and operating leverage, and that's even without any further growth in scale. It's been a strong year of earnings growth in FY '25, but there is a lot more to come. The lease-up of our recent deliveries as well as the remaining committed pipeline will deliver an additional GBP 24 million of rent over the next 4 years. As a reminder, this pipeline only requires a further GBP 130 million of CapEx to deliver. This strong top line growth will ensure we continue to deliver very strong earnings growth, and we're targeting EPRA earnings guidance of GBP 60 million next year and a 50% increase in 5 years from FY '24 to GBP 72 million in FY '29. We see this growth as exceptionally strong, particularly as it's delivered through a period in which we'll absorb the full rebasing of our interest cost to market levels, which we currently assume to be 5.5%. The bridge on this slide breaks down the key drivers, including the benefits of like-for-like rental growth assumed at 3% to 3.5%. The yield pickup from recycling out of our lower-yielding reg's assets into our build-to-rent portfolio, scale efficiencies with EBITDA margins growing to over 60% and the mitigating impacts of reducing debt on higher interest rates. This growth is locked in with upside from delivery of further pipeline schemes or stabilized acquisitions. So to summarize, we've continued to deliver a very strong operational performance with rental income increasing by 12% and EPRA earnings also up by 12%. This growth is being delivered from a position of real financial strength. Our liquidity and our balance sheet are strong, giving us the flexibility through disposals to reduce our debt by GBP 300 million to GBP 350 million over the medium term, as we reinvest into our committed pipeline. We maintain our EPRA earnings guidance of GBP 60 million by FY '26 and GBP 72 million by FY '29 from the delivery of just our committed pipeline alone, whilst also fully absorbing the headwind of higher interest rates. This earnings growth is a major component of our medium-term total returns target of 8%, which we see as a low volatility return and which remains unchanged, assuming constant yields. And at the current share price, this would equate to a 12% return. With that, I'll now hand you back to Helen. Helen Gordon: Thank you, Rob. In this section, I'm going to go through the 5 fundamentals of our investment case, and then, look at the performance of one of our new openings and also the Renters' Rights Act and our shareholder value creation model. Our investment case is compelling. We invest in a low-risk, low-volatility asset class with resilient and proven growth. We're in a market with exceptional fundamentals of housing supply shortages and growing demand. Our customer base is strong with a positive outlook for rental growth. And we now have certainty around our regulation following Royal Assent of the Renters' Rights Act. We have a sector-leading operational platform supported by technology, and this gives us great data and insights, and I'll now look at each of these in a little more detail. So residential is a low-risk investment with sustainable growth. Yes, it's lower yielding than some asset classes, but that is because it's lower risk. It has consistent year-on-year rental growth, and it has delivered above inflation rental growth. And residential rents and capital values have outperformed commercial real estate. This is underpinned by a supply shortage of homes. Our market fundamentals are strong, a shortage of supply and a growing population. We have in this country an estimated shortage of 4.3 million homes. And of the 5.6 million private rental homes, still only 2.5% are owned by professional build-to-rent landlords. Private landlords continue to exit the market, reducing supply, and fewer homes are being built. Recent revisions of the household growth show a 10% increase in household in the 10 years to 2032 and rental demand is set to grow by 20% in the 10 years to 2031. The structural supply and demand imbalance that underpins our sector has never been more acute. Our customer base is strong. On average, a Grainger customer earns around GBP 38,000 per annum. And the average Grainger household income is GBP 62,000 per annum. Our core demographic is in the 20 to 48 range, which tends to see the fastest earnings growth. Our customer base is very diverse. And as a reminder, we cap our student numbers. This diverse customer base and healthy affordability gives us confidence on future rental growth and occupancy. Now, last month, the Renters' Rights Bill achieved Royal Assent. This means we now have certainty on the regulatory outlook, and importantly, it rules out rent control. We contributed our insights to government throughout the process. The act is designed to raise standards, and we at Grainger are already delivering high standards. The proposed standards are consistent with our business model and our operational platform. And our customer-centric approach is embedded in Grainger's business. So the 5 key changes here are the abolition of no fault evictions, annual market rent reviews, pet-friendly policies, open-ended tenancies and decent home standards. And these align with our business model or current practices. The changes in our processes to comply with the act are already well advanced. We know the main measures will be introduced from the 1st of May 2026, and we're ready. So importantly, we now have certainty that rent controls do not form part of this important act. The final piece of our compelling investment case is our operational platform and how we deliver operational excellence. We've grown our offer supported by technology, and this gives us great insights into what our customers want. In our operational excellence, we have moved from instinct to insight. We use AI-driven sentiment analysis to inform our operations. And the data tells us what's important to our customers and what they want from a home. Now, this strengthens both our leasing and our customer retention. Our intuitive customer app as well as our friendly on-site residence team drive our excellent engagement and performance scores, and we sit ahead of many big brands in customer satisfaction and Net Promoter Scores. Building trust is no small feat for a landlord. Now turning to a recent case study, our latest opening in London is Seraphina at Fortunes Dock and it's opposite Canning Town transport interchange. Now, our commitment to this scheme was some time ago. However, even with outward yield movement, rental growth has more than compensated. It's a high-quality scheme, and it was delivered into our best letting season, which is late summer. And we allowed 12 months to lease up in our underwriting. But the lease up here in the first couple of months takes it to 88% let. Rental growth is ahead of underwriting, and the scheme forms part of 3 buildings: Argo, which was launched in 2017; Nautilus, which was launched in 2023; and Seraphina. And whilst there is a slight rental difference, our cluster strategy delivers consistent service. What I'm so proud of is that the rent differential between Argo and Seraphina is only GBP 60 a month. And that is evidence of the low depreciation and resilience of our product. Unlike other real estate asset classes, residential has lower depreciation and greater resilience. As a reminder, Argo is 8 years old, all refresh costs have gone through the gross to net, showing its resilience and lack of depreciation. Residential investment run well offers a true net yield. Grainger's shareholder value creation model is simple and clear. We're investing in high-quality rental homes in great locations with strong demand, and this investment is low risk. We have inflation linking rental growth and the efficiency of a sector-leading operational platform. We are expanding our EBITDA margin, and we have strong growth opportunities secured for now and the future. Our growth is funded. We have demonstrated our track record of disposals. We have a strong balance sheet, and we are lowering leverage. So what this means is that this proven model is built to deliver shareholders' excellent risk-adjusted returns. Thank you. I now invite you to ask questions, and I'll be joined by Rob Hudson, our Chief Financial Officer; Mike Keaveney, our Director of Land and Development; and Eliza Pattinson, our Director of Operations and Asset Management; and other senior leaders in the room. So anyone listening in, you can submit questions through the webcast, but we're going to take questions in the room first. Helen Gordon: Chris, I've got my notepad because I know it will be a 3-parter. Christopher Millington: I've learned the lesson there. Chris Millington at Deutsche. First one I'd like to ask is about this deleveraging and kind of how the strategy is working. So if we don't -- let's say, we don't get such a ramp-up in finance costs going forward, would you still look to delever to that extent? Or should we think it more you're managing the finance cost within the mix of earnings? I'll stop there and go again in a minute. Robert Hudson: Yes, I think we'd always retain some level of flexibility, Chris. So if indeed, the outlook improves and interest rates start to fall a bit, we've modeled on current forward curves of 5.5%, then we'd obviously always aim to have a little bit of flexibility because we are thinking principally around preserving strong earnings growth in the business. Christopher Millington: Very clear. Assuming your assumptions on the 5.5% are correct in the GBP 300 million, can you just talk about what capacity you've got to invest? What -- how should we think about the secured pipeline coming through and beyond and maybe stabilized acquisitions which you mentioned? Helen Gordon: Yes. So you saw the slide, Chris, which actually had over GBP 900 million of capacity. And obviously, that sort of will grow over time. The main components of that are our regulated tenancy portfolio that we're working through strategic land portfolio and other older, non-core assets. So even with deleveraging, completing the pipeline because of our strong operational cash flow, we've got capacity to do our secured pipeline. Christopher Millington: And when do you think we should start seeing that get committed to? Helen Gordon: I think, as I mentioned, we'd look at that commitment in relation to all other options within the portfolios that deleveraging and also the investments in our existing pipeline. But obviously, as the Seraphina example shows, we make a commitment a couple of years out. Christopher Millington: And then I just wanted to explore the valuation backdrop. Perhaps just a little bit of detail as to kind of what assets, regions drove the slight outward yield shift? And just what you're hearing from the value as in what you feel about the outlook for yields? Helen Gordon: Yes. I mean, the interesting thing is how strong the investment market has been maintained for residential assets. We've seen some significant transactions. It was a few outward yield movements on some of our more regional portfolio, but it was literally 10 basis points outward yield movement there. And there were a couple of asset-specific movements. But overall, yields have been stable for the last couple of years, if you look at the valuers' charts. Eleanor Frew: Eleanor Frew from Barclays. So occupancy levels are high, rental growth slowing a little. Can you talk about how you're thinking about balancing the 2 moving forwards? You're likely to prioritize keeping occupancy. And then maybe any comment on incentives used over the year and any planned? Helen Gordon: Yes. Great question. I would -- that occupancy figure is exceptional at 98.1%. We model our business on a lower occupancy. What I always say is important is getting real estate income producing. It's probably one of the most important things you can do. That's sort of rather than keeping occupancy to drive topline rental growth. The new lets' figure that you saw in the numbers reflected the fact that in order -- because we got some late deliveries, if you like, into the year, we wanted to make sure that we went into the winter season with a really high level of occupancy. And so we did offer some incentives. So that blended rental growth just recognizes some small incentives that we made there, but occupancy and rental growth is something that the senior leadership team look at every single Monday morning in a lot of detail. So it's a really careful balance, and I think that anyone that's not looking at both might miss the picture. Eleanor Frew: Great. Then, we understand the market participants that students are increasingly turning to BTR instead of PBSA. Is that something you've seen? And have you seen any pressure on your cap? Helen Gordon: Students have obviously liked build-to-rent for a very long time. Our business model is to build long-term communities, which are most resilient, and therefore, have higher retention rate since students obviously churn more readily. So we've kept our buildings to make sure that students are only a small proportion and that means that we don't get that big summer churn when they finish their courses. But there's another reason for it as well, which is just that mix of young professionals and students doesn't always mix too many parties, I think. But we have -- there are certain cities where obviously, we've come under pressure to let more to students, and it's just really keeping very, very disciplined in order to ensure that we keep that balance of the community and prevent a high level of churn. Thomas Musson: It's Tom Musson at Berenberg. You just mentioned on rent growth for the year ahead, I think to expect some sort of normal seasonality and growth higher in the second half. Can you just remind me what sort of dispersion is in terms of rent growth first half versus the second half? Helen Gordon: I'm going to ask Rob to answer this in more detail in a moment. But one of the things I would say is that we've had quite an unusual market for the last few years. So -- this company is over 100 years old, and we always know that our best leasing season is the sort of late summer into the autumn. What happened during the pandemic and post pandemic is that, that changed with the way that the market went into fluctuation. And now, we're actually seeing it return to normal. But Rob, why don't you give some more detail on that? Robert Hudson: Yes, absolutely. So the first point is we continue to guide for our long run rate of 3% to 3.5% for the year ahead. And that's because we're sitting with very healthy levels of affordability at 28%, which has been constant at that level for quite some time. And, of course, the fundamentals of demand and supply with supply shrinking and demand remaining strong. So, as Helen said, the market obviously has been quite exceptional for the past few years coming out of COVID. But we could expect something in the order of anything up to 100 basis points spread between the first and the second half, but still very much guiding towards the long run rate for the year ahead. Thomas Musson: I just had a second one. You mentioned Bristol launched last week. Can you say -- I don't know if you have any early insight into how that's going? Any early demand there? Any chance that can be a successful lease-up as Seraphina? Helen Gordon: We haven't actually launched it yet, but we -- there's a good buildup, and it sits within a really good cluster. And so we've got good insight into it being a very, very strong rental city and good sort of indication of demand. Eliza, do you want to say anything on that? Eliza Pattinson: Yes. I guess, just going back to seasonality, we've done extremely well in all of our lease-ups in Bristol, but we are launching this building into the low seasonality of lettings. So we'll be doing prelaunches, pre-lets, and we have got good interest at the moment. Helen Gordon: Neil? Neil Green: Neil Green from JPMorgan. Just one, please. There were some initiatives announced in London, I think, last month around speeding up housebuilding activity, focus on the affordable element, but interested to get your take on whether you think this is the catalyst and also whether there's changed anything for Grainger when it comes to the future pipeline, please? Helen Gordon: Yes. I'm going to turn to Mike to talk about this because he's pulled all over the guidance on it. But -- I mean, I think it's a really strong signal of how difficult people are finding it to actually build in London. And just to give you an idea, I think the stat that was out was -- new homes delivered in May was 19. That's total new homes. So you can imagine they do need to stimulate housebuilding in London, but Mike, why don't you talk about the detail? Michael Keaveney: Sure. Thanks, Helen. So what was announced really were emergency measures around the fast track process for getting consents. And obviously, they dropped the amount of affordable housing that they expect from sites and also within that announced grant levels for the affordable housing. But it's really a signal that the GLA are listening to the fact that the housebuilding sector in London is under pressure from a viability perspective. And it's still going to be consulted through in the next 6 weeks or so. But I think it's a really welcome step that they realize, and it's not just build-to-rent, obviously, it's the house builders generally, that their viability models are struggling. And the right lever is affordable housing and grant. And so we welcome that. Helen Gordon: Alastair? Alastair Stewart: Alastair Stewart from Progressive. A couple of questions related to that. Recently, have you -- I know you -- your performance with the building safety regulator has been better than most. But what's your reading of the overall [Audio Gap]. Michael Keaveney: Definitely made a difference, and the big difference is engagement. So now developers in that process have someone they can speak to and talk about the process they're going through. And that's made a massive difference, I'd say. We recently achieved Gateway 2 approval with our partner in Guildford, and that was delivered in 22 weeks, which is much closer to the 12 weeks they originally started with. So we do see -- again, they are listening. They are trying to solve the problem and solve the problem without compromising safety. So yes, the direction of travel is good for that. In terms of the second question, the principle behind that is that there will be a dearth -- there's a backlog of residential development that needs to be -- that will get released through Gateway 2, and suddenly, it will all arrive at once. I think the emergency measures tell you something about that likelihood. The reality is you have Gateway 2 as a barrier, which is now being traversed. But after that, you have a viability issue on certain schemes around London, mainly with the house builders. So I -- and you'll see that the RPs are pulling back from development. So we don't see a massive increase in house building driving inflation. We see a steady progression of house building. Helen Gordon: James? James Carswell: James Carswell from Peel Hunt. Maybe a slight follow on from Chris's question. But just in terms of credit spreads and margins, it feels like they've probably come in looking at what some of the other REITs have done recently. I mean, where do you think -- if you were refinancing today, I appreciate you're not, where do you think your kind of marginal credit spread would be? Robert Hudson: Yes. So based on our internal forecast and current rates, the all-in rate would be around 5.5%. So I think it's obviously true to say as obviously gilt yields have moved, then we've seen a country movement on credit spreads, but the all-in remains around 5.5%. James Carswell: And then maybe just in terms of bigger picture, I mean, funding the kind of the next, I guess, phase of Grainger in terms of opportunities you're seeing, acquisitions, yes, how should we think about funding those? Because the non-core assets are kind of being used for the current pipeline and deleveraging. And is now a good time to maybe think about third-party capital? Is that under consideration? Helen Gordon: We do look at third party, and the Board discuss it, the pros and cons of doing that. But James, we've got a lot of capacity and a big pipeline to go at that we can actually fund ourselves. And so it's obviously -- but we talk to partners all the time. And if there is a right opportunity. And, of course, we do have a joint venture with TfL on our strategic joint venture. So we are known as being good partners. So I wouldn't rule it out. But -- I mean, the great thing is we have clear visibility on how we can fund that secured pipeline. Any other questions? Kurt, you are going to fire some from the webcast. Kurt Mueller: There are a few that have come in online. The first is from John Vuong, Van Lanschot Kempen. The #2 key positive drivers for NPS is the quality of the property. But at the same time, you mentioned that your assets have low depreciation and require minimal CapEx. How can you reconcile these 2 statements? Helen Gordon: It's because we're constantly on top of them, and meaning, that we're refreshing all the time, and we're doing that through the 25% gross to net. So it's very different from, say, our European counterparts that do put their refresh costs -- capitalize their refresh costs. And just as a reminder to John, the majority of our portfolio has been built since 2017. So it is actually a very, very new portfolio. And when we designed it in our specification, we looked very, very carefully at the long-term use of finishes, which is why we invest in high-quality finishes to make sure it doesn't deteriorate as quickly. Kurt Mueller: Next question is from Andres Toome of Green Street. What is the impact to yield on cost for schemes benefiting from lower affordability housing quota and the community infrastructure levy in London? We partly answered that, I think, before. And do you see any opportunities emerging from these changes? Helen Gordon: Yes. So -- I mean, most of our schemes have been through the planning process. But, Mike, why don't you answer this? Michael Keaveney: Yes. I think what lies behind the question is whether lower affordable housing and say, increased grant and that kind of combination would lead to greater returns, which is not quite the point of what the emergency measures are trying to do. The emergency measures are trying to bring back viability to housebuilders so that they make their returns. If you created a scenario where super normal returns were delivered through that, they would pull back. And so really, the benefit is that the housebuilders, the general housebuilders should be able to hit their viability returns, not make supernormal profits. Kurt Mueller: One final question from online. Dr. Francis Jardine, I believe, a private shareholder. "I have investments in over 20 REITs, who pay quarterly dividends, does the Board of Grainger intend to consider paying quarterly dividends going forward? Doing so is only a question of managing cash flow". Helen Gordon: We pay -- obviously, we pay half yearly dividends, as a reminder. I will make sure that the Board discussed it at the next meeting. Kurt Mueller: That's it from online. Helen Gordon: Any other questions in the room? Chris, another one? Christopher Millington: It's as I was getting through to the appendix on the presentation. But I notice now we've got London and Southeast net initial yields, quite tight versus the rest of the country, actually, a little bit below where you're holding in the Southwest. I think it's 4.3%, place 4.1%. What do you think of the relative attractiveness of London now you've seen that sort of convergence? Helen Gordon: Yes. I think it comes from the fundamentals of our sector, which is you've got a shortage of supply across the whole country. So you've got occupancy, and therefore, sort of they have converged the biggest -- I haven't put it in this year, but it is in the appendices. It is my chart where I show where is the best rental city. And the best rental city for obvious reasons is London. So I would argue -- I have to be careful, I think, we've got the values in the room, but I would argue that the London yields are too cautious. For most of my career, London yields have been significantly lower than where they sit today. No more questions. Thank you very much for getting up early and coming and joining us this morning. Any other questions, we will be around for a little while before I think another property company comes in here. So thank you.
Operator: Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Ellington Credit Company Second Fiscal Quarter ended September 30, 2025 Results Conference Call. Today's call is being recorded. [Operator Instructions] It is now my pleasure to turn the floor over to Alaael-Deen Shilleh, Associate General Counsel. Sir, you may begin. Alaael-Deen Shilleh: Thank you. Before we begin, I'd like to remind everyone that this conference call may include forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are not historical in nature and involve risks and uncertainties detailed in our registration statement on Form N-2. Actual results may differ materially from these statements, so they should not be considered to be predictions of future events. The company undertakes no obligation to update these forward-looking statements. Joining me today are Larry Penn, Chief Executive Officer of Ellington Credit Company; Greg Borenstein, Portfolio Manager; and Chris Smernoff, Chief Financial Officer. Our earnings call -- our earnings conference call presentation is available on our website, ellingtoncredit.com. Today's call will track that presentation and all statements and references to figures are qualified by the important notice and end notes at the back of the presentation. With that, I'll turn it over to Larry. Laurence Penn: Thanks, Alaael-Deen, and good morning, everyone. We appreciate your time and interest in Ellington Credit Company, which we often refer to by its New York Stock Exchange ticker E-A-R-N or EARN for short. Please turn to Slide 3. The credit markets generally rallied during the third calendar quarter, supported by a dovish shift from the Federal Reserve, which delivered its first interest rate cut for the year in September. Most corporate credit and CLO spreads tightened overall, as shown here on Slide 3, and that was even despite some notable pockets of weak credit performance in the high-yield corporate bond and leveraged loan markets. Major equity index is also advanced on expectations of further monetary easing. Turning now to Slide 4. Ellington Credit delivered another strong quarter against this backdrop. Our CLO portfolio ramp-up continued at a steady pace, and our net investment income rose accordingly. Our results also benefited from several CLO note redemptions at par on discounted purchases as well as our robust trading activity with more than 90 distinct CLO trades executed during the quarter. Finally, I'm very pleased to announce that Ellington Credit Company achieved full dividend coverage from net investment income in September, underscoring the earnings power of our portfolio as we get closer to being fully invested. Active trading remains at the core of our investment approach. And we believe it enables us to capitalize on mispricing to manage risk more effectively and to continually reposition the portfolio for optimal relative value. This past quarter, we saw yield compression between the CLO debt tranche markets and the leveraged loan markets, and that led us to reposition our portfolio in 2 important ways: First, this yield compression led us to increase our portfolio allocation to mezzanine debt, gaining more attractive yields on a relative value basis, especially with the downside protection they offer. Second, the yield compression led us to reduce our exposure to new issue equity. Instead, we gained similar exposures, but at better pricing in secondary market acquisitions of longer duration equity. Another advantage of frequent trading is that it provides more accurate and more actionable information on real-time market conditions and it improves our valuation process, as Greg will discuss later. Our predisposition towards active trading also highlights an advantage of EARN's relatively modest size with $225 million of equity to invest rather than say, $1 billion or more, we can remain nimble, rotate the portfolio decisively and be highly selective in our investments without feeling compelled to own the market. Our portfolio maneuvers this past quarter echoed many of our moves from the prior quarter. Looking back over the last 2 quarters, so dating back to our April 1 conversion to a closed-end fund, approximately 70% of our net CLO purchases have been of mezzanine debt tranches, reflecting our deliberate move up in credit quality. We believe that mezzanine debt tranches currently offer a compelling combination of yield and downside protection, complementing the equity positions we hold. We've also leaned more heavily into the secondary market where relative value opportunities are often more compelling than a new issue. As I mentioned, we've been especially favoring secondary market acquisitions in the case of CLO equity. As shown on Slide 7, as of September 30, our $380 million CLO portfolio was almost evenly split between mezzanine debt and equity tranches with about 14% of total investments in Europe. With that, I'll hand it over to Chris to review our financial results in more detail. Chris? Christopher Smernoff: Thanks, Larry, and good morning, everyone. Please turn back to Slide 4. For calendar Q3, we reported GAAP net income of $0.11 per share and net investment income of $0.23 per share. The weighted average GAAP yield for the quarter on our CLO portfolio was 15.5%. On Slide 6, you can see a breakout of our portfolio net income by CLO subsector, $0.13 from U.S. CLO debt, $0.03 from European CLO debt $0.08 from U.S. CLO equity and a slight net loss from European CLO equity. Strong net investment income across subsectors was complemented by net realized and unrealized gains on CLO debt and partially offset by net realized and unrealized losses on CLO equity and credit hedges. In the U.S. leveraged loan market, overall index prices were broadly unchanged, but performance diverged sharply by credit quality. Lower triple -- sorry, lower quality, CCC-rated loans felt several points amid isolated default concerns, while B-rated loans advanced on sustained CLO demand, further highlighting the theme of credit dispersion. Callable higher-quality loans continue to be repriced at lower rates with price premiums on those loans giving way to new issuance at par with tighter spreads. In Europe, leveraged loan prices lagged the U.S., largely due to more extensive repricing activity. Despite the mixed loan backdrop, U.S. and European CLO debt spreads generally tightened, supported by steady capital inflows and limited new CLO issuance. Seasoned mezzanine debt outperformed as loan prepayment and repricing activity remained elevated. CLO equity also benefited from tightening debt spreads, enabling equity investors to refinance or reset liabilities and lower coupons, though this was partially offset in both the U.S. and Europe by continued loan repricing and isolated default concerns. Slide 7 provides detail on our CLO portfolio, highlighting the continued sequential growth. In total, the CLO portfolio increased by 20% to $380 million. During the quarter, we made new purchases totaling $160 million, 62% of that in CLO debt and 38% in CLO equity and sold $29 million of CLOs, consistent with our active trading approach. At September 30, CLO equity represented 51% of total CLO holdings, down from 53% coming into the quarter, while European CLO investments accounted for 14%, roughly unchanged quarter-over-quarter. Slide 8 provides an overview of the corporate loans underlying our CLO investments. The collateral remains predominantly first lien floating rate leverage loans, representing roughly 95% of the underlying assets. Industry exposure is well diversified, led by tech, financial services and health care with no single sector exceeding 11%. Maturities are spread over several years with the largest concentrations in 2028 and 2031 and limited near-term maturities, producing a weighted average loan maturity of 4.2 years. Facility sizes skewed towards lower borrowers with 42% in facilities over $1.5 billion with a weighted average size of $1.6 billion supporting liquidity. Slide 9 provides further detail on our underlying loan collateral. Slide 10 presents a snapshot of our credit hedges as of September 30. During the quarter, we increased our corporate credit hedges alongside the growth of our loan portfolio. At quarter end, we also maintained a foreign currency hedge portfolio to manage exposure associated with our European CLO investments. Turning to Slide 11. At September 30, our NAV was $5.99 per share and cash and cash equivalents totaled $20.1 million. Our NAV-based total return for the quarter was 9.6% annualized. With that, I'll pass it over to Greg to discuss how the portfolio market has performed, how we positioned our CLO portfolio and our market outlook. Gregory Borenstein: Thanks, Chris. It's a pleasure to speak with everyone today. Calendar Q3 played out almost as a mirror image of Q2. We began with robust performance in July, but momentum faded as the quarter went on. Growing concerns about idiosyncratic credit issues, coupled with continued loan coupon spread compression weighed on CLO equity and even pressured some of the more credit-sensitive mezzanine tranches. Even against this backdrop, both our mezzanine and equity positions contributed positively to performance. As we've mentioned before, we have been concerned throughout the year about the widening gap between strong and weak credits in both the CLO and broader corporate credit markets. Whether it is the prolonged impact of elevated interest rates on floating rate borrowers or the volatility around winners and losers created by AI, tariffs and changing trade dynamics, we've been deliberate and cautious about owning first loss credit risk. CLO equity has continued to experience muted return, not only due to default and distressed exchanges and some weaker credits, but also due to prepayments and stronger credits, reducing returns at both ends of the underlying loan portfolios. For CLO equity, the combination of these 2 factors has more than offset the positive impact of tightening liability costs and deals. On the margin, we generally continue to favor CLO mezzanine tranches as a more attractive balance of risk and return in the portfolio. The subordination and structural protections they offer help insulate us from the dispersion and idiosyncratic concerns mentioned earlier. That said, almost any investment becomes attractive at the right price, and we are continuing to see opportunities in both parts of the capital structure when they're offered at the right level. We are continuing to find the secondary markets far more compelling than primary markets, as has been the case for most of the year. We only participated in on new issues equity transaction in calendar Q3. Meanwhile, we saw an uptick in CLO trades for EARN from 79 in Q2 to 92 in Q3, emphasizing our trading-focused flexible approach. In our view, this is something that very much differentiates us from our competitors and should be a source of comfort for investors. Credit issues such as First Brands have roiled the credit markets, and that has led to selling pressure on the stock of CLO closed ends funds including EARN. Similar to what we've seen with BDC stock prices, I believe this is often due to investor uncertainty about the true condition of the underlying portfolio, including the portfolio marks. By trading our portfolio so actively, we possess a great deal of confidence in our underlying portfolio marks. Not only do we have a strong sense of where the market transacts, but it has been relatively straightforward to value our positions because many of them trade frequently, which makes us highly confident in the accuracy of our reported NAV. While we continue to favor mezzanine tranches, EARN has been able to take advantage of some interesting opportunities in the CLO equity market. We expect to continue to see compelling special situations, especially in the secondary market, where we find that our strong relationships and reputation as an active trading counterparty often give us early and differentiated access. While some CLO managers and dealers are willing to offer incentives to entice investors to commit to funding new issue CLO equity investments. We think it's critical to evaluate those incentives in the context of the manager's quality, the deal structure and the underlying collateral and only commit capital when the overall opportunity clears our risk/reward bar. Now back to Larry. Laurence Penn: Thanks, Greg. I'm very pleased with EARN's results this quarter. The steady growth of our net investment income enabled us to achieve full dividend coverage in September, which is an important milestone that reflects the earnings power of our portfolio. While our net investment income can fluctuate month-to-month, as deals are called, distributions are reinvested or profits are taken through trading, we feel confident about our ability to maintain dividend coverage over the long term. Taking a step back, volatility and credit dispersion have remained defining features of the corporate credit markets in general this year and the CLO market, in particular. Uneven impacts from AI and tariffs have definitely factored greatly into the volatility and credit dispersion, but the recent Tricolor and First Brands bankruptcies first brands being a widely held CLO credit, by the way, underscores that the corporate credit markets are also vulnerable to idiosyncratic volatility and credit dispersion. Given that corporate credit spreads overall remained relatively tight during the quarter, we continued to expand our credit hedging portfolio as we ramped our investment portfolio. As shown on Slide 10, we increased our credit hedge portfolio to roughly $90 million of high-yield CDX bond equivalents by the end of the quarter. To put that in perspective, that $90 million equates to about 40% of our NAV as of September 30. So it's a very significant position. And following quarter end, we've continued to increase our credit hedges. This synthetic short position reached more than $150 million in high-yield equivalent as of October 31, as detailed in our October tear sheet that we released last night. While these hedges, like most hedge, can be expensive to maintain, the downside protection they provide is well worth the cost in our view, especially given where overall corporate credit spreads currently stand. If credit spreads widen, these corporate credit hedges should generate substantial gains to help offset any declines in our long CLO portfolio. Finally, I'll note that while high-profile defaults like First Brands tend to grab a lot of headlines, they also give you a real-world look at how CLO structures are designed to work and how our approach is meant to protect investors. In EARN, the impact from First Brands on our portfolio was quite modest. Our mezzanine debt tranches were largely protected by their equity buffers. And while some of our equity positions were affected, the overall fundamental effects for us was quite limited and was felt more in shorter-dated deals as opposed to the longer reinvestment period CLOs, where most of our equity exposure sits. And that's really the point of the diversification that the CLO market offers investors. You avoid taking outsized exposure to any one borrower. That principle, combined with our recent focus on CLO debt tranches served us well through the third calendar quarter. As we move forward, if corporate defaults were to become more widespread, our credit hedges will become even more important as another layer of downside protection. Looking ahead, with a balanced mix of mezzanine debt and equity tranches and robust credit hedging, I believe we're well positioned for both upside and resilience as market conditions evolve. We expect elevated repricing activity and ongoing credit dispersion to continue to create opportunities for outperformance through active portfolio management, further reinforcing our confidence in delivering strong total returns for shareholders. And since we're now close to being fully invested, our likely next step is to raise long-term unsecured notes, which we hope to complete in the coming weeks, market conditions permitting. We expect this additional capital to be accretive to both net investment income and GAAP earnings. Now let's open the floor to Q&A. Operator, please proceed. Operator: [Operator Instructions] We'll take our first question from Crispin Love with Piper Sandler. Crispin Love: My question is on the hedges and the recent moves. As you said, you had a pretty meaningful move in credit hedges from the end of September to end of October. Can you just discuss what you're seeing? What drove the increase versus the end of September? You think spreads are too tight today? And then, of course, we've been hearing some of the -- all the macro noise in credit, private credit. So just curious on your thoughts there and what you're seeing in your portfolio and just more broadly? Laurence Penn: Sure. I'll take the first crack at that. Greg, if you don't mind. Just the increase in the size of the credit hedges was mostly a function of just the increase in the portfolio size and the increase in the leverage in terms of just on an absolute dollar basis in terms of how much debt we have through repo. So a major component of how we size our credit hedges is to make sure that in a severe market downturn, we'll have enough liquidity through the profits on our credit hedges to manage any liquidity issues arising from our repo. So that's really where most of it comes from. But -- and then in terms of timing the market, I'll pass that to Greg. We obviously do have the ability and we like to also adjust size of the credit hedge portfolio in terms of how tight credit spreads are on a historical basis. Greg? Gregory Borenstein: Sure. To echo Larry's point, I think it's important to remember these hedges are here to really sort of protect against a drawdown. It's not a short position, we're necessarily taking. And so early on when we weren't financing our positions as much or if we were more heavy in CLO equity, which we're not necessarily financing the way we'll finance CLO mezzanine positions, they aren't as necessary as we've increased financing on CLO mezzanine position since we've tended to favor those, we've needed to add more protection in these drawdown scenarios from a liquidity point of view. Now that said, we're constantly trading these hedges around as positions come up and down. If we are selling out of something, we may adjust them down to be careful not to be running shorter than we would like either. But you're right, I think that as we see some of these sales have grown in areas of the corporate credit market, we still think that tail risk is attractively priced. And so entering into some of those hedges at these levels versus where we could enter into long investments with some financing, that equation, we think, works out well for EARN generally. Laurence Penn: And I'll just add, we'll be filing our NCSR, shortly, which gives a detailed look at our entire portfolio, including our hedges. And you'll see, if you take a look at those when they come out that they're really mostly what we would call tail hedges, right, to protect against tail scenarios. Crispin Love: Okay. That all make sense. But Larry, I get your point on increasing the hedges with the size of the portfolio in the calendar third quarter. But just looking at October, definitely saw a big increase in hedges, but a decrease in the CLO portfolio, if I'm looking at that right. Was that a more cautious view on credit? Laurence Penn: Greg, do you have a view on that? I actually -- I would have to take a closer look at that to answer that. Gregory Borenstein: I would need to take a look. We've not looked to necessarily represent a shorter, more cautious view. I think, in general, you may have seen some rotation. And as I said, the hedges are really there when we're financing mezz physicians, just as we're adding leverage, the drawdown with the financing can be something that we pay more attention to. The other thing too is earlier on, our hedging options were more limited than they are today in terms of setting up agreements with banks in terms of what we're able to trade. We use a lot of different -- we enter into a lot of different types of markets for different types of tail hedges. And so it's possible from a notional standpoint, you may see some things that are just a lower beta or delta that maybe have a higher notional to that point. And so we'd have to look through in terms of notional sizing. But overall, it's not necessarily an uptick in what we think is the actual risk or equivalent risk of the hedges. It might just notionally look different as we've moved from one product to another. Crispin Love: Okay. And then just last question. Just any color -- I'm just looking at the tear sheet for October. Any color on the CLO portfolio decreased a bit to $371 million from $380 million as you're kind of getting to full deployment? Any reason for the decrease there? Gregory Borenstein: Over the course of October? Crispin Love: Yes. Gregory Borenstein: Well, October is a quarterly payment date, too. So the equity portfolio will have distributions and generally a bit of a markdown in prices. And so while that came out and was distributed, I think there was some of that. Also CLO equity did sell off a little bit in October. I think that's what we saw in the market. And so you saw the NAV move to adjust that a little bit. Laurence Penn: Crispin, I'll just add that the debt portfolio increased net month-over-month and the equity portfolio decreased mainly driven by what Greg mentioned, the distribution. Operator: We'll go now to Doug Harter with UBS. Douglas Harter: You mentioned potentially being in the market for unsecured debt. Can you talk about your appetite for leverage and how you think about where leverage would be kind of for the context of this conversation, we'll hold the asset composition the same just to take that piece of it out of the equation? Laurence Penn: Sure. So as I said, we're really close to fully invested right now. I think at 300 -- between $370 million and $380 million, let's call it, we would have room definitely to go up to around $400 million, maybe a little bigger. We are constrained by all of the restrictions of the '40 Act. We're a fully compliant derivative user and that gives -- that does give us a little more flexibility. So a little less than 2:1 leverage. Again, that's also given our current 2:1 asset to equity leverage. That's given our current portfolio composition as well, right? So the more mezzanine debt that we have, the more we can leverage the more equity we have, the less generally. And if we were to do an unsecured deal, I think you could see, right? So let's just say for argument's sake that it was a $50 million deal, right? So that additional capital, I think just a good rule of thumb again would be something a little less than 2:1 assets to that additional debt capital. Operator: We'll hear next from Eric Hagen with BTIG. Eric Hagen: Do you have any perspectives or predictions on the amount of CLO supply we might see next year? And just how sensitive the market could be at higher levels of issuance and maybe just some of the conditions that you feel like will drive the spread environment next year? Gregory Borenstein: Sure. To be honest, I don't have a lot of conviction there. I think some of it will depend on what we see with new issue loan supply. I think if you speak to a lot of market participants, everyone sort of admits that it's been a challenged ARB with loans being so tight. I think similar to this year, you'll see a lot of reset and refinancing activities of existing deals as opposed to proper new issue, just where the market is today. But that said, it's hard to tell what may happen on both the asset and liability side. Depending what happens with rates, that can force technicals within the loan market, potentially with on the liability side as well. And if you get a situation where some of the loans tend to sell off and maybe widen on spread while AAAs and maybe some of the up the stack tranches hold in better, this may present a good window for new issue -- true new issue to pick back up. But right now, it feels like we will continue in this environment where things are now, where people are getting creative with existing deals, trying to give them new life and extend them out versus newer -- cleaner new issue deals. That's where we see the demand at least today. Eric Hagen: Okay. That's interesting. Do you have any general perspectives on the presence of AI-related credits, which show up in the CLO market, especially the middle market CLO zone? And if you think there's like a lot of indirect sensitivity with respect to like the AI narrative just more generally in the connectivity that it has to the flow of credit? Gregory Borenstein: Sure. So addressing the first part of the question, it definitely will have an impact on the loan market. I think that as AI filters through a lot of different -- it isn't even necessarily all about tech. There's going to be a lot of companies where AI can benefit companies in terms of reducing costs. AI could potentially make some companies uncompetitive though. And so I think that when we speak to CLO managers and we take a look at our own on some of these credits, you will find that a portion of the market will be affected, sometimes good, sometimes bad, by what AI may ultimately end up bringing. This is another point on our concern around dispersion. If it strongly creates winners and losers, this isn't necessarily the best thing for CLO equity. If the winners prepay out at tighter levels and the losers have fundamental problems, that's not necessarily good for the overall weighted average spread of the portfolio or good for the default rate of the portfolio. And so this dispersion is one of the things we're concerned about. As far as it relates to the middle market space, I'm not sure I would specifically comment differently. There's been some information and articles recently about some of those areas maybe of sort of the private credit middle market space that have started to reveal some problems in some of the names. There may be some similarities with the same way AI can affect the broadly syndicated loan market. It will affect these areas of the credit markets as well. It may just take a second to come through as marks don't move as quickly as the underlying loans there are not as actively traded. And that's something that as much as we will go into those markets, we remain much smaller because given our very trading-focused background, it's not as easy for us to assess the day-to-day risk as things move when underlying portfolio -- or some of those portfolios are not reacting to up-to-date information. And so it does lead us to be cautious in some of those areas, to your point, around how quickly if AI leads to an adverse issue in those portfolios that we'll be able to see that information. Operator: Ladies and gentlemen, that was our final question for today. We thank you for participating in the Ellington Credit Company's Second Fiscal Quarter ended September 30, 2025 Results Conference Call. You may disconnect at this time, and have a wonderful rest of your day.
Operator: Good morning, and welcome to Cadeler's Third Quarter 2025 Earnings Presentation. Presenting today are Mikkel Gleerup, Chief Executive Officer; and Peter Brogaard, Chief Financial Officer. Please be reminded that the presenters' remarks today will include forward-looking statements. Actual results may differ materially from those contemplated. The risks and uncertainties that could cause Cadeler's results to differ materially from today's forward-looking statements include those detailed in Cadeler's annual report on Form 20-F on file with the United States Securities and Exchange Commission. Any forward-looking statements made this morning are based on assumptions as of today, and Cadeler undertakes no obligation to update these statements as a result of new information or future events. This morning's presentation includes both IFRS and certain non-IFRS financial measures. A reconciliation of non-IFRS financial measures to the nearest IFRS equivalent is provided in Cadeler's annual report. The annual report and today's earnings presentation are available on Cadeler's website at cadeler.com/investor. We ask that you please hold all questions until the completion of the formal remarks. At which time, you will be given instructions for the question and answer session. As a reminder, this call is being recorded today. If you have any objections, please disconnect at this time. Mikkel Gleerup, you may begin. Mikkel Gleerup: Thank you very much, and welcome to this Q3 presentation from Cadeler. Thanks for everybody who's dialing in for listening to us today. With me today, I have Peter as normal, and Peter will take you through the financial section of the presentation. So just the standard disclaimer. And we can say that this quarter, the highlights of the third quarter of 2025, we can say that it has been financial performance in line with our expectations. We have, in this quarter, also signed the third full scope foundation T&I contract and also 2 turbine installation T&I contracts. We have delivered 3 of our 4 newbuilds scheduled for delivery in 2025 already. And we have the remaining newbuild, the Wind Mover on track for delivery, and she is delivering current expectation within the next couple of weeks. We have had very strong utilization in the third quarter. We have had 92% utilization. And we believe that, as we have always said that, that is a strong measure of our business, and we are working across the globe in both U.S., in Europe and in Asia. And we are continuing with very strong execution. We have the Wind Ally currently mobilizing for the Hornsea 3 foundation T&I project, and we have the Wind Keeper now here in Denmark at Fayard and also upgrading before she is embarking on her long-term contract with Vestas. In terms of commercial highlights of the third quarter 2025, the vessels have been working out there, and we are starting with the Wind Orca that has been performing work on the He Dreiht project for Vestas. The Wind Osprey has done an O&M campaign for Vestas and are now installing a wind turbine installation project on Baltic Power in Poland. Scylla has continued to work on Revolution Wind in the U.S. for Ørsted and Wind Zaratan completed an O&M campaign in Asia and are now getting ready for her next assignments in the next year. The Wind Peak is also continuing to install on the Sofia wind farm owned by RWE where we are working for Siemens Gamesa. Wind Maker is working on Greater Changhua in Asia for Ørsted. And Wind Pace have been executing an O&M campaign basically since she was delivered from the yard, and she's working for GE Vernova. The Wind Keeper, as I said, has arrived in Denmark on schedule and is currently undertaking a complex upgrade scope. And we do believe that we will see her on project in the first quarter next year. Wind Ally delivered 7 weeks ahead of schedule from the yard and sailed directly to the next mobilization port where she's mobilizing all her foundation mission equipment, getting her ready for the Hornsea 3 foundation installation project. Cadeler sits on a significant backlog across key markets, both in U.S. and Asia, but certainly also in Europe. And we have recently disclosed a very large foundation project with an undisclosed client for execution in 2029, which is something that we are very, very pleased with. I think it's a verification of the concept we are running on the foundation side where the biggest clients in our industry, they are coming to us for full T&I on foundation installation, both near term, midterm and also in the longer term. We will continue to work very, very diligently for more foundation work, but also for more WTG work. And as we do that, we will also continue to build Nexra, our O&M vehicle. And we expect that the backlog will continue to be strong across the years that we are sailing through now. The backlog has basically grown since we listed the business, and we are now standing today at a backlog of almost EUR 2.9 billion, where 78% of that has reached FID. We believe that, that is a quality sign that so much of our backlog has reached FID and also that we are continuing to grow the backlog. We have discussed before that we see 2027 and 2028 as years with slightly more competition for the projects and also an expected lower utilization degree on the fleet. But we are, of course, still working very, very hard to continue to get the best projects in these years so we can continue the journey with our fleet, with our company and our people. In terms of the newbuilds out there, we have Wind Mover that are delivering here in Q4 this year. This is the last delivery this year. And when this is delivered, we will have totally taken delivery of 5 vessels this year, including the Wind Keeper, which was an additional delivery this year that was unexpected at the beginning of the year. And it's very, very close to completion, has already completed the sea trials, and we are expecting, as I said before, to deliver the vessel in the next couple of weeks. The Wind Pace is on track. And she -- we expect that she will be floated out of the dry dock here in December 2025 and delivery is still planned for the third quarter 2026, but there are opportunities for us to potentially advance that should the market need that in 2026. On Wind Apex, we still look at the delivery in Q2 2027, and we are following the plan there exactly as on the other vessels. The Wind Keeper, as I said, has arrived at Fayard in Denmark, and we are on schedule. It is a big upgrade scope we are doing on the vessel, but we need to make sure that these vessels operate to catalyst standards from the beginning. We are working with one of our esteemed clients with Vestas, and we want to make sure that Vestas get a real Cadeler experience on the Wind Keeper from the beginning. The primary scope of the Wind Keeper will be O&M services, but with the crane she has and the leg length she has and the carrying capacity she has, she can also embark on installation scopes. For us, it's important that we make sure that we drive a lot of value out of this investment, and we believe that with what we have seen so far that, that is very, very much a strong opportunity for us and for our client in collaboration. At this point, I will hand over to Peter for the financial highlights in this quarter. Peter Hansen: Thank you very much, Mikkel. Yes, financial highlights for Q3. It was a very, very strong quarter that reflects high utilization and cost under control in comparison to last year, of course, we have 3 more vessels in operations, the 2 B Class vessels Wind Peak and Pace and Wind Maker. Revenue was EUR 154.3 million. Equity ratio is still with the more leveraged balance sheet with deliveries and drawdown on our facilities still very solid 47.3%, utilization very high at 92.2%, which is very, very good for the quarter. Market cap EUR 1.4 billion, approximately 3x the guided EBITDA for the year. EBITDA for the quarter, EUR 109.1 million. Cash flow from operation activities, EUR 214 million. And as Mikkel explained, a backlog record high at EUR 2.9 billion, 3 months daily average turnover is EUR 5.4 million. If we look at the P&L for Q3, yes, again, it really reflects that there are more vessels in operations, Wind Peak, Wind Pace, Wind Maker. And it is a picture that we have seen quarter-by-quarter with a very strong results once a vessel goes into operations, our financials take a step up revenue, EUR 154.2 million, and that is due to, of course, the high utilization, but also the additional vessels. Cost of sales under control, EUR 38,000 approximately for the quarter, a little bit up as compared to last year, but also 2 vessels in operations in the U.S. with a little bit of higher OpEx per day, but still below the EUR 14,000 mark per day. SG&A also up due to what we have been communicated for some time now that we are building the organization exactly to what we see now. We have more vessels in operation and also the upcoming foundation projects. EBITDA, as said, is EUR 109 million, which is more than double what we had last year. P&L for the 9 months from the 1st of Jan to 13th of September, it is more or less the same story. In addition to that, you can see that the OpEx for the year is EUR 34,000 per day, which is also reflecting that it is operation under control. As communicated around first half report, we also have received these termination fees for the termination of a long-term agreement on a postponed -- including on a postponed project Hornsea 4. Balance sheet, yes, reflecting the deliveries and we have taken so far this year, 3 new builds and the Wind Keeper. But as said, still equity ratio at a very comfortable level. This is a slide we have shown a couple of times. It really shows that we have sufficient funding to go through the remaining CapEx program we have with the Mover with 2 A Class vessels coming in, in Mover in Q4 '25 and Ace in '26 and Apex in '27. So we have quite a strong balance sheet and cash and liquidity available. And other story here is that we still see a lot of support from the banks. I think it's unchanged strong support we have seen throughout the last couple of years. Apex is not committed financing yet because it's delivered in '27. So we will start financing that one in '26 and have that in place approximately 1 year before delivery in order to not incur too much commitment fees on that one, but we see exactly the same strong support and interest from the banks also for the Apex. This is the financing overview. What is new here is that we had a Wind Keeper bridge facility that we took when we signed the agreement on the acquisition of Wind Keeper, and we have now a Wind Keeper syndicated facility in place to replace that. That was not done by end of Q3, but that is something that has happened subsequently. Full year outlook for '25. We maintain the outlook that we issued around first half year report after the termination of the long-term agreement. Of course, we are way along into the year, and there's not a lot of uncertainties and judgments left. However, we -- what can fluctuate here is how much of the T&I scope of -- on T3 that falls into '25, '26, '27, that is something that can move a little bit, but we maintain the guidance from half year before. Over to you, Mikkel. Mikkel Gleerup: Thank you, Peter. In terms of commercial outlook for the business, I think what we can say in terms of our view on the market, we get a lot of questions on this and rightfully so. We do see a recalibration. We still see strong momentum, especially in the inner years and in the outer years with a period in between where the momentum is weaker. And what do I mean by that? Let me first talk about the inner years. I think it's fair to say that at the moment, there are several projects out there that don't have an installation solution or an O&M solution at the moment, and they are still looking in the market. In '26 and also in '27, it is becoming increasingly difficult to get a solution and especially if that solution is a solution where it's the same vessel that does everything. Of course, if you're willing to piece meal it together, then you can find a solution still. But this is -- this will be the next step. I think '26, close to impossible at the moment. And in '27, it is becoming more and more something that you have to put together to deliver a full solution to clients. So we are seeing that in the middle year, so the second half of '27 and also in '28, that some of the projects there have been shifting to the right. And that means that there are lower-than-expected utilization in this period. But we are still seeing a significant outbuild in '29 and forward. And as we have just shown the market as well, we have signed a big contract for '29, and we see actually that some developers that would like to secure their capacity for this period, the '29, 2030, 2031 period sooner rather than later to not miss out on the capacity in those years. So -- of course, a lot is still pending on the auctions that are coming like auction round 7 and auction round 8. But we do see that also there is support from governments. In Denmark, for example, there have been support on 2 of the offshore projects to make them increasingly attractive to the market. And hence, we also do believe that there will be successful bidding in Denmark around the auction. We believe that it's fundamentally important to say also that even with the adjusted targets, we are still seeing a large outbuild of offshore wind in this decade. And from next decade, we do expect that the curve will increase in its steepness and more will be outbuilt as we come into that area. And as we say at the bottom here, we do expect a vessel undersupply towards the end of the decade and the beginning of the next decade. In terms of capacity and what we see in the market and what others are seeing in the market, we are seeing a different reality from whomever you ask. And we have tried to show here what the various consultants and analysts that are looking at the market. When they look at the worldwide market, excluding China, what are they saying that will be installed before 2031. And no matter what line you're taking here, there is a significant increase from where we are today and to where we will be when we are into the next decade. So I think that Cadeler's focus is to grab the right projects, the best projects and make sure that we are running on as high utilization profile on our vessels as possible. And I think that we -- with the plan that we have laid out also for the middle years, the '27, '28 years that we are on a mission now to close these years in as fast as possible with the best projects possible in these years. It is a fact that there are more competition in '28 than we expected due to missed auction rounds and due to projects being shifted to the right, but it doesn't mean that there's no opportunity. And I think that, that is the important message from us that is that there are opportunities, and we are fighting for those opportunities, and we will continue to do so. Europe will continue to be the leader in the outbuild, but we also do see APAC continuing outbuild and especially Korea is coming in that market in addition to what we have seen in Taiwan and in Japan. Recently, there has also been a European developer signing a development agreement in another Asian country, but we don't believe that, that will have an impact in this decade. We still have the largest fleet in the industry, and we believe that, that fleet and the flexibility, predictability and affordability that it gives our clients is something that they are having a preference for. We are still active in a wide range of tenders across all years out in the future, and we are fighting as hard as we can to make sure that we deliver the best value and the best projects to our investors. That is what we come to work for and what we are fighting for every day. But we do believe that the offering that we can offer to our clients has a value and also something that will drive value for us and our investors. We have also shown on this slide that the supply has gone down since we last addressed the investors in a group setting. The Maersk Offshore Wind vessel, the contract between Maersk and Seatrium was terminated. And hence, at the moment, we do not consider that vessel as being in supply in the market and hence, the supply has gone down. In terms of key investment highlights, as I already said, largest and most versatile and flexible fleet, this enables a lot of different things for our clients, both in terms of cost utilization, efficiency and project derisking. And we see that all of these matters are something that we are currently discussing with clients for current projects, for projects in the near, the mid and the long term. We are active in all of these time lines. We have a highly experienced team, and we have been conservative in how we have grown the team, and that is also why we are confident that we have the right-sized team for what we are seeing in front of us now. We have good relationship with clients and with contacts in general in the industry, and we believe that we are in a very, very good situation in terms of negotiating projects with our clients. We believe we have a resilient global platform. We believe that we are able to spread risk on more units and hence, that we are also both from an operational risk, but also from a, let's say, a market risk in a good position. And we do see also that the O&M market is something that is taking an increased share of the fleet in terms of either campaigns on turbines or ad hoc service work that is needed for main component replacements on the products already installed out in the market. We do see an undersupply of capable vessels, in particular, on foundations in 2029 and WTG vessels from 2030. And that is something we can already start to see now because we are basically bidding some of those projects already now, and we see, as I said, also, a very strong growth in the demand for O&M services. So all in all, with the reality of the middle years, the second half of '27 and '28, we believe that we are in a market that in the short term will be very, very strong and very, very busy where every single vessel day will be captured. Then we are coming into a period of more balanced work and more balanced utilization and then coming into a market again that is picking up in '29 with the projects we currently see out there. We have a strong track record in the capital markets, and we are backed by a record high order backlog of EUR 2.9 billion and we believe that, that order backlog provides a lot of earnings visibility. And as I read in some of the reports this morning that came out, more than EUR 700 million of that is in the next 12 months. So also in terms of what is covered for the next 12 months, we are also in a very, very good position. So I think from that point, very strong near term, slightly weaker middle term and then a pickup again in the longer term. That is what we have for you today. So from this point on, we are happy to take questions. Operator: [Operator Instructions] Our first question is from Martin Huseby Karlsen from DNB. Martin Karlsen: I think you did a pretty good job talking about 2028 being a transition year, but I'm curious to hear a little bit on your confidence level for '29 and '30 seeing higher volumes. Is that related specifically to some events out there? Or is it in general contingent upon more government and political support for offshore wind in Europe? Mikkel Gleerup: Yes. Thank you, Martin. Good question. I think the confidence level is primarily built on the number of projects we are bidding at the moment, but also how our clients are willing to commit to these bids if they can secure capacity. I think that for -- obviously, something like the U.K. round 7 auction, I know that the budget was for some in the market lower than what was expected. But I still believe that with the budget, a significant amount of projects can be approved. And for us, it's about being involved in the right projects, but also a general belief from the projects that are currently tendering in those years and willing to commit to those years, we form an overall view that we see and especially on '29 on foundations that there is or will be potentially a situation where not everybody can be served in that year. Martin Karlsen: Good. And then as a follow-up, in terms of positioning Cadeler for the next, call it, next couple of years in terms of backlog, '28 looks maybe to be a little bit challenging. But when you get into '29 and '30 and there is quite a lot of uncertainty in the industry as a whole, could you talk a little bit to how you perceive or get comments from clients with respect to your positioning, having a large fleet of vessels and also being able to do both foundations and turbine versus some of the single or 2 vessel companies out there? Mikkel Gleerup: Yes. I think that, that is something that is certainly valued highly by the clients that there is a degree of predictability and safety in the supply side because I think that even for a year like '28 where some developers, they have one project to execute, it is very, very important that, that project goes to plan. And I think that we see that -- and we also feel very much from the conversations we have with our clients that it is a lot around our ability to deliver, our ability to guarantee vessel and potentially backup vessels if something should go wrong, that matters more than anything else. We oftentimes get the question, how much do you discuss price with your clients? And I would actually still say that price is not the main thing that we are discussing with our clients, whereas it is true that there is, of course, more pressure in '28 because we are more fighting for fewer projects. So that's a natural function. But I think that there are realities on both sides of that. So I think, firstly, it depends a lot on which developer are we talking to. And secondly, also what kind of project is it that they want to execute. But particularly on the foundation side, it's a confidence in the delivery. And on the WTG side, it's also this whole, how can we back up around the turbine OEMs should they have problems, for example. So I think that those are things that we are discussing. Martin Karlsen: And you touched a little bit on it, my next question in your answer already. But in terms of pricing, there's been at least from the outside, pretty solid pricing for '26, '27 execution, then you announced recently work for '29, '30, which also seem to be at a good pricing. Can you kind of help us understand that in the context of '28 demand looking a little bit softer? Mikkel Gleerup: And I think again, it depends a lot where you're looking. If you're looking in Asia, I think that we are still seeing a tighter supply and demand balance even in '28 compared to rest of the world. But I would say in Europe, we are seeing that in '28, the prices are slightly more under pressure, and you need to be sharper in order to secure projects there. So in '28, I would argue that price is a matter because obviously, if you have a project in 2028, you also know that there are more companies that can do it for you than currently there are projects. And hence, that drives, if not a downward pressure on the prices, then at least a stabilization of prices at least. But I think that it is an overall evaluation criteria. It's -- as I've said before, it's hard to evaluate it on a daily rate basis. So I cannot tell you that it has gone down from this to this. But I think it's more for the overall view on the project, but it doesn't mean that it's not still something that is attractive for us to do. Operator: Our next question is from Jamie Franklin from Jefferies. Jamie Franklin: So firstly, just focusing on 4Q. You mentioned obviously that Hornsea 3 is probably the biggest variable in terms of where you end up within your full year guidance range. Could you maybe just give us a bit more color on the scope currently being worked on Hornsea 3? And then as you move into 2026, what is your kind of current expectation in terms of timing for first monopile installation, please? And then the second question is just for Peter. In terms of the cash flow for 4Q, can you give us any indication of what to expect in terms of working capital, a pretty decent inflow in 3Q? Should we expect that again in 4Q? And similarly, on CapEx, what are kind of the main components to expect in 4Q? Is it just a final installment of Wind Mover? Or are there going to be some Wind Keeper upgrade CapEx as well? Peter Hansen: Yes. If we take the last question first. Thank you, Jamie. CapEx Q4, that is, of course, the Mover. And then it's mission equipment on Wind Ally, I think. And then, of course, what is also coming every quarter is these capitalized borrowing costs. But on these 2, it will be around EUR 320 million so around that, but predominantly coming from the move of working capital. Of course, Q3 is a little bit of a special quarter for working capital because it goes down significantly due to that we have received the termination fees on long-term agreement cancellation that was sitting as an asset at the half year, end of June, and we received the money in Q3. So there was an inflow there. If you isolate that, it's pretty much the same picture we will see in Q4 as we have seen in Q3. We have modest growth in working capital or same level. That is what we see. What we are seeing on -- the transport and installation scope, we are doing in '26, that is, of course, the planning and engineering, but we're also starting on the transportation scope in Q4. So that is what we see the first monopile -- maybe you can answer that... Mikkel Gleerup: Yes. I can answer that, we are not allowed to tell you because it's Ørsted that is having that under their announcement criteria, so to speak. So we are not allowed to guide you towards when the first pile is in the water. What I can say is that we are absolutely on plan on Hornsea 3 and that we follow all our planned deliveries on target and on budget at this stage, which is very, very pleasing because, of course, at this stage, we have delivered many of the engineering scopes that we have been working on for years and years. And this includes the transportation frames for the secondary steel, the transportation frames for the piles, the mission equipment for the vessel and the vessel is mobilizing at the moment. At the same time, we are preparing 2 ports, the Port of Tyne for secondary steel where the Wind Orca will operate from and Tees work where the Wind Ally will work from loading out piles. So a lot of things are going on. And we consider at the moment that we are in full execution on Hornsea 3. But of course, the Ally will come in, in the first quarter next year and start preparing for installation of piles, but the exact dates and targets and all of that is not something we are allowed to discuss in the public domain. Operator: Our next question is from Daniel Haugland from ABG Sundal Collier. Daniel Vårdal Haugland: Good to see you and congrats on a good report. So I have a couple of questions. The first one is on the contract, the EUR 500 million contract you announced recently. Are you kind of able to give any indication of a rough kind of percentage split of how much is related to the T&I services and how much is the installation that is... Mikkel Gleerup: Unfortunately, we're not -- it forms part of an auction for the client, and hence, we are not allowed to divide it out any more than we are at this stage. We will do that whenever we pass certain milestones. But at this stage, we are not allowed to do that. Daniel Vårdal Haugland: Okay. That's okay. And then my second question is, given that you're now kind of ramping up revenues from foundations into 2026, will you start kind of a segment reporting, splitting out the 2 different ones at some point? Or will you kind of just continue on the way you've already been reporting? Peter Hansen: We have no plans to show segment reporting on that. Daniel Vårdal Haugland: Okay. And then on kind of the commercial outlook, I see that you're still expecting vessel undersupply towards the end of the decade. So I was wondering, could you maybe explain a little bit more on that, Mikkel, because as you said, demand looks to be shifting to the right. So are you expecting anything to happen on supply as well? Or are you just saying that demand will still grow enough in, say, 2029 and '30 to still create an undersupply? Mikkel Gleerup: Yes. As I said to Martin, when he asked the same question, I think that we are getting this confidence from the projects we are bidding and also the clients that are willing to put money where their mouth is, so to speak, on their projects. And that is for us a good indication that these projects are something that they are betting on at least and in terms of undersupply, I think we have said for a few quarters now that we think that most of the analysts they are getting the supply side wrong, both on the WTG and on the foundation installation and that too much is counted on the supply side. And I think that the future will show how that will work out. But as I think that has been said from our side before, whether or not there is an over or undersupply, we believe that the best assets in the industry drive so much efficiency on a project that it will always be the best solution to go with the best asset. So in terms of fall height, we believe that we are in a good position with the assets we have, not for every single project in the world, but for, let's say, a standard offshore wind project at utility scale, we believe that there is a strong benefit and a strong efficiency gain in taking the best asset for the project. So I think that it's a combination of these things that we, in general, think that most analysts get the supply side slightly wrong. And we think also that the clients are much more, let's say, active and committing to the years '29, 2030, 2031 and then what I said around fall height. Operator: Our next question is from Andreas [indiscernible] from SB1 Market. [Operator Instructions] Andreas, we are unable to hear you right now. Apologies. We seem to be having some technical difficulties. That is our final question for today. So if you -- we would like to hand back to Mikkel Gleerup for any closing remarks. Mikkel Gleerup: Yes. Thank you. Just wanted to say thanks for listening in to this quarterly presentation. We are looking forward to come back to you with the fourth quarter and the year presentation also with more details on the Hornsea 3 because at that point in time, we will have a lot of exciting stuff to show you. So -- yes. Wait out for that. It will be interesting. There's a lot of exciting things going on at the moment, and we're looking forward to also announce the delivery of the Wind Mover in the not-so-distant future. Thank you very much for listening in and reach out to us if there's any follow-up questions that is better handled on a one-to-one basis. Thank you.
Operator: Good morning. My name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone to Atkore's Fourth Quarter Fiscal Year 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. Thank you. I would now like to turn the conference over to your host, Matt Kline, Vice President of Treasury and Investor Relations. Thank you. You may begin. Matthew Kline: Thank you, and good morning, everyone. I'm joined today by Bill Waltz, President and CEO; John Deitzer, Chief Financial Officer; and John Pregenzer, Chief Operating Officer and President of Electrical. We will take questions at the conclusion of the call. I would like to remind everyone that during this call, we may make projections or forward-looking statements regarding future events or financial performance of the company. Such statements involve risks and uncertainties such that actual results may differ materially. Please refer to our SEC filings and today's press releases, which identify important factors that could cause actual results to differ materially from those contained in our projections or forward-looking statements. In addition, any reference in our discussion today to EBITDA means adjusted EBITDA. And any reference to EPS or adjusted EPS means adjusted diluted earnings per share. Adjusted EBITDA and adjusted diluted earnings per share are non-GAAP measures. Reconciliations of non-GAAP measures and a presentation of the most comparable GAAP measures are available in the appendix to today's presentation. With that, I'll turn it over to Bill. William Waltz: Thanks, Matt, and good morning, everyone. Starting on Slide 3. Today, we will provide an update on strategic actions, discuss our fiscal 2025 fourth quarter, our full year financial results and our outlook for fiscal 2026. We will share our perspective on the end markets we serve and our long-term strategic focus. Turning to Slide 4. Before we discuss our results, I want to highlight the announcement we made this morning related to the strategic actions we are pursuing with the goal of maximizing shareholder value. Back in September, we announced that the Board of Directors and the executive leadership team were evaluating a broad range of alternatives to enhance focus on Atkore's core electrical infrastructure portfolio. These alternatives included a potential sale of our HDPE business and the decision to close 3 manufacturing facilities. The Board has now decided to expand the scope of the strategic alternatives to include a potential sale or merger of the whole company. As a result of the Board's decision, I have agreed to stay at Atkore as CEO through at least the conclusion of this strategic review. To date, Atkore has identified and is executing upon a series of actions that we believe will improve the long-term financial returns of the company. The process of selling our HDPE business is ongoing, and we have identified 2 other modest noncore assets that we anticipate being able to successfully divest in late Q1 2026 or early in the second quarter. In addition, we plan to cease manufacturing operations at the 3 manufacturing facilities previously announced in the second quarter of fiscal 2026. By delivering on these actions and the planned divestitures, we expect to improve our financial profile of the company and return to year-over-year growth in adjusted EBITDA in FY '27. Expanding our strategic alternatives also allows us to consider multiple scenarios, with the intention of creating shareholder value while positioning Atkore to succeed for the years to come. Turning to our results on Slide 6. Organic volume was up 1.4% in the fourth quarter with contributions from both segments. Notably, we saw double-digit growth in our plastic pipe, conduit and fittings product category. This includes our PVC, fiberglass and HDPE products, which all delivered double-digit volume growth in the quarter. Overall, our net sales of $752 million in the quarter exceeded the outlook that we presented in August. Our adjusted EBITDA of $71 million in the quarter includes approximately $6 million of onetime inventory adjustments related to one of the sites that has been previously announced for closure as part of our planned strategic actions. This inventory adjustment impacted our Safety and Infrastructure segment. Our results also included approximately $5 million of additional nonroutine items related to advisory and legal expenses. Excluding the impact of the inventory adjustment and the nonroutine items in the quarter, our adjusted EBITDA would have been $82 million and within our expectations set forth in August. Reflecting on the totality of the year, volume was up approximately 1%. This marks 3 consecutive years of organic volume growth for our company. As we've explained in the past, the breadth of our portfolio prevents overexposure to specific end markets. This is particularly important in years where certain end markets may be growing at a slower rate or even contracting. Our cash flow generation has been and continues to be a strength of our business. This year, we returned $144 million to shareholders through share repurchases and dividend payments. We also preserve financial flexibility by refinancing our existing asset-based lending agreement as well as our senior secured term loan, which moves out our maturity dates beyond fiscal 2030. Looking ahead, our focus remains on creating shareholder value, which we believe will be accomplished with an emphasis on our core electrical infrastructure portfolio. We anticipate generating strong cash flows, which provide us with optionality on how to best deploy capital and create shareholder value. We are encouraged by the growth projected across several construction end markets in FY 2026, including data centers, health care, power utilities and education, while remaining focused on Atkore's ability to participate in long-term trends related to the adoption of renewable energy, grid hardening, digitization and the increasing demand for electricity. I'd like to take a moment to recognize Atkore's talented teams for their efforts and dedication to our company. Thank you. Now I'll turn the call over to John Deitzer to talk through the results from the fourth quarter and full year in more detail. John Deitzer: Thank you, Bill, and good morning, everyone. Turning to Slide 7 and our consolidated results. In fiscal 2025, we stayed focused on executing our strategy, while also exploring additional ways to strengthen our company for the future. The year was not without its challenges, but we are working to meet these challenges by announcing and completing certain actions in the fiscal year, while pursuing additional opportunities to strengthen our financial profile for the future. Net sales in the fourth quarter were $752 million, and our adjusted EPS was $0.69. Adjusted EBITDA for the fourth quarter was $71 million. We generated a net loss of $54 million in the fourth quarter. Within our quarterly net loss was a $19 million noncash goodwill impairment charge related to our mechanical tube business as well as the $67 million impairment charge related to certain HDPE assets. The goodwill impairment related to our mechanical tube business reflects forward-looking cash flows, which now assume lower volumes. The mechanical tube products are made in 1 of the 3 facilities that was previously announced to close as well as another facility that shares capacity with steel conduit. By shifting our focus and priority towards electrical products, we plan to use the available capacity in favor of a higher concentration for our electrical infrastructure portfolio of products. The impairment charge related to our HDPE assets was triggered by the announcement of our intention to explore the sale of our HDPE business at the end of the fourth quarter. The impairment reflects an adjustment of the net assets relative to the forward-looking cash flows across various scenarios. For the full year, net sales were $2.9 billion, and our adjusted EPS was $6.05. Adjusted EBITDA for the full year was $386 million. Turning to our consolidated bridges on Slide 8. In fiscal 2025, net sales increased $22 million due to volume growth, contributing incremental adjusted EBITDA of $10 million. Our average selling prices decreased by $382 million. Bill mentioned that our fourth quarter results included select onetime inventory adjustments and additional nonroutine items totaling approximately $11 million. Excluding the impact of those items, our adjusted EBITDA would have been $82 million in the quarter and $397 million for the full year. Moving to Slide 9. As Bill mentioned, we are proud to highlight that Atkore has achieved 3 consecutive years of organic volume growth. We grew volume 3.5% in fiscal '24 after growing volume 3.2% in fiscal '23, exemplifying the strength and resilience of our portfolio even in times of fluctuating end market conditions. As we look forward, construction end markets are expected to grow, and we anticipate our volume growth in fiscal 2026 to be mid-single digits. In FY '25, our metal framing, cable management and construction services products grew low single digits due to increased support for mega projects, including data centers. In FY '25, we grew our PVC business, which included high single-digit growth in PVC conduit and especially strong double-digit growth from our fiberglass conduit products, which are increasingly being used for data center projects and included in our plastic pipe conduit and fittings product category. Turning to Slide 10 and our segment results in the fourth quarter. Net sales in our Electrical segment were $519 million, with $7 million contributed by organic volume growth, offset by continued pricing normalization in our PVC products. Our steel conduit products saw sequential price increases for the third consecutive quarter. Shifting over to our S&I segment. Net sales increased 4% during the quarter compared to the prior year. Our S&I segment EBITDA dollars and margin were both meaningfully higher than the prior year, in large part due to better cost management and productivity improvements. As Bill mentioned, we recorded an inventory adjustment in our S&I segment of approximately $6 million at one of the facilities that has been previously announced for facility closure. Turning now to our outlook on Page 11. We anticipate a mid-single-digit volume growth in FY '26, driven by expected growth in all 5 of our product areas. For the first quarter of FY '26, we are expecting net sales in the range of $645 million to $655 million and adjusted EBITDA between $55 million and $65 million. We expect adjusted EPS to be in the range of $0.55 and $0.75. For the full year, we expect FY '26 net sales in the range of $3.0 billion to $3.1 billion and adjusted EBITDA between $340 million and $360 million. Adjusted EPS is expected to be in the range of $5.05 and $5.55. As we have discussed in the past, our business experiences short lead times and limited visibility to end customer demand. To shift more focus to the medium to long term, we have made the decision not to provide a quarterly outlook starting in calendar year 2026 with our fiscal first quarter earnings call. However, we will continue to refine our full year outlook during each quarterly call as we progress throughout the fiscal year. We expect the first quarter of fiscal '26 to be the softest quarter of the year, and for performance to ramp as the year continues. At this time, we expect the back half of the year to be higher than the first half of fiscal '26 on an adjusted EBITDA basis. Next, Slide 12 summarizes our solid financial profile. Our cash flow generation has always been a strength, which helps support a healthy balance sheet. Our liquidity provides the foundation that enables us to execute key strategic opportunities, while returning capital to shareholders. With that, I'll turn it to John Pregenzer to give an update on our end markets and our long-term strategic focus. John Pregenzer: Thanks, John. Turning to Slide 14. The breadth of our product portfolio is a differentiator for Atkore. Atkore's products broadly serve construction activities, making their way to each of the relevant end markets. Demand for electricity continues to increase. The need for power centers around the expansion of data centers to support AI. We are now in what some are calling the data era, with reshoring efforts and demand for data centers to help power the expansion of AI, contributing to an expected 2.6% compound annual growth rate for electricity consumption through 2035. Electrification is required in most areas of construction. Our products provide comprehensive solutions to deploy, isolate and protect critical electrical infrastructure, emphasizing that Atkore really is all around you. The demand outlook for FY '26 reflects strength in most end markets. It's important to understand both expected growth rates as well as the relative size of the market. While data centers continue to draw most of the attention within the construction community, that end market, in total, is still smaller than several other end markets. Nonetheless, data center construction is growing significantly, and we participate in that growth. Renewable energy is expected to increase from approximately 20% of the power generation mix today to 28% by 2035, and solar continues to be the quickest path to online production available to the market, a key advantage for meeting the expected increase in U.S. energy demand. Finally, turning to Slide 15. Today and into the future, we are focused on prioritizing our portfolio of domestically manufactured electrical infrastructure products and delivering on the strategic actions that we believe will maximize shareholder value. We remain committed to maintaining a strong balance sheet and financial profile that enables us to return capital to shareholders, while making modest capital investments that support operational excellence aligned to the Atkore business system. Our positioning in key electrical end markets gives us confidence in our ability to grow volume over the mid- to long term, while our diverse portfolio enables us to maintain resilient, while navigating headwinds in certain end markets. We, as a management team, have conviction on our teams and are focused on delivering to our plan. We recognize our recent performance challenges, and we are determined more than ever to drive improved results that create greater value for our shareholders, employees and stakeholders. With that, we'll turn it over to the operator to open the line for questions. Operator: [Operator Instructions] And your first question today comes from the line of Justin Clare from ROTH Capital Partners. Justin Clare: I wanted to start out with the guidance. So for fiscal '26, you're calling -- or you see mid-single-digit volume growth. I think the midpoint of the revenue guide implies 7% year-over-year growth. So that would suggest you could see some pricing benefit through the year? So wondering if you could just comment on is that expectation -- the expectation and whether -- or what is driving that potential price improvement? John Deitzer: Yes, Justin, you're aligned there. I mean, as I think we said in some of the prepared remarks, we've seen sequential price increases in our steel conduit business. There are some other businesses where we've had pricing growth as well that impacts the sales line, but it's really that price versus cost dynamic too. We do anticipate continuing to have price versus cost headwinds. But when we're looking at where some of the underlying raw material commodity inputs are, where they were versus historically, we are seeing some ASP and sales growth as well, but there is sometimes some price versus cost compression there, too. So that's some of the dynamics. But there would be some embedded benefit -- or increase, I should say, at the ASP line with some of those raw material inputs at an elevated level this year versus last year, meaning, '26 versus '25. Justin Clare: Got it. Okay. And then just also on the guidance. When I look at your Q1 guidance and then the full year, for Q1, the implied EBITDA margin, I think, is about 11%, and then closer to 12% for the full year. What is -- or what do you expect to drive the margin improvement through the year? How much visibility do you have there? And is it really the pricing dynamic that's driving that? John Deitzer: Yes. It's a great question. So we are seeing a little bit of softness here in the first quarter as we sequentially move down here from the fourth quarter. We do have a positive expectation as we ramp throughout the year, meaning we do have line of sight to a lot of the construction services and the mega projects in Q2 to Q4. So that's positive as we see throughout the year. We're also seeing real strength coming through. I think in John Pregenzer's comments, he talked about the growth in solar. And we do anticipate that in 2026 as opposed to 2025, which has had a lot of volatility in the year with that industry and some -- what was going to happen with or without some of the subsidies associated with the Inflation Reduction Act. So we see some positive elements here contributing. Bill, I'm not sure if you wanted to add anything? William Waltz: No, I think that's it. I mean that the cost actions we're taking to help with the margin and so forth that, again, I think even in my prepared remarks and what we sent out September 29 or whatever, that second half this year, as we do get the 3 facilities closed and continue to drive extra productivity off a really strong 2025 productivity, that I do think things are lined up, especially as we go into the second half of the year here. Operator: Your next question comes from the line of David Tarantino from KeyBanc Capital Markets. David Tarantino: Maybe could we start with the strategic review and maybe just kind of walk us through kind of the range of outcomes we could expect? And maybe what's the magnitude of the 3 divestments you outlined? And how should we be thinking about a suitable situation where you would consider a sale or a merger? William Waltz: Okay. Well, obviously, it's early on. I'll start and then either -- especially John Deitzer, I guess, here, if there's any of your add-ons, but it's early on. But there has -- since we made our announcements, we're still pursuing HDPE. I don't think we can get any more specific, but there's obviously interest there that us with our banks and so forth are working through. So that continues to move forward just like the other actions that we kind of discussed even here with Justin. And then from there, since that time -- well, let me back up. The Board always looks at what's the best outcome for our shareholders. So as part of our discussions. But since we did our announcement at late September, there has been some interesting inbound calls. So again, it's early on in the process, but the Board reflected and it's -- I'd say, a good time, but to make sure we're pursuing what is best for our shareholders. So we'll keep, obviously, investors and everybody else informed as we kick off the process here. So -- and then from outcomes, obviously, it can be the full range from -- as we said in announcements, and I think I covered this morning, from selling the whole co to the other end is the Board decides that the best thing is to continue to run it as is. But right now, we're focused on the strategic alternatives, and we'll see how that plays out over the next several months. David Tarantino: Okay. Great. That's helpful color. And maybe could you give us some color on the cost savings initiatives? What should we be thinking around the magnitude of the savings? And maybe should we be thinking about this as a first step that you feel that there are more opportunities to take more meaningful cost actions within the core business? Any color there would be helpful. John Pregenzer: Yes, David. So obviously, the 3 plants, we started the process of shutting those down. The teams are well organized. We're still in the early stages, but expect all production to cease by the end of Q2. And I think on an annualized basis, we would expect to see about $10 million to $12 million in cost reductions across the fiscal year. John Deitzer: I think, David, just to add on to that. I think these are just key contributors that we anticipate 2027 to be up versus 2026. And so I think that's really the balance here of where some of these actions are plus some other things we're starting to line up. David Tarantino: And maybe just a follow up on that comment within that assumption, should we be thinking about kind of the items you outlined today getting you there? Or should we expect some more down the line? William Waltz: I think with the -- without any additional items, just the fact that these actions, HDPE, and then the growth initiatives that are underway that we kind of alluded to that, whether it's solar, where -- I forget if we have POs, but verbal commitments from customers to be ramping up here early in the calendar year to the global mega projects that are expanding into -- with some well-known customers from one region of the continent to a second region on the continent here, that we see enough pathways right now without additional things to get there. But again, that doesn't rule out. We'll continue to do other actions. So again, I don't want to be giving a specific guide, David, for next fiscal year, but we're optimistic both for this year and definitely as we get into 2027. Operator: Your next question comes from the line of Andy Kaplowitz from Citigroup. Andrew Kaplowitz: Bill and John, I just wanted to focus on last quarter, I think you told us about the $50 million headwind for '26. So as you sort of rolled out your guide, like is that still what the amount is? And maybe you can update us on imports in general, like what have you seen from the steel conduit side and the PVC side, steel was getting better, PVC maybe a little more slowly. So what have you seen there? John Deitzer: Yes, Andy, I'll start with some of the outlook expectations and commentary, and then I'll turn it to Bill and John here to give some more specifics around what's happening in some of the markets that you're talking about. I would say we definitely have continued price versus cost headwinds going in '26 versus '25. We talked about that. And in the third quarter call back in August, we said kind of $50 million of unmitigated headwinds. So we had expected some volume and some productivity benefits to mitigate some of that. And so -- and our outlook this year is still within kind of $340 million to $360 million. So we're right around that $350 million midpoint. So kind of triangulates versus where we said in August. That being said, I think we are seeing additional improvements we're taking. So as I think about the year, the price versus cost dynamic is really going to impact the first quarter the most. And then as we go through the year, the price versus cost dynamic will probably ease. Also as we think about the year, there's going to be a real quarterly ramp in EBITDA, meaning kind of -- we've laid out the first quarter here. So the first and second quarter, definitely the expectation is year-over-year unfavorable. And then we'll continue -- the second half collectively will -- we anticipate to be up year-over-year. So that's kind of how we expect the year to ramp. I'll turn it to Bill here or John to give some comments on the steel conduit market and PVC. John Pregenzer: Yes, Andy. So steel conduit is relatively strong on the import side, which obviously influences a lot of what we're doing. We have seen a slight reduction in import volume this year. So it's down about 2% over last year, but that's -- it's positive in regards to the many years of double-digit growth. So looking at the impact of tariffs in regards to what's happening, probably not as strong as we would have expected. And so spending some time in ensuring that tariff policy is being effectively enforced and working with some different groups there because we would have expected to see slightly stronger year-over-year reductions in steel conduit imports. But the market is fairly good. PVC has been strong. I think it's been influenced by data centers. There's a strong demand for large diameter PVC conduit in that space, which will drive the volume numbers or overdrive the volume numbers for that product line. So we've seen good growth there and expect that to continue. William Waltz: Yes. And then I'll just add to John's comment both on 2 things. So to go -- obviously, we're still working -- the administration is still working on how we can enforce tariffs better. But if you look, Andy, and for the rest of the investors, both of these product categories were growing even round numbers here over the last couple of years, but 20% a year. And to John Pregenzer's point, steel is now for the year, down 2% with imports. So it's going from growing to flat to slightly down. So more to come, hopefully, to make it even stronger for U.S. companies and blue-collar workers in the U.S., but that has been semi-effective. PVC, where to John's point, we're growing, we called out in our prepared remarks, strong double-digit around numbers. PVC from recollection, I think, was up 6% for the year. So imports are still coming in. But even there, not what I perceive the market is and also not nearly as much as previous year. So it's there, but it's -- the tariffs have had a good effect, and we're hoping to make an even greater effect going forward. Andrew Kaplowitz: Helpful. And then, look, I can understand John P's comments about data center markets maybe not being the biggest. But at the same time, we've seen, as you guys know, massive orders across the industrial space over the last couple of quarters. So like when you think about your business, like I know you've talked about construction services in the past. Maybe they're on the comp, and it takes a while. But why shouldn't we see a bigger impact on '26 or maybe we will, from data centers because, again, there is a massive amount of money there, as you guys know. William Waltz: Yes. So no dispute on the massive growth, they're massive. I'm making my own number, Andy, it depends on how big you like, 15% or something. So definitely strong double-digit growth for anybody making any products. I do think as we get in kind one of the answer I gave to an earlier question, that we are going to see -- obviously, our fair share within the products we have relative to the market. We covered that one John Pregenzer's charts. But I also do see our global construction business that's focused on this growing this year at also a very strong, call it, double-digit rate. Now it's -- again, it's how much of our company is that compared to PVC in the chart that John Pregenzer and residential that's still anemic. But I think, Andy, that's why, again, numbers here, I don't want to get ahead of myself, but from our [ 340 to 360 ] guide, our volume guide, are there pathways to potentially be stronger here? Yes. So we're going to see how things play out. So I'm still optimistic here as we go forward. John Pregenzer: Yes. Andy, I think that the product lines that line up with data centers in our portfolio, we see them growing in those type of rates. When you say data centers are up 20% or whatever the numbers are, we're seeing that in certain parts of the portfolio. I think when the global mega projects that we have lined up and we've already started to get orders from and letters of intent from start to kick in the second half of the year, then that will have more influence on our overall growth rates that I think John Deitzer alluded to in regards to the overall revenue growth we'll see in the back end of the year. Operator: Your next question comes from the line of Chris Moore from CJS Securities. Christopher Moore: The 3 plants that are closing, just trying to understand a little bit better, what's being produced there? Is there -- will there be any learning curve when those products are shifted to other facilities? William Waltz: Yes, I'll start. So we have a -- we've discussed all -- I mean I'll give more color. But yes, it's all public. I just want to say something wasn't, Chris. But we have our Phoenix operation that makes things like metal pipes and so forth, that metal conduit and also for our safety and infrastructure. So we will be moving that production back to plants here, for example, in Harvey, Illinois, Hobart, stuff like that. So we have that capability. Most of the capacity from lines, I think we'll be moving one production line out to do this, but most of the capacity is already here. So -- and then -- so I don't think there's going to be a lot of trying to move machines and so forth. For my 40-year career, I've done that before, and there could be challenges here. It's just ramping up. Now some of it are also back to pruning, focusing on electrical products and keeping that market, which we think has the best growth to the small charge we took in the quarter is we are going to narrow some of the scope, which I think quite frankly, is exciting purely from one of the things we're going to drive a lot harder is the 80/20 principle and truly focus on our key products with key customers and so forth. So I think there's a double win there. Then the next facility is a PVC facility in Fort Mill. And that, again, we don't have to move with our lean production and everything else. We don't have to move any of the production line. So again, we have to ramp up other locations, but I think the risk is mitigated purely from the standpoint of investments, productivity, we have that, and we can get rid of the cost and infrastructure without moving machinery. Final facility is we have an operation in Chino, which is around Los Angeles that makes cable products, and we're moving that back into of our facilities here on the kind of the East Coast. So again, we have the capacity there. So obviously, I think it's the right thing to do, where we'll continue to work, driving productivity. As I mentioned already, we had one of our strongest years last year in productivity. And as we continue to drive lean and so forth. And I think as John already mentioned, he's driving with monthly formal calls, but obviously following up with teams, and they have a lot of rigor and structure. So I think it's a great thing to do for our customers and quite -- and our shareholders here. So hopefully, I gave you everything you were looking for. Christopher Moore: No, very helpful. Maybe just a follow-up. HDPE, obviously, that is one of the areas in the strategic -- sounds like you're in discussions. I'm just trying to understand, not specific numbers, but the potential value to be gained from Atkore here, what's the bull case scenario for HDPE for someone outside of Atkore? William Waltz: Yes. So I'll give a high level, but I won't give numbers. John Deitzer, if you want to provide, but I don't think we want to get that specific. So I think in this scenario, the good news for anybody in this market is volumes are coming back. We called out in our prepared remarks that how we're seeing double digits. And I think that's consistent with anybody else that I'm aware of are public corporations, fiber companies and so forth. So the markets are growing, and we are getting our fair share, if not more. And they do anything for us, but then I'll get for the -- whoever if they were to make the acquisition of people is to go -- one of the things we needed to get to was filling up the factory. It's hard to run a factory efficiently when you're not running long runs, you don't want changeovers, you don't have a full absorption. So I think we even have, over time, a pathway to get there. I say, get there, but continue to increase year-over-year productivity and profits and so forth there. But from the standpoint of is it strategic for us as we look forward announcing all these other things. Obviously, at least some people think that it's better in their hands to be run than ours. And we're exploring that, and we'll see where it goes over the next couple of months here. Operator: Your next question comes from the line of Deane Dray from RBC Capital Markets. Deane Dray: Is there any explicit intention now to run the business more for cash? It looks like you've -- you're pulled back a bit on CapEx. Would you consider suspending the dividend here? Your balance sheet is in great shape, but just the idea of running the business more for cash at this stage. William Waltz: So Deane, let me do it this way. Have a good -- we'll have a good discussion on and have a good discussion with the Board. But as of now, no, we're running -- and I'm going to make it clear, like one of the calls this morning is our employees and so forth. We're running this business that I'm proud of, and I see to all the other questions how this is -- even you get to the second -- and I'll get back to cash in a second. But as we -- implicit in our guide, if you walk through numbers, the second half of the year will be up year-over-year in profits and so forth and where we drive that into next fiscal year that we already kind of alluded to in the growth initiatives. So -- and I'll tie it back to cash. But no, we're running this business like we would without any change. Now to your point. So therefore, no, we have no discussion in the Board meeting on suspending dividends. Two, to go what we've always said, at least in my mind, is with the CapEx, we made a bunch of investments on all these things like solar and even behind the scenes, the ERP systems. But a lot of those things are coming to fruition now. So we just don't need the amount of CapEx, and we're getting back more to historical trends. So -- and that's where I do think to the prepared remarks and in the charts with very comfortable, great performance on cash that we're comfortable that we'll continue to deliver strong cash flows here. So -- but no, it's not because of exploring strategic alternatives, just the right thing to do for the company and our investors. Deane Dray: You mentioned the Board a couple of times, and I know you're limited in what you can say here, but can you just give us a sense of the activist engagement at this stage, the additions to the Board, how aligned are you? Is there a cooperative tone here? And just kind of -- if you just walk us through whatever you can, would be appreciated. William Waltz: I'm glad you're asking for that. This is probably the biggest softball question of the questions asked. No, totally cooperative. I don't know. I won't mention their names or it's in the press like Adam and so forth. But I'm not suggesting anybody calls, but you would find out that it's -- we're aligned. We -- back to my prepared remarks, and I think the beginning question is as we look through, the Board's always looking to do what's best for the corporation and stakeholders, its investors and so forth. So as inbound calls came in, it made sense to formally do this. And also for us, I think it's the best thing to do, after a robust discussion, to formally announce it versus -- I'm sure you're aware of other companies have sold, but you don't know until they announce it versus let's cast a wide net. So whether it's a PE firm strategic, whatever is there. So from that standpoint, dealing with Adam, Andy, the [ Renick ] team, they're -- we've been aligned since day 1. And we also believe in the Board refreshment and so forth that we are planning to do just as some of our Board members now are within a couple of years of retirement. So bringing on Frank to the Board that our whole [indiscernible] team has met with, I've met with, our Chairman has met with. I'm excited that Frank's willing to join. So we'll have immersion with him and jump into strategic reviews here and we're totally good. It's the right thing to do. Operator: Your next question comes from the line of Chris Dankert from Loop Capital Markets. Christopher Dankert: I guess on the back half weighted nature of the guide, forgive me if I missed it, but I mean, there's some seasonality dynamic there. Can you just kind of walk us through the other components as we think about why the back half is stronger than the first half and kind of how that could change potentially? John Deitzer: Yes. I'll start and then kind of let the rest of the team jump in here on what I missed. In the first quarter, too, one item is -- we'll end on December 26. And so we have a little bit of a short week at the start of the fiscal first quarter and a short week at the end here. And so that's a little bit of the compression dynamic in the first quarter that we're seeing. I think it's 10% less shipping days in the first quarter versus the fourth quarter, right? So that's -- you're seeing that. And then we always have a normal seasonality decline of a couple of percent from Q4 into Q1. So that's the dynamic there. And as we look forward, though, the rest of the year, we do see strength coming back from a lot of the investments that we've made. And we have invested heavily in this business, and that's also why we're seeing some of the investments come down as we had talked, they would come down. But some of those investments we're seeing come through or expect to come through this year would be the solar investments. That industry is really looking poised to have a strong recovery in calendar 2026. And so that will be -- you'll see that come through in the Q2 to Q4. We do have some better line of sight on some of these larger mega projects that we've talked about, and they are chunky. When they come, they come in kind of chunks, but they're not as consistent as everyday stock and flow orders. And so we have better line of sight to some of those. And I think John P. had mentioned that we have some letters of intent and things like that with some big customers. So we're excited about that. And then the initiatives, whether it's on the PVC water side, et cetera, we have made some investments, and we're expecting those to come through. We have that equipment in place. So it's a combination of those factors of -- as we look forward into the back end of the year, that second half in totality, but really the fourth quarter here as we look should be up. We anticipate it to be up year-over-year. William Waltz: Yes. I'm just going to add color to that to go just like John Deitzer mentioned where either orders, letter of intent with global mega projects, same thing. I think some of the orders in versus verbal commitment from solar customers, a significant ramp-up here starting in the first quarter of the calendar. And for the public, there's a couple of public solar companies. If you read their earnings, they're both bullish in that case and then other private ones as they look forward into next year. So again, the solar market should be growing. We've had verbal, if not, purchase orders there. And then there's some organic things like the regional service centers as we continue, again, with John Pregenzer and other leaders guide on just how we make it more efficient with the [indiscernible] pulling even 80/20, like what are the real critical products that we have to drive and continue to perform even better there, that that's a winning proposition with one order, one delivery, one invoice that I think we're going to see a good maximization as we get into next year. So not that it hasn't worked yet, but even better. So I think it's a coal cross-section there that makes us excited, Chris. Christopher Dankert: No, that's extremely helpful. I guess as a follow-up, I mean, John, you mentioned the water investments there. I guess we've been talking about that in the past and then frankly, raised a couple of eyebrows. I guess, any comments you can give in terms of number of locations that have been changed over to water PVC from electrical capacity expected contribution? Anything at all you can kind of give us to put arms around that piece of the business? William Waltz: Yes. So let me handle this one because I do think, and I own it, like everything else, our communication on this. So we have around -- well, if we reduce the factory here, but like 8 facilities, geographically dispersed. As we continue to drive productivity, we are getting more throughput in our lines. And these are simple things like less scrap -- I won't get too geeky here, but single minute exchange of die, the turnover time that we have extra capacity here across our facilities. We buy -- and I'll hit in your specific question. We buy resin effectively. We -- in several of our facilities, we're already in these markets. So we're not looking at all to cut down on our electrical growth. Actually, we see electrical conduit for all the things we mentioned, from data centers to grid hardening continue to grow, just like we called out, they grew double digit here in Q4 to continue to grow well. So like electrical conduit is our main focus. On the same hand, just as an edge-out strategy. Let's invest in making 1 or 2 additional products -- I could say, C900 because that's the product, but like let's make this one other product that we have the capacity on to further absorb the line, the overhead. It's a good profitable product here. So we've made those type of investments in the factory, but it's not like a new factory. It takes nothing away from our primary focus on electrical, and we are seeing growth here. Now in those new products like C900, I'm seeing good solid double-digit growth in those type of things. So again, I think from an investor standpoint, where we're focused on electrical is absolutely all -- I say I'm doing [ Atkore's ] how we utilize an edge-out strategy for something that should add some organic growth to the corporation's additional profits and so forth. And that's it. But it is, to John Deitzer's point, with that ramp-up, we see strong enough growth that is going to help us drive the second half of the year. John Pregenzer: Yes. I think to Bill's point, I think we're happy to see the growth in PVC conduit that we've had here in the last couple of quarters. I mean it's been really positive to see the penetration we've had growing that product line, while we expand some capabilities in a handful of our PVC plants that we're already doing. Nonelectrical or water products in the past, they can do some additional product lines and have some additional capacity, but we really feel that we're on the back end of that investment, and then we'll start to see the commercial benefits as we execute that plan going forward. But again, the primary activity in all of our plants is PVC conduit. Operator: And this concludes the question-and-answer session. I will now turn the call back over to Bill Waltz for some closing remarks. William Waltz: Before we conclude, let me summarize our key takeaways from today's discussion. First, Atkore has a solid financial profile, differentiated product portfolio and placement in key electrical end markets, projecting growth into the next decade. Second, Atkore continues to evolve and drive towards excellence. Our announcement to explore strategic alternatives is intended to chart the best path forward. Finally, our decisions now and in the future will be made with a steadfast commitment to creating and maximizing shareholder value over the long term. With that, thank you for your support and interest in our company, and we look forward to speaking with you during our next quarterly call. This concludes the call for today. Operator: This concludes today's conference call. You may now disconnect.
Helen Gordon: So good morning, everyone, and welcome to Grainger's full-year results. Once again, we have delivered an excellent performance as we continue to deliver strong growth in our earnings, in our income and in our margin with high occupancy and a Grainger product, which continues to deliver for customers and shareholders. So the agenda this morning is that I will take you through the highlights, Rob will take you through the financial results, including our compelling growth to come and our conversion to REIT status. And then, I'll go through our investment case, the strength of our market and give you a quick insight into one of our new openings. And I will explain how we're well positioned for the changes to renting that are due to come in from next May and how we are driving shareholder value. We'll then have time for Q&A with members of the senior leadership team. So I'm pleased to tell you that Grainger is now the U.K.'s leading residential REIT. It feels quite good to say that. We are a build-to-rent investor operator with a sector-leading portfolio of high-quality homes in the best location. Our fully integrated operational platform, enhanced by technology, is capable of scaling. And this operational platform gives us a real competitive advantage in a sector with high customer interface and where operational excellence is a barrier to entry. Our investment case of a real estate asset class that delivers inflation linking returns is proven. As you can see here, consistently tracking wage growth and as is our proven strategy, we continue to deliver earnings growth to our shareholders and great homes to our customers. So looking at our earnings growth, we continue to target GBP 60 million of earnings in full year '26 and GBP 72 million by full year '29 and that's a 50% growth from full year '24. There are 2 simple reasons. We have sustainable rental growth outlook, and we have strong underlying fundamentals. And our strong earnings growth will be delivered after absorbing higher interest rates. We're expecting rental growth to continue at 3% to 3.5%. And we have a resilient customer base to support this. We have strong underlying market fundamentals with regulatory certainty and no rent controls and growing demand and constrained supply. We're reducing debt, which Rob will cover later, and we have topline growth, and we are improving margin. So turning now to the highlights of our results. We've delivered another outstanding performance. Our net rental income is up 12%. Our like-for-like rental growth is up 3.6%, and we've delivered 12% earnings growth and 10% dividend growth. And our NTA, our asset value, has remained resilient at 298p per share. We continue to deliver operational excellence. We've delivered high occupancy at 98.1%, and we've secured strong customer retention at 61%. And we have good customer affordability. On average, our customers are paying 28% of their income on rent, which is below the market average. And we are delivering a sector-leading gross to net at 25%. That's a 75% rental margin. So overall, an excellent set of financial and operational results. We continue to optimize our portfolio through sales of older or non-core assets and our investment in our new products. We have recycled GBP 1.9 billion of assets since the start of our strategy, and we've sold GBP 640 million since September '22. We've been selling in line with valuations and proving the accuracy of valuations. And importantly, we have over GBP 900 million in non-core assets to fund our future growth and our deleveraging. We are a highly cash-generative business with over GBP 200 million in operational cash flows each year. And as we recycle out of this low-yielding non-core assets, we secure attractive income accretion. We have a very clear capital allocation strategy. We are always focused on maximizing returns for shareholders. Our current priority is to fund our committed pipeline of GBP 343 million, and there's just GBP 130 million remaining to invest. And it is this committed pipeline, which will deliver our earnings growth to GBP 72 million by full year '29, a 35% increase from today. And as a reminder, a 50% increase from full year '24. Then, we are deleveraging in line with plan. Our debt is fixed at low rates to full year '29. So this deleveraging will support our earnings growth and ensure an optimal capital structure. And as we continue to recycle, we can look at stabilized acquisitions, and we have also our secured and highly attractive, forward-funded and direct development opportunities. So we have further opportunities in our planning and legals pipeline. We have all these opportunities for future growth. And of course, we will assess these against other opportunities to return capital to shareholders. We have a capital allocation strategy delivering for shareholders in the short, in the medium and in the long term. So turning to our portfolio and pipeline, GBP 3.5 billion, that's over 11,000 homes. And our portfolio of regulated tenancies is just over GBP 0.5 billion, and our future pipeline is GBP 1.3 billion. Our committed pipeline is immediate. Of the GBP 343 million, there was only GBP 130 million to invest. And indeed, last week, we completed on 374 homes in Bristol, one of our strongest cities and with more homes being delivered in our pipeline in London and Guildford. We have a highly attractive secured pipeline for further growth, including our strategic JVs, and we have a portfolio of sites going through the planning process. So we have optionality for the future. And we have clear visibility on our earnings growth and our EBITDA margin expansion. Our growth story is compelling. Yes, this is my favorite side. We've delivered extraordinary growth over the last 10 years. We've been consistent in our delivery, growing our net rental income on average 14% per annum. Our EPRA earnings have grown dramatically through the development of our platform and the efficiency it delivers. Our EBITDA margin has improved from 19% to 56%, with more to come. So this momentum is continuing with strong growth in our income, in our earnings and with further EBITDA margin expansion. So in summary, we've delivered a strong performance. Our operational highlights are our conversion to a REIT, 98.1% occupancy achieved, robust rental growth secured at 3.6%. And now, we have the Renters' Rights Bill passed. We have real clarity on our future regulatory environment and no rent controls. We've delivered a strong financial performance, a 12% growth in our net rental income, 12% earnings growth and a strong sales performance and a 10% dividend increase. We have a very clear focus on how to drive returns for our shareholders. We're focused on maintaining occupancy and rental growth. We're focused on delivering strong compounding earnings growth. We're focused on cost efficiency and reducing net debt, and of course, continuing to deliver high-quality homes and great customer service. And I'll now hand over to Rob to take you through the detail. Robert Hudson: Thank you, Helen, and good morning, everybody. Today, I'm going to run through the financial performance for the year and outline the very strong earnings growth that we have to come. FY '25 has been another period of excellent growth, demonstrating Grainger's resilience and our market-leading position. We've continued to deliver a strong operational performance with like-for-like rental growth of 3.6% and occupancy at 98%. Overall, total net rents continued their strong growth, up 12%. This resulted in strong earnings growth with EPRA earnings up 12%, and we're still targeting our GBP 60 million guidance for the coming year and a 35% increase to GBP 72 million by FY '29. Adjusted earnings were broadly flat at GBP 91 million, as the sales profits from our reducing regulated tenancy business are replaced with rental income from our pipeline. Our dividend per share increased by 10% to 8.3p, and EPRA NTA was resilient in the period at 298p. Now, looking at the income statements in more detail. Our overall like-for-like rental growth was strong at 3.6%. Stabilized gross to net was again flat at 25%, demonstrating our ongoing focus on cost efficiency. Overhead costs were up 4% in the year, in line with wage inflation. And looking forward, we're targeting GBP 2 million of cost savings with a GBP 1 million benefit in FY '26. So overall, this will mean that overheads will not grow for the next 2 years. Interest costs increased largely due to lower levels of capitalized interest and a slightly higher average interest rate during the year. EPRA earnings continued their strong growth trajectory, up 12%. And as a reminder, now, we're a REIT, this will be our key earnings metric going forward. As expected, sales profits were lower at GBP 37 million, in line with the reduction in the regulated portfolio size, and our sales are performing well and in line with book. Other adjustments include derivative valuation movements and a fire safety provision, which reflects a revision of cost estimates. Now, looking at the moving parts of our 12% increase in our net rent for the period. Strong occupancy and like-for-like rental growth of 3.6% contributed GBP 2 million. And this was driven by strong performances in both PRS at 3.4%, which is stabilizing back at long-run averages of 3% to 3.5% and our regulated portfolio of 6.6%. The strong lease-up performance of our recent pipeline deliveries has contributed an additional GBP 18 million of net rent. Our asset recycling program offset this growth by GBP 6 million. Looking forward, we'd expect rental growth to continue in line with the long-term average of 3% to 3.5% in FY '26. With the occupational markets back to normalized levels, we expect to see some seasonality in rental growth return with half 2 stronger than half 1 growth. This chart shows the key movements in NTA over the course of the year. Our EPRA NTA was maintained at 298p per share. Net rents and fees added 18p, with overheads and finance costs offsetting this by 11p. Overall, our portfolio valuation for the period was up 0.7%. And the PRS portfolio saw 1.1% valuation growth with ERV growth of 3.2% and a modest outward yield shift on some assets. Valuations on the regs portfolio were down 0.6%, demonstrating their resilience, and further details of the valuation can be seen on Page 45 in the appendices of this presentation. Now, turning to net debt. Net debt was broadly flat during the year at GBP 1.46 billion, in line with our plans. Operational cash flows remained strong with GBP 205 million generated and with disposals contributing GBP 169 million net of fees. The investments in our build-to-rent portfolio has now started to moderate, as we work our way through the committed pipeline, and there was GBP 133 million invested during the year, with a further GBP 130 million spent on the pipeline, and the majority of that being in FY '26. In line with our previously discussed capital allocation strategy, we'll continue to generate sales at current levels. These proceeds will be used to fund the committed pipeline and then go towards lowering leverage by GBP 300 million to GBP 350 million. Going forward, we, therefore, expect net debt to remain broadly flat for the coming year before starting to delever from FY '27. And our balance sheet remains in great shape. Both net debt at GBP 1.46 billion and LTV at 38% were broadly flat over the year, in line with our plans. We maintained strong liquidity and a robust hedging profile with rates fixed in the mid-3% range. As previously highlighted, we plan to reduce our net debt by GBP 300 million to GBP 350 million over the next 4 years, as we continue to sell through our lower-yielding non-core assets. We regard this as very deliverable given our continued strong performance on sales. This will see our net debt, it's around GBP 1.1 billion, and that will equate to around an 8x net debt-to-EBITDA and an LTV of 30%, which we see as the right capital structure in this current interest rate environment. As net debt is brought down over the medium term, this will help mitigate the impact of rising finance costs, as our low rate hedging rolls off, and that ensures continued strong earnings growth. REIT status has been a long-term ambition since the start of our strategy, and I'm pleased to say we successfully converted to a REIT back in September. The benefits to the business of being a REIT are substantial, as we no longer have to pay corporation tax on the profits of our build-to-rent business. And in the first year of FY '26 alone, this is expected to generate GBP 15 million of savings with this increasing as we deliver further growth. We see the resilient growth that our residential business delivers is arguably the perfect fit for the REIT structure with no impact on our business model or our strategy. And we're firmly committed to delivering a strong progressive dividend. Now, we're a REIT, our dividend policy will be to distribute at least 80% of EPRA earnings. In FY '26 and FY '27, we'll have a reg profits top up. Beyond that, we'd expect the dividend to be fully covered by our EPRA earnings. This will see a mid-single-digit growth over the next 4 years, as we absorb the full impact of interest rate increases. As a reminder, beyond the higher interest rate headwind, we're a business that will deliver strong organic earnings and dividend growth of around 5%, simply as a result of our 3% to 3.5% rental growth and operating leverage, and that's even without any further growth in scale. It's been a strong year of earnings growth in FY '25, but there is a lot more to come. The lease-up of our recent deliveries as well as the remaining committed pipeline will deliver an additional GBP 24 million of rent over the next 4 years. As a reminder, this pipeline only requires a further GBP 130 million of CapEx to deliver. This strong top line growth will ensure we continue to deliver very strong earnings growth, and we're targeting EPRA earnings guidance of GBP 60 million next year and a 50% increase in 5 years from FY '24 to GBP 72 million in FY '29. We see this growth as exceptionally strong, particularly as it's delivered through a period in which we'll absorb the full rebasing of our interest cost to market levels, which we currently assume to be 5.5%. The bridge on this slide breaks down the key drivers, including the benefits of like-for-like rental growth assumed at 3% to 3.5%. The yield pickup from recycling out of our lower-yielding reg's assets into our build-to-rent portfolio, scale efficiencies with EBITDA margins growing to over 60% and the mitigating impacts of reducing debt on higher interest rates. This growth is locked in with upside from delivery of further pipeline schemes or stabilized acquisitions. So to summarize, we've continued to deliver a very strong operational performance with rental income increasing by 12% and EPRA earnings also up by 12%. This growth is being delivered from a position of real financial strength. Our liquidity and our balance sheet are strong, giving us the flexibility through disposals to reduce our debt by GBP 300 million to GBP 350 million over the medium term, as we reinvest into our committed pipeline. We maintain our EPRA earnings guidance of GBP 60 million by FY '26 and GBP 72 million by FY '29 from the delivery of just our committed pipeline alone, whilst also fully absorbing the headwind of higher interest rates. This earnings growth is a major component of our medium-term total returns target of 8%, which we see as a low volatility return and which remains unchanged, assuming constant yields. And at the current share price, this would equate to a 12% return. With that, I'll now hand you back to Helen. Helen Gordon: Thank you, Rob. In this section, I'm going to go through the 5 fundamentals of our investment case, and then, look at the performance of one of our new openings and also the Renters' Rights Act and our shareholder value creation model. Our investment case is compelling. We invest in a low-risk, low-volatility asset class with resilient and proven growth. We're in a market with exceptional fundamentals of housing supply shortages and growing demand. Our customer base is strong with a positive outlook for rental growth. And we now have certainty around our regulation following Royal Assent of the Renters' Rights Act. We have a sector-leading operational platform supported by technology, and this gives us great data and insights, and I'll now look at each of these in a little more detail. So residential is a low-risk investment with sustainable growth. Yes, it's lower yielding than some asset classes, but that is because it's lower risk. It has consistent year-on-year rental growth, and it has delivered above inflation rental growth. And residential rents and capital values have outperformed commercial real estate. This is underpinned by a supply shortage of homes. Our market fundamentals are strong, a shortage of supply and a growing population. We have in this country an estimated shortage of 4.3 million homes. And of the 5.6 million private rental homes, still only 2.5% are owned by professional build-to-rent landlords. Private landlords continue to exit the market, reducing supply, and fewer homes are being built. Recent revisions of the household growth show a 10% increase in household in the 10 years to 2032 and rental demand is set to grow by 20% in the 10 years to 2031. The structural supply and demand imbalance that underpins our sector has never been more acute. Our customer base is strong. On average, a Grainger customer earns around GBP 38,000 per annum. And the average Grainger household income is GBP 62,000 per annum. Our core demographic is in the 20 to 48 range, which tends to see the fastest earnings growth. Our customer base is very diverse. And as a reminder, we cap our student numbers. This diverse customer base and healthy affordability gives us confidence on future rental growth and occupancy. Now, last month, the Renters' Rights Bill achieved Royal Assent. This means we now have certainty on the regulatory outlook, and importantly, it rules out rent control. We contributed our insights to government throughout the process. The act is designed to raise standards, and we at Grainger are already delivering high standards. The proposed standards are consistent with our business model and our operational platform. And our customer-centric approach is embedded in Grainger's business. So the 5 key changes here are the abolition of no fault evictions, annual market rent reviews, pet-friendly policies, open-ended tenancies and decent home standards. And these align with our business model or current practices. The changes in our processes to comply with the act are already well advanced. We know the main measures will be introduced from the 1st of May 2026, and we're ready. So importantly, we now have certainty that rent controls do not form part of this important act. The final piece of our compelling investment case is our operational platform and how we deliver operational excellence. We've grown our offer supported by technology, and this gives us great insights into what our customers want. In our operational excellence, we have moved from instinct to insight. We use AI-driven sentiment analysis to inform our operations. And the data tells us what's important to our customers and what they want from a home. Now, this strengthens both our leasing and our customer retention. Our intuitive customer app as well as our friendly on-site residence team drive our excellent engagement and performance scores, and we sit ahead of many big brands in customer satisfaction and Net Promoter Scores. Building trust is no small feat for a landlord. Now turning to a recent case study, our latest opening in London is Seraphina at Fortunes Dock and it's opposite Canning Town transport interchange. Now, our commitment to this scheme was some time ago. However, even with outward yield movement, rental growth has more than compensated. It's a high-quality scheme, and it was delivered into our best letting season, which is late summer. And we allowed 12 months to lease up in our underwriting. But the lease up here in the first couple of months takes it to 88% let. Rental growth is ahead of underwriting, and the scheme forms part of 3 buildings: Argo, which was launched in 2017; Nautilus, which was launched in 2023; and Seraphina. And whilst there is a slight rental difference, our cluster strategy delivers consistent service. What I'm so proud of is that the rent differential between Argo and Seraphina is only GBP 60 a month. And that is evidence of the low depreciation and resilience of our product. Unlike other real estate asset classes, residential has lower depreciation and greater resilience. As a reminder, Argo is 8 years old, all refresh costs have gone through the gross to net, showing its resilience and lack of depreciation. Residential investment run well offers a true net yield. Grainger's shareholder value creation model is simple and clear. We're investing in high-quality rental homes in great locations with strong demand, and this investment is low risk. We have inflation linking rental growth and the efficiency of a sector-leading operational platform. We are expanding our EBITDA margin, and we have strong growth opportunities secured for now and the future. Our growth is funded. We have demonstrated our track record of disposals. We have a strong balance sheet, and we are lowering leverage. So what this means is that this proven model is built to deliver shareholders' excellent risk-adjusted returns. Thank you. I now invite you to ask questions, and I'll be joined by Rob Hudson, our Chief Financial Officer; Mike Keaveney, our Director of Land and Development; and Eliza Pattinson, our Director of Operations and Asset Management; and other senior leaders in the room. So anyone listening in, you can submit questions through the webcast, but we're going to take questions in the room first. Helen Gordon: Chris, I've got my notepad because I know it will be a 3-parter. Christopher Millington: I've learned the lesson there. Chris Millington at Deutsche. First one I'd like to ask is about this deleveraging and kind of how the strategy is working. So if we don't -- let's say, we don't get such a ramp-up in finance costs going forward, would you still look to delever to that extent? Or should we think it more you're managing the finance cost within the mix of earnings? I'll stop there and go again in a minute. Robert Hudson: Yes, I think we'd always retain some level of flexibility, Chris. So if indeed, the outlook improves and interest rates start to fall a bit, we've modeled on current forward curves of 5.5%, then we'd obviously always aim to have a little bit of flexibility because we are thinking principally around preserving strong earnings growth in the business. Christopher Millington: Very clear. Assuming your assumptions on the 5.5% are correct in the GBP 300 million, can you just talk about what capacity you've got to invest? What -- how should we think about the secured pipeline coming through and beyond and maybe stabilized acquisitions which you mentioned? Helen Gordon: Yes. So you saw the slide, Chris, which actually had over GBP 900 million of capacity. And obviously, that sort of will grow over time. The main components of that are our regulated tenancy portfolio that we're working through strategic land portfolio and other older, non-core assets. So even with deleveraging, completing the pipeline because of our strong operational cash flow, we've got capacity to do our secured pipeline. Christopher Millington: And when do you think we should start seeing that get committed to? Helen Gordon: I think, as I mentioned, we'd look at that commitment in relation to all other options within the portfolios that deleveraging and also the investments in our existing pipeline. But obviously, as the Seraphina example shows, we make a commitment a couple of years out. Christopher Millington: And then I just wanted to explore the valuation backdrop. Perhaps just a little bit of detail as to kind of what assets, regions drove the slight outward yield shift? And just what you're hearing from the value as in what you feel about the outlook for yields? Helen Gordon: Yes. I mean, the interesting thing is how strong the investment market has been maintained for residential assets. We've seen some significant transactions. It was a few outward yield movements on some of our more regional portfolio, but it was literally 10 basis points outward yield movement there. And there were a couple of asset-specific movements. But overall, yields have been stable for the last couple of years, if you look at the valuers' charts. Eleanor Frew: Eleanor Frew from Barclays. So occupancy levels are high, rental growth slowing a little. Can you talk about how you're thinking about balancing the 2 moving forwards? You're likely to prioritize keeping occupancy. And then maybe any comment on incentives used over the year and any planned? Helen Gordon: Yes. Great question. I would -- that occupancy figure is exceptional at 98.1%. We model our business on a lower occupancy. What I always say is important is getting real estate income producing. It's probably one of the most important things you can do. That's sort of rather than keeping occupancy to drive topline rental growth. The new lets' figure that you saw in the numbers reflected the fact that in order -- because we got some late deliveries, if you like, into the year, we wanted to make sure that we went into the winter season with a really high level of occupancy. And so we did offer some incentives. So that blended rental growth just recognizes some small incentives that we made there, but occupancy and rental growth is something that the senior leadership team look at every single Monday morning in a lot of detail. So it's a really careful balance, and I think that anyone that's not looking at both might miss the picture. Eleanor Frew: Great. Then, we understand the market participants that students are increasingly turning to BTR instead of PBSA. Is that something you've seen? And have you seen any pressure on your cap? Helen Gordon: Students have obviously liked build-to-rent for a very long time. Our business model is to build long-term communities, which are most resilient, and therefore, have higher retention rate since students obviously churn more readily. So we've kept our buildings to make sure that students are only a small proportion and that means that we don't get that big summer churn when they finish their courses. But there's another reason for it as well, which is just that mix of young professionals and students doesn't always mix too many parties, I think. But we have -- there are certain cities where obviously, we've come under pressure to let more to students, and it's just really keeping very, very disciplined in order to ensure that we keep that balance of the community and prevent a high level of churn. Thomas Musson: It's Tom Musson at Berenberg. You just mentioned on rent growth for the year ahead, I think to expect some sort of normal seasonality and growth higher in the second half. Can you just remind me what sort of dispersion is in terms of rent growth first half versus the second half? Helen Gordon: I'm going to ask Rob to answer this in more detail in a moment. But one of the things I would say is that we've had quite an unusual market for the last few years. So -- this company is over 100 years old, and we always know that our best leasing season is the sort of late summer into the autumn. What happened during the pandemic and post pandemic is that, that changed with the way that the market went into fluctuation. And now, we're actually seeing it return to normal. But Rob, why don't you give some more detail on that? Robert Hudson: Yes, absolutely. So the first point is we continue to guide for our long run rate of 3% to 3.5% for the year ahead. And that's because we're sitting with very healthy levels of affordability at 28%, which has been constant at that level for quite some time. And, of course, the fundamentals of demand and supply with supply shrinking and demand remaining strong. So, as Helen said, the market obviously has been quite exceptional for the past few years coming out of COVID. But we could expect something in the order of anything up to 100 basis points spread between the first and the second half, but still very much guiding towards the long run rate for the year ahead. Thomas Musson: I just had a second one. You mentioned Bristol launched last week. Can you say -- I don't know if you have any early insight into how that's going? Any early demand there? Any chance that can be a successful lease-up as Seraphina? Helen Gordon: We haven't actually launched it yet, but we -- there's a good buildup, and it sits within a really good cluster. And so we've got good insight into it being a very, very strong rental city and good sort of indication of demand. Eliza, do you want to say anything on that? Eliza Pattinson: Yes. I guess, just going back to seasonality, we've done extremely well in all of our lease-ups in Bristol, but we are launching this building into the low seasonality of lettings. So we'll be doing prelaunches, pre-lets, and we have got good interest at the moment. Helen Gordon: Neil? Neil Green: Neil Green from JPMorgan. Just one, please. There were some initiatives announced in London, I think, last month around speeding up housebuilding activity, focus on the affordable element, but interested to get your take on whether you think this is the catalyst and also whether there's changed anything for Grainger when it comes to the future pipeline, please? Helen Gordon: Yes. I'm going to turn to Mike to talk about this because he's pulled all over the guidance on it. But -- I mean, I think it's a really strong signal of how difficult people are finding it to actually build in London. And just to give you an idea, I think the stat that was out was -- new homes delivered in May was 19. That's total new homes. So you can imagine they do need to stimulate housebuilding in London, but Mike, why don't you talk about the detail? Michael Keaveney: Sure. Thanks, Helen. So what was announced really were emergency measures around the fast track process for getting consents. And obviously, they dropped the amount of affordable housing that they expect from sites and also within that announced grant levels for the affordable housing. But it's really a signal that the GLA are listening to the fact that the housebuilding sector in London is under pressure from a viability perspective. And it's still going to be consulted through in the next 6 weeks or so. But I think it's a really welcome step that they realize, and it's not just build-to-rent, obviously, it's the house builders generally, that their viability models are struggling. And the right lever is affordable housing and grant. And so we welcome that. Helen Gordon: Alastair? Alastair Stewart: Alastair Stewart from Progressive. A couple of questions related to that. Recently, have you -- I know you -- your performance with the building safety regulator has been better than most. But what's your reading of the overall [Audio Gap]. Michael Keaveney: Definitely made a difference, and the big difference is engagement. So now developers in that process have someone they can speak to and talk about the process they're going through. And that's made a massive difference, I'd say. We recently achieved Gateway 2 approval with our partner in Guildford, and that was delivered in 22 weeks, which is much closer to the 12 weeks they originally started with. So we do see -- again, they are listening. They are trying to solve the problem and solve the problem without compromising safety. So yes, the direction of travel is good for that. In terms of the second question, the principle behind that is that there will be a dearth -- there's a backlog of residential development that needs to be -- that will get released through Gateway 2, and suddenly, it will all arrive at once. I think the emergency measures tell you something about that likelihood. The reality is you have Gateway 2 as a barrier, which is now being traversed. But after that, you have a viability issue on certain schemes around London, mainly with the house builders. So I -- and you'll see that the RPs are pulling back from development. So we don't see a massive increase in house building driving inflation. We see a steady progression of house building. Helen Gordon: James? James Carswell: James Carswell from Peel Hunt. Maybe a slight follow on from Chris's question. But just in terms of credit spreads and margins, it feels like they've probably come in looking at what some of the other REITs have done recently. I mean, where do you think -- if you were refinancing today, I appreciate you're not, where do you think your kind of marginal credit spread would be? Robert Hudson: Yes. So based on our internal forecast and current rates, the all-in rate would be around 5.5%. So I think it's obviously true to say as obviously gilt yields have moved, then we've seen a country movement on credit spreads, but the all-in remains around 5.5%. James Carswell: And then maybe just in terms of bigger picture, I mean, funding the kind of the next, I guess, phase of Grainger in terms of opportunities you're seeing, acquisitions, yes, how should we think about funding those? Because the non-core assets are kind of being used for the current pipeline and deleveraging. And is now a good time to maybe think about third-party capital? Is that under consideration? Helen Gordon: We do look at third party, and the Board discuss it, the pros and cons of doing that. But James, we've got a lot of capacity and a big pipeline to go at that we can actually fund ourselves. And so it's obviously -- but we talk to partners all the time. And if there is a right opportunity. And, of course, we do have a joint venture with TfL on our strategic joint venture. So we are known as being good partners. So I wouldn't rule it out. But -- I mean, the great thing is we have clear visibility on how we can fund that secured pipeline. Any other questions? Kurt, you are going to fire some from the webcast. Kurt Mueller: There are a few that have come in online. The first is from John Vuong, Van Lanschot Kempen. The #2 key positive drivers for NPS is the quality of the property. But at the same time, you mentioned that your assets have low depreciation and require minimal CapEx. How can you reconcile these 2 statements? Helen Gordon: It's because we're constantly on top of them, and meaning, that we're refreshing all the time, and we're doing that through the 25% gross to net. So it's very different from, say, our European counterparts that do put their refresh costs -- capitalize their refresh costs. And just as a reminder to John, the majority of our portfolio has been built since 2017. So it is actually a very, very new portfolio. And when we designed it in our specification, we looked very, very carefully at the long-term use of finishes, which is why we invest in high-quality finishes to make sure it doesn't deteriorate as quickly. Kurt Mueller: Next question is from Andres Toome of Green Street. What is the impact to yield on cost for schemes benefiting from lower affordability housing quota and the community infrastructure levy in London? We partly answered that, I think, before. And do you see any opportunities emerging from these changes? Helen Gordon: Yes. So -- I mean, most of our schemes have been through the planning process. But, Mike, why don't you answer this? Michael Keaveney: Yes. I think what lies behind the question is whether lower affordable housing and say, increased grant and that kind of combination would lead to greater returns, which is not quite the point of what the emergency measures are trying to do. The emergency measures are trying to bring back viability to housebuilders so that they make their returns. If you created a scenario where super normal returns were delivered through that, they would pull back. And so really, the benefit is that the housebuilders, the general housebuilders should be able to hit their viability returns, not make supernormal profits. Kurt Mueller: One final question from online. Dr. Francis Jardine, I believe, a private shareholder. "I have investments in over 20 REITs, who pay quarterly dividends, does the Board of Grainger intend to consider paying quarterly dividends going forward? Doing so is only a question of managing cash flow". Helen Gordon: We pay -- obviously, we pay half yearly dividends, as a reminder. I will make sure that the Board discussed it at the next meeting. Kurt Mueller: That's it from online. Helen Gordon: Any other questions in the room? Chris, another one? Christopher Millington: It's as I was getting through to the appendix on the presentation. But I notice now we've got London and Southeast net initial yields, quite tight versus the rest of the country, actually, a little bit below where you're holding in the Southwest. I think it's 4.3%, place 4.1%. What do you think of the relative attractiveness of London now you've seen that sort of convergence? Helen Gordon: Yes. I think it comes from the fundamentals of our sector, which is you've got a shortage of supply across the whole country. So you've got occupancy, and therefore, sort of they have converged the biggest -- I haven't put it in this year, but it is in the appendices. It is my chart where I show where is the best rental city. And the best rental city for obvious reasons is London. So I would argue -- I have to be careful, I think, we've got the values in the room, but I would argue that the London yields are too cautious. For most of my career, London yields have been significantly lower than where they sit today. No more questions. Thank you very much for getting up early and coming and joining us this morning. Any other questions, we will be around for a little while before I think another property company comes in here. So thank you.
Operator: Thank you for standing by. This is the conference operator. Welcome to Vext Sciences Third Quarter 2025 Financial Results Conference Call. As a reminder, all participants are in listen-only mode and the conference is being recorded. [Operator Instructions] I would now like to turn the conference over to Priam Shahrabordi. Please go ahead. Unknown Executive: Thanks, operator. Good morning, everyone, and thank you for joining us today. Vext Third Quarter 2025 financial results were released earlier this morning. The press release, financial statements and MD&A are available on Plus as well as on the Vext website at vextscience.com. We would like to remind listeners that portions of today's discussion includes forward-looking statements and that forward-looking statements are included in today's filings. There can be no assurance that these forward-looking statements will prove to be accurate or that management's expectations or estimates of future developments, circumstances or results contained therein will materialize. Risks and uncertainties that could affect future developments, circumstances or results are detailed in the MD&A and Vext's other public filings that are made available on SEDAR and we encourage listeners to read those risk factors in conjunction with today's call. As a result of these risks and uncertainties, the developments, circumstances or results predicted in forward-looking statements may differ materially from actual developments, circumstances or results. This call also includes non-IFRS financial information, and such non-IFRS financial measures are subject to the disclosure and reconciliation included in our press release disseminated earlier today as well as the MD&A. Forward-looking statements made during this conference call are made as of the date of this call. Vext disclaims any intention or obligation to update or revise such information, except as required by applicable law. Next financial statements are presented in U.S. dollars and the results discussed during this call are in U.S. dollars. I will now pass the call over to Eric Offenberger, Chief Executive Officer of Vext. Eric Offenberger: Thanks, Priam. Good morning, everybody, and thank you for joining our third quarter 2025 financial results conference call. I am joined today by Trevor Smith, Vext's CFO. Q3 was a solid quarter for Vext. Our results reflect a mix of continued progress in Ohio and consistent execution in Arizona. Revenue was $12.7 million, up 41% year-over-year. driven by the full quarter contribution from our Athens and Jeffersonville dispensaries in Ohio and continued resilience in Arizona. We once again generated positive operating cash flow, something we've done for the fourth consecutive quarter now and continue to strengthen the foundation of our business. Across our 2 operating states, we're seeing very different market dynamics, and our model is proving resilient in both. Ohio continues to gain momentum as adult-use sales expand and our retail footprint grows. We're positioning the business to capture more of the demand through continued retail expansion and improved cultivation output. Arizona on the other hand, remains mature and competitive market that's working through excess supply and lower pricing. Our team continues to do a great job managing through it consistently outperforming state averages, generating positive adjusted EBITDA and protecting margins through a focus on efficiency and customer loyalty. Turning first to Ohio. Ohio continues to stand out as a growth engine for Vext. Revenue in the state was steady this quarter with retail growth from the ramp-up of our third and fourth dispensaries in Athens in Jeffersonville, offsetting intentionally lower third-party wholesale activity, consistent with our shift toward a more retail-focused model. Our 4 operating dispensaries continue to perform well, supported by steady customer traffic, strong customer retention and ramping up store level execution. The addition of drive-thrus to select dispensaries has also been a clear success, driving convenience, higher visit frequency and reinforcing the strength of our retail-centered vertical platform approach. We're adding drive-throughs across our retail platform wherever permitting allows and results have been consistently positive. During the quarter, we increased flower inventory in Ohio in anticipation of our next phase of retail growth. While the tagging of our well-positioned Fairfield store opening has shifted into early 2026 due to permitting related delays, we're excited to bring our 3 remaining locations online through 2026 and expect them to meaningfully contribute to our results. Trevor will speak to the financial impact in more detail but at a high level, we expect to monetize our excess inventory through the wholesale channel throughout the remainder of the year, enhancing cash generation. With Portsmith consolidated as of October 1, and cultivation yields improving meaningfully, we expect to see strong revenue growth in quarter 4 as throughput increases in more of our retail network contributes for a full quarter. Beyond that, we're focused on completing construction of our 3 remaining locations to reach state license cap of 8 dispensaries during 2026. While initial opening time lines targeted early 2026, store launches will ultimately align with the pace of permitting and regulatory approvals. As these milestones are achieved, we expect our larger footprint to meaningfully expand our reach, positioning Vext for continued growth in one of the country's most promising adult east markets. Turning to Arizona. Our operations continue to perform well with our sales exceeding state averages on a per store basis and demonstrating the strength of our retail execution and local customer base. The broader market, however, remains soft with statewide sales down about 12% sequentially and 6% year-over-year due to pricing pressure and typical summer seasonality. Our focus remains on efficiency and margin protection in what continues to be a competitive environment, selling our own brands through our retail network, maintaining tight operational controls and strong yields from our Eloy cultivation facility, which continues to exceed market averages have helped us maintain positive adjusted EBITDA despite multiyear revenue declines across the state. We believe our above-average execution in Arizona is a clear indicator of our ability to not only sustain performance but win in markets as they mature and grow increasingly competitive. Against this backdrop, we're entering year-end with momentum and a stronger foundation to build on. In Ohio, we're continuing to see strong high-margin growth as the adult use market expands, while in Arizona, our team is proving we can stay profitable and efficient in a competitive environment. That balance between growth and stability supported by our capital-light model and focus on vertically integrated disciplined operations has enabled us to deliver solid cash flow margins through the year. With much of the heavy lifting on acquisitions and build-outs now behind us, our focus is on converting more of that growth into free cash flow, strengthening our balance sheet in delivering steady long-term value for our shareholders. Before handing the call over to Trevor, I want to thank our team for their continued hard work and focus, even in a tougher quarter with increased seasonality in Arizona we delivered positive cash flow, kept expenses in line and stayed on track with our growth plan in Ohio. With that, over to Trevor for a review of the financials. Trevor? Trevor Smith: Thanks very much, Eric. The third quarter reflected continued execution in a mixed market environment. Revenue was $12.7 million compared with $13.4 million in the second quarter of 2025 and $8.9 million in the third quarter of 2024. On a year-to-date basis, revenue reached $37.6 million, up 46% from 2024, driven primarily by the expansion of our Ohio retail operations and steady performance in Arizona. Behind these top line results, we're seeing solid operational momentum, especially in cultivation. As noted last quarter, one of the areas we've been focused on is better aligning our cultivation footprint with retail demand to support margins across the business. Those efforts are showing real progress. Over the past 2 years, our weighted average yields have steadily improved, up about 10% in the third quarter of 2024 compared to the prior year and a further up 15% in the third quarter of this year. More recently, 2 pilot programs we initiated at incremental capital-light cultivation capacity, delivered test yields nearly 50% above our current averages. These early results highlight a meaningful opportunity to improve throughput and cost efficiency as the programs scale, and we look forward to keeping you updated. As Eric outlined, it's worth noting that we intentionally built additional flower inventory in Ohio during the quarter in anticipation of the Fairfield store launch and had more sellable grams on hand at the end of Q3 versus Q2. With that opening delayed slightly into 2026, there was a short-term impact on working capital and operational cash flow in the quarter. However, we remain well positioned to capture additional revenue and cash conversion over the next few months. Inventory stood at $8.3 million, a sequential decline. The decrease in inventory valuation despite the just mentioned increase in sellable grams, reflects the realignment of our inventory with current market conditions and production efficiencies. Under IFRS accounting, this adjustment temporarily increased cost of goods sold in the quarter, and we expect margins to normalize as that inventory sells through in Q4. Adjusted EBITDA came in at $2.1 million, representing a 16.7% margin. The decline in adjusted EBITDA compared to prior quarters was driven primarily by lower wholesale flower prices in Arizona, which compressed margins and reduced the IFRS fair value of biological assets. It is important to note that these impacts are noncash working capital adjustments tied to market pricing rather than operations. When adjusted for these temporary factors that are required under IFRS, our core profitability remained consistent with our run rate earlier this year. Operating cash flow for Q3 was $1.26 million, or a 9.9% cash flow margin. The wholesale pricing movement I just mentioned, created a working capital impact that drove much of the sequential decline in operating cash flow despite stable underlying demand. Adjusting for the temporary working capital items, including the Ohio inventory build combined with progress we made against legacy income tax payments, our operating cash flow would have been in line with our performance over the first half of the year which speaks to the strength of our core operations. Operating expenses were down year-over-year and down as a percentage of revenue, reflecting continued cost discipline even as we expanded our retail footprint. We're seeing operating leverage begin to show through and expect that to continue as new stores are consolidated. On the balance sheet, we ended the quarter with $3.7 million in cash. Looking ahead, the pieces are in place for a stronger finish to the year. With Portsmouth now consolidated, cultivation yields improving and a solid foundation in both states, we expect revenue, adjusted EBITDA and cash flow to step up meaningfully in the fourth quarter. Our focus remains on generating cash, maintaining cost discipline and funding our Ohio expansion through steady, internally driven growth. Supported by growing momentum in Ohio, steady operational improvements in Arizona and a disciplined capital-light strategy, we expect to deliver consistent financial performance through year-end and build on that strength heading into 2026. Thank you, everyone, for joining us for our third quarter 2025 financial results conference call. I'll now turn it over to the operator for your questions. Operator: [Operator Instructions] The first question comes from Paul Penney with Partner Capital Group. Paul Penny: Solid quarter. A couple of questions on Arizona, any positive impacts from the enforcement on hemp-related products? And secondly, can you give us a better feel for the seasonality on traffic trends and average spend in the summer when the weather is in the triple digits? And then thirdly, do you think the wholesale market has bottomed in Arizona? Just give us a feel for wholesale prices. And if you think they've bottomed out. Eric Offenberger: Thanks, Paul. As far as we can tell, the seasonal traffic was about the same patterns as last year. We didn't really see like an impact of customer base that was that significant compared to the pricing compression and what happened that way. So I think really most of the issues are still price driven. That said, you also have more stores this year than last year, but not significantly. But you did have some of that and people moving stores and doing some of those things that came online in the third quarter with the heat in Arizona. As far as wholesale prices, my gut feeling tells me no, it's not bottomed out yet. Does it fall as fast as it has been? I don't think so. I think some people are producing at below cash numbers to generate cash. It's a question of how deep their pockets are and how long they want to sustain that. And I think that really has created a problem. Just strictly pure economics oversupply. So that's kind of our take on the whole thing. Paul Penny: Great. And switching over to Ohio. Where are you seeing the most upside in terms of your expectations on the traffic side or the average price in basket size? And what's the best case and worst case in terms of opening all 8 stores into 2026? And then lastly, how many of the do you think can have drive-throughs? Eric Offenberger: So when we get all done, I'll start with the last part. The 7 out of the 8 can have drive-throughs, and we think we'll be there by the end of the year with them as they come online. Anything new is being built with a drive-through. There's 2 that have to be retrofitted and those are based upon state approvals and zoning. So that's it. As far as opening by the end of '28, it really gets down to is how do you do on permitting? Where are you at with zoning, that type of stuff. Fortunately, Scott, our in-house counsel is very good at real estate transactions and knows the space very well within Ohio and does a good job getting them up and going for us. So that's been a real positive. Ohio, what we see as traffic patterns are still pretty good in Ohio. Again, they're bringing on new stores and they're seeing some competition. I think what's really happening from our store standpoint is with our vertical model, we're maintaining market share, but you're doing that at a price, right? So the consumer is obviously getting a cheaper market, cheaper price than they have been getting but with the cultivation capped in Ohio, I think that's been a positive. I think some of the brands that were primarily wholesaling are bringing some of their own retail online. And lo and behold, they're starting to sell their brands through their own stores like everywhere else does in order to maintain their margins and keep their margins solid. So with Vext, we have good in-house brands, good product development. We've always worked on it. And we always talked that we're not a brand company, and we're really truly not. But we market our own brands and our own quality and ensure that into the store to help maintain the margin. So we just don't see it as being a big wholesale play for us as much as to control your costs like a private label. So the quality is there and the consistency, and getting the customer pattern and then peppering it in with other products that we have with people we work with. Paul Penny: Great. And Trevor, one quick one for you. Do you view the operating cash flow margin as bottoming this quarter in terms of when you look out the remainder of the quarters in the year? Trevor Smith: Yes, absolutely. Primarily a function of that markdown in average selling price per gram. So that had a ripple effect through all the IFRS valuations on inventory. And then we got caught up a bit on the legacy income tax payments. Of the almost $900,000, 2/3 of it related to the 2017 and 2018 audits that have already been completed. Operator: The next question comes from Andrew Semple with Ventum Financial. Andrew Semple: Yes, I just want to go back to the margins. Obviously, we're seeing quite a bit of volatility in that over the past few quarters and even in the past few years. I don't know if this is a question for Trevor, Eric, but where would you expect the margins to stabilize? I know you indicated the first half of this year, but even then margins were slowing around a fair bit quarter-on-quarter. So maybe if you had any color commentary on where you would expect the margins to stabilize once all the stores are open, your vertically integrated model humming in Ohio, that would be helpful. Trevor Smith: Sure. Yes, I still think it's probably going to revert back closer to the first half of the year. You have some price compression that we don't necessarily see recovery overnight on. But at the same time, we do expect meaningful improvements in yield, which will help on the cost structure side. So it's noisy and it has a lot to do with when we plant, how we plant, what day the end of the quarter ends on, the changes in valuation. And I think we're still one of the few companies under IFRS, so we get a lot of noise on the biological assets. But yes, I would expect margins, like I said, revert closer to the first half of the year, again, mostly due to cost efficiencies. Andrew Semple: Got it. Okay. And then on the cultivation yield we've been hearing yield improvements are kind of across the street from other operators, too. Though the quantum, I guess, Vext is looking at there with kind of the 10% and 15% and testing at 50%, that seems to be a bit larger than some of the peers are doing. So where do you think you stack up relative to the peers? Is this you guys catching up, keeping pace? Or do you think you're leapfrogging some folks? Some context on kind of where you think you are on the yield side would be helpful. Trevor Smith: Sure. I think historically, the company may have been a bit of a laggard, but over the last couple of years, we've caught pace. And I think if the pilot program widely adopts the way the 2 trial test runs have, we expect to leapfrog a fair amount of the pack. Andrew Semple: Got it. And then finally, maybe just in terms of 2026, obviously, opening or looking to open 3 additional Ohio stores. What else would be in your CapEx budget for next year? What kind of projects are you looking at? Eric Offenberger: I think at this point in time, Andrew, what we're doing is staying focused on opening the 8 stores and generating cash and improving the balance sheet, and looking for opportunities that make sense from a accretive standpoint, and maximizing the shareholder value. So we don't have anything that are jumping out at us or anything that we're not looking at as a general rule. That said, you follow the space as well as anybody, and we've always thought you do a great job with it. So you know what's happening with AYR, PharmaCann, the 4Fronts and stuff along those lines. We're trying to see kind of how those assets get released into the market and what happens with them, and we think there's going to be some other ones. So we think there's going to be some good opportunities and be prepared. Operator: [Operator Instructions] The next question comes from Josh Felker with CB1 Capital. Josh Felker: Eric, Trevor, congrats on the quarter. I've got a 3-parter and then a single question. That's okay. on Ohio, I'm just expecting -- I'm just wondering how you expect your wholesale business to trend as you continue to turn your stores online? Second part, how much of your current internal capacity do you think your 8 stores are utilized? And then I guess, going forward after that, what are your expectations for the Ohio wholesale business after those stores are online? Eric Offenberger: Josh, I'll get part of that, and then we'll let Trevor with the specifics because, obviously, he's -- that's his daily work. So from a wholesale strategy, it's not going to be any different. We're going to continue to support our stores and run the brands. We typically try to do at least 70% internal, 30% on the other ones, as the stores come online and open and the efficiency from the cultivation, that really will support where the mix ends up. And I think that's really been a good indication. So today, that strategy is working well, and we'll continue with that strategy until we see a condition change in the market. I'll let Trevor address kind of the specifics within that answer. Trevor Smith: Sure. cultivation yields taking a step forward and the delay of the Fairfield opening, we're sitting on a fair amount of inventory in Ohio more than we normally would in terms of sellable grams. So I would expect that to get sold through in the fourth quarter, retail promotion as well as wholesale sales. So year-over-year, we're already up about 50% from last year. I'd probably expect that to continue a little bit just because of the prior mentioned major leap forward and cultivation yields that we're expecting and when those will come in the first harvest relative to when the new stores will open and ramp. So we're always constantly managing that supply-demand curve. So I would expect wholesale to be elevated for probably next several quarters. And then as Eric mentioned, our long-term strategy is always to pair retail distribution with our wholesale or with our cultivation production. So we're not relying on the swings in the wholesale market. So long term, our facility is going to be designed to service all of those 8 at those 70% internal measures that Eric was mentioning. And I think we'll kind of see how the Ohio market develops in the coming quarters if we're going to make any decisions beyond that. Josh Felker: Super. Appreciate the detail there. And on the accounts receivable line, that's an issue that operators have been noting for upwards of a year now. I'm just wondering, are you seeing any of the accounts receivable issues that some of your peers are mentioning? Trevor Smith: No, thankfully, the team is doing a really good job on that front. As I mentioned, wholesale is up about 50% year-to-date. AR is only up about 35%, and our current status for AR as we disclosed in our MD&A is still at 90%. So we feel pretty good about our relationships with our customers. I appreciate their business. I think there's ample opportunity. We've carved out some shelf space there. but it is something that we are cognizant of has been kind of an industry-wide concern. Josh Felker: Forgive me if I try to sneak in a third question. I'm going to count my first one as one question. For the remaining 3 stores left open in Ohio, I know you've mentioned in the past maybe above average expectations versus the state. I'm just wondering, does those expectations still hold given what you've seen in the market? Eric Offenberger: Yes. We're still very optimistic about where we're at, the strategy, the traffic patterns, where we're trying to put these stores and how they've been embraced. As we've talked about before the 6 store is something we're really excited to see open. We really are happy with the landlord and the location. So we're really happy to see that. And we think Store 7 will be in the Columbus market. And hopefully, we'll get the permitting and can get the provisional done with the state here pretty quickly and get that up and going. Store 8, another -- it will be in the Cincinnati area and we're happy with where that store is going to be located, too. So yes, we're really -- yes, I can't -- Josh, I can't tell you how excited I am with what Scott has been able to accomplish in Ohio on the real estate front. It's just been phenomenal. Everything, the expectations of when we brought him on and my past work with him, he's lived up to it and so is the team in Ohio. So I could not be happier with everybody's performance. Operator: This concludes the question-and-answer session and today's conference call. You may disconnect your lines, and thank you for participating, and have a pleasant day.
Fani Titi: [Audio Gap] So before I start, let me just thank all my colleagues for the contribution they make in looking after our clients. Because we're going to be talking a bit more today about our growth plans in the second half of this presentation, I thought to start off with our strategic positioning. As you know, we have always been a business that is not everything to everyone. We have select clients that we serve in fairly narrowly defined markets. And it is really important as we embark on a path of growth that you understand that we will be evolving naturally the model that we have been following all the time. As you know, our model is based on the fact that we support our clients on their journeys, both as personal clients and as business clients. and we tailor solutions to the needs that they have. And these solutions are delivered with a high touch and a level of service that we generally refer to as out of the ordinary. So as we think about the next number of years going forward, that is the lens through which we will look at what we are trying to do. We're very pleased with these results given the environment that we're operating in today. And as a business, as we look forward, we have a level of excitement, enthusiasm and energy that we can do more for our clients. And we will have the opportunity in the second half for some of my colleagues to present on our offering to the corporate mid-market. Really excited to hear what they will have to say. At the final year results in May next year, we will present our proposition to enhance our offering to our private clients. You know that we presented a comprehensive strategy for growth in May. We are now starting to unpack elements of that strategy. And hopefully, you will find that interesting and meaningful. As the last point on the slide shows, this is a business focused on building. this is still the slide. I'm still on the same slide. Is this what is on the screen. See I've got 2 slides in front of me. And I'm talking to the right-hand side of my presentation. So the last point on that screen, which is what I'm talking about in terms of our strategic positioning, relates to the posture of our business for the next 3 to 5 years, a business dedicated to disciplined growth. Okay, Nish, I'm going to do this click. Good. Nish is going to take you through the results in great detail, but I would like to give you some basic highlights on these results and some key takeaways. We are very pleased that we are reporting a growth in adjusted earnings per share of 2.5% to 40.5p. We're also quite pleased that we've seen significant activity in our clients, and this is evidenced by the growth in net core loans and advances, the growth in deposits and the growth in funds under management as represented by the second set of graphs. So our client franchises are deep and our earnings are diversified in nature. Capital generation has continued to be strong, and this enables us to reinvest in the business. The reinvestment, for instance, in our corporate mid-market franchise, the reinvestment in our platforms as we modernize our estate is by an example of the strong capital generation that we have. And in addition, we are able to reward our shareholders with distributions. You will know that in this period, the Board has declared a dividend per share of 17.5p, and we also have undertaken a significant portion of the share buyback program that we announced in May. So capital generation is really quite important. And the last set of graphs on the right show that our return on equity is well anchored within our medium-term targets. The presentation today will talk about how we move from circa 14% to the top end of our range of 13% to 17%. If you look at the next slide, our pre-provision adjusted operating profit is slightly behind at GBP 527.4 million. As I've indicated, we have very good client activity. So our net interest revenue was very strong in this period, but we had the effect of lower interest rates on our endowment. And so, our net interest income was negatively affected by that. As indicated, we are also investing heavily for growth as we move forward. Our cost-to-income ratio at 51.9% is below our indicated range of 52% to 54%. As we look forward, we've indicated to the market that we expect to be in this range even though we will continue to invest in people and technology, firstly, to support our current revenues; secondly, to transform our operating platforms; and thirdly, to invest in the growth initiatives that we have spoken about in May. Our credit loss ratio at 35 basis points is in the through-the-cycle target range of 25 to 45 basis points, even though interest rates from where we stand are still relatively high. We would expect over the next 12 to 18 months that we will see a continued reduction in interest rates, even though that may be at a pace that is slower than we would like. Very happy with the return on tangible equity at 15.7%. And of course, the increase in our tangible net asset value per share of 7.4% is very pleasing in our view. Not going to talk to this slide on our commitment to our path to net zero by 2050. As expected, you don't have changes in this particular slide from period to period. This is a long-term commitment towards reducing our fossil fuel exposures, driving sustainable and transition finance activities and promoting within our client base a movement towards being more sustainable. So you shouldn't expect changes on this slide at every reporting period, but it is important that we indicate that we remain committed to our path to net zero by 2050. Now to unpack the results, I'm going to ask Nishlan to take us through the rest of the results presentation, and I will close off at the end. Nish? The slide on the right is the next slide. Nishlan Samujh: We got it. Thanks, Fani. I'm just going to spend a little bit of time to give you some of the context that we operated in, give you some detail about how we've performed geography as well as across our businesses. So if we start with the context, and we had a debate when we produced this slide as to exactly how you calibrate 1.5% and 1.1% because these numbers are still relatively low in terms of growth. But I think that the direction is extremely important. If we look back into 2024, we were all talking about the election environment and the fact that most of the world will be in a state of flux, in a state of change. And I think we're through that particular cycle, but the consequences is what we continue to live out. And those consequences has a bearing on how these projections actually move out over time. And it does really feel like we're moving into territory, where that's becoming a lot more clearer, albeit that there are still pockets and pockets and pockets of uncertainty that sits in the system itself. Interest rates interestingly have been on a path that's reducing. And if we spoke to you, again, a year ago, we would have probably have expected these graphs to have a sharper line down, and that's not the reality because at the end of the day, some of those uncertainties and particularly the implications around inflation has been tightly managed across the world. But that being said, we are definitely in a reducing interest rate environment. And in fact, from a South African perspective, the debate around setting the inflation target closer to 3% with a 1% [ flex ] around those numbers really will encourage these numbers to get towards 8% from a South African context. Now I'm not sure when we last heard those sort of numbers in a South African context. The rates have been coming down from a U.K. perspective, but probably similar to South Africa, yes, we see it down by 1% year-on-year, but that rate of reduction is still relatively slow. And it's because of these things, we continuously have indicated that interest rate reductions will have a negative impact on our earnings in the short term. But as a business, we encourage and we really want to see a lower interest rate environment. And hopefully, what you will see in these results is the momentum that gets introduced, particularly in the non-interest revenue lines as we go through the detail. We look at exchange rates, the rand had a negative impact on our income statement as the average rates were a bit weaker in the period. And in fact, from a balance sheet perspective, we had a positive impact because the closing rates were a little bit stronger over the period. And off late, I think the rand has seen good support, particularly if you think that, that economy has now come off the gray list, and the fact that we've seen an upgrade from Standard & Poor's an upgrade that we hadn't seen for 16 years. And that, I think we should not underestimate. From a markets perspective, I draw your attention to the March '25 blip that you see on this schedule, and that's really where we opened this financial year with relatively weaker markets at the beginning. And since then, we've seen strong growth in markets, and you will see that in our AUM. But what we are also highly encouraged by is the record flows that we continue to see into our platforms, particularly in South Africa. Now looking at our earnings drivers. AUM for our wealth business in South Africa is up 13.4%, yes, 11.3% in neutral currency, and that's supported by net inflows for this first 6 months of ZAR 11.5 billion, a significant number. We also have acquired a few aspects and bolstered our Swiss platform, and that's added ZAR 5.2 billion of AUM and net inflows. Clients continue to manage their money. So from non-discretionary funds, we do continue to see some volatility in that. Rathbones reported GBP 113 billion of AUM, and that's really supported by stronger markets. They had net outflows. I think it was around about GBP 0.2 billion. But the business has been focused on the integration. And I think from our perspective, we see a business that has now really gone through the bulk of that and should shift to the front foot focused on markets and focused on flows. Net core loans grew by 8%, and I'll unpack that by geography on the right-hand side, and it's quite pleasing to see the green arrows around that particular wagon wheel. It's not a perfect market yet, and it remains a highly competitive market in a low-growth environment. And it's in this context that we produced these numbers. And that is also supported by the fact that we continue to grow our client pools, and we continue to penetrate markets deeper, but really holistically focused on what Fani has highlighted, which is to be pinpointed in terms of where we execute our efforts. Now, you reminded me of how this slide starts, so let's get it done. Adjusted operating profit was down 1.4% in the period, and let's look at what's driven that particular outcome. We see that net interest income has reduced by 2.1%. And again, when we speak of the short term, this is the impact that you will see in the 6-month measurement is that low interest rates in both South Africa and from a U.K. perspective has had a negative impact. However, in certain instances, we've managed to navigate that really supported by the fact that we continue to see book growth across our platforms, albeit at competitive margin levels as well as improving the cost of money across our businesses. Non-interest income has largely neutralized that drop in net interest income, and that has been supported by strong fees and good investment income over the period. And that's momentum that has come into the system as well as the fact that we've seen stronger advisory fees in this particular period. Our impairment charge has dropped from 42 basis points last year to about 35 basis points in this period. I would say the real outcome is a very similar position to what we saw at the end of March. Asset quality remaining robust across our businesses. We do have some experience specific impairments, but we don't see any trending in any of our portfolios that causes any particular concerns for us. I think as we introduce our strategies around, for example, corporate mid-market, we are very mindful of the fact that in that particular market, you may have higher levels of impairments supported by higher margins. And at the end of the day, we will talk about those probably next year when we unpack some of that detail. Operating cost is up 1.5%. So you may think that we've really, really cut our costs. But the reality is that we've -- when I unpack the detail around that, firstly, variable remuneration is lower in both geographies, and that's a function of determining the variable remuneration based on economic return, as well as the competitive environment that we operate in, but really following profitability in the different businesses itself. Fixed costs are actually running well ahead of inflation, and I'll get into some detail around that. And the way we look at fixed costs is what does it cost us to run the business as it stands. And those costs are running at around about 1% to 1.5% ahead of inflation as we absorb some of the costs that have come into the system in both geographies as well as other service costs and the fact that we've -- although tightly managed headcount, we still have increased headcount to service the business overall. And I'll unpack that for you in some detail. And the second area that drives costs is really the implementation of systems and processes that will support our growth initiatives. The third area is to continue to build resilience in our business and to continue to enhance and modernize our platforms. So those are the 3 areas that we continuously monitor across the business with the cost-to-income ratio at 51.9%. From a technology perspective, one day, Lyndon will present this, and I'll get over the nervousness. But at the end of the day, it comes back to what we said. We continue to modernize our platforms and a lot of that modernization is actually in the run rate. We've given you a range of our cost-to-income ratio of between 52% to 54%, and we remain confident that we will maintain the run rate around that. We have very low capitalized software and some may criticize that as the fact that we may be transitioning at a slower pace, and you will see that number pick up as we invest in our platforms, but again, not an overly material number on our balance sheet. Our overall technology spend at 20% of operating expenses, we think, is on par with the market. Yet we continue to invest in our platforms, modernize those and remain extremely mindful in an environment, where AI becomes a lot more relevant, the counterbalances around things like cyber and the rest of it become more acutely important for us to keep a handle on. So getting into the divisional reviews. From a geographic perspective, we have produced GBP 230 million from our U.K. business for this half. You will see that our contribution from Rathbones appears significantly up at 18.2%. And that is a function of the fact that the business has achieved synergies of around about GBP 60 million of run rate in this period. However, if I take you back to markets, we started off with a very weak first quarter, and that was reflected in lower revenue for that particular business in the 6 months that was reported at the end of June. However, we have increased our accrual on the business because although the total shares in issue, we have effectively around about a 41.25% interest, there's a portion of those shares that are held within Rathbones that are not yielding dividends and therefore, should not be included. And in fact, if you take our number of shares and multiply it [Technical Difficulty] operating EPS, we get to accrual rate of around about 43%. And we have some catch-up in this period, which has accounted for just under around about GBP 4 million in that number. The Specialist Bank, I will get into some detail. Net profit is really in line with the prior year. Group Investments represents the dividend on the sort of 10% stake that we hold on Ninety One. With Ninety One effectively combining with the Sanlam platforms, we expect that stake to drop to about 8.5% on the bigger platform itself. That business announced their results recently and have grown their dividends by 11% year-on-year. Group costs are down. As we indicated, it will reduce to some extent. And we think it's at levels, where that probably operates at. Looking at the Specialist Banking business, yes, we did see net interest income reduced by 5.8%. That's in the context of strong growth in terms of our lending books, but the decrease in interest rates in the short term will have a negative impact. When you look at the market, some of the banks have defended that well in this particular cycle because of the larger structural hedges that they have in play. But our mix of our deposit base, we are not in a position to have those levels at this point in -- at this particular position. Net interest -- non-interest revenue grew by 11.4% in the period, really underpinned by strong growth in fees, to some extent, lower opportunities from balance sheet management and other trading activities. And again, hopefully, you have seen that the introduction of momentum into the business in those lines as well as seeing higher listed advisory fees in the period. Our cost-to-income ratio is marginally up at 53.3% with fixed costs growing at 7.3%. As I've indicated, our run costs have probably increased by around about 4.2% to 4.3% and the differential is the cost that we are incurring as we continue to invest into our platforms. And looking at the credit loss ratio for this period at 56 basis points. We think it will remain in that sort of ballpark as we look forward to the year-end as we still think -- we still see the impact of interest rates that, that has on these higher levels. But as you can see from our staging, the book has remained relatively stable over the period, and I've clearly indicated that we see no trending to call out to you guys. I've really unpacked Rathbones from an earlier conversation, but these are some of the key numbers. And I think it's worth calling out that the business remains focused on delivering a trajectory towards a 30% operating margin by the end of 2027 financial year. Now moving on to South Africa. Here, we see total operating profit reducing to -- by 2.6% to ZAR 5.7 billion. And if I unpack the numbers, you can see where the sensitivity in that reduction is in group investments, and that's really a listed stock that has gone up and down in these markets. Overall, you will see that the group investments layer will continue to be less relevant, as we continue to realize add value that remain -- those remaining investments. The Wealth and Investment business grew by 2.1% and the South African Specialist Banking business by 2.6% with group costs remaining relatively steady. Unpacking the Specialist Bank, Here, we saw net interest income increase by 6.5% in the period, really a function of continuing to challenge the cost of money and the cost of deposits. And to some extent, we are starting to see good momentum in our corporate mid-market deposit gathering capability, which will continue to enhance the net interest margin in that particular platform as well as the increase in core loans and advances, but we had to absorb obviously lower interest rates on our net surplus cash positions that we hold. Non-interest revenue decreased by 2.1%, and that's really a factor of lower trading income and lower client flow income in this particular period, offset largely by higher fees for reasons that I've already effectively identified, and that is increased activity in our equity capital markets, advisory activity as well as in the private banking business itself. In this business, investment income has held up relatively strongly. The cost-to-income ratio is also slightly up at 47.4%, but well within the 49% to 52% that we indicate as the long-term sort of level that this business operates at. Here, operating costs grew by 10.2%. And from a run perspective, those costs have grown by about 5.8%, absorbing inflation, absorbing a weaker rand and the fact that you also do have some foreign denominated costs in this particular area. The differential, again, being supported by areas of focus on implementation of strategy. The credit loss ratio is at 12 basis points. So it remains relatively low, and that talks to the quality of the book and the experience of the underlying book. Again, if we look at the staging, the fact that we have seen some curing of Stage 3 assets in the current period, talking to the fact that the quality of the book remains very robust. We are very proud of the performance of the wealth business in South Africa. The business continues to have a very strong and high integration with the private banking business in South Africa, and that's really our private client offering in that market, distinctly positioned with our offshore capability and the fact that we are deeply servicing that particular market. I think the operating margin is slightly tighter, but still very healthy at 30.5%. Now this slide, we debated on whether we should pull it because there's a few red blocks on this slide. But hopefully, you can see at the bottom of the first 2 red blocks, they're actually green in rand, and that's really the impact of the slightly weaker exchange rate in the period. And group investments will continue to become less relevant, but with some volatility because we have a listed position in that. And from a U.K. perspective, underlying profit growing by 3% and in fact, closer to 9% when we factor in tax and the cost of AT1 instruments, as we've removed some of the double cost that was in the system last year, having redeemed some of those instruments. Return on equity and return on tangible equity remaining market comparably strong across the businesses. This is for one of the analysts that asked us to reconcile operating profit to adjusted earnings. And again, I've called out the factors that apply. So I'm not going to spend too much of time on it. And that's a summary of the numbers that we've spoken about, and you can see that our average allocated equity at GBP 5 billion. So that's me. One more slide, Fani, 2 more. Net asset value and tangible net asset value on the next slide, but Fani has gone through that detail. And the last point I'll talk about, Fani, it's now your time, is that capital has remained robust. We have adopted Basel 3.1 in South Africa, and we'll see those capital ratios come down a little bit in the next -- by about 2028, but we have maintained high levels of capital to absorb those. And from a PLC perspective, the ratios are extremely healthy. Now, it's time for you. Fani Titi: Thank you, Nish. You can see that Nishlan is playing some games with me. He says he's done. And with that said, he says he's not done. I hope in the presentation, you have taken away the sense of a business that is performing as we expected in these markets at a headline level, as Nishlan indicated, I'm okay to you. At that level, we have had a relatively strong NII performance, the effect of lower interest rates and continued investment in our business, as we indicated to support current revenues to support the modernization of our estate and to support the growth initiatives. So for us, we feel that we're building for the long term, and we're excited about that as a path going forward. So as we look forward to the full financial year, we will expect the performance in the second half to be generally in line with the first half performance that we have reported here. We still operate in a tale of 2 cities. The South African economy is in a slightly better state, as Nishlan may have indicated, growth forecasts are being revised upwards. We've seen a credit rating upgrade, albeit that we are still 2 notches below investment grade, but the direction is great. We have seen the removal of the country from FATF, the so-called grey list. And as we -- the country hosts the G20, we have seen a greater interest in intra-Africa trade and the commitment by the leaders to open borders and to facilitate more trade. So that economy is looking a little better. In the U.K., while the economy is still constrained, given some of the uncertainty around the fiscal space, and in fact, we are waiting with bated breath, the budget speech by Rachel Reeves next week, we still see a higher level of uncertainty. What we did obviously will be policies that support growth and investment and obviously, policies that do not punish those that are successful and are creators of wealth. That is what we would hope for, what we get is that obviously is what we're all waiting for. So given that macroeconomic picture in the 2 largest geographies, we do expect that ROE for the full year will be at around 13.7%, as I said, in line with the current ROE. SA will be at around 18.5%. We have a target range of 16% to 20% for SA. For the group, we have a target range of 13% to 17%. And for the U.K., we have -- we will expect ROTE to be around 13.6%. Nishlan has spoken quite extensively about costs. We do expect that despite the investments we're making, we should still be coming through in the 52% to 54% range. Credit loss ratio still to be within our through-the-cycle range of 25 to 45 basis points. Again, as Nishlan indicated, we would expect this to improve as rates continue to go down, client activity increases. So essentially, in a diversified model, where you have net interest headwinds, you would expect over time that client activity should improve and that your credit loss ratio equally should improve. And obviously, we have a significant wealth businesses that contribute noncapital-intensive revenue. So we're well positioned to manage the complex external environment. And in addition, we are committed to supporting our clients as they navigate the uncertainty that is in the economic environment. So in conclusion, we remain excited about how tightly our business is focused in the client segments that we target. We are excited about our continuing entrepreneurial culture, where we can flexibly serve our clients in a tight environment and our clients are resilient. They have scale and -- sorry, our client franchises are resilient and they have scale. So as we continue to invest and build, we would expect that we will see even better scale. I spoke about the strong generation of capital to continue to invest in our business and to continue to reward our shareholders with distributions. The presentation that will come shortly is a presentation about the future, about the investments we're making and about how we're expanding our overall franchise. As Jay Neale has said last night when we had a leadership meeting, the business is focused on what we can build. The external environment is where it is. We have to back ourselves to execute on the opportunities that we have ahead of us. On that note, that's the presentation. We're happy to take questions. I think we will start off here in London. Is that the way we do with [ Cue ]? Cue has been conducting how we go about. So I have to look at the employee structure. Any question from London? Fani Titi: Okay. It seems like we don't have a question here. So we'll go to Johannesburg, where Cumesh is holding fort. Cumesh has been wining and dining precedents and to the high heels. So Cumesh, if you can be with [ mortals ] like us for about 40 minutes or so. Any questions from Joburg? Cumeshan Moodliar: Thanks, Fani. I'm just checking in the Johannesburg room if there are any questions. No questions from the room in Johannesburg. Fani Titi: Thanks, Cumesh. I am tempted to give a chance in London again, but Stephen advised me some time ago, don't over offer opportunities for questions. So in respect to the elders, I will bring this particular presentation to a close. Online. Okay. No questions in London, though. So let's see what we have online before we close. [ Don ], do we have anything online? Unknown Executive: Fani, we have a few questions online. The first question is from Radebe Sipamla from Mergence Investment Managers. Could you please comment on the reports this week that Investec would be partnering with Pepkor to help it with launching banking services across its store footprint? Is the SA retail banking strategy pivoting towards being more mass focused? Fani Titi: I have tried throughout this presentation to indicate that we remain a niche player. We have select client segments that we serve. And as we go into the next presentation, you will see why that is the case that we can win in the corporate mid-market because we are not trying to be everything to everyone. So in short, we do not have any agreement executed with anyone. And we will not comment on any of our clients and any discussions that we may or may not have as we go forward. Needless to say, inclusion, financial inclusion within the South African context is something that a lot of players are worried about. And we continue to see what role we can play in that market, but nothing of significance. I understand that the client you're talking about has also said categorically that they are not in any such bank partnership. Unknown Executive: The next question is from Baron Nkomo from JPMorgan. Customer deposits increased by 3.6% annualized. Please discuss your funding strategy, both in South Africa and the U.K. going forward, especially in light of the changing interest rate environment. Fani Titi: Okay. I'm going to ask Cumesh and Ruth. They've had such an easy ride today, so they're going to have to answer. Let's just say it quickly this way. One of the critical reasons why we want to go into the corporate mid-market is also to expand our deposit franchise and have access to transactional deposits. We have been gathering retail deposits at a significant pace. And within the South African environment, we have been improving our liability mix, reducing reliance on corporate deposits and obviously getting a much more optimal funding base. That's why as much as interest rates have decreased there, if you do more work on our margin, you will see that we've been able to defend some of that margin. And in the U.K., we have a wide distribution network in terms of how we access deposits. But let me leave it with Ruth first and then Cumesh next. Ruth Leas: Good morning, everyone. Thanks very much, Fani. We are always looking to optimize our overall cost of funding. You will have seen, if you look through the analyst book this morning that our loan-to-deposit ratio looks very healthy at around 81%. In the recent period, we have repaid our TFSME, and that's why you see the level of deposits where it is. We are seeing the overall cost of deposits reducing as interest rates are coming down, and we'll constantly be looking for opportunities to reduce our overall cost of funds. Very comfortable with where we positioned our funding, continue to keep our sources well diversified in multiple different markets, and the Investec brand has very good traction in the U.K. deposit market. Fani Titi: Thanks, Ruth. Cumeshan Moodliar: Thanks, Fani . I think you -- just in your opening, you covered a fair bit of the deposit strategy in South Africa and funding strategy in South Africa. I think safe to state in the period under review, we were able to grow our non-wholesale deposits by close to 10%, and that's part of a very clear funding strategy to continue to grow retail deposits and continually balance that against wholesale deposits. So I think our funding channels, particularly in our private bank and other areas, including our corporate cash management channels, have all been quite successful in raising retail deposits. We're excited about what can be achieved in the corporate mid-market over a period of time, and we've already started to see how that business is getting on to the flywheel of deposit raising. So a very clear strategy in South Africa. The team have been working on it extensively over the period to continue to ensure that we have the right balance of funding mix to support the growth of the business going forward. Fani Titi: Thanks, Cumesh. I know that about a year or 2 ago, some people were worried that our overall deposits looked like they were going down in SA, but it was really the wholesale side, and it was part of our strategy. So thank you. And may you continue to be successful there. Unknown Executive: A follow-up question from Baron Nkomo of JPMorgan. The cost-to-income ratio increase also reflects investment into people and technology. Please elaborate on the nature of these investments and how quickly you expect them to translate to revenue and efficiency gains. Fani Titi: The question is probably not as accurate as it has been stated. If you look at the full year cost-to-income ratio to FY '25, our cost-to-income ratio was 52.6%. So the current 51.9% is actually in line and in fact, better. Of course, relative to the September number last year, which was about 50.8%. If memory says well, it looks like it has increased. So we're very comfortable with where that number is and our efforts to continue to run efficiently. Nishlan tried to explain the 3 areas of cost, one being the normal run, where we are just over inflation and then the investment in the modernization programs. We would expect that in the modernization program, quite a significant bulk of those investments should be done in the next 3 years or so. And the other will be probably 2 to 3 years thereafter. So the benefits will obviously come as you implement those investments and you complete them. And in some cases, you then do not run a parallel infrastructure. And obviously, with respect to the investment in the mid-market, we've given you a sense, and we will unpack it of what levels of revenue we may expect to achieve by 2030. And in the case of the U.K. corporate mid-market, because South Africa is a number of years ahead in terms of implementation, we will give you both a '30 view, but an FY '32 view just to give you a sense of the returns we hope to get from these investments. We run a highly disciplined process of investment, well governed by both the executive and the Board reviews that on an ongoing basis. And as Nishlan indicated, we have a very low level of capitalization on the balance sheet in terms of technology. I think the number is GBP 8.6 million or so. And as we go forward, given the investment, that number may increase. And again, in Nishlan's words, non-materially from the perspective of the overall balance sheet. Next, [ Donald ]? Unknown Executive: Thanks, Fani. The next question is from Chris Steward of Ninety One. Can you give an update on the cleanup of the South African group investments portfolio, please? Fani Titi: We're really at the tail end of that process. As Nishlan indicated, that number is getting to be non-material as we go forward. We have 2 or 3 investments. The largest investment you will know, Chris, and we continue to work with our core shareholder there to find ways in which we could achieve our goals. They are the smaller investments, some of them are in process, but we are not duly concerned about it. It's really something that is almost out of the system. That's why Nishlan says that number is getting smaller and smaller and largely irrelevant. Chris, you must be happy about that table Nishlan gave you, which has the cost of AT1. So Nishlan was referring to Chris. So now that he's online, I can talk to him. Unknown Executive: Thanks, Fani. The next question is from Harry Botha from Bank of America. Can you provide more color on the reduction in your 2026 U.K. ROTE guidance from 14% to 13.6%. Fani Titi: We've indicated that the environment continues to be constrained. I talked about a tale of 2 cities, where from a South African perspective, the sentiment in the economy is better, some upward revisions in the expected growth over the medium term. Clearly, the U.K., there is still a higher level of uncertainty, even though the opportunity for us remains quite significant. We've tried to explain the trade-off between net interest income impact as rates come down and the activity that we see, the increased activity that we see amongst our clients and over time, as those rates go down, an improvement in the credit loss ratio. So that is the interplay between those 2. We are not concerned about what in our view is a marginal decrease, about 2% or so percent in that ROTE. And from a market context, we remain very competitive, as Nishlan said. Unknown Executive: Thank you, Fani. We have a follow-up question from Harry Botha. Can you provide detail on the outlook for the South African fee and commission income? Fani Titi: Cumesh, do you want to bet on that? I mean, obviously, we're going to try to wrap this one up in the next 5 or so minutes at most because we do have a mid-market -- corporate mid-market presentation. Cumesh? Cumeshan Moodliar: Thanks, Fani. I think if we look at the period ahead, we see equity markets positive movement in equity markets. We've also seen higher levels of IPOs and M&A activity. So all things being equal, we hope to see an upward trend in terms of fee and income growth in the SA context, together with some increased trading activity. Fani Titi: We have a strongly performing wealth business, 13.4% increase in funds under management, [ ZAR 11.5 ] billion net inflows in rands. So our outlook on [ thus score ] is positive. Thanks, Cumesh. Shall we take just one last -- how many more questions do we have? Unknown Executive: We have one last question, Fani. The last question is from Jarred Houston of All Weather Fani Titi: [ Hoping you have many whole lot ] of questions there. Unknown Executive: He asks, why has the progress on the share buyback program been slow? Fani Titi: Well, we've executed about half of it. We're comfortable with the pace, and we will continue to execute as necessary. When we made the commitment, we said over the next 12 months. So achieved about closer to half at half year. So that's okay. Unknown Executive: Thank you, Fani. At this time, there are no further questions. Fani Titi: Thanks, Don and Cumesh. And to everyone that's attended, thank you for your attention. And, in particular to the analysts, thank you for your interest. As usual, we are available for more in-depth interaction on the results to provide more depth and color on the different aspects of it. We're going to now take how much time, Cue? About 10 minutes. If we could be back at the top of the hour. So in London, that will be 10:00 and in South Africa, that will be 12:00, and we're really excited to show you what we are building on the corporate mid-market side. Thank you very much and see you in about 10 minutes. [Break] Well, good morning again. And it's always -- it's noon in South Africa actually. It's always lovely to see the Zebra Gallup. And it is really appropriate for this next stage of the presentation because we are front-footed, excited about growth and energized to execute. I'm talking to the slide on the left, Cue just to make sure that I've got my orientation right. Just to start off, as you know, we are on a journey of disciplined growth, and we will cover but one element of the journey, and we will give you a sense of how that plays into the overall strategic path over the next 5 years or so. I will be joined on the stage by Nick Riley, our Head of Corporate Mid-market in SA; and [ Andy ]. I don't know how it happened that we all have the same ties, but let that be. So I'll give a brief overview of why this segment is both relevant and important for our journey as we go forward. And starting off, I will not repeat our strategic positioning other than to say that the whole organization is energized behind the objective of growth. And this is one element of that story. We started this journey in 2019, and we had a CMD presentation, if you remember, in early 2019, where we said to the market that we would like to achieve at least a 200 basis point improvement in the performance of the business as measured by ROE; and the key planks in that plan were that we would look at capital allocation particularly strictly with the intention of generating returns above the cost of capital. So as a consequence, we exited a number of businesses either because our risk appetite was a bit narrower or because we could not gain scale in those businesses. And while the restructure was an important part of what we did, we also invested in our U.K. Private Banking proposition. You may remember that at that time, we were losing about GBP 30 million a year on that proposition. And we decided to make an investment, and we have been able to execute on that growth plan. So as we engage on another fresh investment into an area, we are encouraged by the past successes over the last number of years. So we embark on this process with a lot of confidence about what the business can achieve. In May, we laid out a strategic path for the next 5 years or so. Just to go over it quickly without too much talk on it: The first idea was that we wanted to grow our existing client franchises. So we sought to deepen our franchises. We sought to scale them a lot more. And of the 200 basis points that we sought to gain in the upliftment of our ROEs, half of that would come from the scale and the leverage coming out of our franchises. The second area of work was the corporate mid-market, and we will talk about that later today. So I wouldn't say much. The third was the expansion of our private clients capability. We have an international franchise. We have, as we discussed earlier today, a leading franchise in South Africa, which is international. We have a capability in Switzerland and so on and so forth. And we have a strategic positioning in Rathbones post the combination of Investec growth and investment in Rathbones to gain scale and capability. So in May, we will give you a sense of how we will go about that. And then we also said that we will continue to exercise discipline in how we go about our business. Capital allocation would be important. And one plank that was really important at the time, we said we would like to increase the proportion of noninterest revenue and in particular, wealth-related revenue. And we gave you a number of about 35%, and we were specific that to achieve that objective, we will definitely consider inorganic growth. And the last element of that strategy was that we would intensify our efforts around creating a single organization that is client-centric, where we deliver for our clients holistically and our operating platforms will be such that we can support that single organization that is client-centric. We've talked quite a lot about the investment we are making in these platforms. Just to move forward, why would we go into this space? And some people would say it's late in the day, some would say it's a "highly competed for" a segment of the market. The reality is that we already have a significant presence in the corporate mid-market. Nick will go through the work we've done over the last number of years in South Africa, the level of revenues we are already generating about ZAR 1.7-or-so billion and the number of clients we have there. So this is an expansion of our capabilities to more fuller service -- our clients in the mode of One Investec. In the U.K., as you know, we've built a pretty good corporate mid-market capability, and we do a lot with our clients in that space, but we do not offer transactional banking and the fullness of the offerings that we have. So if you look at Investec and where we are, a leading Private Clients business, as we've spoken about, equally a leading Corporate and Investment Banking business in the markets that we operate in, and we already have a number of clients in the corporate mid-market. And we think it is time for us to get into this sector and to gain market shares that would appear small relative to others, but they would be consistent with our approach of niche markets and high levels of service and high-value proposition. So it's really important to understand that we're not trying to go very wide and deep into the market. We will still follow our DNA of select client segments, high-value relationships and deep commitments and partnering of clients. So how do we think we will go about in this environment? As I said, we will be bringing a niche-style operation, what we call a private bank service style to the corporate mid-market. And when we went down the journey of a private bank 5, 6 years ago in the current form, people said, but what would you really do that is different in terms of the market. And we have proven that our targeting was quite specific that our service model was quite specific as well, and we've been able to build a fantastic business with 8,000 to 9,000 clients, and we would be looking to get that to about 18,000 clients in the next 5 years. So we know how to build niche businesses. We know how to work with a private bank-style service, and we're bringing this to -- this particular segment of the market. As indicated earlier, the idea is to close the gaps in our current offering in the mid-market. In South Africa, we already have a significant presence and track record. In the U.K., as part of the group strategy, we are starting that journey. But given the advantages we have already, we are very excited about that opportunity. One of the advantages of coming in at this time, firstly, we are leveraging off our existing brand capability, our existing operating platform, but we can flexibly tailor integration of our platforms with those of our clients because technology is much more flexible. You don't have to build the way that legacy systems have been built. So for instance, API enablement in terms of being able to do something that's bespoke to a client. And because this is the approach we're taking, we are not looking at hundreds of thousands of clients or millions of clients, because you can't offer this level of customization and flexibility if you go mass market. In South Africa, we are looking at about 10,000 clients in this horizon. In the U.K., we are looking at about 1,000 clients. You can't do this if you are focusing on the broader market. And this is in our DNA. This is how we operate. I remember, I had a chat with a friend of mine who used to run a large bank in South Africa with more than 20 million clients. And he said to me, I cannot understand how of the 100,000 clients and the few corporate lines you have, you have built a business of the scale you have, the profitability that you have. But that's the DNA of being a niche operator with high levels of service with a level of flexibility to tailor solutions for clients. Lastly, we are going to be naturally evolving what we already have in terms of our franchises. We hear every day that those clients, private clients who have businesses say to us, why wouldn't you develop a capability to services because we love our experience with you. So this is a natural extension of the client franchises that we already have. In the mid-market, as we said, in the U.K., we offer a number of products from risk management-type products to lending products, but we do not have that glue that a transactional banking, full service mid-market corporate banking capability would offer. It is time for us to get in and build this business. So why this particular market? Obviously, a high-growth segment of the market and a really important contributor to economic growth in the markets in which we operate. We think we have the opportunity to build and scale a business that will contribute meaningfully to our business. The risk-adjusted returns in this sector of the market are quite attractive. In South Africa, the operators there are generating in excess of 30% ROE in this segment. In the U.K., I think the average is around 20% or so. And this represents for us a significant opportunity. We spoke earlier today about our efforts to diversify our deposit book and our funding base. This business is really quite important if you look at the performance of banking businesses in being able to access transactional operational deposits. We already have in South Africa, a significant deposit base. We will seek to grow that as we go forward. As Cumesh said earlier today, we are trying to diversify away from wholesale or too much reliance on wholesale deposits. So this is part of that overall strategy in building a deeper, much more differentiated and much more diversified deposit franchise. I've already alluded to the fact that technology makes it possible for us to springboard and to serve our clients flexibly. We probably wouldn't have been able to do this 5, 7 years ago because we were building other parts of our business. And I do not think that our operating platforms would have been amenable enough for us to put this additional capability onto it. So technology will give us an ability to move forward faster. As indicated already, we believe this is smack bang in the middle of who we are as Investec. So the strategic fit is really incredible. On this slide, and I won't read what our clients have said, the high-touch service model is really exceptional. And if you ever had the opportunity to sit with our private clients and for them to tell you why they choose to have us as their primary bank. And some of the corporate clients, we have equally do say so. So we'll take advantage of technology, and we will have the platforms that are competitive. But what will always differentiate our offering is that at the end of the line, you can talk to a human being, a very qualified human being who can solve for your problems. We get the stories about clients having issues at midnight in New York, and they can actually get their issues solved by calling into our client support center. This model works. We have seen it work over a long period of time. We're excited to bring it to the corporate mid-market. As I say, a number of the owners of these businesses are already our clients, directors of some of these businesses are already our clients on the private side, and we are excited to extend our service to them. How do we see the client value proposition? I mean, obviously, we're looking at -- we're already doing a lot of funding for investment in working capital that we do today. We will be able to do this with a level of focus and dedication that allows us to do even more for our clients. As indicated earlier, we have treasury risk solutions that we offer to our clients, whether you think about cash management, you're thinking about ForEx management that we do today. So we'll be able to help our clients optimize their returns and manage their risks by working with us in a partnership-type model. And that really is what is different about Investec. We are not a transactional bank in the sense of trying to do a deal and move on to try to do another one. We walked the journey. I spoke in the morning about our model being that of partnering with clients on their personal and private journeys. That's why for those directors of businesses, when we say to them, we now can offer you a full-service transactional banking, it makes sense for them to bring those business for those owners for whom we are already doing, for instance, wealth management, and we now have this capability that we can bring to their businesses. It's a fantastic market opportunity for us. So just expanding what we do for clients and going into the market with more services. Our clients are generally very active. So for us, we will be able to continue to advise them, but also to provide them funding to act on opportunities. In that space, being nimble, being flexible and being able to make a quick decision is actually more important than the cost of money, because our clients can take advantage of opportunities. We'll be able to do that in a more holistic way for the corporate mid-market, and we've been building over a period of time. Those who know our business well in South Africa will know that over the last number of years, we've concentrated on the payment space, making sure that we work both with regulators and with others to make payments a lot more easier and a lot more seamless. And to go into this part of the market, you ought to be able to handle a level of volume from a payments perspective for your clients, and we have been investing in that capability. And I've talked about the personalized engagement that we offer. And there's no doubt in our minds, is a huge distinguishing feature of our offering. So let's look at the growth and the proposition we are looking for in perspective. Firstly, we are not going outside of our term lines. We are still targeting fairly -- in a fairly limited manner. We're still looking to select clients carefully. The numbers we mentioned, 1,000 clients in the U.K. corporate mid-market, about 10,000 SA. These are not crazy numbers, but they present for us an executable opportunity. And what we are going to do with these clients is deeply ingrained in our DNA. So we know our people can execute on the proposition. We've already invested in the U.K. in the private bank over the last 5 years and the successes they have given us the confidence that we can embark on this journey and be successful at it. So the targets we have set are really achievable. Serco 8% market share in SA. We're already at 3,000 clients. You get the next [ 7, ] it's only 5% more market share. We are very confident we can get there. Within the U.K. context, as equally said, tiny market share, but we should be able to offer high-value services; and as a consequence, do better from it. So how does this fit into the overall perspective of a business that continues to improve its return profile? As I said earlier today, returns are an outcome. Our focus as a management team is on building capabilities, supporting our clients, being flexible around their needs. And if we do that right, the returns should follow very logically. So on the -- on this particular bridge, I've indicated that the leveraging and scaling up of our core franchises will contribute a significant portion to the returns uplift. We already are looking -- are working on capital optimization. A shareholder or an analyst asked us why we are not a bit quicker in the share buyback, but we are on course and on program. So we're comfortable about that. And we will continue to manage our capital dynamically. If as an example, we get an opportunity to acquire a business, that means that we may have then to be flexible in how we look at capital allocation. It will be dynamic, but supporting of the overall strategic intent that I talked about yesterday. So the South African piece of this of this strategy will contribute significantly in this time period. The U.K. piece by 2030 will just be gaining traction. So we expect that piece to contribute more significantly beyond the FY '30 horizon. We'll give you a sense of what we think the revenues will be by FY '30 from our U.K. business, but this is really exciting if you look at it long term. As I said about this earlier, because we've tested the model in SA, and we are successful, and we've been investing in these platforms and we have the benefit of latest technology, we think our U.K. rollout will, in fact, benefit from all of those. So that's how we will be building over the next number of years. To give us a bit more of a sense of how we will do this in each of the 2 geographies. I'm now going to call the top youngsters to present, starting off with Nick Riley. Nick, you're ready? Thank you. Nicholas P. Riley: Okay. Let's make sure we get these slides right. Thanks, Fani. Certainly an exciting opportunity for us. It's been lots of fun getting stuck into the detail over the last 7 weeks since I stepped into the saddle. The next few slides will unpack the corporate mid-market opportunity and strategy for South Africa. So what is this client segment? Juristic entities with a turnover between ZAR 30 million and ZAR 1.5 billion are banked by the Business and Commercial Banking divisions of the incumbents in South Africa. This client segment is extremely profitable and a high ROE segment for the banks. Whilst it's highly competitive, we think it remains ripe for disruption. There are approximately 3.5 million juristic entities in South Africa with a turnover between ZAR 0 billion and ZAR 1.5 billion. Our definition of the corporate mid-market incorporates unlisted juristic entities. Now we're still on that slide, [ Donnie. ] All right. I'm now looking -- I'm making the same mistake you made. Look left, not right. So our definition of the corporate mid-market incorporates unlisted juristic entities with a turnover between ZAR 30 million and ZAR 1.5 billion. This takes us out of the SMME segment, which is experiencing fierce competition by the incumbents and new entrants to the market. It's a deep segment, ZAR 79 billion in revenue, ZAR 620 billion of loans and ZAR 405 billion of operational deposits. Our market share is between 0.5% and 5% in terms of these measures and presents significant opportunity for growth. Investec believes its niche are companies with a turnover between ZAR 100 million and ZAR 1.5 billion, representing an opportunity set of about 220,000 clients. We would consider banking clients below the ZAR 100 million threshold where we foresee the ability to grow and support these clients. We're underrepresented in this growing market and are well positioned to gain market share. We're not starting from scratch. We have 3,000 existing high-value relationship-led clients. We already offer lending, certain transactional banking capability, savings product, risk management product and advisory service to this existing client base. Historically, we've serviced these clients from different divisions within the Investec Group, limiting the full enablement of the bespoke service model that we offer. We now have one business, one leadership team with full accountability and responsibility to deliver the strategy with laser-focused execution. We are targeting 10,000 clients by 2030. So in terms of the numbers of the client set of 220,000; 5%. The 8% Fani referred to was loan market share by 2030. So to reach our 10,000 clients, we need to acquire another 7,000. So whilst we're materially increasing our base from 3,000, the target number remains at a level which allows us to deliver the Investec bespoke service model. Our competitor banks have between 20,000 and 50,000 clients, which makes it difficult for them to replicate the high-touch tech-enabled Investec client experience, way easier for us to create a comparable product set, way more difficult for them to compete with our service level. The upside to this 10,000 clients is the client acquisition opportunities that reside within the bank, where either we bank the individual and not their business, which Fani has spoken to, or existing clients have told us that they want to do more with us when we've got a comparable product offering. They tell us, if you can do for me what you do for my personal, I'll move my business banking tomorrow. We see these opportunities as low-hanging fruit. So what does a typical client look like within the existing base of 3,000? They have a turnover greater than ZAR 100 million and have either 1 or 2 products with Investec. We see this now as a significant opportunity to further cross-sell to these 3,000 clients, increasing the average product from 1 or 2 to 4. I'll illustrate what this trajectory looks like shortly in an example. Our existing lending clients are concentrated within sectors that are working capital or asset heavy. We'll now look to broaden that sector focus as we scale, leveraging the sector specializations, intellectual property and network within our Corporate and Investment Bank. Here's a short example of what the trajectory looks like. We first engaged this client in 2018. They're a provider of infrastructure to the ICT sector. We provided a term and trade facility of ZAR 24 million to unlock growth out of their working capital. Fast forward 7 years, they've grown their turnover by 6. We've increased our facilities by a factor of 5, and we now have 5 products across 3 juristic entities. Investec funded the vertical integration into a transport business. We funded the acquisition of the owner-occupied property. Our current funding consists of trade, term and overdraft and access facility. And we provide transactional banking through underlying transactions, corporate credit cards and FX facilities. We've recently introduced our leveraged finance team with the opportunity to introduce a new investor. This is what that trajectory looks like. This is what we will aim to do in terms of increasing the products across that client set. So what is the execution of the corporate mid-market strategy look like in terms of numbers? We've already got ZAR 1.7 billion across the existing client base. This is not a nascent business. The execution of the strategy is expected to more than double our revenue from ZAR 1.7 billion to ZAR 3.8 billion. Similarly, more than doubling our profit, representing compound growth between 18% to 20% over this 5-year period to 2030. We expect to achieve this through doubling our loan books, capturing operational deposits to increase the existing base by a factor of 5 and a significant increase in capital-light transaction banking fees. Whilst the execution of the strategy will require further investment, we have the benefit that these are existing businesses with existing infrastructure and existing platforms. This additional expenditure will not impact on the Group's target cost-to-income ratio range. So the more than doubling in profitability and naturally higher ROE from this business segment is expected to deliver meaningfully to the 200-basis point increase in the Group ROE that Fani mentioned earlier. So where will we focus and where will our priorities be to successfully execute on the strategy? The lending, savings, risk management product and advisory services, which form a part of this product suite, as reflected in the earlier wagon wheel are all mature platforms, already servicing the existing clients -- our base of 3,000 clients. There will be further investment in transactional banking feature rollout, modernization of the tech stack, automation of client touch points, including KYC and onboarding, API-led integration over the next 12 to 18 months. These enhancements will assist with a simpler and friction-light move of clients from some of our incumbents. The additional investment will, for the first time, enable a holistic transactional product set comparable to our competitors. It creates the opportunity to access a subset of the market that we have not been active in before. So with a level playing field in terms of product, we can now really differentiate our bespoke service model, offering corporate mid-market clients access to our world-class client support center, deep specializations and relationship-driven and empowered bankers. So let's now bring it all together. This is a natural evolution for Investec. We're building off an established base with a history of successfully servicing selected client segments in a highly competitive market. In a segment traditionally underserved, we will, for the first time, be able to offer the full product capability with our distinctive and differentiated service. Always Human, enabled by our culture and values. The experience is effortless and professional; the expertise is specialist, value-adding and proactive; and the attitude, passionate and can do. To win, we only need 5% market share in numbers. And within the next 5 years, this will lead to a tripling of our client base, increased entrenchment with 4 products per client, a more than doubling of profitability with a CAGR of 18% to 20% and a meaningful contribution to the 200-basis point enhancement of ROE. This new division that will be delivering on the strategy will be known as Investec Commercial Banking. Thank you. Andy, over to you. Unknown Executive: Okay. Good morning, everyone, and good afternoon for those of you in South Africa. Fani and Nick have both spoken about the mid-market plans being a natural evolution. Nick and the team have clearly got a head start on us here in the U.K. But I've been amazed by the energy and enthusiasm that we've experienced when talking about this proposition to our clients and everyone else actually that's in the street that we get to talk about. Lots of our existing clients are really keen to get involved as soon as possible. In fact, I was recently at a lunch with some clients I know really well, and they were pushing me seriously hard on how quickly we can get this moving so they can come and join us. In a very short space of time, we've attracted some incredibly experienced individuals from existing mid-market banks in the U.K. And we've got others that are already keen to join. And let's not forget that's in addition to the really high-quality people who have already been helping us build these franchises over time. Everyone wants to be part of building this Corporate Banking business that has a private banking feel. We're excited and confident to grow something that's truly unique in the U.K. for the mid-market clients. And I'm going to spend a few minutes talking about the U.K. proposition more specifically, and in particular: Why we like the market? What we're focused on building? And how we're going to deliver that at pace? I've got the slides, [ fine. ] There are around 80,000 businesses in the U.K. with a turnover of between GBP 5 million and GBP 250 million. We believe 60,000 of those play to our existing strengths and sector expertise. So that's where we're going to focus. Banking in this segment is dominated by the big 5 banks, but there's no significant differentiation between them. We're going to deliver a premium out of the ordinary alternative that simply isn't available elsewhere. We have a distinctive brand with a great reputation. Clients already choose us due to our high service standards. And we have an exceptional client relationships and deep expertise, regularly winning awards for client experience in this mid-market. So let's look at the next slide for what we have today and what we need to build. If you look at the green and orange dots, you'll see that we already have one of the most comprehensive and compelling propositions in the mid-market. We have the vast majority of lending products, a strong treasury and risk offering, and we're one of the few banks in the mid-market with advisory and equity teams. And of course, we have our private banking expertise. The key ingredients that we need to add are scalable transactional banking and best-in-class relationship managers who are going to pull all of this together for us. So let's look at some of the time lines and the value of what we think we can deliver. The big banks in the U.K. make around GBP 6.5 billion of profit per annum in this space. And as Fani said, that's made at an average of about a 20% return on equity. So strategically, this is a very key driver for us for accretive growth as we move forward. Working backwards from right to left, by 2030, our ambition is to be delivering GBP 80 million to GBP 100 million worth of revenue from these 1,000 clients. Between now and then, which is the middle column, we will have a full proposition live by quarter 1, '27, a full relationship banking team in place by '28, and we expect to break even by '29. Our current focus is on product development, relationship management and operations and technology. And on the next slide, I'm just going to give a flavor of a longer-term view because this is just the start of what we can achieve. If you look at the left-hand side of the slide, we already have award-winning franchises in the U.K., be that the 60,000 clients we have in our asset finance businesses or the corporate client base with treasury, FX, risk solutions, direct and specialist lending. We are building relationship banking in the middle of this to enhance our existing clients' offerings and also allow RMs to confidently attract new clients. By 2032, we aim to have 40 to 50 relationship managers in the market, delivering a revenue of about GBP 175 million. That means we'll have 2,000 clients who, on average, will hold 3 to 4 products with us. And this will make a material contribution to the growth and returns of our U.K. bank. To deliver this full-service relationship banking, we need to build scalable transactional banking, an operational platform that's intuitive and gives great client experience. And for that, we're clearly leveraging, as others have said, the good work that's taken place so far in our infrastructure. We're in the process of recruiting a market-leading relationship team to offer the whole of Investec to our clients. Our service-led approach is to provide a private banking experience in the mid-market and the differentiation will be operations and technology that allows RMs to spend their time with clients, not spending 70% of their time as many do today on admin and other queries that come through. Relationship managers need time to understand their clients properly. We want them to have that time to listen and proactively help those clients to grow. And we want them to offer the full breadth of capability across Investec. For day-to-day client needs, our clients are going to have access to our market-leading client support center, phones answered quickly by people who will do their best to fulfill their needs there and then without further handoffs. We're on track for putting our relationship managers, our first relationship managers into the market in quarter 1 of '27, but we may well bring that forward to H2 of '26. We're going to test our capability with a small number of pilot clients as we progress to full rollout. So let's move on to delivery. Our approach to delivering at pace is guided by a few key principles. Product and service development will be client-led, driven by insight and testing. We will leverage lots of our existing capabilities. We will adopt the latest tools, including AI, wherever possible. And clearly, building the right team is critical. I'm just going to take a minute to talk about the team that we're building. We're bringing in new expertise where required. And let's not forget, we've already got lots in-house, but we're bringing in people who have been there, seen it and done it in the U.K. mid-market for the activities that are going to be new for us. In a very short space of time, we've attracted some incredibly experienced individuals, and we continue to build out this team. Everyone wants to be part of building this unique Corporate Banking business that has a private banking feel. The focus, the energy and the expertise is incredible to see. So let me just summarize. In the U.K., we believe we have a clear opportunity for Investec to differentiate in the U.K. mid-market. It's not just what we do. It's about how we do it. We create real expertise and trust, and that drives exceptional client relationships. This is a natural evolution, as everyone has said, for our U.K. bank to support the growth of mid-market clients as well as our own at accretive returns. We already have a compelling mid-market proposition. Investment over the next 2 years will significantly enhance this [ for ] transactional banking, relationship management and a modernized digital platform. Increased client acquisition and deeper client relationships would increase our share of wallet to drive income growth and return on equity. We're now laser-focused on the execution to build this, and we have a unique proposition for our mid-market clients. I'm now going to pass back to Fani. Fani Titi: Thank you, Andy. Thank you, Nick. You can see we do have some top youngsters in our team. Ruth, thank you for supporting the development of this capability in this market. The opportunity is real. The execution will require the level of focus that Andy spoke about. So from the perspective, as I said, of the uplift in our returns, the U.K. piece is the blue sky because we haven't factored that much into our 5-year horizon as excited as we are about that opportunity. The U.K. -- sorry, the South African opportunity is "in the now" because we've been building there for some time. It's about the flywheel momentum that we are now building in that business, more than doubling in a number of the metrics that Nick spoke to. It's important, again, to say that we've given an outlook of 52% to 54% cost-to-income ratio despite the level of investments that we are making in these new initiatives. We remain comfortable that we've been prudent before in getting some of the investments into the normal run. So while we are investing more, we are unlikely to significantly move upwards our cost-to-income ratio. And this is why this particular capability makes sense for us because it leverages not only of the DNA of the business, but also of the investments that have been made and expanding relationships that we already have with our clients. So we conclude again by giving you this simple slide about our right to win, a private client banking experience for a select number of clients in the market and expansion and evolution of the relationships that we already have and that we have the experience to implement a growth strategy. We have the people to do this. We have the culture that can support this nimble high-touch offering to clients in the corporate market. We've got the capital and the liquidity to stand behind the efforts that we have indicated. Excited about this Zebra that is galloping forward. In May, we'll give you a view into our private clients strategy. And if I'm excited today, I'm even now just running towards May because we would love to show you what we are doing. But the execution challenge is significant. We are not underestimating that at all, but we are a team focused on building enduring value for our clients. So thank you. We'll take some questions. How do we do the questions in this room first? Okay, Cue. Thank you. Any questions from the room? Okay. No questions. We'll go to Cumesh in SA. I seem to see how this pattern is going to go. We're going to have questions from the online line. Cumesh, any questions from SA? Cumeshan Moodliar: We're just checking Fani. [ Donovan, ] are there any questions online? Okay. There's some online. I'm just going to check the room first. Fani, are there any -- if there are any questions in the room? No questions in the room. Donovan, can we go to the online questions? Unknown Executive: Sure. Our first question is from Kevin Harding from Investec Investment Management. For the South African Corporate Mid-market business, what is the current cost-to-income ratio for that business? And how are costs expected to grow relative to revenue growth? The current target assumes revenue grows at about 17.5% to 2030. Fani Titi: Nick, do you want to -- the youngsters have to work for their lunch. Nicholas P. Riley: And I'm hungry. Kev, so the trajectory will be slightly different over the 5-year period. So the next 2 years, we'll complete the expenditure, as we've said, in line with the broader cost-to-income ratio, and that's new people, that's technology, systems and processes, which will then give us the platform for the full transactional banking capability. That's when we would look to ramp up on the operational deposits. So towards the end of 2030, we'd expect that cost-to-income ratio to be in the high-40s, sub-50%. As it stands now, it's in line with our existing ratios. Fani Titi: Thanks, Nick. Nick has run a listed company before. So I think he has, what shall we call it, the agility to field the bouncers as they come. Donnie? Unknown Executive: Thanks, Fani. The next question is from Harry Botha from Bank of America. In South Africa, what is your sense of the number of private banking customers that can provide links to mid-market corporate clients? How sticky are clients with South African incumbents? And is there a significant customer acquisition cost as you help customers switch over to Investec systems? Fani Titi: I think both of the youngsters should come on the stage so that you don't have to be going up and down. Let's just give you the opportunity to excel. Unknown Executive: Just coming up, because I've not been called a youngster for a very long time. I'm going to enjoy this moment, Fani. Nicholas P. Riley: Sorry, Don, could you repeat the first part of the question? Unknown Executive: Sure. So what is your sense of the number of private banking customers that can provide links to mid-market corporate clients? Nicholas P. Riley: So the work that we've done, it's between 1,500 and 2,000 that the -- we think there's the opportunity to bring across private clients that we bank in their personal capacity in terms of their businesses. And that's what we referenced as the low-hanging fruit. I think the second part -- what's the acquisition cost? I think if I understood correctly in terms of bringing across clients from the incumbents. Look, I don't think we underestimate that there's going to be a flush of clients. We understand that some of these clients have been banking with the incumbents for 20 to 30 years. But I think now that we have the full product offering, I think the proof is in the pudding that we've already got 3,000 clients. So we've got clients internally and externally at the group that are investing in banking with us based on that capability. We understand that potentially it could take 3 to 4 years product by product to be able to unhook some of the clients from the incumbents. Around acquisition costs, we don't see that elevating again above our cost-to-income ratio. So we'll manage it within the group's targets. Fani Titi: Donnie? Unknown Executive: Thank you. One last comment online from Nathan Jeffery from Brown Jeffery Ventures. He says, it is very good to see a shift to commercial in the U.K., and he seems pretty pleased by that. Fani Titi: Thank you. That is fantastic. Unknown Executive: Someone else is excited by it. Fani Titi: I was just about to say, Donnie, why are you taking comments? I thought you were giving us questions. But that comment we will take any day. That brings us to the end of our presentation. It's now back to work. Thank you very much.
Operator: Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Natuzzi S.p.A Second Quarter 2025 Financial Results. [Operator Instructions] Joining us on today's call, as usual, are Pasquale Natuzzi, Executive Chairman and Chief Executive Officer, Ad Interim; Carlo Silvestri, Chief Financial Officer; Mario De Gennaro, Chief HR Organization and Legal Officer. Furthermore, also joining us on today's call are Ms. Marilena Scaramuzzo, Treasury Vice President; Domenico Ricchiuti, Chief Operations Officer; and then Piero Direnzo, Investor Relations. As a reminder, today's call is being recorded. I will now turn the conference over to Piero. Please go ahead. Piero Direnzo: Okay. Thank you, Donna, and good day to everyone. Thank you for joining the Natuzzi's conference call for the 2025 2nd quarter financial results. After a brief introduction, we will give room for the Q&A session. Before proceeding, we would like to advise our listeners that our discussion today could contain certain statements that constitute forward-looking statements under the United States securities laws. Obviously, actual results might differ materially from those in the forward-looking statements because of risks and uncertainties that can affect our results of operations and financial condition. Please refer to our most recent annual report on Form 20-F filed with the SEC for a complete review of those risks. The company assumes no obligation to update or revise any forward-looking matters discussed during this call. And now I would like to turn the call over to the company's Chief Executive Officer. Please, Mr. Natuzzi. Pasquale Natuzzi: Thank you. Good morning, everyone, and thank you for attending this conference call. While all the information regarding the performance of the first 6 months have been available on the press release, which we sent to all of you. I believe that for all stakeholder information, I would like to add also some additional information, which I believe are very important for everyone. What has caused the result, which everyone is lumpy, okay, starting by me, by the shareholder, by all the stakeholders and by the management has been caused primarily from the Chinese market and the American market. And I like to explain that, which I believe is very important. In China, China is an important market for us. So that's why like [Technical Difficulty] in china regarding the tariff. And that has caused in China a crisis, which has impacted on our business. The volume that were forecasted for China were very much higher, much, much higher than what we are doing today. To give you an idea, just in 2025, we closed 77 stores in China. But -- and we opened 30 new stores. So while we closed 77 stores between Natuzzi Italia and Natuzzi Editions, we opened 30 new Natuzzi store in China. So there is really a situation, let's say, complicated situation. But the fact that we are closing the store and opening a new store, 30 stores with the partners that are investing on our brand, this is something that needs to be told, needs to be understood from everyone. Now in many time, the tariff and the uncertainty between how much it would cost to import the product from China. In China, China has been always an important market for us, not only for distribution, but also for production. So our production for the United States for the second line and Natuzzi Edition has been always manufactured in China. But since the tariff war started in 2019 where was announced tariff of first 15% and then an additional 10% that caused decline in sales from China to America and was affected on our volume and consequently on balance sheet. Recently -- and that was last year, October when, again, tariff uncertainty and the relation between United States of America and China were arguing every morning. We decided to shut down our factory in Shanghai and open a small factory -- new small factory in Quanjiao is a province where the cost would be much lower than Shanghai. And we moved the production from Shanghai to Italy to supply the American market and cut down the fixed cost of obviously, the factory in China and improving production and cost efficiency in the Italian plants. That was last year -- October last year. Obviously, a few weeks later, start again tariff between Europe and China. So -- but when we decided to move the production from China to Italy, there was no idea that one day, the United States of America would ask a tariff also from Europe. And obviously, that has been also impacting negatively on our margin. Back to China. So again, we shut down 77 stores. We closed 77 stores in China and we opened 30 new stores in China, while also in the rest of the world, we opened also 12 new stores, and we shut down 17 stores. So I mean, the -- to improve our retail division by eliminating stores that are not qualified for the brand position. And to substitute with a new store in the appropriate location with update consumer experience, it's a process that we are pursuing, investing continually. And that's because of that for the all stakeholder interest, I would like just to show a little bit -- I mean, we don't give up as a company. We have been continuing to invest on our brand in terms of new product, new merchandising, I mean, exhibition. I'd like just to show you a little bit, okay? It's something very interesting for all stakeholders to understand. Piero, can you help me please to show the -- let's start from beginning. Want to start from here? No, no. I mean we go after, please, Piero. So in order to support the commercial development, we implemented several initiatives in 2025, trade fairs, client congress and design shows. Can we look that, please? Go ahead. Go ahead. I don't need to read all those things. Just show image. So last April, in Milano, the picture that you will see here that you see on this slide is our participation to Milano Fair last April. The reason why we -- and since the COVID, we haven't participated to fairs because unlikely retailer, they were not traveling. So after 6 years, we decided to attend again this fair in Milano and was really a success. Then you can see -- have all the information regarding the visitors, the number of company, the number of country, whatsoever. You will find all the information on the website, and we will provide also to send as we do with the press release, okay? Go to the next, please, Piero. So consequently, even in High Point, that building that you will see on green is our Natuzzi America headquarter in High Point, North Carolina. We attended 2 fairs this year, one in April and one in October, where obviously, we meet the customer, we show new project, we show new marketing plan. So these are all efforts that the company has made in 2025. Go to the next, Piero. Then we also organized the headquarter congress here in our -- in Italy where we invite the customer from emerging market primarily. Invite the customer from Italy, from Europe. They come in to our congress and they spend 1 to 2 days here in our headquarter to choose new project, new product, new marketing plan, update their store. It's really a very important activity that we do. For example, we have the summer edition, 80 clients from Europe and Far East and our Divani&Divani partners. So all the customers. This is another huge investment to organize those 2 congress in Italy, in our headquarter. We go to the next. Then we also organized this year 3 congress in China. One was in March with the launching of Feelwell concept, is a concept of comfort, which is very innovative, and we introduced it to 200 journalists, VIP and institutional guests and 320 dealers. That was March this year, 2025. In July, also in Wuxi was launched the new Natuzzi Italia store concept, 7 media interview, 40 articles published, 143 architects designed, 21 VIP dealers were there. Natuzzi Editions, another event, very important in last October in China with 150 dealers, 100 VIP and 5 media. So in other words, China, which is a very important market, which is unlikely is facing a crisis that we never would imagine before, we are closing stores that are not performing. We are opening 30 new stores, but we have been attending exhibition, congress and meeting the customer and promote the business. Go to the next, please, Piero. And then we have the design show. We had 10 design show. In February, we were in Riyadh Downtown Design. In April, Milano Design Week. In May, ICFF, New York, we were present there. June, Design Show Melbourne in Australia. July [ Casa Decor ] in Madrid. September, we were Dubai -- Mumbai Design Week. In November, we will attend again Mumbai -- no, Dubai, we were last week in Dubai with Design Week, and we will be next week in Mumbai again in India. And then the first week of December in Miami Art Basel. All those exhibition where we show our novelty, our new project are very, very important to get -- to be in touch with the market, with the customer, with the designer architect. And we were also in Osaka last April, the Expo Osaka. We were there 791 events organizing in Italian pavilion. 1,300 official delegation were there, 7,500 company representative. Okay. Next, please, Piero. Highlights, Trade and Contract. Those building that we show you we launched last November in Dubai, the first Natuzzi Harmony Residences. Then because the building is under construction, we already sold several apartment, Natuzzi apartment, all furnishing by Natuzzi. And so we already signed the second contract in -- always in Dubai with the same developer for another 80 apartments. And we signed another contract with an entrepreneur developer in Jerusalem in Israel, where we designed already the building, and we have the contract in our hands to develop this tower. Many other projects are in the pipeline. So that's all those information I gave to you just to show that despite the headwind we are facing in terms of business, we strongly believe that all those initiatives, all those, I mean, initiatives that we have made and we developed more than 30 new projects because obviously, when we attend the fairs and congress and those events specialized for architect, we show a new project, new project in order to stimulate interest in our brand, in our company. So again, we don't give up. We strongly believe in the future and all the investment made in 2025 makes me personally and makes the company confident about the potential growth of the business. So I can stop here for now, and I can -- I'm ready for any stakeholder to ask a question. Thank you very much for listening. Operator: [Operator Instructions] Our first question today is coming from David Kanen. David Kanen: The first one is I see that you've extended personally a credit line to the company of $15 million. What are the terms of that in terms of the interest rate and then also, you've referenced noncore assets that you can dispose of. Could you quantify for us some of those assets, what they're worth, tannery other property that you can potentially dispose of while we're transitioning the company to profitability? Pasquale Natuzzi: So as anticipated in the press release, the Board of Directors has just approved the guidelines of a multiyear restructuring plan basis and optimizing the cost structure, increasing the flexibility and developing the retailer business. To implement these activities in the plan targeted investments are likely to be required such as marketing, retailer, the managing and redundant workers and et cetera. Therefore, the board will be evaluating measures aimed to strengthen the capital structure to support the restructuring plan. Once the restructuring plan is finalized and approval by the competent corporate body, we will provide further information on the capital strengthening measures required. I have granted credit line to the company because as the majority shareholder, I'm firmly convinced that the effective implementation of the restructuring plan guidelines, particularly those relating to the Italian production hub and the general optimization of fixed cost together with our commercial initiatives can help the group to relaunch its activities and pursue sustainable profitability. This credit line will provide the resources needed to address the short-term needs and ensure the financial stability required to achieve the group strategic objectives set out in the restructuring plan. However, as I previously mentioned, together with the Board of Directors, we are evaluating a measure to strengthen the company's capital structure. In the current year, we -- that's it. So that's the story. Carlo Silvestri: David to further add is a 0 interest loan. And as you know, we are looking always for opportunity to, let's say, monetize some of our noncore assets. In specific for the tannery, we don't have any news so far, but we are actively looking for other opportunities to offset some of our noncore assets. And this would be also one of the point of our strategy for the near future regarding also the rightsizing of our industry operations facilities. David Kanen: Okay. That's helpful. Carlo, could you quantify for us 2 things. First, on the assets, give us a sense as to the value of some of these noncore assets as well as the tannery. How many millions are these assets worth? And then if you could give us some sense of the restructuring, once we move past it right now, our gross margins are last quarter at these volumes was only 34%. After the restructuring let's assume similar revenues, what type of gross margin do you think we can achieve. And then in terms of operating expenses, what kind of a reduction do you think we can get in operating expenses? And will we be positioned to be profitable as a $320 million company? Carlo Silvestri: Thank you very much for all the questions, David. Let me elaborate a little bit because it's a bit long. I will try to summarize it to be effective. First of all, in terms of assets. Okay. Our total net asset value is around EUR 70 million, okay. To specify which is core and noncore, for the moment, I cannot give you the precise figures because all the investigation and internal analysis and discussion with the Board are ongoing. So this will be, let's say, quantified in a way once the final setup of our operations is done. But as I said before, this is one of our strategic point. If talking about the tannery, the tannery had a value of EUR 5 million specifically, that was the last evaluation we had. But of course, David, we need to be aware that then we need to go on the market. And these are the latest valuation and specifically for tannery is not an easy market to find a buyer in this moment. For the other assets, when I talk about EUR 70 million is composed by the plants and the machinery. So also on this, we need to play careful. It's not a value that we can totally monetize because like for the machinery, it's a different way of evaluating. So this is for the assets. Allow now to discuss a bit about the gross margin. And as far I can give you indication on what we are working because, of course, the work is on process and so I can't disclose any further detailed information, but allow me to give you the sense of what we are doing. With Mr. Natuzzi and all the team, we are working to be sustainable, especially from the financial point of view. So when we talk about increasing marginality, this is one of the main points. The 34% has some factors that need to be specifically addressed. The first one is the impact -- direct impact on the lower retail sales that, as you know, has a higher margin. And this, we are working with Mr. Natuzzi and the commercial team to bring back the sales that will grant us a higher marginality. On the other topics, we are working on both operational efficiencies that they will increase the margin and will decrease as one of the reply to your question, all the industrial costs in a permanent way and working on the price list to adopt the profitability to the changing environment of business. So all of these activities together with other actions that are aimed to be more efficient from the cost point of view, targeting of decreasing and increasing the speed of that activity to the economic environment will improve our marginality. Therefore, we will go back to the trajectory with increasing margin and decreasing the sales to be breakeven. I hope being clear and replied to all your questions, David? David Kanen: Yes, that's very helpful. I appreciate the clarity and the detail. So are you saying at these levels, these depressed levels we're running at after the restructuring, your objective is to be breakeven. Did I hear that correctly? Carlo Silvestri: Yes, the trajectory of the plan is to be profitable. Yes, the trajectory of the plan is to be profitable, David, absolutely. David Kanen: Okay. Okay. And then in the past, I guess this would be a question for Pasquale Jr. I don't know if he's on the call, but if you can speak to the commercial initiatives, Mr. Natuzzi highlighted some of these large projects in Jerusalem and Dubai, et cetera. For next year, could you give us a sense as to your internal goal for annual run rate in commercial revenue? Is it $10 million a year, is it $20 million, $40 million? What is a realistic internal goal in terms of run rate? Because this is incremental, and I know there are companies that are doing hundreds of millions of dollars in this business. It seems like there's enormous upside to it. So if you can give us a sense as to the magnitude that would be really helpful. Pasquale Natuzzi: Okay. I can answer, David. Certainly, you're right. But to be honest, I mean, we want to communicate the real contract that we have in our hand. So we started with one contract in Dubai. Then we -- because it's been successful, now we have the second contract. And because it has been successful we have also contract in Israel. There are already 3 towers that we should develop. I mean, and we have other very important, very exciting project in the pipeline. But I mean, we are not ready now to tell you how much volume we are going to develop with the Trade and Contract business. Certainly, the fact that we've been attending two events in Mumbai and then in Dubai, in Riyadh, then even in New York, where we invest money and we need the architect, where a developer just -- I mean, we are promoting the business. And certainly, we are expecting to get good return, to be honest, okay? Carlo Silvestri: Yes. May I add also on this Mr. Natuzzi, David, to give you a magnitude, it is a start-up. So the number will be low in the beginning, but then there will be a multiply effect. The more projects we do, the more they know, the more we have. And specifically, when we talk about revenues on a yearly basis, there are 2 sides of the contract. The first one is design fees that we will get in the first phase of the contract. The second one is when we realize the project and we deliver all the merchandise that has a time line that we don't know and we cannot predict. So as a total ballpark, we are in a start-up phase and then on top of that, it's difficult for us as of today to understand the phasing of the delivery of the product. David Kanen: Okay. That's very helpful. And then is there a way that perhaps I can extrapolate if you can give me a sense maybe per unit, let's say there's a building that has 150 units in it, okay? What do you think the spend is, on average, what is the normal spend per unit? Is it, 4,000, 7,000? If you can give me some sense... Carlo Silvestri: It really depends on the project, David. It really depends on the kind of project. Pasquale Natuzzi: No. I mean if I understood well the question, David, I mean, we promote the Natuzzi Harmony Residences, and we promote apartment of different size. Then we give the liberty to the consumer to choose the Natuzzi product. So it depends. We can -- I mean so the amount of cost to furnishing each apartment could be very much different. It depends. Because as you know, each project we make is available in leather or is made in fabric. Could be -- the configuration could be a big one or a small one. It depends from the customer needs, the consumer needs. So I mean the price could be different. We believe that next year, while after we furnishing, we decorate several apartments. We should make -- we must be in the position to average them, and we can give you this information. David Kanen: Okay. And then let me move on to my last question, and then I'll go back into queue if there's anyone else that would like to pose questions is, could you give us an update on the permanent CEO search. Do you have candidates that you feel you're close to deciding on? And is that something that you expect perhaps by early next year will be finished? Pasquale Natuzzi: We engaged a head hunter company and started to propose some candidates. I already made one, I tell you one and I spent 2 hours time. Certainly, we need to find a CEO that should understand how to develop and manage high-end brand. One, we need to -- the same CEO needs to have experience also in managing a retailer. And the last and not the least, should also experience in operation because we are a company which we design a product, we manufacture product, we sell the product through the retailer. We are a global company so I mean it's not easy, but certainly, we will continue to do the search. There are certainly some people capable to manage our company. But that's -- we are going forward, be sure about that because I like to be the president of the company. I cannot be everything. I'm here to add to the company, obviously, because I feel responsibility for that. David Kanen: I'm going to try and squeeze one more question in there. My apologies. So the last quarter you reported was second, the June quarter. Clearly, the third quarter is over, are we basically maintaining the levels that we saw in Q2? Or have things gotten worse? Or are they slightly better in terms of the written orders? Pasquale Natuzzi: I mean I already declared on the press release, David, okay? I mean it's -- I mean, I hope I have been clear. I'm sure that I have been clear because I wrote, I read, I re-read again the press release. So do the same please, all right, and you will then understand the company direction. Operator: [Operator Instructions] We're showing no additional questions at this time. I'd like to turn the floor back over to management for closing comments. Piero Direnzo: So no further questions. Operator: That is correct. Pasquale Natuzzi: Okay. So thank you very much to everyone, to every listener. And I really appreciate your attendance. Thank you. Thank you very much. Piero Direnzo: Bye-bye.
Operator: Thank you for standing by, ladies and gentlemen, and welcome to Tsakos Energy Navigation Conference Call on the Third Quarter 2025 Financial Results. We have with us Mr. Takis Arapoglou, Chairman of the Board; Dr. Nikolas Tsakos, Founder and CEO; Mr. George Saroglou, President and Chief Operating Officer; and Mr. Harrys Kosmatos, Co-CFO of the company. [Operator Instructions] I must advise that this conference is being recorded today. And now I pass the floor to Mr. Nicolas Bornozis, President of Capital Link and Investor Relations Adviser to Tsakos Energy Navigation Limited. Please go ahead, sir. Nicolas Bornozis: Thank you very much, and good morning to all of our participants. As you mentioned, I'm Nicolas Bornozis, President of Capital Link and Investor Relations Adviser to Tsakos Energy Navigation. This morning, the company publicly released its financial results for the 9 months and third quarter ended September 30, 2025. In case you do not have a copy of today's earnings release, please call us at (212) 661-7566 or e-mail us at ten@capitalink.com, and we will have a copy for you e-mailed right away. Please note that prior to today's conference call, there is also a live audio and slide webcast which can be accessed on the company's website on the front page at www.tenn.gr. The conference call will follow the presentation slides, so please, we urge you to access the presentation slides on the company's website. Please note that the slides of the webcast presentation will be available and archived on the website of the company after the conference call. Also, please note that the slides of the webcast presentation are user controlled, and that means that by clicking on the proper button, you can move to the next or to the previous slides on your own. At this time, I would like to read the safe harbor statement. This conference call and slide presentation of the webcast contains certain forward-looking statements within the meaning of the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties, which may affect TEN's business prospects and results of operations. And before turning the call over to Mr. Arapoglou, let me take the opportunity to congratulate Dr. Tsakos for your recent recognition in New York by the Philoptochos Society of the Greek Orthodox Cathedral, paying tribute to your personnel and the group's contribution to the Global Maritime Industry to Philanthropy, Education and Community Welfare. Congratulations. And at this moment, I would like to pass the floor to Mr. Arapoglou, the Chairman of Tsakos Energy Navigation. Please go ahead, sir. Efstratios-Georgios Arapoglou: Thank you, Nicolas. Good morning, and good afternoon to all. Thank you for joining us today for the announcement of the 9 months and third quarter results of 2025. No surprises. Our business model continues producing sustainable profits, beating estimates, as you saw, while at the same time, building up a solid stream of $4 billion of accretive future contracted revenue. This provides stability and more predictability in our results going forward, as we explained many times in the past and mitigate volatility in our stock price while maintaining a very solid cash position of nearly $300 million. These results are a product of high fleet utilization, best-in-class operating efficiency by now a trademark for TEN. We're reminding the market of our record 20 Vessel Newbuilding Program with deliveries starting Q1 2026 until Q4 2028, 10 of which the shuttle tankers with long-term accretive employment. The program includes, of course, 3 VLCCs, materially growing our presence in the sector -- in this sector of the market. At the same time, and as mentioned earlier, in earlier communications, we are focusing on selling our older tonnage in order to continue maintaining a young and very modern fleet. Lastly, as mentioned in our press release, after the $0.60 per share interim dividend in July, we declared payment of an additional $1 per share dividend. This will be paid in 2 equal tranches of $0.50 each, one in December 19, 2025, and one in February 19, 2026, in order to, going forward, gradually align dividend date to the timing of audited results as Nikos Tsakos will explain later. At today's stock price, the total dividend of $1.60 per share for the year represents a very attractive yield of over 4%. So congratulations once again to Nikos Tsakos and his team. Their proven track record and business model in a market with stronger tanker fundamentals and turbulent geopolitics. This ensures continued success. Thank you very much, and over to you, Nikos. Nikolas Tsakos: Chairman, thank you, and welcome, everybody, to our 32nd year 9 month call. First of all, I would like to congratulate Clio Hatzimichalis for becoming a full -- she is our lawyer keep us out of trouble for all this year. So we're very happy for her to join the main Board of the company and looking to spend much more time, productive time. Well, in September, when we reported our 6-month results, I think we were all satisfied. They were good results. We did not expect the market to take -- to become even better, even stronger. And that's where we are today. I think we're perhaps more than 50% higher on the spot market than we were back in September, which we were very satisfied having gone through the typical seasonal period and being with a lot of profitability. We had a couple of months of lull waiting for the developments of the IMO saga, I would say. I think rightly so, the postponement has been achieved, and that allows the shipowners and the related parties to this industry to be able to put more input and find solutions going for the -- going forward. So I think we welcome this development. Since that development has put the world in -- at peace, the end of too much tariffing each other has also been achieved and the market has gone from strength to strength. We are seeing a market which has limited supply of tonnage. And all our vessels right now are in very high demand. I was glad that we, of course, were way ahead of -- or beat the estimates, and we're looking forward because I think the quarter we're going through now is also going to be a very strong quarter. We just concluded our fourth long-term profit sharing almost arrangement today on our VLCCs with a very accretive minimum rates, minimum rates that we would be happy to have as fixed rates many years before, and that would be a minimum rate and then with unlimited upside for the company. And with this part of good news, I will ask George Saroglou, our President, to give us a quick update of what has happened in the last 9 months. George Saroglou: Thank you, Nikos. We are pleased to report today on another profitable quarter. Tanker markets have remained healthy during the course of the year. And as Nikos mentioned, energy majors continue to approach our company for time charter business. Since the start of the year, we have 40 new time charter fixtures and extension of time charters. And today, we have a backlog of approximately $4 billion as minimum fleet contracted revenue. We have a 32-year history as a public company. From 4 vessels in 1993, we have turned every crisis the world and shipping has faced through the years into a growth opportunity. And we have faced many crisis since the start of the new decades, a lot of which we did not actually expect. We faced a global COVID crisis in 2020 with lockdowns and unprecedented collapse in global oil demand. Then as the world was exiting COVID and we were trying to go back to normal, we've had the war in Ukraine in 2022 and a major -- which resulted in major disruption in energy trading. Then in late 2023, we had the attack of Hamas in Israel and the ensuing war and the continuous attacks of merchant vessels in the Red Sea until most of the shipping people decided not to cross the Red Sea anymore. The turmoil in the whole of Middle East, the unwinding of globalization, the introduction of tariffs in 2025, trade wars between the United States and China and the rest of the world and the decarbonization efforts of many global industries, including shipping, which, as you know, has the lowest carbon footprint when we compare while at the same time, it's the most efficient way to transport different land-scale cargoes around the world. So a lot to do in such a short time. So far, we have managed to navigate the TEN ship safely through these challenges, thanks to the company's crisis-resistant model. Let's hope we go back to more peaceful and normal times for all very soon. Today, TEN is one of the largest energy transporters in the world with a young, diversified, versatile fleet of 82 vessels, a pro forma fleet of 82 vessels. So in Slide 4, we list this pro forma fleet, and we start with the conventional tankers, both crude and product tankers. The red color shows the vessels that trade in the spot market, and we have 7 as we speak, and our new buildings under construction. With light blue, we have the vessels that are on time charter with profit sharing, 16 vessels and with dark blue, the vessels that are on fixed rate time charters, 39 vessels. In the next slide, we list the pro forma diversified fleet, which consists of our 2 LNG vessels and our 16 vessel shuttle tanker fleet. We are one of the largest shuttle tanker operators in the world with very young and technologically advanced vessels following the tender we won earlier in the year in Brazil, building the Samsung shipyard in South Korea, 9 shuttle tankers for Transpetro. We have 6 shuttle tankers in full operation after recently taking delivery of both Athens 04 and Paris 24, which commenced long time charters to an energy major. If we combine the 2 slides and account only for the current operating fleet of 62 vessels, 23 vessels or 37% of the operating fleet has market exposure, spot and time charter with profit sharing, while 55 vessels or 89% of the fleet is in secured revenue contracts, that is time charters and time charters with profit sharing. Our clients with whom we do repeat business through the years are the blue chip list of our world. ExxonMobil is the largest revenue client, followed by Equinor, Shell, Chevron, Total and BP. We believe that over the years, we have become the carrier of choice to energy majors, thanks to the fleet that we built, the operational and safety record, the disciplined financial approach and the strong balance sheet and financial performance. The left side of Slide 7 presents the all-in breakeven cost for the various vessel types we operate in TEN. Our operating model is simple. We try to have our time charter vessels generate revenue to cover the company's cash expenses, paying for the vessel operating and finance expenses, for overheads, chartering costs and commissions and let the revenue from the spot and profit-sharing trading vessels contribute to the profitability of the company. And thanks to the profit-sharing element for every $1,000 per day increase in spot rates, we have a positive $0.09 impact on the annual EPS based on the number of TEN vessels that we currently operate in -- have exposure to spot rates, and that is 23 vessels. We have a solid balance sheet with strong cash reserves. The fair market value of the operating fleet is approximately $4 billion against $1.9 billion debt, and the net debt to cap is around 47%. Fleet renewal and investing in eco-friendly greener tankers has been key to our operating model. Since January 1, 2023, we have further upgraded the quality of the fleet by divesting from our first-generation conventional tanker, replacing them with more energy-efficient newbuildings and modern secondhand tankers, including dual fuel vessels. In summary, we have sold 17 vessels with an average age of 17.3 years and capacity of 1.4 million deadweight tons and replaced them with 33 contracted and modern acquired tankers with an average age of 0.6 years and 3.4x the deadweight capacity of the vessels we sold. We continue to transition our fleet to greener and dual fuel vessels. We are currently one of the largest owners of dual fuel LNG-powered Aframax tankers with 6 vessels in the water. Global oil demand continues to grow year after every year. OPEC+ accelerated their voluntary production cuts, wars, economic sanctions, sanctions listed tankers and geopolitical events positively affect the tanker market and tanker freight rates. While the tanker order book remains at very healthy levels as a big part of the global tanker fleet is over 20 years. As we speak, almost 50% of the fleet is over 15 years and needs to be replaced soon. And with that, I will pass the floor to Harrys Kosmatos, who will walk us through the financial performance for the third quarter. Harrys? Harrys Kosmatos: Thank you. Thank you, George, and welcome, everyone, to our call. So I'll start with the 9-month highlights. So as the tanker markets continued their upward trajectory propelled by the crude sector and VLCCs in particular, available term rates for crude vessels merited a shift towards fixed employment in order to provide earnings visibility and further safeguard the cash generating ability of the fleet. To this effect and in line with the company's tried and tested employment model, bar some occasional aberrations for opportunistically capturing short-term fix reverted to the norm and operated most of the fleet during the first 9 months of the year in secured revenue contracts. In particular, with a fleet of almost 62 vessels in the water, similar to the corresponding 2024 9-month period, days under secured employment, that is vessels on fixed time charters and time charters for 47 provisions increased by 12%, while days on pure spot experienced a 32% decline. Of interest, days on profit sharing contracts alone increased by 18%, signifying TEN's commitment to maintaining a meaningful presence in the still lucrative spot market. Today, 23 vessels in the fleet, 7 on spot and 16 on profit shares do provide TEN with such operational latitude. As a result of this employment recalibration for the 9 months of 2025, TEN generated $577 million in gross revenues and operating income of $171 million, which incorporated $4.5 million of capital gains from the sale of 4 older vessels. Capital gains during the equivalent 2024 period were at $49 million from the sale of 5 vessels, highlighting TEN's policy to continue the strategic recycling of the fleet with newer, more eco-friendly vessels, new builders in the majority. In line with the above employment pattern and fewer vessels on dry dock compared to the 2024 9 months, 9 now from 11 last year, fleet utilization increased from 92.2% to 96.2% during the 2025 9 months. The fleet's Time Charter Equivalent rate for the first 9 months of 2025 settled at a healthy $30,703. During the 9-month period and in line with the reduction of the fleet's spot exposure explained above, Voyage expenses declined from $118 million in the 2024 9 months to $95 million now, a $23 million betterment. Charter hire expenses also decreased by $4.6 million, whilst vessel operating expenses increased by just over $7 million from the 2024 same period to settle at $155 million. As a result, operating expenses per ship per day for the 2025 9 months averaged still competitive $9,797, just 1/3 of the Time Charter Equivalent rate mentioned above. Depreciation and amortization came in at $126 million for the 9 months of 2025 from $118 million in the 2024 9 months, reflecting the introduction of 3 newbuilding vessels and the new depreciation calculation on the 2 vessels repurchased from lease structures. General and administrative expenses were at $32 million, reflecting the amortization of stock compensation awarded in July 2024, and scheduled to fully vest by July 2026. On the other hand, significant improvements were made in our interest costs as a result of declining global interest rates and despite $126 million increase in the company's debt obligations from the 2024 9 months due to new loans for TEN's Newbuilding Program. $72.7 million of interest costs now compared to $87.4 million in the 2024 9 months, a near $50 million saving. At the end of the 2025 9-month period with 61.2 vessels on average in the quarter and the 20 Vessel Newbuilding Program, our total debt obligations were at $1.9 billion, while net debt to cap stood at a comfortable 47.3%. TEN's loan-to-value for the 2025 9-month period was at a conservative 50%. Interest income came in at $7.7 million, a meaningful contribution. As a result of the above, the company during the first 9 months of 2025 generated a healthy net income of $103 million, which translates to $2.75 in earnings per share. Adjusted EBITDA for the 2025 9 months was at about $290 million, while cash at hand as of the end of September 2025, stood at a healthy $264 million after having paid $135 million in scheduled principal payments, $178 million in yard predelivery installments and capitalized costs and $20.3 million in preferred share coupons. And now let's move to the quarter 3 highlights. The third quarter of 2025 experienced similar movement in fleet employment patterns, which led to fleet utilization increasing from 92.8% in last year's third quarter to 94.8% during this year's third quarter, despite 4 vessels undergoing scheduled dry dockings during the period compared to 3 vessels in the 2024 third quarter. With vessels in the water slightly under the level of the 2024 third quarter, the fleet generated $186 million of gross revenues and $60.5 million in operating income, which included $8.9 million, call it $9 million of capital gains from the sale of 3 older vessels and not the similar performance from last year's third quarter, which did not incorporate any gains or losses from vessel sales. The resulting Time Charter Equivalent per ship per day was at $30,601, in line with the focus of diminishing our presence in the spot markets. Naturally, voyage expenses during the year's third quarter were lower compared to last year's third quarter, experiencing a $7.7 million decline to settle at $27.4 million. Operating expenses, on the other hand, increased in line with the introduction of 3 larger vessels and settled at $52 million. The resulting operating expenses per ship per day for the third quarter of 2025 came in at $9,904, again, ahead of the fleet average TCE and still competitive, thanks to the efficient and proactive management performed by TEN's technical managers. Depreciation and amortization were a touch higher from the 2024 third quarter levels at $42.4 million, again, reflecting the new vessel introductions and the 2 suezmax repurchased from sale and leaseback agreements. General and administrative expenses were $5 million lower from last year's third quarter at $9.2 million. Interest costs, again, following the downward trend in interest rates came in at $23.7 million from $32.2 million during last year's third quarter. In other words, savings of $8.5 million. On top of that, another $2.1 million in cash gains was realized through the interest income generated during the 2025 third quarter. As a result of all the above, TEN during the third quarter of 2025 reported $38.3 million of net income or $1.05 in earnings per share. The adjusted EBITDA during the third quarter of 2025 settled at about $96 million, reflecting the shift towards longer-term secured revenue contracts to meet our clients' increasing long-term demand. And with this, I pass it back to Nikos. Thank you. Nikolas Tsakos: Good. Thank you, Harrys. Since the figures are good, we didn't talk about them a lot. But as I said, I think we had good results in the first 6 months. The market had a long period, really expecting the developments of the net zero discussions at the IMO. And after the extension of the discussions, the market has taken off again, and we are looking at the business coming very strong in the spot market and a lot of employment. As we said today on our VLCCs has been extended for another 2 years and there's a huge appetite for business out there. There's an increasing presence of the gray fleet, a lot of breakdowns on those ships. And of course, we are going through, again, more than expected geopolitical challenges with hijacking of vessels like the recent one from Iran and the Somalia piracy on both on Greek vessels outside -- quite outside 500 miles away from the Somalia growth. So there's a lot of interference. And in the meantime, this has created a nervousness in the market going forward, which we are able to take advantage with our chartering strategy I described with 40 new ships totaling $4 billion of extended business over the next 5 years. And with that, we would like to open the floor to any questions. Operator: [Operator Instructions] Our first question comes from the line of Climent Molins with Value Investor's Edge. Climent Molins: I wanted to start by asking about the 12 VLCCs coming open throughout this month. You mentioned in the press release that the employment on the DS1 has been extended for 2 years. Could you clarify at what terms? And secondly, based on your data kit, the Ulysses should also come open this month. How do you plan to employ this vessel? Is there any appetite to trade on spot? Nikolas Tsakos: Yes. Thank you for your questions. We are trying right now to protect our ships from being actually hijacked by the major oil companies. So it's -- but joking apart, I think we are seeing a significant increase, a 20% increase from our profit-sharing arrangements of the past from our minimum profit sharing arrangements. So there is a significant appetite for the vessels out there. I cannot -- perhaps if you -- next week when you see Harrys in the states, he can give you more details on that. But of course, it's quite a positive situation. Climent Molins: Makes sense. I'll reach out. I also wanted to ask about the Maria Energy. It is fixed until February of next year, but the long-term contract you signed a while ago doesn't start until May, if I remember correctly. Do you plan to trade the vessel on spot once it comes off its current contract and before it starts the next one? Nikolas Tsakos: The vessel is actually fixed back to back to a 15-year employment. So there won't be any downtime between that other than the survey that she will have the scheduled survey, which will have to go before the delivery of this in April. So the vessel has been chartered back to back until she goes to her new charter. So there won't be any downtime. Climent Molins: Perfect. And final question for me. You have a couple of MR newbuilds delivering in early '26. Should we expect those to be fixed on long-term contracts before delivery? And should that be the case, what kind of duration are you looking at? Nikolas Tsakos: We're contemplating. As I said, there's a big appetite. We're here with our chartering team. They have, I think, 5 or 6 major oil companies looking for those ships. As you know, we're a big participant in the Cargill-Maersk pool. We're very happy with that performance of that pool. And I've been saying that for us, the best method or the only method of consolidation in our industry is through commercial pooling because whoever has a fleet of our size or smaller or around or bigger does not really -- you do not gain any economies of scale of just ordering more and more and more ships and running more ships because the ships are always there. So we are supporting the pool, and we're -- the pool has performed quite well. And we might be considering also pooling. Pooling gives you the upside of -- gives you full utilization and the upside of a spot market. Operator: Our next question comes from the line of Poe Fratt with Alliance Global Partners. Charles Fratt: Some of the questions were covered already, but when I look at your newbuild program, close to 20 major commitment. What are you looking at as far as the fleet renewal side? You've been active selling assets. Asset values are fairly firm in my mind. So what should we anticipate over the next, call it, year or so as far as on the asset sales side? Nikolas Tsakos: Our -- I say we are close to negotiating 5 of our first-generation vessels. And so if you put it in a 12 month -- if you put it -- if you take a 12 months forward, I think it would be perhaps double that, 10 vessels. We're looking to the transactions we have in mind would release close to $250 million of net cash, which is more than enough of what we need for our newbuilding program. Operator: Ladies and gentlemen, that concludes our question-and-answer session. I'll turn the floor back to Dr. Tsakos for any final comments. Nikolas Tsakos: Thank you. Well, I hope, first of all, thank you for listening in. The market looks getting firmer and firmer. And from what I understand from my kids that are studying on the East Coast, the weather is [indiscernible] yet. So we're looking for further call. We're looking forward to continue with this positive market. Right now, we're taking advantage as much as possible with the team. And I would like to wish everybody a happy Thanksgiving next week. And don't forget that the TEN's share price is right now on Black Friday prices. So before next Black Friday, you buy some more of that. And I will ask our Chairman to have a final word. Thank you. Efstratios-Georgios Arapoglou: Happy Thanksgiving for me, too. I think that we're looking forward to beating all estimates next time around, touch wood. And again, congratulations to Nikos Tsakos team for excellent performance. Nikolas Tsakos: Thank you all. Happy Thanksgiving. Thank you. Efstratios-Georgios Arapoglou: Thank you. Bye. Operator: Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.
Operator: Good day, and welcome to the NetEase Third Quarter 2025 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Brandi Piacente. Please go ahead. Brandi Piacente: Thank you, operator. Please note that today's discussion will contain forward-looking statements relating to the future performance of the company and are intended to qualify for the safe harbor from liability as established by the U.S. Private Securities Litigation Reform Act. Such statements are not guarantees of future performance and are subject to certain risks and uncertainties, assumptions and other factors. Some of these risks are beyond the company's control and could cause actual results to differ materially from those mentioned in today's press release and this discussion. A general discussion of the risk factors that could affect NetEase's business and financial results is included in certain filings of the company with the Securities and Exchange Commission, including its annual report on Form 20-F and in announcements and filings on the Hong Kong Stock Exchange's website. The company does not undertake any obligation to update this forward-looking information, except as required by law. During today's call, management will also discuss certain non-GAAP financial measures for comparison purposes only. For a definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results, please see the third quarter 2025 earnings release issued earlier today. As a reminder, this conference is being recorded. In addition, an investor presentation and a webcast replay of this conference call will be available on the NetEase corporate website at ir.netease.com. Joining us today on the call from NetEase's senior management are Mr. William Ding, Chief Executive Officer; Mr. Zhipeng Hu, Executive Vice President; and Mr. Bill Pang, Vice President of Corporate Development. I will now turn the call over to Bill, who will read the prepared remarks on William's behalf. Bill Pang: Thank you, Brandi, and welcome, everyone, to today's call. Before we begin, I would like to remind everyone that all percentages are based on RMB. The third quarter marked continued momentum and strong execution across our NetEase family. By uniting creativity with exceptional operations, we created more meaningful connections with players, driven by our diverse portfolio of games that expanded our global reach and reignited our player enthusiasm for our key franchises. Total revenues increased 8% year-over-year, reaching RMB 28.4 billion in the third quarter, and revenues from our games and related VAS grew 12% in the third quarter compared with the same period last year. Innovative creativity and long-term operation remain the defining force behind NetEase's ongoing player engagement and global expansion, whether for new launches or established titles. Our teams are dedicated to delivering unexpected gaming experiences and responsive live services that are winning over players worldwide. This strategic creative approach continued to gain traction overseas, amplifying the influence and excitement of multiple games in the third quarter, including our new releases. Destiny: Rising, our new free-to-play mobile sci-fi RPG shooter quickly topped iOS download chart in the United States and other major Western markets following its global launch on August 28. The game has received widespread acclaim, securing leading positions on iOS download chart across nearly 100 markets worldwide, featuring Destiny's iconic powerful game gunplay across diverse mode setting new time line. The game has earned positive feedback from long-time fans, while gaining traction within the broader shooter game community. The excitement continued in China, where Destiny: Rising debuted on October 16 and immediately topped our downloading chart, drawing in players nationwide to experience the streaming shooting action at their fingertips. Marvel Rivals continues to captivate superhero shooter fan base around the world. Kicking off its fourth season on September 12, the game introduced a wealth of refreshing new content, features, special events and team-ups. Following the update, it reached #3 on Steam's global top seller chart. The new map, K'un-Lun: Heart of Heaven transport players to the Asian East, while the debut of Angela and eagerly anticipated Vanguard spurred excitement across the player community. Additionally, inspired by Marvel Animation's Marvel Zombies, a limited time PvE Zombie mode was released, featuring challenging bosses, Zombie Namor and Queen of the Dead just in time for Halloween. Beyond the game, Marvel Rivals Ignite celebrated its grand finals at DreamHack Atlanta, held in collaboration with ESL FACEIT Group. Elite players from around the world showcased their exceptional skills and strategies, drawing massive engagement both on-site and online and reflecting Marvel Rivals growing appeal. As we continue to enrich our global portfolio through diverse partnerships, our original titles are also gaining increasing momentum worldwide. Delivering a distinctive survival open world experience to players globally. Once Human launched engaging updates in the third quarter [ organizing ] its growing global community. On October 30, the game introduced a major new scenario centered on the capture and customization of deviations alongside a significant refresh of the PvP experience that provides more intense combat options. The highly anticipated collaboration event with the global hit game Palworld also went live on the same day, bringing popular pros to a dedicated in-game island, which further invigorated the player community. We recently shared some of our upcoming international expansion plans at worldwide gaming events like Gamescom and Tokyo Game Show 2025, generating even more excitement in the community with engaging player interactions. We exhibited Where Winds Meet at Gamescom 2025, showcasing our creative ambition in cultural storytelling and next-generation Wuxia World building. In China, Where Winds Meet continue to captivate Wuxia fans with its narrative-rich setting, authentic Chinese martial arts theme and innovative gameplay that combines single and multiplayer. Each newly unveiled district not only engages our existing fans, but also attract new players, driving continued growth in both revenue and monthly active users to new highs in the third quarter. On November 14, we brought Where Winds Meet [indiscernible] open-world featuring dynamic combat to the global market on both PC and PlayStation 5. Within just 2 days, we achieved a peak of 190,000 concurrent players, secured the #5 spot among the most played games and #4 position for top seller globally on them. Additionally, it became one of the top 10 bestsellers across the United States, Germany, France and several other regions on PlayStation. This underscores the widespread appeal of our captivating Wuxia universe to an even broader audience. To further enhance community engagement, the mobile version has commenced preregistration and is set to launch soon. Our highly anticipated title, Ananta, also garnered significant attention at the Tokyo Game Show. Players showed enthusiasm for in-depth game trailers and engaging hands-on playcasting. They will draw in by the game's imaginative action design, high-fidelity visuals and modern urban storytelling. Setting a dynamic and immersive city environment, Ananta blends high-energy action with open-world freedom, offering players an experience that goes well beyond conventional gameplay. We are pleased to see mounting excitement and anticipation among this title, including recognition from the Japan Game Award 2025 Future Division, where it was named as one of the most promising upcoming games. Our groundbreaking MMO, Sword of Justice went global across mobile and PC platform on November 7, topping the iOS download chart in multiple regions. The international release included AI-powered MPCs and intelligent face creation system. We showcased this at the Tokyo Game Show in September, highlighting how emerging technologies are reshaping gameplay experiences. Sword of Justice also continued to engage domestic players in the third quarter with its ever-evolving gameplay and rich content. With the global version now live, Swords of Justice is bringing its immersive world and cutting-edge AI enhancement to broader international audience. On top of the new releases we have brought to the international stage, our established games are also gaining steam in multiple regions worldwide. Our realistic car simulation game, Racing Master has continued to gain popularity overseas through localized content, making it highly resonate with players in Japan since it launched there last year. Player engagement spiked in August during its anniversary celebration with carefully designed in-game content, boosting the game's performance in Japan. Exciting e-sports events like the Racing Master 2025 Legendary Cup Finals held in Bangkok in August, brought passionate racers and fans from across Asia together, uniting Racing Master's distinctive global community. As firm believers in live operations, we stay closely attuned to players' evolving expectations across every title, and our domestic games continue to deliver strong performances. Each game update present new opportunities to entertain, engage and grow our communities. This approach continues to resonate with players, driving steady growth across our domestic portfolio for both new titles and games that has been around for decades. Fantasy Westward Journey Online, one of our longest running flagship titles at 22 years and counting, amplifies our dedication to sustain high-quality operations. The game is built around an inclusive ecosystem that allows players of all types to find enjoyment. We continue to inject fresh vitality through new features and mechanics. In July, we launched our innovative unlimited server, which offers classic gameplay under a popular modern model that eliminates the entry barrier of upfront time-based payments. This generated substantial enthusiasm from long-time fans and newcomers alike, significantly boosting player engagement. As a result, it has achieved 4 successive record peaking concurrent player counts since the third quarter, reaching a height of 3.58 million in early November. Fantasy Westward Journey Mobile also continues to evolve as we regularly introduce new features that players love. To meet players' demand, we launched our new casual server, which is designed for fun and streamlined play. It offers Fantasy Westward Journey Mobile's signature gameplay in a lighter format featuring simple progression, low threshold and intuitive controls. With a surge of new and returning players, monthly active users reached a 2-year high in September. Another long beloved MMO, Tianxia, continues to engage its community with deeply resonated updates. In October, we concluded closed beta testing for Tianxia II Classic. This version recreates the game's iconic art style and slower paced gameplay, allowing players to experience its distinctive Chinese cultural event. Meanwhile, the existing Tianxia client will undergo a complete upgrade with player progression seamlessly shared with Tianxia: Wanxiang the brand-new cross-platform client powered by Messiah, our flagship in-house engine. The upgrade will both enhance graphic quality and expand access for players across PC and mobile platforms, allowing them to experience the Messiah universe everywhere. Identity V fan base maintained a high engagement level in the third quarter, supported by our steady cadence of seasonal updates and partnerships. New characters released along with each season update, including Hunter of QS and the Survival of Lanternist in the third quarter, infused new energy into Identity V's distinctive role, reinforcing Identity V as a top destination for asymmetric gameplay fans. In addition, the game's collaboration with the Palace Museum Classic on September '25 added Majestic rooftops of Forbidden City to Identity V's manner, adding a new layer of cultural depth. Eggy Party also experienced robust growth with the third anniversary celebration in July, sparking renewed enthusiasm across the player community. Daily active users exceeded 30 million and average play time hit record high, driving historical engagement level. Two new gameplay modes quickly followed in September. [ Spooky Treasure ] Squad presents an intense extraction experience and Crazy Farm introduces a casual and social farming simulator. Both were highly praised and attractive way of returning users during the National Day holiday. Meanwhile, we continue to evolve Eggy Party's AI-powered AIGC tool, making its map design faster, easier and more enjoyable. We believe that together, these innovations are keeping Eggy Party fresh and its community inspired. Thanks to this ongoing effort, we saw Eggy Party's performance recover to historical peak level in both daily active user and average play time, which we expect will pave the way for smooth development in the coming years. Another example of our player-first philosophy and commitment to innovative high-quality content is Onmyoji, one of China's earliest and most iconic anime style games. On September 10, we launched its ninth anniversary celebration, featuring rich new content and gameplay updates shaped by player feedback. The highlight was a new character Yuki Gozen whose beautifully crafted CG trailer gained widespread attention on social media from both long-time fans and broader anime community. It was broadly inherited for its innovative use of stereoscopic screen and 2D animation tags to create a naked-eye 3D visual effect. With strong community support, Onmyoji quickly entered China's top 10 iOS download chart, demonstrating the vitality of this enduring IP and the strength of our long-term operations. Our commitment to engaging players and continuous innovation is also evident in Naraka: Bladepoint. In the third quarter, we rolled out new heroes and exciting collaborations such as Armor Hero in September and the time-limited return of Nier in October. Naraka: Bladepoint esports present is also growing. The 2025 Naraka: Bladepoint Pro League, NBPL, autumn season marked its first professional league since being selected for the 2026 Aichi-Nagoya Asian Games, culminating its rolling finals in October. Now in its fourth year, NBPL has become the cornerstone of Naraka's esports ecosystem and China's top professional league for the title, driving increasing social media engagement across major platforms. We continue to expand our domestic portfolio with new lighthearted experiences that appeal to a wider range of audience. [indiscernible] our MMO featuring magical heartwarming creatures inspired by Chinese fairy tales, has built a dedicated fan base since its launch in August, designed with a portrait interface for easy one-handed play. The game combines the joy of capturing and nurturing creators with strategic term-based combat and building a homeland for them to thrive in. Backed by our players and supported by world-class partners and global teams, we're building enduring collaborations that keep expanding what's possible in gaming. Blizzard titles continue to elevate the gaming experience for Chinese players. World of Warcraft rolled out updates across both classic and modern servers during the third quarter, sustaining strong engagement among long-time fans and newcomers alike. To further enhance localized experience, the game just launched a highly anticipated China-exclusive Titan Reforged server this week, blending the nostalgia of classic expansions with modern gameplay elements. The new server fulfills players long-awaited expectations and has reignited excitement across the World of Warcraft community. Overwatch 2 has also recently introduced a new Chinese hero, Wuyang, further deepening the game's diverse roster of characters. Meanwhile, Hearthstone celebrated its 11th anniversary, amassing over 100 million registered players in China. A series of special anniversary events drove enthusiastic participations from both loyal fans and newcomers to the game. The Diablo franchise also continued to capture attention. Diablo 2 resurrected, the legendary remaster of the installment that helped define the franchise returned to China on August 27. Newest season released in October pushed the game's daily active player base to record high. In parallel, Diablo IV, the latest blockbuster bringing the series signature dark aesthetics to a new height, were launched in China on December 12. Furthermore, the genre-defining real-time strategy game, Starcraft II, also returned on October 28, triggering excitement among fans. Minecraft China Edition, the localized version of the globally popular sandbox game, reached 1.25 million concurrent players on August 17, an impressive milestone in its eighth year of operation. Committed to nurturing its UGC ecosystem, the game continues to enhance creation tools and expand exposure for community creators, now supporting over 300,000 creators. By delivering enriched locally tailored experiences, Minecraft China Edition has fostered a highly engaged and loyal player community. Beyond above titles, other globally renowned franchises in our portfolio also continue to thrive in China, engaging vast creative community and expanding local ecosystems. Along with our expanding global presence and evolving development capabilities, our domestic community continue to thrive. Regardless of geographies or genre, we'll continue to put player first and work closely with our partners to deliver memorable high-quality experiences across our beloved franchises and existing new titles still yet to come. Turning to Youdao. Youdao continued to solidly execute its AI native strategy in the third quarter with healthy development of both its education and advertising businesses. For learning services, Youdao Lingshi grew gross billing by over 40% year-over-year in the third quarter. Notably, they partnered with the Yau Mathematical Science Center of the Tsinghua University, providing technical support to a platform, which is designed to identify and support mathematically gifted students. The platform is currently being piloted in top-tier schools with a national rollout plan following further refinement. Youdao's online marketing services achieved robust growth in the third quarter. As we advance the use of AI across multiple advertising processes, we further enhanced our expertise in programmatic advertising and influencer marketing campaigns, elevating the efficiency and effectiveness of advertising. For smart devices, we continue to enrich our offerings with technology upgrades. In the third quarter, we launched a new tutoring pen, Youdao Space X, which features a series of intelligent capabilities such as precise scanning for long-form and multi-graphic problems to help students learn more effectively. Turning to Yanxuan. The business continued to perform well across major e-commerce platforms, led by steady development in its core categories such as pet food, home sense and home goods. Propelling technology-driven innovations, Yanxuan's product launches have consistently stood out in the market. Its new pet food product is a refined production process, making it smoother and easier for pets to digest, earning a widespread praise for addressing common digestive issues. Across the NetEase family of businesses, we continue to build on our foundation of creativity, quality and disciplined execution. Looking ahead, we are focused on advancing our development capabilities and global reach, scaling our original IP into lasting franchises and elevating every experience we deliver. Guided by innovation and the trust of our communities, we're shaping a future defined by meaningful growth and enduring impact. That concludes William's comments. I will now provide a brief review of our 2025 third quarter financial results. Given the limited time on today's call, I'll be presenting abbreviated financial highlights. We encourage you to read through our press release issued earlier today for further details. As a reminder, all amounts are in RMB unless otherwise stated. Total net revenue for the third quarter were RMB 28.4 billion or USD 4 billion, representing an 8% increase year-over-year. Total net revenue from our games and related VAS were RMB 23.3 billion, up 12% year-over-year. Specifically, net revenues from online games were RMB 22.8 billion, up 3% quarter-over-quarter and 13% year-over-year. The quarter-over-quarter increase in online games net revenue was due to higher net revenues from self-developed games such as Fantasy Westward Journey Online and Sword of Justice as well as certain licensed games. The year-over-year increase was attributable to higher net revenue from self-developed games such as Fantasy Westward Journey Online, Eggy Party and newly launched Where Winds Meet and Marvel Rivals as well as certain licensed games. Youdao's net revenue reached RMB 1.6 billion, representing a 15% increase quarter-over-quarter, driven by growth in smart devices and online marketing services. Year-over-year revenue rose by 4%, attributed to a higher contribution from online marketing services. NetEase Cloud Music net revenue of RMB 2 billion, stable quarter-over-quarter, but down 2% year-over-year. Notably, revenue from membership subscriptions continued to show healthy growth both sequentially and year-over-year. Revenues from social entertainment services and others, though still lower compared with the same period last year, stabilized quarter-over-quarter. Net revenues for innovative business and others were RMB 1.4 billion, down 15% quarter-over-quarter and 19% year-over-year. The sequential decline was mainly driven by Yanxuan due to its high base during the 618 e-commerce festival. The year-over-year decrease reflected an increase in certain intersegment transaction elimination and to a lesser extent, decreased net revenue from Yanxuan and certain other businesses. Gross profit for the third quarter of 2025 was RMB 18.2 billion, up 10% year-over-year, primarily driven by increased net revenue from online games. This quarter, our total gross profit margin was 64.1%. Looking at our third quarter margin in more detail. Gross profit margin was 69.3% from games and related VAS compared with 68.8% in the same period of last year. The improvement was mainly driven by a higher mix of PC games in China, which typically have higher margins. Our gross profit margin for Youdao was 42.2% compared with 50.2% in the same period last year. The decrease was mainly due to the declined gross profit margin of online marketing services. Gross profit margin for NetEase Cloud Music was 35.4% in the third quarter versus 32.8% in the same period a year ago. The margin improvement was primarily driven by steady growth in our core online music business with lower contributions from social entertainment and other lower-margin services. For innovative business and others, gross profit margin was 43.0% compared with 37.8% in the third quarter of 2024. Despite the impact of intersegment elimination mentioned earlier, the improvement was mainly driven by better margins at Yanxuan and the higher revenue contribution from certain innovative business with relatively stronger margins. The total operating expenses for the third quarter was RMB 10 billion or 36% of our net revenue. Taking a closer look at our cost composition. Our sales and marketing -- our selling and marketing expenses as a percentage of total net revenue were 15.7% compared with 14.5% for the same period last year, primarily due to increased marketing expenditure related to online games. Our R&D expenses maintained stable at 16% of total net revenues in the third quarter compared with 16.9% for the same period last year, reflecting our consistent investment in content creation and product development. The effective tax rate was 13% for the third quarter. As a reminder, the effective tax rate is presented on an accrual basis in accordance with applicable policies and our operations. Our non-GAAP net income attributable to shareholders for the third quarter totaled RMB 9.5 billion or USD 1.3 billion, up 27% year-over-year. Non-GAAP basic earnings per ADS for the quarter was USD 2.09 or USD 0.42 per share. Additionally, our cash position remains robust with net cash of approximately RMB 153.2 billion as of September 30, 2025, compared with RMB 142.1 billion at the end of last quarter. In accordance with our dividend policy, we are pleased to report that our Board of Directors has approved a dividend of USD 0.11 per share or USD 0.57 per ADS. The company announced today that its previously approved share repurchase program of up to USD 5 billion for the company's ADS and other shares in open market or other transactions will be extended for an additional 36 months until January 9, 2029. As of September 30, 2025, approximately 22.1 million ADS has been repurchased under this program for a total cost of approximately USD 2 billion. Thank you for your attention. We would now like to open the call to your questions. Operator, please. Operator: [Operator Instructions] Your first question comes from Xueqing Zhang with CICC. Xueqing Zhang: [Foreign Language] [Interpreted] Congratulations on the third quarter. My question about Fantasy Westward Journey. Given that FWJ PC has consistently set new record for online player count since this summer, we would appreciate that the company is sharing its operational structure for this evergreen title. And we have several follow-up questions on it. Firstly, what's the core driving factors behind the unlimited player server. And secondly, what's the user profile? What's the ratio of retaining players to new players. And lastly, is this model replicable across other flagship titles? William Ding: [Foreign Language] Bill Pang: [Interpreted] Okay. I'll do the translation. The longevity of Fantasy Westward Journey online PC is based on highly stable economic system and unique enriched gaming experiences which are very rare in most other games. Our team has been dedicated to providing sustainable fun experience, stable ecosystem and innovative content. This commitment has been recognized and appreciated by the players as well as we can see from the market. In the unlimited server, we have removed the upfront time-based payment, streamlined the gameplay and systems, offered a lighter gameplay format, while preserving the core designs that has evolved in our classic server over time. Compared with the comprehensive and diverse game experience on the content, unlimited server offers enjoyable experiences in the simple -- more simple direct manner with a smooth learning curve, unlimited server has attracted both many former players back to the game as well as new players. This user demographic of unlimited server actually also benefited the classic server by introducing additional new and returning players. Fantasy Westward Journey online as a legacy game has been operated for 22 years. We remain committed to the innovation and diversified experience to meet -- continues to meet the demand from our community. Looking ahead, we will continue to focus on long-term development, providing our broad player community with various choices in one game. Operator: Your next question comes from Thomas Chong with Jefferies. Thomas Chong: [Interpreted] Can management comment about the gaming trend in China as well as overseas. On the other hand, can management also talk about the overseas expansion strategy? William Ding: [Foreign Language] Bill Pang: [Foreign Language] [Interpreted] Okay. I will do the translation. During our business operations process of doing business in overseas market, we have accumulated successful experiences, which is powered by the strong development capability we have in-house here. For example, in Japan, we have Knives Out as identified been very popular in national network games. And last December, we released Marvel Rivals globally, super successful. And just November 15 this month, we released Where Winds Meet in global markets. And all this product achieved a very good level of success overseas, and we hear a lot of positive feedback from the community as well. In the -- what we see is that in the overseas market, NetEase as one of the most prominent game developing powerhouses in our industry. And we are the only company that bring the purely truly Chinese authentic online games to global market. For example, Where Winds Meet, it's a very Chinese [Technical Difficulty] and we're the only big successful companies that bring this level of authentic experience to the online gamers globally and received very positive feedback. Looking ahead, we believe we have the capability to bring more and more success cases to overseas markets and provide gamers from the globe with more and more high-quality content and services. We have confidence in that. William Ding: [Foreign Language] Bill Pang: [Interpreted] Yes, there are some further comments from William. One is that actually also in this month, we also rolled out our Sword of Justice into the global market. And of course, 3 years ago, we rolled out Naraka: Bladepoint PC on global market. And as you heard, we showed our games to public for both ANANTA and Sea of Remnants. The market has very big expectations. We showed ANANTA game show this year, and it's been named one of the most promising upcoming games by the Japan Games Award 2025 Future division. NetEase, we are based in China, and we are also carving our territory in the global market. That is what we have been doing. We have some successes, and it's -- we're going to keep doing. Operator: Next question comes from Ritchie Sun with HSBC. Ritchie Sun: [Foreign Language] [Interpreted] Regarding Identity V, we have seen the volatility in grossing and DAU in recent months. Can management discuss the reasons behind it and the strategy to improve the performance? Secondly, World of Warcraft and Hearthstone have returned to China for 1 year already and about to face tough comps. Can management discuss the performance metrics now versus 1 year ago and plans to drive sustainable growth in the future? And the Diablo IV is also coming back soon. Can management discuss the monetization potential considering the more intense competition in the ARPG genre? William Ding: [Foreign Language] Bill Pang: [Interpreted] Okay. I will translate this part first. Indeed, it's true that there has been some influence from competing products during the summer holidays, particularly among general users in lower-tier cities. However, we also have noticed that the impact has eased since the start of back-to-school time. And in fact, talking about September, Identity V actually has reached historical high starting from the new semester compared to the same period in previous years. While Q4 historically has never been the peak season for Identity V, the team is focusing on preparing new content and marketing campaigns for the Chinese New Year cycle. During this period, we observed the demand -- the diversified demands on diversified gameplays from community. So we have been preparing more comprehensive and large-scale side game modes while on the other hand, we're also working on the next chapters of the game. William Ding: [Foreign Language] Bill Pang: [Interpreted] Thank you, Yes. As we approach the end of current expansion of World of Warcraft, it is indeed expected to see decline in performance compared to this launch period. Meanwhile, Hearthstone has steady maintained its cadence of expansion updates over the past years. With different operation strategy from the past, the performance of both games actually maintained higher than status than when the operation closed previously. Moving forward, we'll continue to deepen our collaboration to sustain our unique competitive offerings in the China market. And one specific example I want to give here is the Titan Reforged Server for Warcraft. That indeed was initiated by -- together by our Chinese team and the U.S. team. Together, we set the target and designed together and developed specific for this demand and the result is very good. So that is one example to see by working closer together, we can achieve better result compared to the past. Talking about Diablo, Diablo IV has its own unique quality, and we have brand-new business plans in place for it. We believe it will secure its deserved market share and commercial performance in the ARPG segment after launch. In addition, StarCraft II has achieved record high user engagement since its launch, infusing vitality into the RGS genre. Operator: Your next question comes from Alicia Yap with Citigroup. Alicis a Yap: [Foreign Language] [Interpreted] So just wanted to follow up. I think management earlier mentioned ANANTA was recently showcased at the Tokyo Game Show and has a pretty good feedback. So just wanted to know more details about the user feedback. And then how should we think about the market positioning and also the differentiation of this game? And then it also seems that the game included a pretty decent rich content and also the innovative gameplay. So any comments on that? And then are there any updates regarding the next testing timing and also the official launch timing in 2026 that you can share? William Ding: [Foreign Language] Bill Pang: [Interpreted] We showcased the latest update and playtesting of ANANTA at the Tokyo game show, which attracted significant attention on social media across the world, winning one of the most promising upcoming titles by the Japan Game Award 2025 Future Division. We believe with a blend of colorful quality content, innovative monetization strategy as well as our focus on long-term operations we anticipate the game will secure a new position within the industry ecosystem. We're currently planning to further enhance our development process, the development process is on track now, and we'll proceed with testing and launches as scheduled. And when time comes, we have further updates to share. Operator: Your next question comes from Jialong Shi with Nomura. Jialong Shi: [Foreign Language] [Interpreted] We noticed from media, it seems to us the number of new games in your pipeline every year is smaller than in the past few years. If our observation is correct, just wonder what is your current strategy towards launching new games into the market. And if NetEase does not launch as many new games each year, what will be the growth driver for your online gaming business? William Ding: [Foreign Language] Bill Pang: [Interpreted] Okay. I will do the translation. The whole company will be very focused on our success products. And among the already success product, we'll keep refining and keep focusing. We don't want to distract too much focus to charter many, many new products, which we don't have super confidence. For new projects, we will look at product more prudently and more focused, making sure that whatever new product we're building, it has confidence power in the content market. We actually don't see this to contradict with another. We believe being focused is one of the core competence a company needs to have. That's our view. Operator: Our next question comes from Felix Liu with UBS. Felix Liu: [Foreign Language] [Interpreted] My question is on the recent news of organizational changes in your game department. Will these changes impact the near-term operations of the related games? And how does management think about the current organizational structure under the context of your game strategy? And should we expect more changes to come? William Ding: [Foreign Language] Bill Pang: [Interpreted] Okay, I will do the translation. Regarding the recent adjustment and changes, it's part of the company's normal personnel turnover process and has been carried out without impacting daily operations of our game. That's rest assured. The adjustment is aiming to make the operation more focused and efficient, allowing us to concentrate -- keep concentrating on creating enduring high-quality product. For example, for existing evergreen titles, we asked our teams to stay focused continuously refining and optimizing the games. For new titles that show evergreen potentials, we'll allocate sufficient resources to develop them into Evergreen long-lasting successful games. However, for teams that are not keeping pace with the market trends or user demand, we also must trim decisively to make sure a healthy development of our core initiatives. NetEase has been especially for 28 years, and our commitment to creating high-quality products has remained unchanged. We'll allocate more resources to evergreen titles and provide more opportunities to teams who are creative and willing to innovate. Operator: Your next question comes from Lincoln Kong with Goldman Sachs. Lincoln Kong: [Foreign Language] [Interpreted] So my first question is about AI. So we have actually seen some of the games like Eggy Party or Justice Mobile has already integrated with AI applications. So going forward, for our existing portfolio and the new games, how should we think about AI can bring additional opportunities to our gamers? And the second question is in terms of the future new games. Given that the company now focus more on quality of those new games, so how should we think about the potential important game genre going forward? Specifically like for the shooting game genre globally, I think we have seen a rapid growth. So how would NetEase sort of differentiate ourselves in this shooting genre? William Ding: [Foreign Language] Bill Pang: [Interpreted] Okay. I'll do translation. First of all, regarding the question on AI, we have been using AI in development and AI is very important in game development and operation, and we have accumulated tons of hands-on in this area. And compared -- especially compared to many of our peer companies from overseas, we have more hands-on experience in this area. We have deployed massive resources in the research of AI and how to use AI in the process of game development, innovation and operation. Actually, the user experience is the best answer to guide us on how we should deploy technologies. But we don't think we have time here today for the detailed specific user experience explanations. Regarding your next question on the future direction of product, as we explained, we'll focus on the concentrating resources on building really high-quality flagship products, the product that we have conviction on the success. We won't do aggressively blindly open many projects. That's not our direction. We'll be focused on -- we'll do focused targeted approach to the new project. And in the future coming years, we believe NetEase compared to most -- many other companies in our industry globally, we are one of the companies that has clear vision on the future in future products, and we will make ground breakthroughs. Operator: Your next question comes from Yang Liu with Morgan Stanley. Yang Liu: [Foreign Language] [Interpreted] Let me translate my question. My question is about the Sea of Remnants this new game. Could the management share about the R&D development and expected launch timing? And what will be the commercial strategy for this title? And is there any direct peers or competitor for this game? And what NetEase can do to differentiate? William Ding: [Foreign Language] Bill Pang: [Interpreted] I will do the translation. First of all, the Sea of Remnants is a very important product to us. We focus on that very much. The team has very rich development and operational experience in the company. And the game is built on our self-developed game engine will support both PC, mobile and console as well. On the detailed gameplay and content, we believe we have a clear decisions on how to do that. We believe it's going to be a fresh experience in the market. It's going to be a multi-character cultivation kind of type, but not the traditional way. The sailing experience on the ocean as well as the rich combination between characters and classes, we believe it will bring a fresh unexperienced ocean experience to the gamers. Operator: And that concludes the question-and-answer session. I would like to turn the conference back over to Brandi Piacente for any additional or closing remarks. Brandi Piacente: Thank you once again for joining us today. If you have any further questions, please feel free to contact us directly. Have a great day. Thank you. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]
Louise Curran: Good morning, everyone. I'm Louise Curran, Head of Investor Relations at Johnson Matthey, and a very warm welcome this morning to our half year results presentation. Thank you, everyone, for coming along to the Andaz today, and welcome to those joining on the webcast as well. A little bit of admin before we start, if you could please turn your phones off or on to silent. And I'll point your attention to the cautionary statement. I'm very pleased today to welcome Liam Condon, Chief Executive Officer; and Richard Pike, our CFO. In terms of agenda, we'll follow the usual format. Liam will run you through an overview. Richard will then take you through the financial results, and then Liam will cover our strategic progress in the half. And we'll, of course, leave plenty of time at the end for Q&A, both in the room and then on the webcast. And with that, I'll hand over to Liam. Liam Condon: and big congratulations to you on your new role. And a big thanks also to your predecessor, Martin Dunwoodie, who've done great work for us. A warm welcome to everybody here in the Andaz Hotel. I'm really happy there's so many people here, so we can get some heat into the room because it was a very cold morning. And a warm welcome to everybody who's joining us online today. So I'm just going to hit some of the highlights of the half and then talk about some of the key priorities that we're working on that we're going to give you more color on throughout the presentation today. So first of all, I think the standout was the underlying operating performance increasing by 38%, an 11% increase in Clean Air and a 33% increase in Platinum Group Metals. So in the environment we're in, I think, a very strong overall performance and a good indication of the progress we're making here. Secondly, -- and Richard will talk extensively about this. You will see very good progress on our implementation of our new cash-focused business model. We had a significant cash outflow in the first half of last year. This time around, you will see a -- not a significant, you'll see a significant turnaround and a small inflow. So that's quite a big movement. And there is a lot more to come in the second half and then, of course, in the subsequent years. And the building blocks behind that, Richard is going to talk to you about. And the third point, which is very important as well, the sale of Catalyst Technologies to Honeywell is on track. We had said that, that will close in the first half, calendar half of '26, and that remains the case. And once we close that deal, as we said, we'll be returning GBP 1.4 billion to shareholders upon closure. A final point I'd make is we did -- we have made some announcements this morning around organizational changes. And I'm sure we'll -- I'll be talking a little bit about this later on, what the rationale behind that is. I'll make it clear for the purpose of today's presentation, Richard is in his CFO role only. When we get to the Q&A, you can gladly ask him about his motivation for the new role going forward. But first and foremost, it's the CFO role for today's presentation. So a couple of the top or a few of the top priorities that we have for the next 6 months for the full year and then subsequently and just the progress we're making around that. I've already mentioned the sale of Catalyst Technologies, and we'll unpick that a little bit later on. So what still needs to happen. But here, we're fully on track for that closing in the first half of calendar '26. Second one, we've spoken extensively about our ambition to significantly increase the margin of Clean Air. And here, you can see, again, very strong progress, a 200 basis point increase in the margin for Clean Air, an increase in absolute profitability. So despite declining volumes, this is a really strong performance and leaves us completely on track for our target of 14% to 15% margin of -- by the full year this year. And with that, on track for our ambition '27-'28 of getting to basically 16% to 18% margin. Very strong performance from Platinum Group Metal Services with 33% increase in underlying operating profit. This was clearly helped also by Platinum Group Metal pricing, the trading business -- but it's also refining, which has been doing well. And it's also efficiencies, which is where we've simply been running the business more efficiently. So a strong underlying performance here. Our new PGM refinery, which is a huge investment. And I think against the background of the importance of critical minerals, it's hard to underestimate how important this is, both for JM, I think the U.K. and globally. This is the world's biggest refining plant for platinum group metals that we're building in Royston out beside Cambridge. This is on track to start commissioning in -- by March of 2026. It's a very big capital project. It's about GBP 350 million capital expenditure here. And we do have a small delay of a few months. But because we have our ongoing refinery, our old refinery, our 60-year refinery, still running in parallel, this has no impact on our guidance or our ability to deliver to our customers. So in the bigger context, it's a smaller delay, but important to flag it, but it's a few months. On Hydrogen Technologies, we are on track. And again, this is now almost end of November. We're very much on track for breaking even by the end -- or have run rate breakeven by March '26. This is something that we had committed to, and we have line of sight of that. And we're confirming that again today. I think there was some skepticism that we might get there, but we absolutely have line of sight to that. And that's why we are reconfirming that we will break even with that business or have run rate breakeven by March '26. And then the final point, and again, Richard will talk to this extensively, is the significant improvement in free cash flow and the building blocks going forward to give you that confidence that we will be generating GBP 250 million free cash flow going forward on a consistent basis. And what's behind that, Richard will explain. So they're kind of the highlights. We'll unpick different elements of this as we go through the presentation. But first, I think it would be helpful to go through the detail of the half year results, and then I'll come back and share some more color on these strategic priorities. And with that, Richard, over to you. Richard Pike: Thanks, Liam. Good morning, everybody. So building on Liam's introduction, just to remind everybody, we've now treated Catalyst Technologies discontinued. So the results that we'll present are excluding CT. Obviously, still a very much an integral part of the group until we affect the sale to Honeywell, but all the numbers in here are talking about essentially the remaining business going forward. So as Liam said, I think we're really pleased with this in terms of -- against the targets we set out in May, actually, we think we've made really strong progress pretty much across the board against where we said we would focus. So you can see that despite sales being modestly down as a result of primarily Clean Air volume decline, basically, you're seeing strong improvement in underlying operating profit significantly because we're focusing on the things that are within our control. That feeds through to earnings per share. And to my mind, and I will, as Liam said, spend quite a bit of time on this. I think for me, possibly, despite those headline operating profit numbers, which I think are really quite impressive in the current environment, I think the free cash flow focus in the modest time we've actually started to shift gear on this is moving very well in the right direction. Our net debt is up. That's primarily because CT had cash outflow in the first half and the dividend. So -- and we've also had a significant stock build in our U.S. refinery because we took it down for a maintenance shut in October. So despite the stock build and despite metal prices being higher, I actually think this is all quite a good news story, and I'll talk about how that's going to play through in the second half. As a result of which we're maintaining our dividend at 22p per share. In terms of looking at the P&L, I mean, I've just touched on the highlights there. The only real thing I go to draw out is the interest charge you can see is higher year-on-year. That's because we had a couple of one-off nonrecurring items in the prior year. This level of interest charge gives you a feel for the run rate of where interest cost is on an ongoing basis. Coming down to the businesses. So in Clean Air, pretty much if you look across the piece in terms of how we're performing. LDD pretty much in line with market. Europe has been difficult for us this year, but pretty much in line. LDG, worse than market. But if you recall, several years ago, we made a shift from gasoline towards diesel to the primary focus. So we came out of a number of those. We've had platforms that were on running off over time, and this is the picture you're seeing that running off. In more recent times, we had an increased focus primarily towards hybrid. You've seen that in some announcements, but they take a while to come through. So sort of you've got a gap between when we announce something and it's in the numbers. So there's no surprises in here from our point of view. And actually, HDD, we're actually start ahead of the market. So in the area that we consider is likely to continue to grow going forward and where we're strongest in terms of market share and positioning, we're actually doing better than the market as well. Over and above the sales position, basically, what you can see here is the strong focus on our costs. I said basically the full year, if you looked at our plan to get us from the sort of 12% last year into the mid-teens this year, a lot of that will be about overhead reduction. You can see that coming through in terms of the margin improvement. Also the operational excellence, commercial excellence, those areas are getting more ingrained in the organization. So I think this gives us a strong belief that actually we're heading towards that 16% to 18% margin range. PGMS, good half. We had a weak first half last year. We have been benefited from higher metal prices this year versus last year. And actually, it's been a more volatile trading environment. So the trading side of our business benefits when it's more volatile. So those things have been through, but pleased there in terms of year-on-year improvement. And there's a lot of focus at the moment. Liam touched on, obviously, the build of our 3CR facility. That's critical for us going forward. We've still got a couple of years of running this old asset. So focusing on consistency of operations and actually maintaining our assets in a reliable fashion as possible is really key to Liam's point around delivering for our customers. That's where the strong focus is in the side of the business. Hydrogen, as Liam just said, you can see here improvement year-on-year in terms of the run rate. For those eagle eye of you, you'll notice that our losses in the first half of this year are higher than the second half of last year. That's because we have a weighting in terms of when we recognize our revenues, it's second half weighted. And so we've got line of sight, very clear line of sight in terms of our contractual position with our customers, see what's coming through, hence real confidence about that getting to a breakeven run rate by the end of the year. And as I said, despite actually the profit number being in really good shape, this is probably where I'm most pleased actually in the first half. So you can see, obviously, with a starting point of profit improvement, that's a good starting point for our cash generation. But the really important thing here is that movement in working capital. And these things take a while to bed down. I talked at the year-end about the fact that actually, there's quite a lot of areas which are not rocket science. But in an organization that's not particularly being cash orientated, some of these things are sort of ingrained processes that need to change. And we've started with payables. I'll come back to that. There's more to do on receivables and inventory. Some of those things take longer. But actually, what you can see here is actually a shift in focus. There's still a lot to do here. This is nowhere near job done. It's a modest cash inflow in the first half. But given we have circa GBP 200 million of stock build associated with the refinery shutdown in October, and we've had higher metal prices, I actually think this is really positive because that stock build will unwind in the second half, and we've got ongoing focus in other areas. So to touch on those actions, particularly around the cash side of the to actually replicate the CT profits that sort of lost with the sale, we've said that we need to take a significant amount of overhead out. We used to be a much bigger group. We still have some overhead that sort of reflects the situation of the legacy of us being a bigger group. We're losing CT, a much more simple group. And actually, our overheads need to reflect that. We're making progress. And a decent chunk of that is on the Clean Air side. We talked about the fact that the most of the difference between the 12% last year and 14% to 15% this year was going to be about overhead reduction. You can see that actually Clean Air is already delivering on that and more to come in the second half. And a similar amount is coming through on the group side of things. And as Liam will come back to the organizational structure, as we simplify our group structure, simplify the way in which we run things, that will feed through to greater levels of overhead reduction going forward. CapEx, we're still at elevated levels, and that's going to continue through this year and next year, primarily because of 3CR, but also other areas within PGMS infrastructure, which feed into 3CR. And so our target of getting down to GBP 120 million, which is close to depreciation, we're on track for, but you're going to see that higher level of CapEx. And that's why, to a certain extent, not just that reason, but why it's quite important we're focusing on working capital in the near term because that working capital saving offsets some of that higher CapEx in the next couple of years. If you think about all of this coming together, what we said at the year-end was we'll sell CT, well on track, as Liam said, and he'll come back to that. Basically Clean Air, get it to 16% to 18% margin, well on track, get 3CR built. Yes, we've had a couple of hiccups, if you like. So we had industrial action with one of our contractors. And that's led to lack of productivity in terms of the people on site. So that pushes out the schedule and so on and so forth. I think what's been really important since the summer, our team where we changed the number of members, the general contractor and the subcontractor with in distraction have worked really hard to get to a schedule that everybody believes in, the detailed level of work that underpins that, everybody signed off on. Everybody is holding hands and actually intent actually we're really confident about the plan we've got in place. And if we actually generate the working capital improvements we promised for the next couple of years, that will actually underpin our cash generation while we're still spending more CapEx to then get to a situation of lower CapEx going forward, which underpins why we get to the GBP 250 million of sustainable cash flow from '27, '28. We've talked about this a few times, but just to reiterate on the shareholder return side, on the GBP 1.4 billion that we're returning, I spoke to pretty much every shareholder through the year-end process about where preference was. I think everybody recognizes that whilst there might be a preference in some areas for share buybacks, it would take us about 6 years to return this through share buybacks. So that's not realistic. So the majority is going to come back through a special dividend with the share consolidation and then the balance going back through share buybacks probably during the course of calendar '26. And then ongoing from '26, '27 onwards, we promised about GBP 200 million of returns from there. Depending on how the share buybacks play out, share consolidation and so forth, they also determine how many shares we have an issue and things. But I think you're looking at a situation where we'd like to have about 1/3 dividend, 2/3 share buybacks from '26, '27 onwards. And then outlook for the year, my last slide, basically. We're in good shape. We're very much expecting to deliver on our promises for the full year. PGMS will be down year-on-year in the second half. We've touched on this before. There's low metal recoveries, there's higher maintenance costs given the age of the asset, but nothing different to what we actually said at the year-end. So we feel we're in good shape for the year. We feel we're in good shape in terms of delivering on our '27, '28 targets. And on that, I'll hand back to Liam to give you a bit more detail. Thank you. Liam Condon: Great. Thanks a lot, Richard. So if we jump in on the strategic topics, the first one, which is top of mind is probably the Catalyst Technology sale. So what still needs to happen on this? Well, we have a binding sales and purchase agreement with Honeywell, which is publicly available, where also what needs to happen is listed in that document. But in essence, it's 2 things. One is the regulatory approvals. We need regulatory approval in 12 jurisdictions. We have 11 and the 12th is progressing smoothly as planned. So we believe that's very much on track. And then there's the carve-out, which is 2 elements. This is basically the legal reorganizations which is very much on track. And then the transitional service agreements and long-term supply agreements to ensure that customers and employees are looked after, and that's all very much on track as well. So they are the 2 big elements that need to happen for us to close. And then based on where we are today and the very good collaboration with Honeywell, our expectation is, as we have previously stated, that we will close in the first half calendar of '26. I think it's important to note that the business has been -- had a weaker performance or the CT business had a weaker performance versus prior year, significantly weaker. This is completely market related. And if we look at it from a market share point of view, the CT business has maintained market share in every key market and in some instances, even improved the overall market share. So the underlying performance from a market point of view is very good. It's just the market is pretty weak right now. We have continued to win new significant new sustainability-related projects. These are typically in the sustainable aviation fuel space. So the pipeline remains very, very robust. And with that, the growth outlook for that business remains very strong. So that's the overall situation for Catalyst Technologies and the sale to Honeywell, which is very much on track. Now if we go to new JM then without CT, we had outlined previously what we're really doing here is focusing on our core competency of Platinum Group Metals. This is what this company has done for over 200 years. We would consider ourselves world champions as far as Platinum Group Metals is concerned. We don't think there's anybody who can manufacture, trade and recycle as well as we can, and that's what we're really known for. And we build businesses that typically use Platinum Group Metals, and there are multiple applications. The biggest is, of course, Clean Air, catalytic converters. But within the PGM business, there's many other industries that are served and serviced by the PGM business. And as we outlined, we have a big opportunity now with a more streamlined group to run the business much more efficiently. To be very honest, we don't -- you don't need a big corporate center if you have 2 businesses that are very closely interlinked with each other, the PGM and the Clean Air business. So -- and I'll explain this a little bit later when we talk about organizational design, there's plenty of opportunities for us here to further streamline how we run the business to be simply more successful in the market. Now if we go to the first of the big businesses in here. Just a reminder again of our ambition, we said by '27, '28, we want to achieve at least GBP 2 billion in sales and a 16% to 18% margin. You'll recall in 2022, we were at a margin of 8.7%. This half, you can see that we're up to 12.4%. -- so a really significant jump in the last few years. And we have line of sight to the 14% to 15%. And with that, we think from a trajectory point of view, we're very much on track here. Now if we have a look at how we're doing from a winning point of view, and Richard explained a little bit what's happening in the market. Question is that kind of at least GBP 2 billion, what's the confidence level? Well, at least 90% of that business has already been won. So that, I think, should underpin our confidence in this business. So very strong overall win rates. And what's, I think, been really encouraging recently because we've been focusing on the hybrid space, we've actually started winning business with leading Chinese OEMs who are typically the leading hybrid players. And if you can win with a Chinese OEM in China, then your -- both your technology and your cost must be really good. And this is not just servicing then the Chinese market. This is also for export to the rest of the world. So this is actually a significant step forward and gives us a lot of confidence in the portfolio and again, our ability to win in this space. Lots of progress on partnerships with our strategic customers. And the point that I won't elaborate on much this year, but right now, but rather talk about it more extensively at the full year results. We do have a small kind of almost like a start-up business within Clean Air. And I think there's a general perception that Clean Air is maybe sunset industry sunset business. But there are elements that are growing, like, for example, the hybrid business, like, for example, the heavy-duty diesel business. But there's also something what we call Clean Air Solutions, which is using the core emissions technology of Clean Air for nonautomotive type use cases, typically stationary use cases. And one -- and the example that's mentioned here is we've just won several multiyear contracts for emission control technology for engine systems for data centers. And of course, data centers is a hyper growth area right now. Most of those data centers are fueled by fossil fuels. So they require emission control technology. Otherwise, you're going to have toxic fumes. And that's where our core competence is again. So this is an area that's growing, and we'll unpick that further at full year. But I just want to highlight, there's -- within Clean Air, there's enough opportunity in here to give us a lot of confidence about the targets that we've set for '27, '28. Now beyond winning commercially, we do continue to drive efficiency. This is really important for us. This is also why our margin has been improving. There's been a significant reduction in overheads, especially SG&A, some R&D as well. And as we do that and as we're winning business, I think where we're really encouraged is our Net Promoter Score has actually increased significantly. This is almost unheard of that the Net Promoter Score is up 15 points. This means at a point in time where we are improving our profitability, our customers are thinking more highly of us. That's not necessarily to be taken for granted. And it's really a sign of how much value the commercial teams together with the tech teams are adding for our customers. So I think really strong progress here. And we will continue on the journey of footprint optimization. When we started in '22, we had 50 production lines. We're down to 21 now. And that journey of consolidation between production lines and site consolidation will continue, and it continues at the pace that the market is evolving. The market evolves faster in a certain direction, we can move faster from consolidation or we move slower. So we just adapt to what's happening in the market. But all of this gives us, again, the strong confidence that we can -- we'll get the margin up to 16% to 18% by '27, '28. So that's Clean Air. If we go to Platinum Group Metals, -- and again, in a world that's very concerned about critical minerals, this is a jewel in the crown, I think, for the U.K., but for -- basically from a global point of view to have the know-how and portfolio and the people that we have for this business, very profitable business that has a big moat around it. And we've given out the targets, the guidance, GBP 450 million sales by '27, '28 and a circa 30% operating margin. You can see there's 3 parts to this business. In essence, it's producing products, so typically alloys, anything that uses PGMs for multiple different industrial and other applications might be for life science, might be for defense. There's many different use cases, and we produce products often customized for our customers then. We also refine. We're the world's biggest refiner and recycler. And again, this -- the vast majority of that happens in the U.K. currently with a very old refinery and in future with a brand spanking new refinery, which will be absolutely state-of-the-art. There will be nothing else out there in the world like what we will have then when this is complete, which is relatively soon. And we also have a trading business. So we buy and sell and manage metals on behalf of our customers. And that's important because this stuff is super valuable. A normal -- an average industrial company doesn't really have the infrastructure from a security and a logistical point of view to actually manage precious metals. We have all of that. And this, again, this is a service component that we offer for our customers. So fantastic business. I mentioned both myself and Richard have mentioned how important the new refinery is. And we're very -- we're on track now to start commissioning by March of '26. This is really important. Richard already elaborated, there was some industrial action that's cost us a few months. But it means we will still be fully operational within the calendar year '27. And to underpin that confidence about being fully operational, we also have a clear plan to start decommissioning the old refinery within '27 as well. So by the end of '27, we'll start decommissioning the old refinery. And we always said we would only start decommissioning when we're 100% certain that the new refinery is up and running. And from everything that we can see today, we have complete line of sight of that. As Richard said, we have our best teams on this. Everyone has joined hands. It's got the utmost focus, and we're very confident about the schedule that's in place now. And thankfully, we still have the old refinery to keep supplying customers as long as this one is not up and running, but it will be up and running in calendar '27. And the old one, we will then start to take down. So that's the overall situation for 3CR, and that's why we're very confident that this will be a big, big benefit for us going forward. Now besides the business, I mentioned earlier on that we have an opportunity to basically streamline how we run the business. And again, if you think about the situation, CT is moving out. With Clean Air and PGMs, we have 2 businesses that are intricately linked through Platinum Group Metals. They all use lots of Platinum Group Metals. We manufacture products. We also recycle products on behalf of our customers. We manage their metals. So there's a lot of synergy in here. So we gave a lot of thought together with our Board about how we could set ourselves up for success in the future and really accelerate progress. And what we've agreed on is a new streamlined organizational model. So we're moving away from divisions and sectors with individual CEOs. And given that we'll only have 2 businesses that are intricately linked, we're going to move to an operating model where we have one Chief Operating Officer who can ensure that we're tapping into all the synergies across those businesses. And basically, we'll move from 9 people on the Executive Committee down to 6. And I think this is -- it's a good reflection if you think where our business was and is, it will be a smaller business going forward. So the streamlining should really start at the top. This is a team that's been working together very intensively and very successfully, particularly since this summer on developing the new strategy, the new JM going forward. We have a lot of fun together. And based on kind of how we're all interacting with each other and looking at the strengths of different people, what we've decided is Richard will become the Chief Operating Officer. And for those of you who are not so familiar with Richard's extensive curriculum vitae, he has a lot of experience running operations in other industrial companies, both on the manufacturing and the recycling side. He's super passionate about operations. He loves getting into the detail. And he wants to make sure that we can deliver on all these cash commitments that we're making. So he wants to be on the front line managing this. So we think this is a great move. And we're really lucky within JM that we have Alastair Judge, who many of you possibly know. Alastair is the current Head of Strategy and Operations. Alastair used to be the Interim CEO for Clean Air. So he knows Clean Air intricately, and he used to be the CEO for Platinum Group Metals. So there's nobody who kind of knows the business better than Alastair. What's important is Alastair is also a chartered management accountant. And for the vast majority of his working life, he's worked in financial roles. He was intricately involved in -- together with the entire team in developing the cash-focused business model going forward. So we think it's a great combination to have Alastair as the new CFO, Richard as the COO and then everybody else on the team who's a fantastic team, all working really closely together to deliver on our commitments. So we're absolutely convinced that this organizational model will help us to accelerate progress, and this is the way we're going. Maybe on that, because we have Anish with us here today in the audience, let me say Anish will be leaving. There was an announcement made today. Anish is taking up a great new role. He'll become Group CEO in another company. And that's a fantastic development. I'm super happy, Anish, for you personally. Anish has really strengthened Clean Air. And I think the most important thing Anish has done, he's developed a great team. There is a fantastic team within Clean Air. They're all ready to step up and they're all ready to support Richard. So I think this is -- for all of us, it's actually a really good news story. So big thanks to you, Anish, on behalf of everything that you have done for us. What's not on here is CT. The CT CEO will continue to report to me directly, but this is the new JM going forward. So will not be a member of this executive team and will continue to report to me as long as CT is within JM, which is up until the first half of the calendar year '26. So I hope that's relatively clear. Now this team also is -- has been placing a lot of emphasis on developing the right culture for us to be able to succeed with our commitments. And just to give you a few data points on how we're doing on that front, this is really important for us that we have a culture that really enables implementation of the strategy and not one that's holding us back. For us and particularly, I think anybody in the process-related industry, what's really important, everything starts with safety. Every meeting starts with a safety moment, really important for us. But it goes deeper at JM when we think about safety, it's about looking after each other. It's about taking pride in your workplace. It's about caring. And if you're -- I just have a fundamental belief if your safety stats are improving, probably your culture is going in the right direction. It's a sign that people care. It's a sign that they're looking out for each other. It's a sign they're taking more pride in their work. That's really important. And we've seen a significant improvement in our safety stats. We know we still have a long way to go. We need to continuously improve here, but it's important that we're seeing progress, and we are seeing progress here. Second one, and I've already mentioned Clean Air. It's not just Clean Air, all of our businesses. We've seen a significant improvement in customer satisfaction as measured by Net Promoter Score. Again, 13 points up for JM in total. That's an almost unheard of increase. in a very difficult market environment where everybody is dealing with lots of issues, our customers are thinking much more highly of us because they can see the value that we bring to them. So -- and this is really important for us that we have the customers front and foremost, we track this rigorously. Third point, data point, also super important, employee engagement, which is typically an early indicator of performance. There's usually a lag between where your engagement is and then how your performance turns out. And typically, when you have lots of change, external change, internal change, your employee engagement will drop typically. We've actually seen -- we've just measured this in October. We do this every 6 months. And we've seen another good increase in employee engagement. And this is over 80% of all of our employees reply to this survey. So this is a really big population and a good increase in engagement. So again, these are all data points that tell you something is improving and give us confidence that we can continue to drive performance. We've aligned incentives. We never had targets for cash in the past. We always -- it was always underlying OP and margin where typically and sometimes sales would typically be the KPIs we would use. Now we also have clear targets and incentives for cash so that people have skin in the game for what we have committed to externally. And that, we believe, is also helping us drive performance, which you can see then in the results that we've delivered in the first half. So just a reminder of what you can expect from us by '27, '28, at least mid-single-digit CAGR in pro forma operating profit going forward for which we're very much on track then this year so far. Annualized free cash flow of at least GBP 250 million and returns, as Richard outlined, returns to shareholders of at least GBP 200 million per annum. So that's what you can expect from us. Tracking progress, as usual, we give some milestones that hopefully enable you beyond the financial reporting just to be able to hold our feet to the fire because we need to do that for ourselves, but we want to be transparent about it. These are the areas that we think matter the most. And we give you a kind of a traffic light, and we'll do this every half year. And whenever there's any significant change to any of these variables, we will update you. As you can see, everything is on track. We've put the refinery on yellow because we have a few months delay. But again, this has no impact whatsoever on our guidance or our financials because we have the ongoing refinery, which will ensure that our customers continue to be supplied. So that's overall the strategic milestones. We'll continue to update you on that. And then just in summary, again, we think we've had a good start with the new model, significant increase in profitability, turnaround in cash with lots more to come and the sale of Catalyst Technologies on track. And we believe the organizational changes we're making will actually help us accelerate progress. So we have a lot to do. We have a lot to look forward to. And now we look forward to your questions. Thank you very much. Louise Curran: So thank you, Liam and Richard, for the presentation. We'll firstly take questions from the room, and then we'll move to questions from the webcast. [Operator Instructions] So Geoff? Geoffery Haire: It's Geoff Haire from UBS. Just first of all, on the ramp-up cost that you sort of alluded to back in May this year for the new refinery, I think you said it would be about GBP 20 million to GBP 30 million. Could you give us an update on what that would be now that you've got more line of sight as it were to when that refinery is coming online? Richard Pike: Still similar, Geoff. I mean, basically increased maintenance costs, dual running, lower metal and that sort of order. So in terms of what we set out in May, that's still sort of trajectory we're looking at. Geoffery Haire: Okay. And the second question I just wanted to ask was, and I don't want this to sound shirlish, but obviously, you've done a lot of work on working capital. Why has that not been able to be done before? And also, do you run the risk that you're working your inventory levels are too low for what you need to produce within the business? How do you manage that risk? Richard Pike: Yes. Look, this has been a growth-focused business. Actually, if you look at where over time, the capital has been deployed, where people have been focused in growth. And generally, when you actually focus on growth, you're actually growing working capital. It's not been focused as much on net cash generation. So to be fair to people, when you target a particular way and that's what we focused on, there are other things that you don't focus on. Now whether we should or shouldn't, it's sort of a bit irrelevant because you can't change the past. What I would say is there is a significant opportunity. [indiscernible] opportunity in payables because we've been paying people too quickly, actually and sometimes ahead of when we actually needed to. There's a significant opportunity in receivables because we've actually been collecting monies too slowly, and we carry far too much inventory. So we're way off a situation where we're potentially driving this to levels that are unsustainable. We actually -- we're only scratching the surface today. Louise Curran: Tristan? Tristan Lamotte: Tristan Lamotte, Deutsche Bank. was wondering a question on PGMS. Could you talk through conditions in -- currently in PGMS and why it would be down in H2? And I'm particularly interested in volumes and feedstock availability. And then linked to that, what kind of PGMS trajectory do you see in the next few years? And is there any change to that trajectory at all with the plant pushout? Richard Pike: We are seeing higher metal prices. So that feeds through in terms of underlying refining performance and to our trading side and that's because of increased volatility in the trading environment, our trading business makes more money when the environment is volatile. So that's benefiting. On the flip side, we have had one of the large mines in the U.S. that's closed. So therefore, there's been lower volumes on the refining side. But as I've also mentioned, because we're actually in a transition phase through to getting 3 built, we have got dual running costs. We've got lower metal recoveries because we've recovered metal over time. And I mentioned at the full year, we had a very strong second half last year, particularly because of metals and other one-off items. So once you've had a one-off item, it doesn't necessarily repeat, that means the following year, it will be down. So the fact that we've got higher running costs and lower one-offs is actually feeding into the second half. But it's exactly the same as what we said in the year-end. We said we'd actually dip before we actually came back. So you've got a decline trajectory through to '26, '27 and then recovery from '27, '28 forward as we get the new refinery up and running. Tristan Lamotte: And then -- I'm not sure if that's working. Yes. And then on exceptionals, just generally at a kind of group level, are you expecting that level to stay similar to H1 and H2? And does that come down into next year? Or what kind of trajectory are you seeing on that? Richard Pike: Yes. There's 2 real items Andre on non-underlying items. One is the costs associating with reducing overheads, i.e., losing people. And the other is the ongoing Clean Air footprint consolidation. So as we take lines out and take sites out, the cost of closure. Those costs you can see in the first half in terms of key categories, that will continue in the second half and continue into next year. And I indicated at the full year that if we're taking around about GBP 100 million of overhead out, that actually you'll be looking at a similar level of costs associated with that as well as Clean Air. So you'll see not exactly like-for-like, but you'll see that sort of overall level across the next couple of years. Louise Curran: I think the next question from Alex. Alexandro da Silva O'Hanlon: Congratulations on a strong first half. Alex O'Hanlon from Panmure Liberum. Just a couple of questions from me. The first is kind of on culture. Obviously, going through quite a big transition at the moment. And you pointed to the engagement score being like kind of upticking a little bit. Just kind of interested in kind of what you're doing to manage that culture during quite a big transition and how you are kind of confident that you can keep that high, that engagement score. Liam Condon: Yes. Thanks a lot, Alex. So we've actually spent a lot of time with leadership explaining we need people to be talking to people. When you've got this much change going on, what you don't want to be doing is communicating through slides and just webcast. We need line managers to be talking to their people to be listening to what their concerns are, taking them seriously and then working on an action plan to address those concerns. So very specifically, one of the elements we track is -- and we can see this from a people management point of view, has there been follow-up related to the engagement survey? Have your actions been -- have your concerns been taken seriously. And we can track literally across the board where it's working, where it's not working and where it's not working well, we then intervene with the line manager and give them support. And if they're not able to come along with the journey, then, of course, we have to take other consequences. But it's really about strong people leadership, listening to concerns, putting an action plan in place. so that people can see their issues are being dealt with and not some generic 40,000-foot kind of strategic stuff, but the issues that they're dealing with on the front line. So we place a lot of attention on that. I think that's the single biggest issue that we can do. And the second one would be everything related to safety because people can understand it's really important that everyone can go home safely to their families every day. And the amount of attention we put on that is quite exceptional. We dedicate a whole -- apart from the fact that every meeting starts with safety every time religiously, we dedicate an entire day every year where we shut down everything and just go through a whole raft of safety measures and trainings. And then we -- throughout the year, we'll have various elements around that as well. So I think it's just walking the talk really and showing people that we care and that with that, they should care too. And I think that's working. Alexandro da Silva O'Hanlon: Perfect. The second question was just on the GBP 2 billion of sales for Clean Air in '27, '28. Obviously, you've got kind of 90% of that in orders already, the same as at the full year. I think at the analyst call at the full year, you mentioned that there are tenders out that could even see you get up to 100%. So I'm just interested in how should we think about that number moving forward? Is it going to be kind of lumpy? Or should it kind of gradually tick up over the next couple of years? Liam Condon: Should the 90% go up to -- yes, yes. Yes, it -- I mean -- I think it's a good one to hand over to Anish just to give a bit of flavor on what kind of contracts we've been winning recently that are not yet in the 90%. So the 90% for sure, increases significantly going forward, but the quality of those wins, I think, is quite exceptional. Maybe, Anish, you can share just some examples of that. Anish Taneja: Yes, of course. Good morning, everyone. And I think it's a fantastic question. With me moving on, I can speak more openly, obviously. So there's one recommendation I want to give you when you look at the businesses. 90% of the GBP 2 billion already won is a great number. But to look at the quality behind it is absolutely crucial because when you look to the automotive environment today, not every tender has the same value in the future because you got to make sure that you win with the winners in the right markets. So let me give you an example with a brand that is clearly going to win in the next 10 years in South America, that's a better tender than maybe with a smaller brand in Europe because it just gives you more run rate, it gives you higher margins, it gives you a longer runway. So when we assess the quality of what we have won, we always look to how long is the contract in which market are we winning? What's the regulations there? How long will combustion engines be surviving in that market? And how is that OEM positioned to be a real winner. So that's the first thing. And then I can tell you the good situation that you have at GM right now is when you have won 90% already today, the total sales funnel is obviously above 100%. So theoretically, you could make it to even more than the GBP 2 billion. But obviously, you're not going to win everything in the funnel. But I can tell you, we are going to win some stuff in the funnel. For example, we have just received verbally the confirmation that we've won a huge LDG tender in Europe with a very big OEM, which is going to give us access to 20% of the hybrid market in Europe. That's going to be huge. So when that's confirmed in writing, I'm sure my colleagues, and it's my farewell present to Richard, will talk to you about that, and it's going to uplift that number. So that's how you have to see it. Louise Curran: We'll just check any more questions in the room. Just wait for the microphone. Thank you. Unknown Analyst: Just a quick question on the -- you mentioned the new contracts for data centers. It might be too early to share, but is there a rough value of those contracts you could share? And I just wondered if that's a new sort of start-up business, does it have any initial margin erosion impact? Or is that one you hit the ground running minutes? Liam Condon: Yes. So we're not sharing the financials now, but we will at full year simply because we want to have a bit more meat on the bones, to be very honest. Although this is a nascent business, it's using the core footprint of Clean Air. So there's no additional investment required in that regard. And this is not something that would be dilutive on the margin. So it's an area that we think is hyper attractive for us. But we'd simply like to have a bit more -- we'd like to show a fuller picture. And right now, it's more or less saying we're actually, we're winning contracts in this space. Multiyear means 5- to 10-year contracts. And what's kind of behind that from a financial point of view, we'll unpick further full year. Louise Curran: Any more questions in the room? So in which case, we'll move to the webcast. So sticking with PGMS, there's a question from Chetan Udeshi from JPMorgan. I think probably, Liam, you referenced the growing importance of critical metals. Are you seeing any change in customer behavior in terms of how they deal with PGM services? Is this business moving to a long-term take-or-pay contract? Can it reduce the lumpiness in earnings in this business? Liam Condon: Yes. We're both looking who's best to answer. It's a very -- maybe I'll start, Richard, and then you chime in. So de facto, we're not seeing -- and there's various moving parts when you think about PGMs. We're not seeing a significant change in customer behavior because these are precious metals. They've always been precious metals. It's just the focus on them has ramped up considerably. I think going forward, there's a keener awareness of where PGMs are actually sourced from. So for example, there is an ongoing discussion in the U.S., a very active live discussion that palladium being sourced from Russia should have significant tariffs on it, which is not the -- or should be sanctioned, which is not the case today. There is a body in the U.S. who has found that there has been some dumping going on there. And if that is the case and palladium is then sanctioned, Russian-sourced palladium is sanctioned in the U.S. that will have an impact in the market. It doesn't impact us because we have -- we do not source any palladium from Russia. That is not the case with all of our competitors. So there is a stronger focus on the source of PGMs going forward. The fact that recycled PGMs have close to zero carbon footprint is something that customers like. They just haven't been willing to pay for it previously. I think as carbon pricing ramps up going forward, that will become more of a topic as well. But the fact though, we don't get a premium because the product is recycled. It's a globally traded product. There's one price as opposed to a differentiation between a lower zero carbon source of PGMs and something where there's a much stronger carbon footprint. So overall, I think from a contractual point of view, we are having discussions and have been having discussions with customers about a fee-for-service type of a model as opposed to just taking a percentage of the value of whatever it is that we're recycling. If you move to a fee-for-service model, that would reduce volatility. That's always a commercial negotiation where there's -- it can go either way. Some customers want that type of a service, some don't. So we make it very much customer dependent, but that's the way we think about it. I don't know, Richard, if there's anything to add to that? Richard Pike: Just try not to replicate anything Liam said, but just for anybody who's less familiar with PGMS, the 3 bits of this business. There's a refining operation where we refine our customers' metal. So it's really, really important that they trust what we do that we take their metal and return as much PGM content as is possible. When I was at the PGM week in New York a couple of months ago, I saw 12 of our top 20 customers. That came out really strong. And obviously, we've been in this industry for 200 years. And the trust in JM, which is fundamentally important. It is -- we are a commodity refiner, so cost per unit is important, but trust in what we do is really important. And I think we stand out there. We have a products business. So we turn PGMs into products. That we do a whole variety of things for our customers. And actually, we're actually, I think, more inventive than others. Quite often, if we see things go away, we're quite often better at providing solutions than that keeps people coming back. And then we have a trading business where I mentioned both metal price and volatility is quite important. Liam talked a little bit about contractual situation. But if you look at the volatility, to Chetan's question, the volatility of returns is primarily about PGM prices, these commodities. So you can't fully get away from that because of commodity and prices will go up and down. What we can do is smooth things. And so as prices have been at 12-, 13-year highs recently, we have looked to lock in a bit more of next year's and the year after's pricing. But that's -- you can only smooth things. Taking a hedge is a gamble because at the end of the day, things can go up or down. So we can remove to some degree, some of the volatility, but you can't remove it entirely. What we can do is we can ensure that we've got consistent refining operations and actually ensure we deliver for our customers on time and deliver their promises. But actually, we've got our cost base in the right place to ensure that we're as competitive as anybody else, and then we manage our commercial situation where we smooth that volatility over time. And those are things that we're looking at in the underlying business model. Louise Curran: The next question, sticking with PGM Services is from Adrian Hammond from Standard Bank Securities. Could you please give some color on autocat recycling volumes? Are volumes still subdued? And how does this differ regionally? Richard Pike: Yes, they are still subdued at the end of the day, although the penetration of electric vehicles has slowed, it's still an increasing space. We have seen down. We haven't seen it come back yet. We do expect to see some degree of recovery there, but it's not feeding through in the market just yet. Liam Condon: Yes. And maybe to add to it, I mean, we had been expecting for some time that the U.S. would bounce back from a kind of recycling point of view on the autocat side. And it hasn't -- so far, it hasn't. And there was kind of -- what we were hearing anecdotally was with pricing where it was, there wasn't enough of an incentive to actually encourage more recycling. With prices where they are now, what we're hearing is the incentive has definitely increased to actually start recycling more. So we've got anecdotal evidence that things are starting to move in the U.S., but we'd like to see it in hard data before we would say it's real. Louise Curran: The next question is on Clean Air from Chetan Udeshi from JPMorgan. Have you seen any shift in Clean Air volume momentum in the current quarter? There were some concerns that there might have been some prebuild in the supply chain ahead of U.S. tariffs. Liam Condon: Do you want -- Anish, do you want to -- here you go. Anish Taneja: Very clear answer, no. So there has nothing been like that. Maybe as a little explanation, you know that we are winning our business, as Richard has described perfectly, very long before we actually produce, which is actually an opportunity for us and not a risk. We can talk about pricing excellence in that time with our customers. Lots of topics there where we can uplift the price. And then the second thing is as we are delivering to Cannes that supply chain is hold very tight. There's opportunities we have taken now on the working capital side. There's more opportunities there for GM in the future. So that's very, very good, organized, very good process and the risk of high inventory builds before certain effects, for example, summer breaks or factories or tariffs or anything has not happened. Louise Curran: Thanks, Anish. The next question now is around Catalyst Technologies from Ella Harvey at Lombard Odier. How does the weaker performance in the segment impact the sale? Liam Condon: Thanks, Ella. So as outlined, the conditions for the sale are related to regulatory approval and to the carve-out, both of which are very much on track. So the market performance is not a condition. Louise Curran: I think that's it in terms of webcast questions. So we'll just do a final check in the room. I think that's good. So thank you very much, everyone, in the room and for your attention on the webcast. And hopefully, we'll see as many of you as possible over the next couple of weeks or so as we do roadshows. Thank you very much. Richard Pike: Thanks a lot, everyone. Thank you.
Operator: Good afternoon, ladies and gentlemen, and welcome to the Volex plc Interim Results Investor Presentation. [Operator Instructions] Before we begin, we'd like to submit the following poll. And I'm sure the company will be most grateful for your participation. I'd now like to hand over to Group Chief Executive, Nat Rothschild. Good afternoon. Nathaniel Philip Victor Rothschild: Good afternoon, everyone, and welcome to the Volex half year results presentation. I'm going to provide you with a summary before handing over to Jon, who will give you more detail on the performance in each market. Following this, I'll update you on our strategy before we take questions at the end. Before we turn to the results, I'd like to talk to you about a further step in our strategic journey I'm delighted that Dave Webster has agreed to join as our Non-executive Chair, enhancing an already exceptional Board of Directors. Dave has unique industry experience. In his current role, he's led the transformation of CPM, a global leader in advanced process automation equipment. And prior to that, he was the driving force for growth and transformation as the CEO of Electrical Components International or ECI, a leader in consumer electrical and off-highway harnesses. He brings decades-long customer relationships in our space, particularly in North America, and he will strengthen the Board's sector insight. His experience will be invaluable as we scale our North American operations and deepen our customer partnerships in this important market. This month, incredibly marks 10 years since I joined the Board of Volex and became Executive Chairman in effect, combining the Chairman and CEO roles. I came into a business that was in decline with less than $400 million of revenue and a market cap of about GBP 50 million. And in fact, it dropped down to GBP 30 million at the low and I set about building a new organization, including talent from within Volex who had not been given the leadership they deserved. So with this excellent team to support me, a lot of hard work and endless travel, we've created one of the true standout success stories in U.K. industrials. A significant architect of this success is John Molloy, our global COO. And he will continue in the same role and is every bit is committed to the business as I am, and both of us have very significant personal investments in Volex. Indeed, my move into the Chief Executive position in Volex merely underlines my deep and ongoing commitment to driving further growth and customer engagement. I will continue to lead from the front, delivering our ambitious plans and bringing in new customers. And I'd also like to say that none of this would be possible without Jon Boaden exceptional financial skills and cool head as the business has become increasingly complex. I'm very grateful to Jon who is sitting next to me. I'm very much as well looking forward to working with Dave and the existing Board to pursue growth in our markets. There are very substantial opportunities ahead, and we have big ambitions. This is a sensible time to align more closely with corporate governance best practice given the scale of our organization and the strong performance we are setting out today. Moving on to the results. We've delivered another excellent first half with revenues of $584 million at an operating margin of 9.8%. We've generated further strong organic growth at 13% despite a challenging macroeconomic backdrop. And in particular, we've seen very strong growth in electric vehicles and data centers. And later in the presentation, Jon will take you through exactly what has happened in each sector. The strong performance is proof that our strategy is working. Investment we chose to make in previous years is supporting growth this year and beyond. Our capabilities make us a first choice provider of critical connectivity solutions for global technology businesses. As the world changes, we're changing with it, and we are evolving our footprint to follow the demands of our customers who are reconfiguring their supply chains to deal with tariff challenges. Our move towards centers of excellence where we can deliver a range of the most advanced Volex solutions in a single location has resonated strongly with customers. It also gives us the opportunity to rationalize smaller sites, thereby improving the overall efficiency of the group. We continue to win new projects with our customers, particularly with electric vehicle customers and in the North American off-highway space. Our first half performance positions us strongly relative to our 5-year plan, which, as you may recall, sees us getting to $1.2 billion of revenue by the end of FY '27. Our strong results for the first half or another significant step towards these objectives. Before we break out the individual markets, it's worth talking about how our customer-centric approach delivers deeply embedded customer relationships, giving us confidence in our strategy. As you should all know by now, we work with the biggest technology brands in the world who have earned recognition as leaders in their fields. They trust us to deliver manufacturing solutions that meet or exceed their quality, reliability and functionality requirements. Although our assemblies might be a small part of large and complex systems they play a critical role every time. This is no different whether we are powering a domestic appliance that brings convenience to everyday life or connecting the key components at the heart of life-saving technology. We've built a business that revolves around the customer. We anticipate their needs and rise to their challenges. Our engineers define innovative production solutions and optimize processes for products that are assured to perform in challenging environments. This creates strong customer lock-in and sticky relationships. In many cases, regulatory requirements form a barrier to our substitution in the supply chain. In others, our deep expertise and consistently strong delivery position us as a preferred manufacturing partner. So this customer-led approach, disciplined reinvestment and daily operational excellence form the foundation of a business that compounds value over time. Many of our largest customers have been working with Volex for longer than I have been operationally involved in the business. Over the past decade, revenues have trebled given by expanding share with existing customers, winning new products and customer projects and customers and a targeted acquisition strategy. Operating margins have strengthened from 2% to a consistent 9% to 10% range, maintained successfully for the past 5 full years. And as a result, operating profit has grown from $7 million in FY '16 to $106 million in FY '25. This performance reflects stringent cost control, relentless operational improvement, talent attraction and retention from the top to the bottom of the organization, plus targeted investments in future growth, each aligned with our customers' priorities. And this combination of growth and margin expansion has translated into basic earnings per share rising from $0.015 in FY '16 to over $0.36 in FY '25. Volex continues to steadily build capability, deepen relationships and deliver consistent, sustainable returns creating shareholder value that compounds year after year. I'll now hand over to Jon to take us through the financial performance in the end market. Jonathan Boaden: Thank you, Nat. So first and foremost, I'm incredibly pleased with the results that we've been able to deliver and this is an excellent performance of $584 million of revenue in the first half of the year, which represents organic growth of 13%. Profitability is towards the top end of our margin target at 9.8%, which means we've delivered $57.2 million of adjusted operating profit in the first half of the year. With lower interest costs, that means we've increased basic earnings per share by 30% to $0.197 per share on an adjusted basis. We've maintained a strong track record around return on capital employed despite the investment that we made in our business, which includes putting in additional working capital to support customers. And as a result, we've stayed at 20% return on capital employed. These results are an indication of a business that is in great shape and navigating dynamic market conditions effectively. Over the next few slides, I'm going to take you through what we've seen in each of our end market verticals. We've established a market-leading capability in electric vehicles and are recognized for our proficiency in both designing and producing key components to power the next generation of transports. Our long-standing partnership with leaders in EV technology has positioned us well to support a broad cross section of the EV market. Much of our 13% organic growth has come from expanding our capabilities laterally to meet evolving market demand. This includes delivering complete AC charging solutions through integrated end-to-end manufacturing. Consumer demand for electric vehicles has continued to grow in our key markets in the U.S., Europe and China. EV sales as a percentage of new car sales recently hit 30% in Europe and 58% in China. While changes in government incentives in some markets such as the U.S. may soften short-term consumer demand, long-term prospects across key geographies are strong. Our footprint allows us to be flexible around customer requirements. For example, we are moving a new program to Mexico to support the customers' tariff optimization strategy. And while this will push out the timing of the initial ramp-up, it is exactly the type of dynamic problem solving that strengthens relationships. With enhanced capabilities supporting a wide range of global automotive brands, we have confidence in our ability to grow EV in the medium term. It's worth starting the explanation about consumer electricals with some context about the performance we've seen over the last 18 months. We have what you might call a post destocking rebound in the first half of FY '25 when we hit $132 million of revenue. This normalized to $125 million in the second half of FY '25. For the first half of this year, we delivered $126 million, slightly down versus a year ago and more in line with the H2 performance. This represents an organic decline year-on-year of 6%. Main voltage power cord continue to represent the largest share of what we do. We work with some of the biggest consumer brands in the world where reliability, reputation and customer experience are key priorities. These brands choose Volex because they have confidence in our ability to exceed their quality and safety demands. Vertical integration and scale in this market means that we have relationships with all the major domestic appliance manufacturers. This is giving us significant traction as we continue to push our harnessing capabilities, an area where we see strong opportunities for growth. In fact, harnesses and other complex assemblies now constitutes almost 1/3 of revenues. In the second half of the year, we have a new incremental harness opportunities in Europe. We've seen some secondary impacts from tariffs on European domestic appliance manufacturers. Some of the Chinese competition have reallocated their marketing spend from the U.S. to Europe and are pushing inventory into the European market in response to U.S. tariffs. This is likely to result in some short-term rebalancing with medium-term growth weighted more towards harnessing opportunities. Now moving on to medical. Although medical is the smallest of our sectors, we proudly support health care innovators whose technologies are transforming patient outcomes and improving lives. Our assemblies distribute power and data through sophisticated medical equipment, ensuring reliability, accuracy and patient safety. The first half of the year has seen disruption in demand for complex medical devices, reductions in spending for both medical research and public health care and the impact of tariffs are leading to reduced or delayed orders for some large medical equipment. The effect is different between customers with some customers continuing to increase demand during the period, but others looking to reduce orders and manage inventory levels. We have the flexibility to manage this variability within our operations and support customers as demand pattern shift. It is against this backdrop that we saw our sales in the medical sector declined by around 10% organically during the first half of the year. It is likely that the uncertainties caused by the impact of tariffs and policy changes will continue in the short term and will result in a headwind to medical demand. However, we remain very positive in relation to the medium term. This is partly due to the success in winning new projects with significant medical brands, expanding the range of customers that we work with. In addition, structural growth drivers are very strong in this sector with rising demand due to demographic change and advances in technology, creating new diagnostic and treatment options. And with our significant and in-depth understanding of our customers' requirements, we are well positioned to meet the needs of these health care innovators. We've seen excellent organic growth of 48% in complex industrial technology with data centers a significant part of that, but we've also had growth across the other categories. Outside data centers, which I'll come back to shortly, we're delivering complex assemblies, both wire harnesses and printed circuit board assemblies into highly specialist and demanding applications. Our customers need exceptional quality and complete confidence that the solution will work first time and every time. Meeting their challenging technical and scheduling requirements takes coordination across our operations and engineering experience to support the build process. When we successfully deliver, we unlock additional project opportunities and further repeat business, which contributes to our growth. We are well positioned in the U.S. market with advanced facilities, which are accredited to deliver defense and aerospace products. This includes involvement in major programs that is stepping up to address current defense challenges. Our overall organic growth outside data centers was over 20%, and much of this came from defense projects. In parallel, we're seeing increased demand from core industrial applications such as building environmental systems. Although the end users are different in all cases, customers are relying on us to deliver a complex solution with maximum reliability in a competitive way. Our additional capacity in Mexico is an important part of fulfilling these requirements. In data centers, we're supplying high-performance copper data interconnect, operating at speeds of up to 800 gigabits per second. These cables form the critical physical links between servers, switches and storage systems within data center racks, enabling ultra-low latency, high bandwidth connectivity for AI and cloud applications. Growth in data center investment globally is fueling demand for these products and revenue is up by 80% compared to the comparative period. As with so much of our portfolio, our ability to manufacture in a variety of locations gives us a competitive advantage given in the ever-changing tariff landscape. And finally, turning to off-highway. Here, we've delivered really strong organic growth of 20% in the first half. This included a project for specialist military vehicles in Europe that doesn't repeat in the second half of the year. This was a project that we were able to win because of our ability to move quickly and respond to customer demand. Our success in this market is down to supporting specialist vehicle manufacturers in areas such as construction, agriculture and large passenger vehicles who have demanding requirements across a significant variety of products. Our ability to leverage our advanced manufacturing platforms to deliver efficient and repeatable solutions despite variable lot sizes is a differentiator in this market. We're making excellent progress in the North America, where expanded capacity and our highly skilled engineers and sales colleagues are securing new project wins. This comes at a time when U.S.-based manufacturers are looking for regional production to manage their supply chain objectives. Let me step you through what we've achieved in margins during the period. We are blending together various operating margins across our entities and then adding in investment in capacity growth and capability expansion. These investments include adding incremental manufacturing space or additional salespeople. On a year-on-year basis, we've improved our first half margins to 9.8%, which is towards the top end of our 5-year plan margin range of 9% to 10%. In achieving this, we've identified cost optimization improvements worth 0.7%, which broadly offsets the impact of inflation during the period. The optimization includes further benefits from rolling out automation as well as the productivity actions highlighted as part of the integration of Murat Ticaret. We also achieved savings through site rationalization of 0.5%. We have a mix benefit, which reflects lower consumer power cord sales and higher revenues from our data center customers. There was a small adverse impact from the weakening of the U.S. dollar, which is our main sales currency. Overall, 9.8% is a very strong first half result, particularly given the amount of investment that has gone into our business recently, Nat will come back to the theme of investment shortly. So now moving on to cash flow. As in previous years, there are some factors in the first half that tend to result in lower cash generation in H1 compared to the second half of the year. EBITDA was up to $73.6 million, a 20% increase over the comparative period. Capital expenditure was lower at $21.3 million, which is approximately 3.6% of revenue and well within the 3% to 4% range that we had guided to. Once again, we had an increase in working capital and higher inventory is a big driver in this. About half of the increase in inventory is coming from data centers, where we hold stock in hub locations to support timely fulfillment of demand. The remaining increase in inventory is across our other go-to-market sectors and reflects the impact of increased demand as well as building buffer stock to support relocation activity. Part of this expansion includes an increase in defense projects, where we hold a greater level of raw materials for operational reasons. Interest and tax are similar to the comparative period, which reflects the timing of tax payments and current debt interest costs in our growing business. The repayment of leases shown below free cash flow includes the exercise of an option to secure the freehold of 2 existing sites at a significant discount to market value, providing greater security and control. Our covenant net debt ratio, which is our preferred way of looking at leverage and excludes operating lease commitments, improved from 1.3x to 1.1x, giving us great balance sheet strength and flexibility. Our capital allocation priorities are unchanged from prior years. Our primary focus is on organic investments. In addition, we continue to explore acquisition opportunities in a disciplined way. I'll now hand back to Nat to update on our strategy. Nathaniel Philip Victor Rothschild: Thank you very much, Jon. I wanted to return to the key pillars of our strategy and outline how this contributed to our first half performance. First and foremost, we are in the right markets where we are winning new business, and I'm particularly pleased with the progress we've been making in off-highway in North America. Our team is getting a huge amount of traction with customers who are looking for a high-quality and cost-effective solution. It is an opportune time for Dave Webster to join our organization. And later this month, Dave and I will be on the road meeting with our customers and visiting a brand-new site we are opening this month in Central Mexico. The substantial growth we have delivered in the last 2 years reflects our ongoing investment program. For example, our product development strategy in EV is delivering growth. Our global capacity investments have given us capability in the right locations to support our customers' tariff mitigation strategies. And this is particularly the case in Mexico, where we have an abundant pipeline of opportunities, many of them new just in the last 6 months. We are a critical manufacturing partner for our customers who depend on our engineering capabilities, our attention to detail and our ability to meet challenging specifications. We build deep relationships by exceeding their expectations. Moving complex production from a competitor or between sites is a big decision. In the last 12 months, we relocated multiple programs for our customers without any major surprises and they have confidence in our ability to deliver. Our people are central to our performance. We trust our teams to deliver. We put our skilled managers at the heart of customer relationships. With the demand into our facilities in North America, we've been augmenting our team in the region, and we are seeing the benefits of this. And finally, acquisitions have been a significant element of our growth story, although it's just over 2 years since our last deal. In the first half of the year, we looked at a handful of varied opportunities but nothing met our strict criteria. With a huge amount of organic growth and new customer programs to deliver, we are looking for well-run businesses with strong management teams that can slot into our organization. We are continuing to pursue some interesting opportunities, but we won't compromise on our acquisition criteria. Every deal we do has to be the right deal for Volex. This investment approach is an important part of how we drive consistent growth and how we position ourselves to win incremental programs with new and existing customers. The qualification process we go through for major new programs is understandably stringent given our critical role. We built capacity ahead of demand based on market knowledge, so we can dedicate space to customers during the qualification process. This has been very successful. Take Batam, Indonesia, where we have now almost filled the additional space we opened last year and also Tijuana, Mexico where we are experiencing strong demand for tariff-free manufacturing, having doubled the size of the facility last year. This month, as I mentioned just a moment ago, we are opening a further purpose-built site in Central Mexico, doubling our capacity in this area. However, footprint is only part of the story. We need to have the right capabilities in our facilities to support evolving requirements and to enhance efficiency. An increasing number of our new programs are built to be highly automated from day 1. In addition, we are retrofitting automation technology to existing lines, reducing operating costs and enhancing throughput and yields. Our vertical integration is at the core of our competitiveness and this differentiates from many of our competitors. And we are currently rolling out additional specialist wire products that we extrude ourselves as well as making complex plastic components and connectors in-house. Our investment in product development focuses on both power products to meet evolving demands in the EV space as well as the next generation of data center cables. And we continue our strong focus on cash payback with the majority of capital programs achieving cash payback within 2 years and often much quicker. This market-leading approach to investment, it helps us to secure benefits quickly and gives us confidence to continue investing in our business. So it seems like yesterday, but we are 3.5 years through our 5-year plan. And our first half revenues of $584 million is a significant demonstration that our strategy is working. It's also proof that we are rapidly closing in on our target of achieving $1.2 billion of revenues. We've been comfortably maintaining our operating margins towards the upper end of the 9% to 10% range, and we are achieving this even after significant investment in growth. And this gives us a high degree of confidence that we will achieve the 5-year plan. So now is the time to summarize our performance and take you through the outlook for the second half. These are, once again, excellent results, a real achievement against the backdrop of tariff-related uncertainty and difficult macroeconomic conditions. And our growth is proof that the strategy is working powered by our investments in incremental capacity and capability. And in addition, as we scale up the business, we continue to achieve healthy margins at the top end of our target range as our operating leverage increases. We have confidence to invest and to pursue acquisitions because we have a strong balance sheet and very significant financial flexibility. And looking forward, we are off to a very good start for the second half of the year. We are mindful of the challenges for short-term uncertainty, particularly arising due to tariffs. However, this is a diversified business with deep long-term customer relationships. Those customers have supported our ability to grow despite these tough conditions, and we expect second half revenues to be broadly in line with the first half. In fact, we see the changing global trade environment as an opportunity for Volex. With our geographic capabilities and ability to support customers moving manufacturing between countries, we are well placed to secure further growth. Given our sustained focus on long-term value creation and our tremendous progress against our current 5-year plan, we have started working on a new 5-year plan and this new plan will reflect the strong and scalable business we have created and set out our ambitions for both revenue growth and margin improvement for the next stage in our journey. We will share this plan with investors in due course. And now we would be very happy to take your questions. Operator: [Operator Instructions] Jon, Nat you've had a number of questions from investors today. So thank you, firstly, to everybody for engagement. Jon, if I may just hand back to you, if you can take us through the Q&A and then I'll pick up from you at the end. Jonathan Boaden: Yes, of course. Thank you, Mark. Yes. So I'm going to collate the questions because often we get several questions on the same topic. So what I want to try and do is try and answer as many as possible and go through a broad cross section of the things that are being asked today. So the first question, one of the pre-submitted questions is, will your manufacturing center around Turkey or might you expand in the U.S. partly in order to mitigate the impact of tariffs? Nathaniel Philip Victor Rothschild: Do you want me to answer that one? So look, we've got 5,000 people in Turkey. We have, I think, 8 sites there at the moment. So we're committed to Turkey. We have more than enough expansion space at the moment, should we need it. And we've also just opened a brand-new low-cost site in the center of Turkey, where labor costs are highly competitive. I think in North America, North America has always been a critically -- the critically important market for us. And if you look at what we've done in Mexico where we have doubled the size of our Tijuana site, and as I said, at least one occasion in my presentation, we've opened a new purpose-built site or we're going actually next week to open a new purpose-built site in Central Mexico. So we are covered for the U.S. market through our investments in Mexico. So I think the -- and we have 2 sites -- 2 existing sites, 2 specialist sites in the U.S.A. at the moment. Jonathan Boaden: There's another question here about -- we announced that we were manufacturing partners for AFC Energy. And the question was to understand how significant that partnership is. Nathaniel Philip Victor Rothschild: So I think that you would need to go and extrapolate from the AFC business plan what -- how big the opportunity could be. But we have the capability to take costs out of the AFC, the portable hydrogen generators that AFC makes. And AFC's success will be contingent on dramatically reducing the cost of those generators. And we're working with AFC as we speak. And I think you need to look at their management team to answer that question. Jonathan Boaden: There's a question about when the San Luis Potosi facility will be operational, which is actually operational now. It opened at the beginning of the previous week. And Nat and I, as well as John Molloy and Dave Webster actually going to San Luis Potosi to see the new facility and to cut the ribbon on the site, but also more importantly, as an opportunity to introduce Dave Webster to the operations of Volex and to also take the chance to meet with customers. So that's a really exciting trip for us. So there's a question about Medical organic revenues have declined by 9.9%, driven by reduced global spending on health care and research. What is the plan to turn this around? And that's a question from Anthony. And I'll start and if you like Nat, you can add your thoughts. But really, we're not planning to do anything different in medical. Because actually, the strategy we have is working. We have some excellent deep relationships with customers. We have some excellent facilities and overall, we see very long-term structural growth drivers in the medical market, and we feel that we're well positioned. And it's a great strength in the portfolio effects we have across the 5 markets that if one of those markets is experiencing a short-term dip for various reasons, in this case, it's related to tariffs and changes in legislation, then we can still deliver 13% organic growth across the piece. So we don't feel that we need to do anything significantly different in medical because we're already doing all the right things. Nathaniel Philip Victor Rothschild: Yes. And just to add, if you strip out our largest medical customer, we grew organically year-on-year in Medical by a few points. And the medical business we have requires very little capital investment. So the sites we've got, for example, in Poland, and in Slovakia that are exclusively medical, they kick out big dividends up to the group every year. They have very, very healthy margins. The business is incredibly sticky. And we've managed to grow our -- we've managed to diversify our medical business tremendously over the last 10 years. And I'm very optimistic about the medical business. I think the amount of destocking that's occurred over the last 12 months. I think some of the customers have gone too far, and I think you can have a really kind of rip come back next year. Jonathan Boaden: Good. Thanks, Nat. It's a question from Stuart about the fact we referenced tariff-related uncertainty multiple times. And he'd like us to explain which specific tariff regimes by region products are the most material to Volex's P&L. So in terms of tariffs, it's our strategy with tariffs from the beginning has been to pass the costs on to our customers, and we've done that in 100% of cases that we pass through the cost of tariff to our customers. And in these results, there's only really 2 areas which we referenced in the presentation where we've seen the impact of tariffs. Part of it is in Medical, where some of our particularly euro-centric customers are seeing reduced demand as they sell into the U.S. And the other area that we mentioned in the presentation is in relation to consumer electricals where Chinese competition are flooding the European market with product at the moment, and there will be a rebalancing that will occur over a period of time in terms of demand. And we addressed the Medical piece earlier on why we still feel very confident in Medical. And in terms of the consumer piece, as we've talked about in the presentation, the big opportunity in consumer is around harnesses. Now quite often for domestic appliance manufacturers, we will sell them a power cord for $1, a harness for a washing machine or an other domestic appliance, we might sell that for $6. So you can see quite quickly that if we can grow the share of that harness market, that, that could have an appreciable impact on our revenue over a period of time, and that's very firmly where we have our sight set in that consumer electricals business. So there's a question from Peter about which of our 5 end markets, EV, consumer, medical, complex industrial technology and off-highway, do you expect to grow the fastest and why? And I feel that that's a question that's best saved for when we release our new 5-year plan. We've clearly seen tremendous growth over the life of the current 5-year plan, particularly in EV, in complex industrial technology. And the next 5-year plan that we will set out in due course will give an indication of where we think that future growth can come from. But overall, we feel very positive about the opportunities in end markets. And to that end, is there a particular end market that you feel particularly optimistic about, Nat, in terms of long-term growth opportunities? Nathaniel Philip Victor Rothschild: Well, true to form, I still feel optimistic about all of them. But I would pick out -- I think, look, we said it a lot that you have a situation where labor rates are going up in Mexico, and there is an opportunity to showcase low-cost manufacturing in Southeast Asia. And the -- it's reason of consumer electricals and then it's, for example, the commercial HVAC market, which are really suited for manufacturing in Southeast Asia. And those are areas of business that require less capital investment than some of our other silos. And I think those are very interesting areas. So there's a little piece of -- a growing piece of complex industrial technology, which -- and then there's the consumer electrical side where we are seeing -- we're getting great traction. So I've always said that the consumer electricals side of our business is very, very underappreciated. And where we came from 10 years ago, we had a non-vertically integrated power cord business and we had no consumer electricals harnesses at all. Now we have a business doing around $0.25 billion a year of revenue. And it's a very, very underappreciated part of our portfolio. Jonathan Boaden: Good. Thank you, Nat. So there's a question which is asking for -- from RW asking for some clarification because there's a statement I made, which is along the lines of that there's an increase in working capital driven by investment in inventory. And I mentioned that part of that is because we're operating through a hub model in data center sales. And the question is, can I please explain what that hub model means. Now how that works, how certain customers ask us to support them is by putting inventory into hub locations, particularly in the U.S., and that allows us to manufacture in Asia, and then we ship to the hub locations and then that inventory is available for the customer to pull to meet their requirements. And it works very well for the customer because that inventory sits on the Volex balance sheet which is one of the reasons why you see this adverse movement in working capital. But for operational reasons, from a customer's perspective, they like that confidence that as there are peaks and troughs in demand of their particular use case. So when they're building data centers that they need to move very quickly to populate the data center with infrastructure, which includes all the service switches. And then, of course, the cables that critically connect all of those things together. They want the confidence that they can go to these hub locations in the locality of where the data centers are being built and move very quickly to achieve their build-out requirements. There's a question from [indiscernible] about if we could explain or if I can explain the decline in revenue in Asia. So within the earnings release. We report revenue both in terms of the go-to-market sector, for example, EV or consumer electricals, but we also report a regional split and there is a reduction in Asia and quite a significant increase in North America, and it really just reflects the end markets where we've seen the biggest pull of data center products and the particular customer mix in those markets. So it's just really a function of how we report where particular customer revenue comes from as noted in that release. Question from Melvin. How significant is the volatility of the copper price to the business and what stocking, destocking is taking place in response. So as we've said previously, and remains to be the case for assemblies and products where copper is a significant element of the bill of materials, it is our policy to pass that copper risk through to the customer. So there is a repricing mechanism around copper and when copper goes up, then we're able to charge higher prices, which means our margins remain consistent in the face of copper volatility. And that is a process that has worked very well for us, but it also is something that's very well understood and accepted by the customers. And we haven't seen any significant evidence that customers are either stocking up or destocking in advance of anticipated moves in the copper market. So of course, the copper market moves very regularly and sometimes quite unpredictably. And for some of our customers where they choose not to take that risk, then we back off that risk ourselves by going up to a bank and hedging the copper exposure. There's a question here from Anthony saying that the markets have reacted favorably to these results has been seen by a substantial increase in the share price. Do you think the present share price and market cap is a true reflection of the value of the business? Or do you think the business is still undervalued given the future growth opportunities? Nathaniel Philip Victor Rothschild: So look, I think investors have to decide how to value Volex. I think given our growth rate, our organic growth rate, where we compare against other U.K. industrials, we should trade on a higher multiple. Jonathan Boaden: Good. There's a question from Theo about has Volex ever considered entering the grid electrical cable market given its growth? And if not, why? So I think this is referring to more like the national grids that the supply side of the electricity distribution market. Do you have any thoughts on that, Nat? Nathaniel Philip Victor Rothschild: This is a different business to us. So this is a business that is dominated by companies like Prysmian and Nexans and other large multinational businesses. And this is not what we do. And Also, the business has much lower margin characteristics. Those are sort of single-digit operating margin businesses. So we're looking for niches. We're trying to be maneuverable. We're looking for more -- for kind of less commoditized business. Jonathan Boaden: Yes. Great. There's a question about the percentage of revenue that each of our largest customers make up in the markets that we operate in? Well, in terms of customer concentration that we have a very broad range of customers. And there's nothing that we, from a management perspective, feel particularly concerned about in terms of customer concentration risk. We do have some larger customers, which tend to be very well-known household names that are leaders at the frontier of technology developments and in particular, we see that within complex industrial technologies and within the EV sector. And what's great with working with companies at the forefront of technology is through our manufacturing partnerships and the complex products that we offer to them, we're able to learn a lot about developments in the technology, and that helps us as we engage with other customers who are perhaps a bit behind the -- a bit further from the leading edge. There's a question about whether the boost that gold miners have had this year with rising gold prices has led to an increase in demand for off-highway vehicles to sort of support the gold market. Now I don't think we have seen anything down to that level of granularity. But perhaps a few words on where you see things in the off-highway space and particularly, I suppose, obviously, you have North American opportunity? Nathaniel Philip Victor Rothschild: Well, interestingly, we won a contract with Fortescue to make the wire harnesses that go into the next generation of electric mining trucks and I went down to their headquarters last year and met Dr. Andrew Forrest and had a tour. And that contract has actually unfortunately, gone away because of the decision by Fortescue to move all their production to China and partly because of some of the decisions that this government has taken. And we're trying now to kind of requalify ourselves on the China part of that business. But that's an example of exactly the type of business that we like to do, which is a big off-highway super customized, heavy harness with tons of complexity to it. Overall, the off-highway business has grown 20% in organically through our acquisition of Murat in Turkey in 2022, we've got almost every single one of the major customers and we're now trying, as we said in previous calls, we're trying to then cross-sell those opportunities into other geographic locations. So that includes North America and obviously, Asia as well. Jonathan Boaden: There's a question I'll take from Nick. Given I run one of our support functions, the finance team. And it's about given the growth of AI, what steps are Volex taking to implement AI in our own organization. And it's a good question that there's a tipping point now in terms of how these technologies have developed that it does allow you to run things in a more efficient way. And AI is just one of the avenues that we are looking at and actually using on a regular basis to become more efficient in the back office of Volex. And that's really important because as we grow revenue, if we want to look to enhance our margin position, and we need to do that through further operating leverage, which is all about running as efficiently as possible in the support functions of the organization so that the operating leverage comes through. And as well as AI that we're using cloud technology, we're using lots of applications. We're rolling out a new ERP system, which is going incredibly well and is giving access to a new feature set, and we're using more tools for greater collaboration across the business. So all of these things come together to put us in a position where we're enhancing the efficiency. I think as a final question. We had a question from Chris who says excellent results, well done. I know it's somewhat futuristic, but do you see data centers opening into space? So I didn't know whether you had -- any thoughts on that as we come to close the Q&A session. A rather left field question for the very end. Nathaniel Philip Victor Rothschild: Well, maybe on asteroids as well in space, but it's -- no, the answer is I don't have any great insight into the thinking of Elon Musk. He is the only person who could possibly pull something like that of. Jonathan Boaden: Very good. Thank you. Operator: That's great. Jon, Nat, thank you very much indeed for updating investors. And of course, if there are any further questions, Jon will give those to you post today's call. Thank you once again to you both. Nat, perhaps before I redirect those on the call to give you their feedback, which I know is particularly important to you both, perhaps I could just ask you for just a couple of closing comments. Nathaniel Philip Victor Rothschild: Well, it's 10 years since I've been doing this, and I think it's 5 to 6 for you now, isn't it as well. So we're in the midst of the journey, and we're grateful for the support of all of the retail investors and also the Investor Meet platform, which is very important to us, and we look forward to seeing you in 6 months' time. Operator: That's great. Jon, Nat, thanks once again for updating investors. If I please ask investors not to close this session as we'll now automatically redirect you to provide your feedback. It only take a few moments complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of Volex plc, we'd like to thank you for attending today's presentation.