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Americans' paychecks are falling into their gas tanks. Consumer prices in March rose at their fastest annual pace in two years thanks to the Iran war, which has sent gasoline prices skyrocketing above $4 a gallon. The surge has quickly eaten away at earnings.
WSJ's Konrad Putzier explains the factors that led inflation to surge in March and discusses the implications for the U.S. economy and the Fed. #WSJ #Inflation #GasPrices
"Experts" see no rate cuts this year. Specifically, the CME Group survey data shows a 70% chance for rates to remain in the 3.50%-3.75% range by January 2027.
Operator: Good day, everyone, and welcome to the FRP Holdings, Inc. Fourth Quarter 2025 Conference Call. [Operator Instructions] It is now my pleasure to hand the floor over to your host, Chief Financial Officer, Matt McNulty. Sir, the floor is yours. Matthew McNulty: Thank you. Good afternoon, and thank you all for joining us on this call today. I am Matt McNulty, Chief Financial Officer of FRP Holdings, Inc. And with me today are John Baker II, our Chairman; John Baker III, our CEO; David deVilliers III, our President and Chief Operating Officer; Mark Levy, our Chief Investment Officer; and John Klopfenstein, our Chief Accounting Officer. First, let me run through a brief disclosure regarding forward-looking statements and non-GAAP measures used by the company. As a reminder, any statements on this call, which relate to the future are, by their nature, subject to risks and uncertainties that could cause actual results and events to differ materially from those indicated in such forward-looking statements. These risks and uncertainties are listed in our SEC filings. To supplement the financial results presented in accordance with generally accepted accounting principles, FRP presents certain non-GAAP financial measures within the meaning of Regulation G. The non-GAAP financial measures referenced in this call are net operating income, or NOI, and pro rata NOI. In this quarter, we provided an adjusted net income to adjust for the impact of onetime expenses of the Altman Logistics acquisition, which is a material business combination unlike our historical real estate acquisitions or joint ventures where expenses are capitalized. We also provided adjusted net operating income to adjust for the impact of the onetime material royalty payment in the third quarter of 2024 to better depict the comparable results year-to-date. Management believes these adjustments provide a more accurate comparison of our ongoing business operation and results over time due to the nonrecurring material and unusual nature of these 2 specific items. FRP uses these non-GAAP financial measures to analyze its operations and to monitor, assess and identify meaningful trends in our operating and financial performance. These measures are not and should not be viewed as a substitute for GAAP financial measures. To reconcile adjusted net income, net operating income and adjusted net operating income to GAAP net income, please refer to our most recently filed 10-K. I will now turn the call over to our President and Chief Operating Officer, David deVilliers III, for his report on company and segment financials as well as operations. David? David deVilliers: Thank you, Matt, and good afternoon, everyone. I'll begin with a review of our fourth quarter and full year 2025 results and then discuss our operating priorities as we move into 2026 and beyond. 2025 was a transition year operationally, but more importantly, it was a year where we significantly expanded the scale, capabilities and long-term earnings potential of our platform. As we enter 2026, our focus is shifting from repositioning and investment toward execution and the conversion of embedded value into cash flow. For the year, we generated approximately $37.9 million of NOI and $22.1 million of FFO or $1.16 per share and ended the year with approximately $144 million of liquidity. These results were generally in line with our expectations and position us well for the next phase of growth. Late in the fourth quarter, we completed the Altman Industrial acquisition for approximately $33.5 million, adding roughly 1.6 million square feet of industrial development pipeline. While not included in our original budget, this acquisition significantly expands our platform and strengthens our presence in high conviction logistics markets. Turning to commercial and industrial. The portfolio totals approximately 807,000 square feet and ended the year approximately 47.5% occupied or 69.9%, excluding our new Chelsea building compared to 95.6% last year. Segment NOI was approximately $875,000 in Q4 and $3.9 million for the year, representing declines of 11.8% and 13.6%, respectively. The primary dynamic in 2025, which we anticipated entering the year was lease rollover timing. While occupancy declined as expected, leasing velocity was somewhat slower than anticipated as tenant decision cycles lengthened. Importantly, we view this as timing within the leasing cycle rather than a change in underlying demand. We currently have approximately 423,000 square feet available for lease-up, representing roughly 52% of the segment. At stabilization, this represents approximately $3.3 million of incremental annual NOI, representing a clear and visible earnings opportunity over the next 24 months. Execution will be focused on leasing velocity, pricing discipline and progressing occupancy towards approximately 70% by year-end, with a path to stabilization in the low 90% range over the following 18 to 24 months. Turning to Mining and Royalties. This segment generated approximately $3.9 million of NOI in Q4 and $14.6 million for the year, representing increases of 11.5% and 1.5%, respectively, with strong margins. The business continues to provide durable, high-margin cash flow with minimal incremental capital requirements and remains an important stabilizing component of our overall earnings and profile. While quarterly results may fluctuate due to timing or nonrecurring items, underlying performance remains consistent and supports balance sheet flexibility. Moving to Multifamily. The portfolio includes approximately 1,827 units across Washington, D.C. and Greenville, South Carolina. NOI totaled approximately $4.2 million in Q4 and $18.1 million for the year, representing modest declines of 2.6% and 0.4%, respectively, with average occupancy around 93% and economic occupancy, which reflects concessions and delinquencies of approximately 88%. Fourth quarter results were somewhat below expectations, primarily driven by: one, retail revenue softness of approximately $127,000 NOI impact; two, lower occupancy at Maren, averaging approximately 89%; and three, continued operating expense pressures. From a regional perspective, South Carolina remains stable with economic occupancy around 92%. Washington, D.C. remains more competitive due to supply pressure with economic occupancy around 87%. Our focus remains on resident retention, disciplined pricing, expense control and improving retail occupancy where possible. Development remains a primary driver of incremental value creation. Our current pipeline represents approximately $441 million in total project costs with expected stabilized incremental NOI of approximately $30 million over time. The Altman acquisition expands our footprint in Florida and New Jersey, adds experienced development talent and enhances our relationship with institutional capital partners. We continue to underwrite conservatively, target yields on cost of approximately 6.7% or greater, market cap rates of approximately 5.25% or lower, target IRRs in the 15% to 20% range. Development value is realized over time through lease-up and our pacing remains disciplined and aligned with market conditions. Stepping back, we operate a capital-efficient logistics platform designed to compound long-term per share value. This model combines development, selective ownership and partners to generate multiple sources of return, including development gains, durable cash flow and fee income. Our approach allows us to recycle capital, scale beyond our balance sheet and dynamically allocate capital across opportunities based on risk-adjusted returns. Importantly, this model allows us to generate value through development, convert that value into durable earnings and scale through partnerships, creating a more capital efficient and higher return platform over time. Our estimated NAV per share is approximately $37.60, increasing to over $40 per share over the next 3 years compared to a current share price that has recently traded between $20 and $24. Closing this gap remains a central focus of management, and we believe execution across leasing, development stabilization and disciplined capital allocation will be the primary drivers of narrowing that discount over time. Looking ahead, we view 2026 as an investment year. We expect NOI to be approximately $37.1 million to $37.7 million, with G&A increasing to approximately $15 million to $16 million as we integrate the Altman platform and continue investing in the infrastructure required to support a larger, more scalable operating platform. Importantly, this increase reflects intentional investment ahead of NOI growth, including the addition of the development, asset management and operational capabilities necessary to execute on our expanded pipeline. As a result, G&A as a percentage of NOI is expected to be elevated in 2026, potentially in the low 40% range before declining meaningfully as leasing activity accelerates, development stabilizes and incremental NOI is realized. Over time, as the platform scales, we expect operating leverage to emerge with G&A trending toward a more normalized range in the low 20% area. We believe this is the right trade-off, investing today to unlock a significantly larger and more valuable earnings base over the next several years. Balance sheet discipline remains foundational. We ended the year with approximately $144 million of liquidity, net debt to enterprise value of approximately 21% and a weighted average interest rate of approximately 5.24%. This liquidity provides flexibility to fund development, support lease-up and navigate market cycles without reliance on asset sales. To close, the next 12 to 24 months are about execution and value realization, leasing the industrial portfolio, stabilizing development and converting embedded NAV into durable cash flow are the key drivers of near-term performance. We are seeing early signs of stabilization across our markets and fundamentals for well-located logistics assets remain constructive. In fact, we recently signed a lease for 15,000 square feet at Cranberry Business Park in Maryland with a face rent 38% higher than the previous tenant and in the final stages of a lease for over 26,000 square feet at Davie in South Florida with a face rate above underwriting. We believe the work completed in 2025 has positioned us to drive meaningful growth in both NAV per share and durable earnings over the next several years. With that, I'll turn the call over to Mark Levy, our Chief Investment Officer, to provide additional perspective on leasing strategy, capital deployment and market positioning. Mark? Mark Levy: Thank you, David. Good afternoon, everybody. So as we enter 2026, our priorities are straightforward: convert vacant square footage into durable cash flow and institutionalize a capital deployment model that is scalable, repeatable and risk aware. Leasing is the fulcrum of value creation in our industrial strategy. Over the last several quarters, we have formalized our leasing process across markets, tightening broker coverage, implementing structured outreach cadence, refining competitive intelligence and aligning leasing and asset management under a single execution framework. The objective is to eliminate variability in process while allowing flexibility and market response. In Maryland, where leasing absorption lagged our initial expectations, we have adjusted. We recalibrated rent positioning where appropriate, expanded brokerage engagement and integrated additional leasing resources following the Altman transaction. We are underwriting to today's strike rents and protecting long-term basis rather than forcing velocity at the expense of asset value. In Central and Northern New Jersey, we are seeing improving tour activity and proposal volume, particularly from e-commerce and third-party logistics users recalibrating inventory strategies. In Florida, demand remains structurally supported by population growth and the migration towards Florida-centric logistics networks rather than reliance on Southeast regional hubs. Decision cycles remain longer than during peak years, but underlying utilization and supply dynamics are stabilizing into what I would characterize as normal post-COVID environment. On the supply side, development starts were materially curtailed in 2025 and entitlement friction, particularly in coastal infill corridors continues to limit new inventory. That dynamic should benefit well-located projects delivering into 2026 and 2027. Our capital allocation framework this year centers on 3 initiatives: first, complete and stabilize the current pipeline, including capitalizing and advancing a 24-acre site in Southwest Broward County expected to deliver approximately 335,000 square feet of Class A logistics product. We are sizing leverage conservatively and underwriting lease-up assumptions that reflect current market velocity rather than peak cycle absorption. Second, formalize a deployment model where basis discipline drive returns. We are targeting infill land positions along the East Coast where entitlement complexity and infrastructure adjacency create structural barriers to entry. Importantly, exit decisions will be made at stabilization, not inception. That preserves optionality, whether merchant realization to crystallize development spread or transition to longer-term hold where compounding cash flow and rent growth justify retention. Third, continue diversifying return channels. That includes selective net lease build-to-suit opportunities, leveraging established occupier relationships, targeted value-add acquisitions where operational efficiencies and mark-to-market leasing can drive NOI growth and capital partnerships that allow us to scale without overextending the balance sheet. Promote economics and fee generation will supplement core NOI over time. Capital markets are incrementally improving. Bank execution is more active, spreads have compressed modestly and equity capital is reengaging in development. We are not underwriting to peak leverage or assuming exit cap rate compression. Our posture remains conservative, protecting downside first, then optimizing upside. Across all industrial strategies, our filters are consistent, infill locations proximate to highways, ports and airports, deep labor pools, limited competing entitled land and basis that provides margin for error. Industrial real estate rewards disciplined operators over full cycles. Our focus in 2026 is to institutionalize that discipline in leasing, in underwriting and in capital structure so the growth is durable and the balance sheet risk is measured. With that, I'll turn the call over to John Baker for his closing remarks. John Baker: Thank you, Mark, and good afternoon to all those on the call. The financial results of 2025, while in line with expectations, don't tell the full story of everything we did this year. It can't be overstated what the acquisition of the Altman Logistics platform and its team opens up for the company in terms of where we develop, how we develop and with whom. This acquisition has refined and augmented a platform and pipeline that management expects will drive earnings and earnings growth, operational cash flow and net asset value. In the short term, that growth will come through improvements in same-store industrial occupancy. Getting our industrial portfolio back to the occupancy levels we have historically enjoyed remains a priority. As David mentioned, fully occupied at current market rents, the vacancies in our current assets represent approximately $3.3 million in NOI growth. That's growth we can achieve with minimal capital expenditures, and it has the most immediate financial impact. In the long run, we will continue to create value through our development segment. In terms of growing NOI, our top priority in this segment is developing and stabilizing our 3 industrial assets in Florida that are currently in development. We anticipate stabilization of these buildings totaling 762,000 square feet in 2028, which represents approximately $9.6 million in net operating income. These same-store development goals are achievable and measurable, and we have provided in Slide 12 of our quarterly supplemental presentation of results, a way for investors to measure and track the value these assets represent when fully leased. This is the yardstick by which we intend to measure our progress, and we intend -- we encourage investors to do the same. I think we can open it up for questions. Operator: [Operator Instructions] Your first question is coming from Stephen Farrell from Oppenheimer. Stephen Farrell: I just want to start with some quick questions on the D.C. market. I know there was a lot of supply that came on this year. And how is it absorbing that? And do you have any comments on a big drop in vacancy pretty much across the board from Q3 to Q4 at Dock, Maren, Bryant Street and the Verge was essentially flat. Any comments on that? David deVilliers: So in terms of D.C., I would say Dock and Maren and Verge are next to some large-scale multifamily that has come online, and they are offering, I would say, significant rental concessions, 2, 3 months. And that's something that we have to compete against, and we're trying to balance that. At the end of the day, it's a competitor. It's right next door, and it's going to put pressure on our occupancy. And that's something that we are experiencing at Dock, Maren, and Verge. Stephen Farrell: And something like how many units came on from that development? David deVilliers: It's probably 2,000 units. Stephen Farrell: 2,000. Okay. And then have you guys offered concessions as well or raised your concession? David deVilliers: No. I mean, in areas where we see and just if we have a number of, let's just say, studio apartments that are all vacant and they've been vacant for a while, we are giving some concessions out, but we're trying to keep them limited. We've seen pretty good renewal success kind of in 2025, we kind of saw renewals, let's just say, 60% across the board with renewal increases of anywhere from 2% to 4%, which was good. But again, as you noted, occupancy at Dock and Maren if you just look at average 2024 against average 2025, it's down. And we're still dealing with delinquencies in the D.C. market as well. Matthew McNulty: And I think, David, you know the answer to this. David deVilliers: I was just going to say, I think the last time we checked on the absorption of those, call it, roughly 2,000 units, it was pretty deep into it, right? Unknown Executive: The pace is good. They are absorbing units. And we've seen that. The velocity is there. Concessions and rental growth seem to be intense. Stephen Farrell: Yes. And then what was the case at Bryant Street because that's a different area of town? David deVilliers: Different area. Average occupancy in 2024 was, let's just call it, 91% and average occupancy in 2025 is 92%. So we saw a little push. At Bryant Street, renewal success, probably just below 60%, 59% with renewals 2.7%. There, we're definitely dealing with delinquency. And it's just tough to kind of push rents with the same pace that we're seeing operating expenses. So that's pushing NOI down at that particular asset that we have in D.C. Stephen Farrell: And what percentage of the vacancy is delinquencies? And is it still tough to get an eviction and get them moving and out of the unit? David deVilliers: It is. It just -- it takes time. It takes time. Bryant Street continues to improve overall, kind of, I'll call it, 2025 NOI compared to '24 NOI was up 5% at Bryant Street, which is great. And we hope to continue that trend. Matthew McNulty: I think, Stephen, you had asked to what percentage of the delinquency is vacancy or we don't -- the delinquency would sort of get added on top of vacancy. And I want to say it's probably in the 5% range. I can't be exactly right. So if you just added another 5% to our vacancy, that would kind of get you to our economic occupancy. There has been some legal changes in D.C. within the last 6 to 9 months, basically a Rental Reform Act that was put in place really to help landlords with a lot of these issues that we're facing on the eviction cycle. We've heard that it's starting to help, but it's going to take some time to really see anything go from what's taken us 15 months, maybe now taken us 13, but it needs to be like 3. So we'll see. Stephen Farrell: You have a lot of projects going on that are getting delivered this year. I just kind of want to run through them. The Altman JVs, how much construction there has been done? I think we're expecting the summer for it to be ready. How much capital do you still need to put into that? David deVilliers: I mean, just high level, all of our Florida assets are delivering this summer. And I would say that is around, let's just say, 600,000 square feet that's delivering this summer in terms of equity, all of our equity is in. All the additional capital is really being funded with our construction loans that we have. And all those projects are well underway. I mean we're very, very close to getting shell finals. And at this stage, focus is on marketing and leasing and the dollars that we're going to be spending are leasing dollars to get those things stabilized. Our 2 projects in New Jersey are very, very close as well, looking to be shell completion final this summer. Stephen Farrell: The Central Florida industrial, that's going to be delivered this summer too? Is that [indiscernible]. Mark Levy: Yes, the answer is yes. Matthew McNulty: Yes. So it's a little later in the year on Camp Lake. Mark Levy: On Camp Lake, that's right. That's a little later in the year, yes. Matthew McNulty: So Stephen, just to clarify, so when we said Florida projects, he's right, they're all delivering. But Camp Lake, Lakeland and Davie, basically, we own either 100% or in the case of Camp Lake, we own 95%. Those are long-term hold assets. And then the other project in Florida that came with the Altman acquisition is Delray, which is already delivered. We are a 10% partner in that. And the same with Hamilton and Parsippany, roughly 10% partner. And those are the merchant build and sell assets. Stephen Farrell: Okay. Got you. And just at Cranberry, is the Cranberry where we had the vacancy last year? Unknown Executive: Yes. Stephen Farrell: Did I miss that you signed the lease there? David deVilliers: We did. We signed a lease for 15,000 square feet, which is good news. We couldn't share that news in 2025, but... Stephen Farrell: And I'm sorry, I missed this part. What was the rate? David deVilliers: I didn't disclose the rate, but I can tell you that the former tenant compared to the new deal that we had, the new deal, the base rent, the year 1 rate is 38% higher than the previous tenant. John Baker: Yes. I think that's the most exciting part about that. It indicates, one, where our rents were before and where they're headed. Stephen Farrell: And do you have any concern over the length of tenants taking to get someone in there? I know that you're dealing with an eviction and then any CapEx that you need to put into it to attract a new tenant. Does that give you any concern though? David deVilliers: It doesn't. Again, I just -- as we enter 2026, and we're kind of through, I'll call it, Q1, we've just seen increased activity, more tours, more proposals, better engagement across our markets. We're just seeing a combination of improving market activity. And as Mark pointed out, I think we have much better internal execution. And that gives us a lot more confidence in leasing velocity through 2026. Mark Levy: Yes. I would just add that we're really -- it's really not sort of a lack of demand. I just think that overall, it's a much more deliberate demand environment. So the process, the decision-making process typically is taking a little bit longer. There is more, for instance, in a -- for a larger, let's say, publicly traded company, there's more internal sign-offs that are now required. And there's just a higher level of focus being paid on things like labor adjacency and things like transportation costs, things like that. And so obviously, with some of the macroeconomic factors around price of oil, things like that, that sometimes drives into the discussion around transportation costs and how that factors into sort of their total sort of cost of occupancy, if you will. So there's just a variety of different elements that sort of fade in and fade out at different points. But overall, holistically, tenant demand is much stronger and much more deliberate than it was in 2025. Stephen Farrell: And do you think that has any implications or effects on the Harford County development? Mark Levy: Well, one of the things that we have seen is that there is -- for occupiers that are requiring a much larger space, call it, spaces larger than 500,000 square feet, there are very few entitled land options remaining really along the entire Eastern Seaboard. I think nationally, there's something under 60 entitled sites that can accommodate buildings of 1 million square feet or larger. So ultimately, larger tenants who are now reactivating into the market after sort of being on the sidelines for the last, call it, 24 months are finding really a dearth of options. So I think our positions in Harford County really will allow us to potentially entertain some of these larger requirements. Both of our positions are located in markets that have very good labor pools that can draw even from as far south as Baltimore City and Prince George's County. So ultimately, we've got a very -- I think, a very strong positioning in the market. The sites are on the way to being fully entitled. And we've had some early constructive dialogue with a number of tenants regarding both our Kraus Phase 2 and our Mechanics Valley site. Stephen Farrell: Okay. That's good to know. And just last one here, Woven and Estero, are those all fully funded? Or do you need to and put up more capital for the developments? David deVilliers: Woven and Estero are both in different stages. Woven, we actually are a lender in that. So we do have additional capital through a bridge loan with them, but equity is -- all the equity is in for woven. Estero, we have probably another $3 million of equity that we would put into that. And then after that, the construction debt is there, it's ready to go. So very, very minimal cash required for each of those. Operator: [Operator Instructions] That concludes our Q&A session. I will now hand the conference back to Chief Executive Officer, John Baker, for closing remarks. Please go ahead. John Baker: I just want to close by saying how excited we are about what the future holds for this company. What the Altman acquisition has done for this company in terms of expanding the options we have and how we choose to develop our pipeline and future assets. It's the most exciting thing I've experienced since working here. When you couple that with the leasing activity we've seen this year, it's really heady cocktail. I really appreciate everyone on the call taking the time to be with us on a Friday afternoon and as always, for your continued interest in the company. This concludes the call.
Operator: Good afternoon, and welcome to the Gaming Realms plc investor presentation. [Operator Instructions] Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Mark Segel, CEO. Good afternoon, sir. Mark Segal: Thank you. Firstly, thank you, everyone, for dialing in, and we'd like to take you through our FY '25 results presentation. So you have myself, CEO, Co-Founder of Gaming Realms and Jeff, the CFO, on the presentation today. I just thought I'd take you through sort of what we do and how we are generating this great growth we've seen in the last few years. So we're a developer and licensor of casino games for the regulated iGaming market, international market, that is. And the majority of our revenue and our biggest IP comes through Slingo, which we acquired in 2015. We actually brought it to the iGaming market. Previously, it existed in the lottery market, the land-based casino market, social gaming market, et cetera. So very, very big important IP. We monetize mostly through real money. We have a platform which hosts all of our games and connects to all the casinos that we work with around the world. And there's great volume in that, both in terms of transactions and players, and partners and number of games. And also, we operate a social publishing, social casino business, which essentially is a way of monetizing our Slingo games in another market. The way we are generating the business comes through 3 areas. The majority and the core part of our business is the content licensing business. We have built up a portfolio of over 80 Slingo games, which are very unique in both format and the IP. And the way we are paid is we share in the operator success. Essentially, the more revenue that our games produce for the operators, we own a percentage of that. It's very diverse now this stream. We work with over 200 partners. We're in 30-odd regulated markets as well, and we have a portfolio probably close to 100 games in total. As Slingo is such an important IP and popular IP, we also are licensing this into other adjacent markets where we've not developed the project. So you can buy Slingo scratch cards in the lottery market in the U.S., for example. And we also have licensed Slingo to social slot providers as well as online scratch cards in other areas as well. And then finally, we have our social gaming business, which is almost like a Candy Crush model where we get in-app purchases and some advertising revenue. And what I will note for the brand licensing is that this revenue stream is as we do deals and it's not necessarily as recurring, say, the content licensing side, albeit we're often renewing all these deals and they do work in its cycle. But in the year, we managed to renew our lottery deal as well as the social casino deal as well. So Slingo is popular really for a few areas. And one of it is the brand itself, hence, why we're able to license into all these other markets and have great success through our games. But the other is it's become a category in itself. And you can quite see here, but these are some operators we work with in North America. And you'll be able to see that in DraftKings and BetMGM, we actually have Slingo sections on the site. So they really stand out in the real estate of a mobile phone. Our Slingo content can be stand out and promoted. The one with there is a big promotion they've done around our games, and they also have a place on their site for all Slingo content. And then on the right is a lottery we work within Canada, where, again, they promote Slingo separately. And so we're able to -- what we've done is we've managed to take Slingo as the iGaming market and then make it a category which stands alongside slot games, table games, bingo, et cetera. And we always market ourselves and are a premium supplier of games. So Slingo is different and premium, and we work with some of the top operators all over the world. I mean notable ones that we've gone live with during the period is BCLC, which is a lottery in British Columbia in Canada. We go live with Hollywoodbets in South Africa as well. We try and work with the biggest partners wherever we are, whichever markets we're in. and we're growing. So in the year, we went live in Delaware in the U.S., U.S. being our largest market and also went live in British Columbia and Canada. We've gone live with Brazil during the year and Peru since the year-end as well. These are new -- Brazil, in particular, is a new regulated market. And so we're navigating that, slowly rolling out our games going live with new partners. We went live in South Africa right at the end of the year. So we'll start to see the benefit of that into 2026 and beyond. Again, as we roll out with more partners and more games as well. And we've gone live in a few more of the regulated markets in Africa. And again, we're at the beginning of our sort of journey in these new really exciting markets for us. And then into Europe as well, there are more markets which are going to regulate in time. I think Ireland is one, for example, which I said it's going through a regulatory period. But at the moment, these are new markets we'll be able to launch our content and essentially open up new revenue streams for our games. So I'll hand over to Jeff now to run through the results for the year. Geoffrey Green: Thanks, Mark. I'll take you through our 2025 financial performance and the key drivers behind the numbers. So I'll start here with some of our key metrics. So at a headline level, as you can see at the top of the slide, we grew our revenue by 10% to GBP 31.4 million over 2024, and we grew adjusted EBITDA 15% up to GBP 15 million, reflecting the continued scale and strength of the model. As the bottom of the slide shows, North America continues to be a key driver behind this growth. So our growth in the regulated U.S. markets was 23% and in Canada was 31%, both in constant currency, and the region now represents 63% of content licensing revenue. And this financial performance is underpinned by what we're seeing operationally. So we've continued to grow the number of operators that we distribute to. So with the 40 new partners that we launched with in 2025, our distribution base now exceeds 250 partners. We're continuing to go live into new markets with the 7 markets that we entered during 2025, including Brazil, South Africa and Switzerland and then the 4 markets that we've gone live within the first quarter of 2026. That brings us to 32 markets that we currently distribute our content to. We also increased the number of games that we've launched across our core Slingo portfolio, our bespoke titles and the third-party titles that we distribute. And player engagement across our portfolio is also up. So we saw a 22% increase in the number of unique players compared with 2024. And encouragingly, we've seen this momentum continue into 2026 so far. So our content licensing revenues in January and February 2026 were 8% ahead of the same months in 2025 or 10% on a constant currency basis. So now turning to the financials. This slide shows our summary income statement for the year. Revenue growth was again driven by our core licensing business, where revenues grew 13% year-on-year. While we reported growth in our content licensing business of 3%, that would have been 5% under constant exchange rates with currencies being a headwind for us during the year, particularly with the U.S. dollar. And as we'll come on to in a couple of slides' time, our -- that growth was also impacted by our U.K. revenues following the introduction of staking limits in April. And then just a few other points to highlight from this slide. We continue to operate a high-margin model, which is one of the bits that gives us the operational leverage. So variable costs represent 20% of revenue. Our admin expenses increased as expected, reflecting the targeted investment in our development team for our future growth. And importantly, we maintained strong cash conversion with GBP 9.5 million of underlying cash inflow, which represents 63% of adjusted EBITDA. So let me now turn to cash generation and capital allocation. This slide shows how we've deployed that cash generated during the year. So we took a balanced approach between returning capital to shareholders and investing in the future growth of the business. During the year, we returned GBP 2.8 million to shareholders via share buybacks as part of an overall GBP 6 million program that was announced. The remaining GBP 3.2 million of that program was completed in the first quarter of 2026 alongside the announcement of a further GBP 5 million buyback. We also increased our capital investment by GBP 2.5 million to grow and scale our content capabilities, the benefit of which will come in 2026 and beyond, and we'll discuss this later in the presentation. And even after these items, we still reported GBP 4.3 million of net cash increase during the year. So overall, we're growing. We're funding that growth ourselves, and we're still returning capital to shareholders at the same time. And that leaves us with GBP 17.8 million of cash at the year-end, giving us significant flexibility moving forward. So this is staying with cash. This is just another slide that shows a slightly different way of how that GBP 4.3 million of reported cash increase came about. It starts with the GBP 8.8 million of profit before tax on the left-hand side and kind of shows the bridging steps to go from that to the GBP 4.3 million on the far right-hand side. The main movements here are the GBP 8.2 million of capital investment and the GBP 2.8 million return to shareholders that we spoke about on the previous slide, alongside the noncash charges, the amortization charge, depreciation and the share-based payment charge and then the tax paid during the year on the right-hand side. So we delivered GBP 4.3 million of free cash flow even after the increased investment and shareholder returns and ended the year with GBP 17.8 million of cash. Now what really underpins this is the strength of the underlying model, which this slide summarizes. In very simple terms, what this is saying is as we grow our distribution by going live with more partners and entering more markets, as we launch more games and as those games gain engagement, that drives higher game play across our portfolio, higher bets placed and ultimately revenue for the business. And I'll show on this next slide how that translates into key metrics. So this slide shows the progress we've made since launching the licensing business in 2017. The top 2 charts here show the cumulative growth in operators and the number of games with over 250 partners and 107 games live by the end of 2025. The bottom 2 charts show the growth in bets and revenue across that same time period. And I would say that the bottom 2 charts are both in-period metrics, whereas the top 2 are on a cumulative basis. So looking at the bottom left chart, that shows that in 2025 alone, over GBP 7.4 billion worth of bets was placed across our portfolio, which really shows the scale that the platform is now operating at. And as our agreements are performance-based, that growth in bets feeds through to increased revenue as shown in the bottom right slide. And as I mentioned a few slides back, that momentum has continued into 2026. So we're looking forward to seeing these charts continue to progress over the coming periods. So I'll now break down that growth by geography. So starting with the U.S. on the left-hand side, revenue grew by 19% or 23% in constant currency. That growth has come about from a number of factors. We saw strong underlying performance and growth in all of our existing markets where every state or every existing state grew at double digits over 2024. We launched some very strong U.S.-focused titles during the year, which our U.S. players really engaged with. We also launched another tranche of bespoke content for our largest U.S. partners, and we went live in Delaware during the year. the sixth state that we distribute our content to and had the full year impact of going live in West Virginia during 2024. I would just say West Virginia and Delaware are very much smaller revenue territories for us. So moving to the right, the U.K. revenue declined by 10% during the year compared with 2024, reflecting the impact of staking limits introduced in April. And we'll come on to a case study on the next slide, showing how we've mitigated and grown the U.K. market subsequently. Canada, moving along to the right again, delivered strong growth, up 26% or 31% in constant currency. Growth here was supported by going live in British Columbia during the second quarter of 2025, launching with 6 new partners in Ontario and also seeing strong organic growth with the existing partners we were live with. And in Italy, we also saw strong growth, albeit from a smaller base there, growing 31%. Towards the end of 2024, we launched our first Italian first title, where we licensed in a top Italian slot brand and built a single game around. And that game has really driven engagement in the market. And the game actually did fantastically well globally, not just in Italy. And then finally, the rest of the world on the far right-hand side, Rest of the world declined year-on-year, mainly due to 2 markets, Portugal and the Netherlands. In the Netherlands, the recent regulatory changes, so the higher taxes, the deposit limits and the marketing restrictions have led to a material contraction in the regulated market size, which we are downstream fro. And in Portugal, while we are live, the regulations in that market mean we can only have a very limited number of titles. So without that regular flow of new content, it's very difficult to maintain or grow revenues there. So I'll now hand back to Mark just to talk a little bit about our U.K. recovery. Mark Segal: I just want to talk about this because the U.K. has always been a growth market for us and was traditionally our largest market, albeit the U.S. and then North America as a whole is overtaking it anyway where there's very big growth. But last year, the new regulations came in at the beginning of April, which actually was a number of regs across the board. The one which affected us most was the staking limit. It's -- our games generally are low staking or the transactions are low staking within games. but we are a multi-staking game and the flow is affected by the staking limit. And we tested 2 different mechanics on how we could work within the staking limit, which we tested at the end of '24. Unfortunately, even though we knew staking limits were coming in, we only had 6 weeks. It was a rolling 6-week notice period. And so even though we developed the tool, we then had to go through the licensing or the certification process for all our games and backdating them, which took time. So Q2 last year, we dropped 21%. And you can see that steadily started to grow Q3, we started to -- we were probably 11% or 12% down then into Q4. In December, we had a great month. It was new content launches, more volume. As we went on, we went from 16 games with this tool to over 50 by the end of the year. And so that's really helped. The base here, just to explain what's the 100% was the 6-month period before the staking limits came in. So essentially from October '24 through to the end of March '25. So December performed above that. We've actually seen growth in the first quarter of '26 versus the first quarter of '25, which was pre-staking levels. So we've been able to maintain this performance in the U.K. And it's really a testament to, a, the popularity of games; b, how these games work even with the restrictions in place and the innovation that we've put into these games and the execution, essentially working through the regulations, certification and with the operators to get the games back live and marketed again. So actually, a shame that we had this bump in the year, which we talked about after the first half of last year, but the recovery is great. And we do have the taxes coming in, in -- well, they came in last week, essentially for the remote gaming increased in the U.K., and we will work through that again, hopefully successfully as we've done now. Geoffrey Green: So this slide shows what happens when we go live with the cohort of operators each year. So I would say the numbers here represent the gross revenues that the operators generate from our games. So if you look at the 2025 stack on the far right-hand side, that shows that the operators or all our partners generated in excess of GBP 350 million in gross revenue from our portfolio last year. And each color within those stacks represents a different cohort of operators that we've launched with. So if you look at the 2021 stack and the gray slither at the top, that shows that the operators that we went live with during 2021 generated, I think it's GBP 18 million of revenue -- of gross revenue from our games. That then subsequently grew to GBP 62 million, GBP 73 million, GBP 80 million and then GBP 101 million last year, showing how we scale and build with our partners over time. I would say that there's a couple of the earlier cohorts, so 2018 and 2020 in particular. They are the cohorts where we went live with some of our largest U.K. partners. So there is a small contraction in 2025, and that's just reflective of the previous slide and our decline in the U.K. in 2025. But the key point here is when we go live with an operator, we don't just launch our full portfolio of games on day 1. We grow with our partners over time as we launch more content, deepen relationships, understand their player base and drive engagement. So the model really grows in 2 ways by layering on new operators each year and then through existing operator cohorts continuing to scale over time as this chart demonstrates. And then finally for me, I just wanted to talk a little bit about 2026 and expectations because this is an area where context is important. The consensus for 2026 is for GBP 14.7 million of adjusted EBITDA, which is slightly below the GBP 15 million that we've just reported for 2025. However, this small change is due to the U.K. tax change that Mark has just spoken through, where remote gaming duty increased from 21% to 40% last week. So what this table is trying to do is show what 2025 would have looked like had that tax mechanism been in place for the full year. And that middle column shows that 2025 reported revenues would have reduced by GBP 2 million and adjusted EBITDA would have reduced by GBP 1.7 million to GBP 13.3 million. So on a pro forma like-for-like basis, we would still have been growing double-digit adjusted EBITDA from pro forma '25 to 2026, showing there remains strong underlying growth in the business. Mark Segal: If you just take on -- move on to invest our growth opportunities for the business. This has been our performance in the regulated iGaming market in North America since we went live there in 2017. And you can see, particularly in the last 2 periods, we've started to grow or we've continued every market that we're in is still growing. Each time we go live with a new market, it's layering on top. And we've seen really, really good performance in the last year in these markets in North America. We've added British Columbia, Delaware, West Virginia in the last year or so, but we're still seeing growth in the ones we have. And that's come from the content that we are launching in the market. We actually had our biggest ever launch last year from one of the games we released, and we expect this to continue into future years. As more states open, they will layer on top. We have great relationships with the operators as well. These markets are still growing, and we've we tend to track either in line or above the market growth as well. So we will continue to see growth in these markets as well as the expectation or the aim from ourselves that we will start to take market share as we innovate our product and take more product to market as well. And this is some research on the U.S. market and where it could go. The base case here, which is sort of the lighter blue, is the predicted growth essentially with no new states regulating through to 2029. And it's still expecting that it will be up to 60% or 62% growth in the markets we're in already, and we should at least perform as well as that. And then the bull case is if we have a couple of significant states or decent-sized states launching in '27 and then in '28. And it can show the potential of where the addressable market could go for us with more states regulating. This is still fairly prudent. We still only have 10 states live by the end of '29 and double the addressable market for us. And Jeff spoke a little earlier about the investment that we're doing into more content and games for our business. So this is in 4 areas really. We are building now more Slingo games than we've done previously. 2025 is at the previous levels of 1 a month, but we should start to see from '26. And then once we have a full cadence from '27 onwards, we'll be launching more Slingo games and the investments started in the year in '25. We're also having a lot of success now building more localized and bespoke content on top of the core roadmap, Slingo road map with our partners. And we've very recently launched Slingo Gold Lucky Pants for Paddy Power. We've launched an NHL game in the U.S. with one of our partners as well as lots of sports brands. And we're starting to see how this is helping us with our -- essentially attracting more players to Slingo who love the games. We've also just launched our first couple of games from a new internal studio that we've growing called Lucky Lunar. These are more traditional type of games, slot games, table games, but they will bring in some Slingo IP to them. So we are innovating here. We're looking at ways we can bring Slingo into a wider portfolio of content, which will attract more players to the Slingo IP, and hopefully, they'll cross-sell and play more of our games. What we have found with Slingo is that most of the players who play 3 Slingo games. They try most of the new games which come out. And some very recent research, I've seen that we are one of the largest family of games in the iGaming space. We're a top 5 family now Slingo in the U.S. market. And the more we can do around Slingo, I think the more we can start to take market share and attract more players to our games. And the other area we've been growing is -- as Jeff said, our platform has been able to scale seamlessly. We had GBP 7.4 billion through the platform last year. And we've been taking other third-party other proven studios games into our platform for distribution. We've plugged into 240 partners now. And so we see an area where we can take other games and take some -- essentially increase our margin and take an offering to more partners. We went live with our third partner, which was S Gaming in January, and that's launched well in the U.S. So we're definitely seeing growth from that side of the business as well. A little bit on the bespoke part of content we can see here and some of it is local. So Trato is deal or no deal for Spain. We have our NHL game, which we with FanDuel. We've got a game here with Paddy Power and also with bet365. So working with our largest partners to try and get some targeted content for them. And then some more in the U.S. market as well. We are doing more and more sports games now, which get promoted in stadium, as you can see on the right with the Detroit Red Wings hockey. But we're also launching quite a few more of those we did in '25 and into '26 as well. And they're really popular. They work very well for the operators who are able to -- the sports betting players love the Slingo games as cross-sell into the casino. And so we have a really good offering for that. We can quite see it here. But I think on the left, Phillies themselves have advertised the Slingo game to go and play the casino to play them. And so we get real good interaction and support from the sports brands as well. I think that's it. A little bit more on the brand licensing here. We can just show the areas where it's gone. We've had so much in retail sales on the Slingo scratch cards and selling millions of these tickets every year. We've got Slingo in a bingo product, which -- we've licensed it to a big operator to build. There's a singer.com portal, which another operator is operating on behalf of us as well. So we're doing -- I think there will be more opportunities here, definitely more demand for sure. It's just a matter of seeing how Slingo can incorporate into the right adjacent markets for us. I think as we get time and scale, we may look to execute some of these ourselves as well because I think it's an area where we can bring our own sort of way of bringing Slingo into new markets. And that's -- that's it on the slides. Operator: [Operator Instructions] That's great. I'd like to remind you that recording of this presentation along with a copy of the slides and the published Q&A can be accessed via investor dashboard. As you can see, we have received a number of questions throughout today's presentation. Can I please ask you to read out the questions and give responses where appropriate to do so, and I'll pick up from you at the end. Geoffrey Green: So we had a couple of pre-submitted questions on our capitalization. So the first one is, can you give some guidance on CapEx spend for FY '26 and beyond? And then can you explain why CapEx increased so much in 2025? And is it likely to keep on increasing indefinitely? So I think we've covered the majority of that through the presentation where we're investing across Slingo, Lucky Lunar, bespoke, aggregation. So capitalization spend did increase 45% in 2025 compared with 2024, which reflects all of those investments and increasing the future content pipeline and what we can deliver to market in future years. In terms of outlook, I wouldn't expect that increase to continue at that rate. I think for 2026, I think we're realistically looking at something mid-teens growth, which would just be reflecting the full year impact of this increased investment, which happened towards the start of 2025. And then it will kind of normalize around that level as we get to our content flow position. And then there's another one on tax credit. The tax situation looks incredibly complicated. How should investors understand it? So I guess you're right. The tax -- how we presented tax over the last few years has been complicated, but it's mainly because as we've become profitable, we've been recognizing deferred tax assets on our historic losses and then subsequently using them. And then we also implemented a new more efficient tax structure midway through last year. I guess the message would be we're kind of through all that. By the end of 2025, we had used all of our available U.K. tax losses and the new structure is in place. So I think on a forward-looking basis for 2026 and beyond, an effective tax rate of the U.K. standard of 25% is where I would point people towards. Mark Segal: And yes, we're jumping around the questions come in, but there's a question on why aren't the brokers conducting the buyback to the maximum, I guess, the parameters they can use or the maximum amount. I mean we are speaking to them, and we're satisfied the buyback is progressing in line with the objectives of the program and within the price and volume limits that have been agreed. There are -- there is some nuance, I think, around the liquidity at the time and the more safe harbors on the price of the independent trades and stuff as well. But we are working with them and trying that it's executed as best as possible. And just moving on, there's a question on brand licensing revenue because we saw a lot of growth in '25. And we -- I talked about a couple of brand deals that we've done. But the question here is, can we help investors understand the nature of the deals, the upfront payments, the multiyear rights, critically the baseline. So I think when they're all accounted slightly differently, the ones which have, in this case, was an upfront amount. It was a continuation of a license and then MRG. And we're hoping it's a 5-year deal. We're hoping it will recoup and we'll earn some additional revenues during the deal itself, albeit we've had to account for it all upfront under the IFRS. We have some other deals, which are more baseline, which are monthly ones with some more performance targets on them. But I think we would expect the licensing to fall probably more in line with what we saw in '24, we'll see in '26 rather than this big spike that we saw in '25. Another question is North America remains your largest market at 63% of the content licensing and growth was 19% in '25, having been 59% in 2024. Is that moderation purely a function of a higher base? Or are you seeing signs of saturation in state? Well, I think we've probably showed you on the slides themselves, but we are -- it is a function, I think, of starting from a higher base. We are -- sorry, this is a slide -- relevant slide here. We are still seeing growth in all the markets that we are in. And you can see in H2 of last year, it was actually large growth as well. So I think we are confident that we can continue to hopefully take some market share with continued growth as well as the increase in the quality, I think, of the games which we are taking to the market now. Another one. You launched 12 Slingo games in '25 and the same number in '24, but also establishing Lucky Lunar Studio for traditional slot content. Given that Slingo's content licensing growth slated 3% in '25, is the pipeline of new Slingo titles actually driving meaningful incremental revenue? Or has it reached a saturation point? So what I'll say here is that we -- it is driving growth. We can see it in the U.S. What we've had to overcome was that we had a big drop in our second largest market in the U.K. in the year, which has essentially made the growth look a lot smaller than it is outside the U.K. And I think we've also working close with our partners as well. I think Lucky Lunar -- well, I know Lucky Lunar did not go live in 2025, albeit the investment started. So we'll start to see benefits of this content in the second half of this year and then probably into the full year in '27 as we start to have a portfolio of games we can work with. But we're still seeing a lot of growth and excitement around our content. We are meeting our partners regularly who want more Slingo. We're the only Slingo provider in the market. We have this great IP. We want to take it into different products as well, we can attract more players. But the actual core game, which we're constantly innovating different ways of the interaction within Slingo is still really, really popular. It's exactly what our partners are wanting and engaging with us. Geoffrey Green: There's another one here. What was the U.K. and non-U.K. growth rate for 2025 and the same question for 2026 to date? So I think as we talked about in the presentation, our U.K. revenues declined 10% over 2024 after the introduction of staking limits. For the licensing segment, our non-U.K. revenue growth was 24%, showing how strong we're growing in our international markets. And then the post period, Mark alluded to earlier. So on a like-for-like basis, we're up in the U.K., low single digits percentage-wise growth over 2025. And outside of the U.K., we were up 10% on a reported basis, but that was 16% on a constant currency basis. And then a very quick one. What were the FY '23 and FY '24 equivalents of the GBP 9.5 million or 63% of adjusted EBITDA to cash conversion you talked about? So 2023 was an inflow of GBP 4.5 million, which was 45% of adjusted EBITDA and 2024 was a GBP 6.1 million inflow, which was 46%. And that bumped up last year to the GBP 9.5 million and 63%, showing that cadence of growth that we're on. Mark Segal: I'm going to combine a couple of questions together. I can get the net essentially around the use of the cash that we're generating. One of them is around is the buyback working and would we consider a dividend and the other one being around the Board has mentioned evaluating acquisitions is suitable. So it's more around M&A. And I'd say we do sit down and look at whether the best way of investing either shareholder value back in the business. Definitely in '25, it was around the buyback and investment in more growth and product for growth and '26 has been that way. We will still look at or evaluate opportunities if we feel the right one is there for an acquisition. I mean it could be a few areas. It could be some really interesting IP again, like we've managed to find Slingo where we can take to market and grow new light, albeit that is -- we've not found anything quite suitable for that yet, which we think we have the traction. I mean it's worth noting that Slingo is going to be 30 years old this year, which also shows a longevity why we don't feel we're anywhere close to a ceiling with what we can be doing with the Slingo IP and the areas it's been in. And the other one is if we can find some maybe not something unique like Slingo, but a really well-run business with good revenues and nice content, which we can take on to our platform and then distribute much wider. So we can start to target that into some of the markets which are more important for us or help grow in new markets. And again, it's just about finding one which I think ticks those boxes can integrate well and we can help -- it can be accretive for our business as well. But we will look at all of these areas together when we look at where we think is the most suitable times and places to be investing back our cash. Another one is, in the 2 months post year-end, core content licensing was 8% ahead of the comparable period in '25. That compares to 3% growth in '25 itself. Is the acceleration driven by new market launches, increased activity with existing partners or other factors? And is it representative of underlying trajectory we expect for the full year? So just putting the U.K. tax aside, the increase there. The growth this year has come very much from the fact that we've got a little bit of growth in the U.K. And actually, if the new taxes weren't coming in, we'd see really good growth in the U.K. this year from where we're at. But in the U.S., it's really where we've seen a lot of good growth and the other is from working well with the partners we're working and getting great content to market. So it's actually come from the activity with our existing partners at the moment. We've launched with a few more. But we do have some interesting markets we've just gone live with the South Africa, the African markets. Hopefully, we'll look to do some more in South America as well. So I think these will start to hopefully have a bit more impact into this year's numbers as well. And one of the reasons why we feel that this year, we'll have hopefully end the year with a more positive or more solid recurring revenues than we start the year because we would have worked our way through what's going to happen in the U.K. with the increased taxes and managed to sort of grow or make up that difference, and then we can grow from that point towards the end of the year as well. I think we've got time for one more. So I'm just going to have to see if there's any we missed. I think we've covered most of it either now in the presentation or the Q&A. There's been a few duplicates there. So I think we're sort of finished now through the Q&A part. Operator: That's great. Thank you for answering all those questions you have from investors. And of course, the company can review all questions submitted today, and we'll publish those responses on the Investor Meet Company platform. Just before redirecting investors to provide you with their feedback, which is particularly important to the company, Mark, can I please just ask you for a few closing comments. Mark Segal: Yes. Just firstly, thank you for your time and support for those who have over the period. I'd just like to say, I feel like we've ended last year and we started this year in a really good place. We're still growing, seeing great growth in our largest markets in the U.S. and Canada. U.K. has returned to some growth as well. But we're in a really, really nice position. We've got a strong balance sheet. We're cash generative. We're able to start to invest in new initiatives, which will have long-term growth for the business, whether it's more Slingo content, different type of content with Slingo IP as well. We're showing continued growth in the markets we're in, but also launching in new markets. So I feel we're in a really exciting part of our business now to kick on. So thank you. Operator: That's great. Thank you for updating investors today. Can I please ask investors not to close the session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This may take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team, we'd like to thank you for attending today's presentation, and good afternoon to you all.
Operator: Good afternoon, and welcome to the Gaming Realms plc investor presentation. [Operator Instructions] Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Mark Segel, CEO. Good afternoon, sir. Mark Segal: Thank you. Firstly, thank you, everyone, for dialing in, and we'd like to take you through our FY '25 results presentation. So you have myself, CEO, Co-Founder of Gaming Realms and Jeff, the CFO, on the presentation today. I just thought I'd take you through sort of what we do and how we are generating this great growth we've seen in the last few years. So we're a developer and licensor of casino games for the regulated iGaming market, international market, that is. And the majority of our revenue and our biggest IP comes through Slingo, which we acquired in 2015. We actually brought it to the iGaming market. Previously, it existed in the lottery market, the land-based casino market, social gaming market, et cetera. So very, very big important IP. We monetize mostly through real money. We have a platform which hosts all of our games and connects to all the casinos that we work with around the world. And there's great volume in that, both in terms of transactions and players, and partners and number of games. And also, we operate a social publishing, social casino business, which essentially is a way of monetizing our Slingo games in another market. The way we are generating the business comes through 3 areas. The majority and the core part of our business is the content licensing business. We have built up a portfolio of over 80 Slingo games, which are very unique in both format and the IP. And the way we are paid is we share in the operator success. Essentially, the more revenue that our games produce for the operators, we own a percentage of that. It's very diverse now this stream. We work with over 200 partners. We're in 30-odd regulated markets as well, and we have a portfolio probably close to 100 games in total. As Slingo is such an important IP and popular IP, we also are licensing this into other adjacent markets where we've not developed the project. So you can buy Slingo scratch cards in the lottery market in the U.S., for example. And we also have licensed Slingo to social slot providers as well as online scratch cards in other areas as well. And then finally, we have our social gaming business, which is almost like a Candy Crush model where we get in-app purchases and some advertising revenue. And what I will note for the brand licensing is that this revenue stream is as we do deals and it's not necessarily as recurring, say, the content licensing side, albeit we're often renewing all these deals and they do work in its cycle. But in the year, we managed to renew our lottery deal as well as the social casino deal as well. So Slingo is popular really for a few areas. And one of it is the brand itself, hence, why we're able to license into all these other markets and have great success through our games. But the other is it's become a category in itself. And you can quite see here, but these are some operators we work with in North America. And you'll be able to see that in DraftKings and BetMGM, we actually have Slingo sections on the site. So they really stand out in the real estate of a mobile phone. Our Slingo content can be stand out and promoted. The one with there is a big promotion they've done around our games, and they also have a place on their site for all Slingo content. And then on the right is a lottery we work within Canada, where, again, they promote Slingo separately. And so we're able to -- what we've done is we've managed to take Slingo as the iGaming market and then make it a category which stands alongside slot games, table games, bingo, et cetera. And we always market ourselves and are a premium supplier of games. So Slingo is different and premium, and we work with some of the top operators all over the world. I mean notable ones that we've gone live with during the period is BCLC, which is a lottery in British Columbia in Canada. We go live with Hollywoodbets in South Africa as well. We try and work with the biggest partners wherever we are, whichever markets we're in. and we're growing. So in the year, we went live in Delaware in the U.S., U.S. being our largest market and also went live in British Columbia and Canada. We've gone live with Brazil during the year and Peru since the year-end as well. These are new -- Brazil, in particular, is a new regulated market. And so we're navigating that, slowly rolling out our games going live with new partners. We went live in South Africa right at the end of the year. So we'll start to see the benefit of that into 2026 and beyond. Again, as we roll out with more partners and more games as well. And we've gone live in a few more of the regulated markets in Africa. And again, we're at the beginning of our sort of journey in these new really exciting markets for us. And then into Europe as well, there are more markets which are going to regulate in time. I think Ireland is one, for example, which I said it's going through a regulatory period. But at the moment, these are new markets we'll be able to launch our content and essentially open up new revenue streams for our games. So I'll hand over to Jeff now to run through the results for the year. Geoffrey Green: Thanks, Mark. I'll take you through our 2025 financial performance and the key drivers behind the numbers. So I'll start here with some of our key metrics. So at a headline level, as you can see at the top of the slide, we grew our revenue by 10% to GBP 31.4 million over 2024, and we grew adjusted EBITDA 15% up to GBP 15 million, reflecting the continued scale and strength of the model. As the bottom of the slide shows, North America continues to be a key driver behind this growth. So our growth in the regulated U.S. markets was 23% and in Canada was 31%, both in constant currency, and the region now represents 63% of content licensing revenue. And this financial performance is underpinned by what we're seeing operationally. So we've continued to grow the number of operators that we distribute to. So with the 40 new partners that we launched with in 2025, our distribution base now exceeds 250 partners. We're continuing to go live into new markets with the 7 markets that we entered during 2025, including Brazil, South Africa and Switzerland and then the 4 markets that we've gone live within the first quarter of 2026. That brings us to 32 markets that we currently distribute our content to. We also increased the number of games that we've launched across our core Slingo portfolio, our bespoke titles and the third-party titles that we distribute. And player engagement across our portfolio is also up. So we saw a 22% increase in the number of unique players compared with 2024. And encouragingly, we've seen this momentum continue into 2026 so far. So our content licensing revenues in January and February 2026 were 8% ahead of the same months in 2025 or 10% on a constant currency basis. So now turning to the financials. This slide shows our summary income statement for the year. Revenue growth was again driven by our core licensing business, where revenues grew 13% year-on-year. While we reported growth in our content licensing business of 3%, that would have been 5% under constant exchange rates with currencies being a headwind for us during the year, particularly with the U.S. dollar. And as we'll come on to in a couple of slides' time, our -- that growth was also impacted by our U.K. revenues following the introduction of staking limits in April. And then just a few other points to highlight from this slide. We continue to operate a high-margin model, which is one of the bits that gives us the operational leverage. So variable costs represent 20% of revenue. Our admin expenses increased as expected, reflecting the targeted investment in our development team for our future growth. And importantly, we maintained strong cash conversion with GBP 9.5 million of underlying cash inflow, which represents 63% of adjusted EBITDA. So let me now turn to cash generation and capital allocation. This slide shows how we've deployed that cash generated during the year. So we took a balanced approach between returning capital to shareholders and investing in the future growth of the business. During the year, we returned GBP 2.8 million to shareholders via share buybacks as part of an overall GBP 6 million program that was announced. The remaining GBP 3.2 million of that program was completed in the first quarter of 2026 alongside the announcement of a further GBP 5 million buyback. We also increased our capital investment by GBP 2.5 million to grow and scale our content capabilities, the benefit of which will come in 2026 and beyond, and we'll discuss this later in the presentation. And even after these items, we still reported GBP 4.3 million of net cash increase during the year. So overall, we're growing. We're funding that growth ourselves, and we're still returning capital to shareholders at the same time. And that leaves us with GBP 17.8 million of cash at the year-end, giving us significant flexibility moving forward. So this is staying with cash. This is just another slide that shows a slightly different way of how that GBP 4.3 million of reported cash increase came about. It starts with the GBP 8.8 million of profit before tax on the left-hand side and kind of shows the bridging steps to go from that to the GBP 4.3 million on the far right-hand side. The main movements here are the GBP 8.2 million of capital investment and the GBP 2.8 million return to shareholders that we spoke about on the previous slide, alongside the noncash charges, the amortization charge, depreciation and the share-based payment charge and then the tax paid during the year on the right-hand side. So we delivered GBP 4.3 million of free cash flow even after the increased investment and shareholder returns and ended the year with GBP 17.8 million of cash. Now what really underpins this is the strength of the underlying model, which this slide summarizes. In very simple terms, what this is saying is as we grow our distribution by going live with more partners and entering more markets, as we launch more games and as those games gain engagement, that drives higher game play across our portfolio, higher bets placed and ultimately revenue for the business. And I'll show on this next slide how that translates into key metrics. So this slide shows the progress we've made since launching the licensing business in 2017. The top 2 charts here show the cumulative growth in operators and the number of games with over 250 partners and 107 games live by the end of 2025. The bottom 2 charts show the growth in bets and revenue across that same time period. And I would say that the bottom 2 charts are both in-period metrics, whereas the top 2 are on a cumulative basis. So looking at the bottom left chart, that shows that in 2025 alone, over GBP 7.4 billion worth of bets was placed across our portfolio, which really shows the scale that the platform is now operating at. And as our agreements are performance-based, that growth in bets feeds through to increased revenue as shown in the bottom right slide. And as I mentioned a few slides back, that momentum has continued into 2026. So we're looking forward to seeing these charts continue to progress over the coming periods. So I'll now break down that growth by geography. So starting with the U.S. on the left-hand side, revenue grew by 19% or 23% in constant currency. That growth has come about from a number of factors. We saw strong underlying performance and growth in all of our existing markets where every state or every existing state grew at double digits over 2024. We launched some very strong U.S.-focused titles during the year, which our U.S. players really engaged with. We also launched another tranche of bespoke content for our largest U.S. partners, and we went live in Delaware during the year. the sixth state that we distribute our content to and had the full year impact of going live in West Virginia during 2024. I would just say West Virginia and Delaware are very much smaller revenue territories for us. So moving to the right, the U.K. revenue declined by 10% during the year compared with 2024, reflecting the impact of staking limits introduced in April. And we'll come on to a case study on the next slide, showing how we've mitigated and grown the U.K. market subsequently. Canada, moving along to the right again, delivered strong growth, up 26% or 31% in constant currency. Growth here was supported by going live in British Columbia during the second quarter of 2025, launching with 6 new partners in Ontario and also seeing strong organic growth with the existing partners we were live with. And in Italy, we also saw strong growth, albeit from a smaller base there, growing 31%. Towards the end of 2024, we launched our first Italian first title, where we licensed in a top Italian slot brand and built a single game around. And that game has really driven engagement in the market. And the game actually did fantastically well globally, not just in Italy. And then finally, the rest of the world on the far right-hand side, Rest of the world declined year-on-year, mainly due to 2 markets, Portugal and the Netherlands. In the Netherlands, the recent regulatory changes, so the higher taxes, the deposit limits and the marketing restrictions have led to a material contraction in the regulated market size, which we are downstream fro. And in Portugal, while we are live, the regulations in that market mean we can only have a very limited number of titles. So without that regular flow of new content, it's very difficult to maintain or grow revenues there. So I'll now hand back to Mark just to talk a little bit about our U.K. recovery. Mark Segal: I just want to talk about this because the U.K. has always been a growth market for us and was traditionally our largest market, albeit the U.S. and then North America as a whole is overtaking it anyway where there's very big growth. But last year, the new regulations came in at the beginning of April, which actually was a number of regs across the board. The one which affected us most was the staking limit. It's -- our games generally are low staking or the transactions are low staking within games. but we are a multi-staking game and the flow is affected by the staking limit. And we tested 2 different mechanics on how we could work within the staking limit, which we tested at the end of '24. Unfortunately, even though we knew staking limits were coming in, we only had 6 weeks. It was a rolling 6-week notice period. And so even though we developed the tool, we then had to go through the licensing or the certification process for all our games and backdating them, which took time. So Q2 last year, we dropped 21%. And you can see that steadily started to grow Q3, we started to -- we were probably 11% or 12% down then into Q4. In December, we had a great month. It was new content launches, more volume. As we went on, we went from 16 games with this tool to over 50 by the end of the year. And so that's really helped. The base here, just to explain what's the 100% was the 6-month period before the staking limits came in. So essentially from October '24 through to the end of March '25. So December performed above that. We've actually seen growth in the first quarter of '26 versus the first quarter of '25, which was pre-staking levels. So we've been able to maintain this performance in the U.K. And it's really a testament to, a, the popularity of games; b, how these games work even with the restrictions in place and the innovation that we've put into these games and the execution, essentially working through the regulations, certification and with the operators to get the games back live and marketed again. So actually, a shame that we had this bump in the year, which we talked about after the first half of last year, but the recovery is great. And we do have the taxes coming in, in -- well, they came in last week, essentially for the remote gaming increased in the U.K., and we will work through that again, hopefully successfully as we've done now. Geoffrey Green: So this slide shows what happens when we go live with the cohort of operators each year. So I would say the numbers here represent the gross revenues that the operators generate from our games. So if you look at the 2025 stack on the far right-hand side, that shows that the operators or all our partners generated in excess of GBP 350 million in gross revenue from our portfolio last year. And each color within those stacks represents a different cohort of operators that we've launched with. So if you look at the 2021 stack and the gray slither at the top, that shows that the operators that we went live with during 2021 generated, I think it's GBP 18 million of revenue -- of gross revenue from our games. That then subsequently grew to GBP 62 million, GBP 73 million, GBP 80 million and then GBP 101 million last year, showing how we scale and build with our partners over time. I would say that there's a couple of the earlier cohorts, so 2018 and 2020 in particular. They are the cohorts where we went live with some of our largest U.K. partners. So there is a small contraction in 2025, and that's just reflective of the previous slide and our decline in the U.K. in 2025. But the key point here is when we go live with an operator, we don't just launch our full portfolio of games on day 1. We grow with our partners over time as we launch more content, deepen relationships, understand their player base and drive engagement. So the model really grows in 2 ways by layering on new operators each year and then through existing operator cohorts continuing to scale over time as this chart demonstrates. And then finally for me, I just wanted to talk a little bit about 2026 and expectations because this is an area where context is important. The consensus for 2026 is for GBP 14.7 million of adjusted EBITDA, which is slightly below the GBP 15 million that we've just reported for 2025. However, this small change is due to the U.K. tax change that Mark has just spoken through, where remote gaming duty increased from 21% to 40% last week. So what this table is trying to do is show what 2025 would have looked like had that tax mechanism been in place for the full year. And that middle column shows that 2025 reported revenues would have reduced by GBP 2 million and adjusted EBITDA would have reduced by GBP 1.7 million to GBP 13.3 million. So on a pro forma like-for-like basis, we would still have been growing double-digit adjusted EBITDA from pro forma '25 to 2026, showing there remains strong underlying growth in the business. Mark Segal: If you just take on -- move on to invest our growth opportunities for the business. This has been our performance in the regulated iGaming market in North America since we went live there in 2017. And you can see, particularly in the last 2 periods, we've started to grow or we've continued every market that we're in is still growing. Each time we go live with a new market, it's layering on top. And we've seen really, really good performance in the last year in these markets in North America. We've added British Columbia, Delaware, West Virginia in the last year or so, but we're still seeing growth in the ones we have. And that's come from the content that we are launching in the market. We actually had our biggest ever launch last year from one of the games we released, and we expect this to continue into future years. As more states open, they will layer on top. We have great relationships with the operators as well. These markets are still growing, and we've we tend to track either in line or above the market growth as well. So we will continue to see growth in these markets as well as the expectation or the aim from ourselves that we will start to take market share as we innovate our product and take more product to market as well. And this is some research on the U.S. market and where it could go. The base case here, which is sort of the lighter blue, is the predicted growth essentially with no new states regulating through to 2029. And it's still expecting that it will be up to 60% or 62% growth in the markets we're in already, and we should at least perform as well as that. And then the bull case is if we have a couple of significant states or decent-sized states launching in '27 and then in '28. And it can show the potential of where the addressable market could go for us with more states regulating. This is still fairly prudent. We still only have 10 states live by the end of '29 and double the addressable market for us. And Jeff spoke a little earlier about the investment that we're doing into more content and games for our business. So this is in 4 areas really. We are building now more Slingo games than we've done previously. 2025 is at the previous levels of 1 a month, but we should start to see from '26. And then once we have a full cadence from '27 onwards, we'll be launching more Slingo games and the investments started in the year in '25. We're also having a lot of success now building more localized and bespoke content on top of the core roadmap, Slingo road map with our partners. And we've very recently launched Slingo Gold Lucky Pants for Paddy Power. We've launched an NHL game in the U.S. with one of our partners as well as lots of sports brands. And we're starting to see how this is helping us with our -- essentially attracting more players to Slingo who love the games. We've also just launched our first couple of games from a new internal studio that we've growing called Lucky Lunar. These are more traditional type of games, slot games, table games, but they will bring in some Slingo IP to them. So we are innovating here. We're looking at ways we can bring Slingo into a wider portfolio of content, which will attract more players to the Slingo IP, and hopefully, they'll cross-sell and play more of our games. What we have found with Slingo is that most of the players who play 3 Slingo games. They try most of the new games which come out. And some very recent research, I've seen that we are one of the largest family of games in the iGaming space. We're a top 5 family now Slingo in the U.S. market. And the more we can do around Slingo, I think the more we can start to take market share and attract more players to our games. And the other area we've been growing is -- as Jeff said, our platform has been able to scale seamlessly. We had GBP 7.4 billion through the platform last year. And we've been taking other third-party other proven studios games into our platform for distribution. We've plugged into 240 partners now. And so we see an area where we can take other games and take some -- essentially increase our margin and take an offering to more partners. We went live with our third partner, which was S Gaming in January, and that's launched well in the U.S. So we're definitely seeing growth from that side of the business as well. A little bit on the bespoke part of content we can see here and some of it is local. So Trato is deal or no deal for Spain. We have our NHL game, which we with FanDuel. We've got a game here with Paddy Power and also with bet365. So working with our largest partners to try and get some targeted content for them. And then some more in the U.S. market as well. We are doing more and more sports games now, which get promoted in stadium, as you can see on the right with the Detroit Red Wings hockey. But we're also launching quite a few more of those we did in '25 and into '26 as well. And they're really popular. They work very well for the operators who are able to -- the sports betting players love the Slingo games as cross-sell into the casino. And so we have a really good offering for that. We can quite see it here. But I think on the left, Phillies themselves have advertised the Slingo game to go and play the casino to play them. And so we get real good interaction and support from the sports brands as well. I think that's it. A little bit more on the brand licensing here. We can just show the areas where it's gone. We've had so much in retail sales on the Slingo scratch cards and selling millions of these tickets every year. We've got Slingo in a bingo product, which -- we've licensed it to a big operator to build. There's a singer.com portal, which another operator is operating on behalf of us as well. So we're doing -- I think there will be more opportunities here, definitely more demand for sure. It's just a matter of seeing how Slingo can incorporate into the right adjacent markets for us. I think as we get time and scale, we may look to execute some of these ourselves as well because I think it's an area where we can bring our own sort of way of bringing Slingo into new markets. And that's -- that's it on the slides. Operator: [Operator Instructions] That's great. I'd like to remind you that recording of this presentation along with a copy of the slides and the published Q&A can be accessed via investor dashboard. As you can see, we have received a number of questions throughout today's presentation. Can I please ask you to read out the questions and give responses where appropriate to do so, and I'll pick up from you at the end. Geoffrey Green: So we had a couple of pre-submitted questions on our capitalization. So the first one is, can you give some guidance on CapEx spend for FY '26 and beyond? And then can you explain why CapEx increased so much in 2025? And is it likely to keep on increasing indefinitely? So I think we've covered the majority of that through the presentation where we're investing across Slingo, Lucky Lunar, bespoke, aggregation. So capitalization spend did increase 45% in 2025 compared with 2024, which reflects all of those investments and increasing the future content pipeline and what we can deliver to market in future years. In terms of outlook, I wouldn't expect that increase to continue at that rate. I think for 2026, I think we're realistically looking at something mid-teens growth, which would just be reflecting the full year impact of this increased investment, which happened towards the start of 2025. And then it will kind of normalize around that level as we get to our content flow position. And then there's another one on tax credit. The tax situation looks incredibly complicated. How should investors understand it? So I guess you're right. The tax -- how we presented tax over the last few years has been complicated, but it's mainly because as we've become profitable, we've been recognizing deferred tax assets on our historic losses and then subsequently using them. And then we also implemented a new more efficient tax structure midway through last year. I guess the message would be we're kind of through all that. By the end of 2025, we had used all of our available U.K. tax losses and the new structure is in place. So I think on a forward-looking basis for 2026 and beyond, an effective tax rate of the U.K. standard of 25% is where I would point people towards. Mark Segal: And yes, we're jumping around the questions come in, but there's a question on why aren't the brokers conducting the buyback to the maximum, I guess, the parameters they can use or the maximum amount. I mean we are speaking to them, and we're satisfied the buyback is progressing in line with the objectives of the program and within the price and volume limits that have been agreed. There are -- there is some nuance, I think, around the liquidity at the time and the more safe harbors on the price of the independent trades and stuff as well. But we are working with them and trying that it's executed as best as possible. And just moving on, there's a question on brand licensing revenue because we saw a lot of growth in '25. And we -- I talked about a couple of brand deals that we've done. But the question here is, can we help investors understand the nature of the deals, the upfront payments, the multiyear rights, critically the baseline. So I think when they're all accounted slightly differently, the ones which have, in this case, was an upfront amount. It was a continuation of a license and then MRG. And we're hoping it's a 5-year deal. We're hoping it will recoup and we'll earn some additional revenues during the deal itself, albeit we've had to account for it all upfront under the IFRS. We have some other deals, which are more baseline, which are monthly ones with some more performance targets on them. But I think we would expect the licensing to fall probably more in line with what we saw in '24, we'll see in '26 rather than this big spike that we saw in '25. Another question is North America remains your largest market at 63% of the content licensing and growth was 19% in '25, having been 59% in 2024. Is that moderation purely a function of a higher base? Or are you seeing signs of saturation in state? Well, I think we've probably showed you on the slides themselves, but we are -- it is a function, I think, of starting from a higher base. We are -- sorry, this is a slide -- relevant slide here. We are still seeing growth in all the markets that we are in. And you can see in H2 of last year, it was actually large growth as well. So I think we are confident that we can continue to hopefully take some market share with continued growth as well as the increase in the quality, I think, of the games which we are taking to the market now. Another one. You launched 12 Slingo games in '25 and the same number in '24, but also establishing Lucky Lunar Studio for traditional slot content. Given that Slingo's content licensing growth slated 3% in '25, is the pipeline of new Slingo titles actually driving meaningful incremental revenue? Or has it reached a saturation point? So what I'll say here is that we -- it is driving growth. We can see it in the U.S. What we've had to overcome was that we had a big drop in our second largest market in the U.K. in the year, which has essentially made the growth look a lot smaller than it is outside the U.K. And I think we've also working close with our partners as well. I think Lucky Lunar -- well, I know Lucky Lunar did not go live in 2025, albeit the investment started. So we'll start to see benefits of this content in the second half of this year and then probably into the full year in '27 as we start to have a portfolio of games we can work with. But we're still seeing a lot of growth and excitement around our content. We are meeting our partners regularly who want more Slingo. We're the only Slingo provider in the market. We have this great IP. We want to take it into different products as well, we can attract more players. But the actual core game, which we're constantly innovating different ways of the interaction within Slingo is still really, really popular. It's exactly what our partners are wanting and engaging with us. Geoffrey Green: There's another one here. What was the U.K. and non-U.K. growth rate for 2025 and the same question for 2026 to date? So I think as we talked about in the presentation, our U.K. revenues declined 10% over 2024 after the introduction of staking limits. For the licensing segment, our non-U.K. revenue growth was 24%, showing how strong we're growing in our international markets. And then the post period, Mark alluded to earlier. So on a like-for-like basis, we're up in the U.K., low single digits percentage-wise growth over 2025. And outside of the U.K., we were up 10% on a reported basis, but that was 16% on a constant currency basis. And then a very quick one. What were the FY '23 and FY '24 equivalents of the GBP 9.5 million or 63% of adjusted EBITDA to cash conversion you talked about? So 2023 was an inflow of GBP 4.5 million, which was 45% of adjusted EBITDA and 2024 was a GBP 6.1 million inflow, which was 46%. And that bumped up last year to the GBP 9.5 million and 63%, showing that cadence of growth that we're on. Mark Segal: I'm going to combine a couple of questions together. I can get the net essentially around the use of the cash that we're generating. One of them is around is the buyback working and would we consider a dividend and the other one being around the Board has mentioned evaluating acquisitions is suitable. So it's more around M&A. And I'd say we do sit down and look at whether the best way of investing either shareholder value back in the business. Definitely in '25, it was around the buyback and investment in more growth and product for growth and '26 has been that way. We will still look at or evaluate opportunities if we feel the right one is there for an acquisition. I mean it could be a few areas. It could be some really interesting IP again, like we've managed to find Slingo where we can take to market and grow new light, albeit that is -- we've not found anything quite suitable for that yet, which we think we have the traction. I mean it's worth noting that Slingo is going to be 30 years old this year, which also shows a longevity why we don't feel we're anywhere close to a ceiling with what we can be doing with the Slingo IP and the areas it's been in. And the other one is if we can find some maybe not something unique like Slingo, but a really well-run business with good revenues and nice content, which we can take on to our platform and then distribute much wider. So we can start to target that into some of the markets which are more important for us or help grow in new markets. And again, it's just about finding one which I think ticks those boxes can integrate well and we can help -- it can be accretive for our business as well. But we will look at all of these areas together when we look at where we think is the most suitable times and places to be investing back our cash. Another one is, in the 2 months post year-end, core content licensing was 8% ahead of the comparable period in '25. That compares to 3% growth in '25 itself. Is the acceleration driven by new market launches, increased activity with existing partners or other factors? And is it representative of underlying trajectory we expect for the full year? So just putting the U.K. tax aside, the increase there. The growth this year has come very much from the fact that we've got a little bit of growth in the U.K. And actually, if the new taxes weren't coming in, we'd see really good growth in the U.K. this year from where we're at. But in the U.S., it's really where we've seen a lot of good growth and the other is from working well with the partners we're working and getting great content to market. So it's actually come from the activity with our existing partners at the moment. We've launched with a few more. But we do have some interesting markets we've just gone live with the South Africa, the African markets. Hopefully, we'll look to do some more in South America as well. So I think these will start to hopefully have a bit more impact into this year's numbers as well. And one of the reasons why we feel that this year, we'll have hopefully end the year with a more positive or more solid recurring revenues than we start the year because we would have worked our way through what's going to happen in the U.K. with the increased taxes and managed to sort of grow or make up that difference, and then we can grow from that point towards the end of the year as well. I think we've got time for one more. So I'm just going to have to see if there's any we missed. I think we've covered most of it either now in the presentation or the Q&A. There's been a few duplicates there. So I think we're sort of finished now through the Q&A part. Operator: That's great. Thank you for answering all those questions you have from investors. And of course, the company can review all questions submitted today, and we'll publish those responses on the Investor Meet Company platform. Just before redirecting investors to provide you with their feedback, which is particularly important to the company, Mark, can I please just ask you for a few closing comments. Mark Segal: Yes. Just firstly, thank you for your time and support for those who have over the period. I'd just like to say, I feel like we've ended last year and we started this year in a really good place. We're still growing, seeing great growth in our largest markets in the U.S. and Canada. U.K. has returned to some growth as well. But we're in a really, really nice position. We've got a strong balance sheet. We're cash generative. We're able to start to invest in new initiatives, which will have long-term growth for the business, whether it's more Slingo content, different type of content with Slingo IP as well. We're showing continued growth in the markets we're in, but also launching in new markets. So I feel we're in a really exciting part of our business now to kick on. So thank you. Operator: That's great. Thank you for updating investors today. Can I please ask investors not to close the session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This may take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team, we'd like to thank you for attending today's presentation, and good afternoon to you all.
Operator: Good morning. Thank you for standing by, and welcome to Sodexo's H1 Fiscal Year 2026 Results Conference Call. [Operator Instructions] I advise you that this conference is being recorded today on Friday, April 10, 2026. At this time, I would like to hand the conference over to the Sodexo team. Please go ahead. Juliette Klein: Good morning, everyone, and thank you for joining us for our H1 fiscal 2026 Results Call. I'm Juliette Klein, Head of Investor Relations. With me on the call today are Thierry Delaporte, our CEO; and Sebastien De Tramasure, our CFO. Thierry will start by sharing his assessment and key messages, followed by Sebastien, who will cover the financials. After that, we will open the line for questions. [Operator Instructions] If you have additional questions after the call, please don't hesitate to reach out to the IR team. With that, I'll now hand over to Thierry. Thierry Delaporte: Thank you, Juliette. Good morning, everyone, and thank you for joining the call. This is my first earnings call as CEO of Sodexo. I'm very pleased to be speaking with you today. What I'll do is I'll share my perspective on where the company stands today, what we are already doing but also the priorities we are setting. We are preparing a more comprehensive update for July 16. Based on our current assessment of the business and the actions we are implementing, there are also some near-term financial considerations. So I want to provide context on how this shape our outlook for 2026. Over the last 5 months, I've spent most of my time in the field with clients, with teams in operations and with our partners. I've been traveling across the U.S. where I'm spending half of my time but also in Asia, in Europe. I joined Sodexo because I'm genuinely attracted to this business. I know B2B, people-intensive service as well. I know how much value can be created when execution, discipline and client focus come together. Sodexo, let me tell you, is a special company. The quality of our people, the pride they take in serving clients every day and the expertise on the ground absolutely stands out. We often operate in an environment where reliability, quality, continuity are critical. So delivering this consistently every day and that our scale is no mean feat. The group was built by Pierre Bellon on a clear entrepreneurial ambition and a strong client mindset. I fully adhere to these foundations. Our priority now is to bring them back to life everywhere. At the same time, this business is different from what I have known before. It's complex in a different way. It's operational, physical highly decentralized and diversified by nature. We have thousands of sites running every day in real time. Disciplined execution and attention to every single detail make the difference. The real challenge, therefore, is driving rigor, discipline and consistent performance at scale. It's about how we lead, organize and execute. Too often, great people are held back by layers, processes and administration instead of being fully focused on clients. So my conviction is clear, growth is the solution. And growth comes from an obsession with clients on the ground every single day. It's earned contract by contract, side by side, by building trusted relationships and creating value at the client level. In our model, growth is not just an outcome. It's a catalyst. It drives operating leverage to support profitability enhancement. It basically fuels the organization with energy, talent and confidence. So let me start with a balanced picture of Sodexo today, our strengths and the realities we need to address. We operate in resilient and growing markets with strong long-term growth drivers. Demand for outsourced services in both food and facility management continues to expand. We also have a global and highly diversified client portfolio, as I said, across geographies, segments, services. In many cases, we are the best partner to self-deliver an integrated proposition with one governance across multiple geographies. This strengthens client relationships and gives us additional levers to grow alongside them. Another key strength is our people-led service culture. Teams who care, who show up for clients every day, and we take pride in delivering. In a people-intensive business like ours, this is fundamental. It's a foundation we will build on as we restore execution and growth. But we also have to face the facts. And the facts are we have consistently underperformed our market and our peers. We underinvested in key capabilities that are critical to run well this business at scale and build a repeatable model. We have not been consistent enough in deploying a best-in-class offer in execution and in the predictability of our delivery and guidance. So what has held us back? The root cause is go back a long time, and there is no [ synoptics ]. First, commercial intensity. We have not shown enough appetite to win, not enough hunger to fight for clients to stay close to them, to truly understand their expectations, to anticipate and even surprise them. We have not been consistent enough in the way we drive growth and retention, winning, defending, expanding key accounts always with discipline and cadence. In a service business, you just can't review sales momentum once in a while and expect intensity to magically appear. It requires systematic follow-up and accountability and sharper engagement with clients. That is changing. Second, empowerment and decisiveness. Decision rights, accountability have become diluted across layers. The heavy structure will slow you down, creating [ interference ] and reduces the permission to act close to the clients and the operations. And third, the prioritization and focus, past organizational choices and too many parallel initiatives wasted attention and [ to resources ]. We were not consistently putting our people and capital towards the highest value priorities. Sometimes, short-term trade-offs prevailed over long-term value creation. As a consequence, we have not invested enough in the capabilities that make execution predictable, sales effectiveness, account management, processes, systems and tools. Now let me move to what we are doing differently starting now, and with a clear focus. We are turning the entire organization towards growth, restoring execution discipline and creating a real sense of accountability and urgency across the board. The first decision I made was to take direct leadership of North America, I wanted to go deep into the business, understand what works and what doesn't and make the necessary changes at the right pace. Over the past months, we have changed around 2/3 of the leadership team in North America. This is about bringing the right mix of experience, energy, accountability. We combine internal talent with external hires to better serve our clients and execute more consistently across America. In parallel, we simplified the global leadership structure, and we reshaped the executive committee to be more execution focused. We removed the zone layer with regional CEOs now reporting directly to me. This, inevitably, short-term decision paths strengthens accountability and brings leadership much closer to clients and operations. The Executive Committee now brings together the business leaders and a very limited number of global functions. And it has a clear mandate, enable execution across the group with discipline and urgency. We also we anchored incentives on growth to reinforce focus and accountability across the organization. In parallel, we are reinforcing sales capabilities, not only in the U.S. but everywhere. Beyond resources, we are strengthening our commercial engine by tightening discipline and governance. We are now consistently running a monthly review of commercial performance, which was not the case, clarifying account ownership and reinforcing the role of account managers. There are key leaders in the organization, fully accountable for client development and retention. We are also accelerating investments in technology. This work has already started. You know that, but it's clear we need to move faster. The focus is on strengthening our core systems, notably finance and HR, and scaling client-facing digital solutions. To me, these are no option. They are required to improve the productivity, speed and overall performance for our teams and for our clients. Finally, we have reinforced a disciplined and systematic reassessment of contract and assets taking into account changes in the environment, but also the strategic choices we make. Sebastien will explain how this has translated into the numbers. These measures, for sure, have a short-term impact on margin. This is deliberate. We are choosing to fix the engine properly rather than optimize around the ages that allow us to raise execution start-ups immediately, then over time to reaccelerate growth in a sustainable way. Now looking forward, our next priority are also very clear. First, we are aligning the organization around a single execution agenda, one set of priorities and clear choices on where we play, how we operate and where we invest. Our choices grounded in one -- in our strengths, our clients' needs and market trends. We call this program shift and grow because that is what it is about shifting the business to grow faster. Second, we are changing how we run the company. Decision-making is being pushed closer to the clients. Operational teams are being empowered. Headquarters are refocused on supporting execution rather than adding layers. At the same time, we are restoring competitiveness across the model, starting with labor. In my view, while a lot has already been done on supply, workforce management is where we see the biggest opportunity, actively managing the workforce pyramid, improving on-site utilization better matching staffing to client demand. That's what I've done for years. We're going to do it here. All of this supported by stronger processes and tools. And let's be clear, these actions are already in motion. Finally, we are reinforcing a strong client focus every day. I'm talking to some of our clients. I make a priority. In all our leadership meetings, we start with client cases, we're keeping this focus front and center, and I want every leader to personally own the client relationship and performance. We are also strengthening our performance culture. We are developing internal talent, bringing in external capabilities where needed and raising the bar on delivery. This is about empowerment and accountability. All of this has clear implications for how we invest, allocate capital and approach the year ahead. That brings me to the recalibrated baseline. We are setting for the fiscal year '26. Turning to H1. The numbers reflect both ongoing execution challenges and deliberate management actions to establish a more disciplined baseline. Organic growth was plus 1.7%, consistent with what we laid out in January, but frankly, below what this business should be delivering. Looking at our commercial indicators, retention over the last 12 months was 93.4%, and development, 5.3%. That's leading to negative net new business levels that are not where they should be, reflecting both execution issues, and an insufficient quality of pipeline and win rates. The underlying operating profit margin was 3.7%, which is down 140 basis points year-on-year. This reflects operational challenges in specific areas, for sure, and the impact of the deep review of contracts and assets we have conducted in the last few weeks and days. As we look to the full year, weaker than net new business in the first half will obviously weigh on organic growth in the second half as well as lower volumes in an uncertain external environment. Lower operating leverage, execution issues in H1 and the actions we are taking are reflected in our outlook. Taken together, this leads to a recalibrated starting point for FY '26 with now an organic growth expected between plus 0.5% and 1% and an underlying operating profit margin between 3.2% and 3.4%. So before I hand over to Sebastien, I want to say, I'm confident in the direction we are taking. The work is well underway. We clearly see where the levers are for improvements. We are operating in markets that are fundamentally attractive, and we are convinced of the relevance of our model. We are already seeing tangible changes in how teams work together, how decisions are made and how we go to market. With that, I now hand over to Sebastien to walk you through the H1 performance in more detail, and we'll talk later. Thank you. Sebastien De Tramasure: Thank you, Thierry, and good morning, everyone. So I will now walk you through our first half financial performance in more detail, and let me start with revenue and organic growth at group level. So reported revenue growth in the first half was significantly impacted by foreign exchange with a negative impact of 5.3%, mainly driven by the U.S. dollar depreciation. M&A had no material impact in the first half as the acquisition of Mediterránea was completed at the very end of February. Organic growth for the group was plus 1.7%. Pricing contributed around 2.4%. Like-for-like volume growth was around 0.2%, supported by cross-selling, especially in Healthcare, offset by a strong comparable in Sodexo Live! in the first half of last year, which benefited from an exceptional level of events. Net new business was negative at around minus 0.6%, reflecting prior year contract losses, mainly in Education and Business & Administration. And finally, we had an impact of around minus 0.3% from a contract reclassification in North America Business & Administration. And this followed the renewal of a contract where the economics and [ contractual ] terms evolved, leading to revenue being recognized on a net basis, rather than on a growth basis, fully in line with IFRS requirements. And as a reminder, the annualized impact of this reclarification is around 100 basis points at group level and will, therefore, weigh more in the second half of the year. Turning now to underlying operating profit margin, which stood at 3.7%. Year-on-year, the group's underlying profit margin declined by approximately 150 basis points in the first half, including a negative foreign exchange impact of 6 basis points. And this evolution can be explained by 3 main factors. First, operations, mix and leverage representing around minus 50 basis points. This reflects mobilization cost and new contract under performance on a limited number of contracts and unfavorable portfolio mix and softer organic growth in the first half. At the same time, we are actively addressing these execution challenges and continuing to drive efficiency and productivity across the group, especially through shared service and efficiency initiatives. Second, the acceleration of investments for around minus 20 basis points. These are deliberate investment, notably in technology, system, supply and commercial capabilities fully aligned with the execution priorities Thierry outlined earlier. And finally, the review of contract and asset that Thierry mentioned had an impact of around minus 70 basis points. And depending on their nature, the outcome of this review affect either underlying operating profit or other operating income and expenses. The impact at underlying operating profit level mainly reflects contract-specific provision following a detailed assessment of actual contract performance, credit risk exposure and litigation matters based on an updated assumption in the current market environment where appropriate. This review was also about improving visibility, reducing future volatility, reflecting clear management choices to address risk earlier and establish a more robust and predictable baseline going forward. Now that we have covered the group picture on both growth and margin, let me turn to the regional view. Starting with North America. Organic growth was down 1.8%, mainly due to contract losses in Education and Business & Administration, changes in scope on certain Business & Administration contract and the one-off reclassification effect. Healthcare continued to deliver strong growth driven by new contracts while Sodexo Live! softer due to a tough prior year comparison. In Europe, organic growth was 2.8%, supported by Healthcare & Senior as well as strong activity in Sodexo Live! across airport lounges and events, while education remains softer. Rest of the World delivered organic growth of 9.2%, driven by new contract ramp-ups and strong underlying dynamic across markets, especially in India, Australia and Brazil. From a margin perspective, the decline was more pronounced in North America where the underlying operating margin decreased by around 200 basis points year-on-year and this largely reflects the execution challenges, the accelerated investment and the action referenced earlier. In Europe and Rest of the World, margins also declined year-on-year mainly reflecting the impact of management actions related to the review of contracts and assets while underlying operational performance remain broadly stable. Now moving to the income statement. So having covered revenue and underlying profit and before coming back to the other operating income and expenses in the next slide, let me complete the picture with financial results, tax and net profit. Net financial expense increased by EUR 24 million year-on-year, mainly reflecting a higher gross cost of debt following the issuance of the U.S. dollar bonds in May 2025 at higher coupons. As a reminder, these bonds were issued in anticipation of the April and June 2026 debt maturities, which we intend to repay from cash reserves. The effective tax rate was 25.9% compared to 19.5% last year. Last year was impacted by one-off positive items, including the update of tax risk related to the Sodexo S.A. tax audit. And net profit for the first half was EUR 188 million. And on an underlying basis, net profit was EUR 285 million, down 37% year-on-year, reflecting lower underlying operating profit and adverse currency effect currencies. Turning to other operating income and expenses. The increase versus last year mainly reflects higher restructuring and rationalization costs linked to organizational changes, leadership adjustment and transformation project. Amortization of purchased intangible assets was stable year-on-year, and other items mainly reflect some assets and footprint rationalization decision, including the write-off of certain production and operational assets, for example, following the rationalization of central production units where capacity has been consolidated into fewer, more efficient sites. They also include pension-related items driven by legislative change in labor law in India as well as the recognition of one-off costs related to multiemployer pension plan in the U.S. Turning now to cash flow. Operating cash flow was EUR 616 million, up EUR 16 million year-on-year and this reflects the fact that last year included an exceptional tax outflow related to the Sodexo S.A. tax audit, partially offset this year by lower operating profit. The change in working capital was negative EUR 490 million and as a reminder, the first half is seasonal low point of our cash generation, and we expect working capital to normalize by the end of the year. Net capital expenditure increased year-on-year mainly due to one-off client investment in the context of contracts renewals. Free cash flow was therefore broadly flat year-on-year at negative EUR 243 million. Net acquisition amounted to EUR 256 million, mainly reflecting the acquisition of Mediterránea alongside smaller bolt-on acquisition in Europe. As a result, our net debt increased to EUR 3.6 billion, corresponding to a net debt-to-EBITDA ratio of 2.7x. This reflects the usual seasonality of cash flow in the first half, but also lower EBITDA days than last year. And as always, we expect a seasonal improvement in net debt in the second half. That said, based on the revised full year fiscal 2026 guidance and the recalibrated baseline, it implies we now expect to end the year with a net debt-to-EBITDA ratio above our target range of 1 to 2x. Let me close by coming back to our guidance for the year and giving you a bit of additional color. So Thierry outlined, this is the guidance we are providing today, reflecting our current assumption and the action we are taking. We now expect fiscal year 2026 organic growth to be between 0.5% and 1%. So this reflects weaker-than-expected commercial performance and in particular, in retention impacting the second half as well as lower volume in an uncertain external environment. Underlying operating profit margin is now expected to be between 3.2% and 3.4%. This reflects reduced operating leverage from a softer top line, ongoing operational execution challenges, the continued impact of our review of contract and asset over the full year and the accelerated investments we are making to strengthen execution. Let me also share a few key modeling assumptions for clarity. So based on current spot rates, we assume a full year 2026 currency impact of around minus 3% on reported revenue. We also assume a positive M&A impact of around 0.5% on revenue, mainly from the acquisition of Mediterránea offset by a few small disposals. On other operating income and expenses, reflecting the level already recorded in the first half, we now expect the full year amount in fiscal 2026 to be around minus EUR 300 million, of which roughly half is restructuring. Net financial expenses are still expected to be around minus EUR 140 million and our effective tax rate to be around 26%. So to conclude, the first half reflects a demanding environment, but also clear and decisive management action on contracts, asset, organization and investment now reflected in today's guidance. As Thierry outlined earlier, this action weighed on the near term but are necessary to reset a realistic deadline and strengthen execution, competitiveness and sustainable performance over the time. With that, Thierry and I will be happy to take your questions. Operator: [Operator Instructions] First question is from Jamie Rollo, Morgan Stanley. Jamie Rollo: So 2 questions. The first one is just on the margin guidance, 3.2% to 3.4%. That's obviously a very helpful clear range, but there's a lot of numbers in that. And you've given us a helpful bridge for the first half, it would be quite helpful to get that bridge for the full year margin, particularly to quantify the contract asset write-down because obviously, that's a one-off and that suggests that 2027 margin should increase naturally. But then again, Thierry, maybe your July review will lead to another step-up in investment next year. So any sort of flavor for what the real underlying base margin might be would be very helpful. And then the second question was just on the leverage as you say, well above the target. I appreciate you've got no covenants, you're pretty well all fixed debt. But what sort of constraints might this have on CapEx spend or bolt-on M&A going forward? Thierry Delaporte: Jamie, thank you. So what I'll do is I'll take the first part of your question and give a little bit of context, and then I'll take the second one on the leverage. And then I'll ask Sebastien to add a lot more details and probably on the bridge you're asking for H2. What we've done, Jamie, is clear. We've done, as we said, clearly the objective and that's why it's my [ ask ] for Sebastien and the team is do a comprehensive review of contracts, asset, risk by the end of the quarter. So literally in the last -- and you know that we do, at Sodexo things are going to change. But until now, there is one single process of forecast per quarter. This is changing to a monthly process now. So what we've done is a very deep reviews of the risks in the contracts and really assess the situation and provision where appropriate. This is not a [indiscernible]. This is really looking at the existence of risk that we have and the level of provision we have against that. For sure, given this -- there's a disciplined risk review embedded into our processes going forward at each closing, but this review we've done is a pretty extensive one for sure. Objective. Simple, improve visibility, reduce the volatility and limit the surprise which has been the issue of Sodexo for the last quarters. So let's be honest, what we've done is create a more solid earnings floor and a stronger base for growth. So that's the philosophy. Now to your point on the guidance and the bridge for H2, you want to cover it, and then I'll come back on the leverage target, connection, okay? Sebastien De Tramasure: So thank you, Jamie. So if you look at the bridge, we shared with you for H1, 3 drivers. So when we look at the full year bridge drivers are broadly the same as the one in the first half. I would say that the impact of the operation mix and leverage, we are not expecting any change between H1 in H2. Then we will accelerate investments. So we mean that the investment rate will be a little bit more on the full year and in H2. And the review of the contract and asset will be lower in the second half of the year. Thierry Delaporte: You asked for '27 as well, Jamie. So for sure, we're not guiding for '27. All I can say is I think you can consider '26 guidance as a floor. Now to your second point, leverage, right? You're absolutely right. The capital allocation framework is the result of a strategy. It's not -- and right now, the strategy is to regain performance, let's be clear, okay? So it's a special year. You can see that. And it wouldn't make much sense to, I would say, give detailed capital allocation messages without first setting a clear direction of travel. So that's what we will do in July. So if you can hold on this 1 for 2 months, 3 months, we'll tell more. Until then, priority is execution and performance recovery. Everything else follows from that. The leverage fully aware, maybe temporarily above our historical range, you know that reflecting lower margins during the reset phase and the investments we are making to stabilize the execution, but also rebuild the business. But this -- and that's an important point as well. To me, this does not limit our flexibility or block any of our actions. Sebastien De Tramasure: And if I may, just we remain a strong cash-generative business, and we will keep and retain a good access to funding. And again, this temporary effect on average are clearly not structural. Jamie Rollo: Okay. So just to clarify then, we'll hear more about the capital allocation in July? And also in July, you're going to be giving, I assume, some medium-term targets and framework? Anything else we should be expecting in July? Thierry Delaporte: So the investor update in July will give for sure, greater visibility on FY '27. And in the, yes, medium-term financial ambition. What we'll do there, Jamie, is we will articulate where we want to position the group versus the best-in-class benchmarks. That's our ambition for sure, including a clear ambition to narrow the growth gap, okay, versus the strongest players in the market. We will also, for sure, present a detailed action plan, underpinning that ambition with you will see clear strategic priorities and financial levers over the medium term, right? So that's what you should expect. Operator: Next question is from Jaafar Mestari, BNP Paribas Exane. Jaafar Mestari: I have 2 questions, please. The first one is just an open-ended question on the review of contracts and assets. Can you give us more concrete examples of what you're reviewing and changes you're making? It was interesting. You mentioned some central [ kitchens ] are being consolidated into a smaller number of sites, for example. Just keen to hear more on those, what sort of measures you're taking? It seems pretty broad ranging. And I'm really mostly interested in the ones that fall into adjusted profits, not on the stuff that is exceptionals, please? And then secondly, on management compensation, there was an undisclosed margin target for full year '26 in your cash bonus for this year. You never said what it was because it was commercially sensitive. Can I ask you if you're basically accepting that you're not getting paid on this part of the targets because you've ended up lower? Or would you expect the Board to adjust these compensation targets because of the voluntary nature of some of the measures you're taking? And related to that, can you remind us factually what's the policy on stock option awards. If I'm correct, Mr. Delaporte, you still have not been awarded your performance shares for this year and understand why the Board did this after disappointing full year results, but if you were awarded them immediately after today's announcement, you would also look perhaps like you're not exactly in the same boat as investors yet? Thierry Delaporte: So Jaafar, I'll try to take the point, and I hope -- you tell me if I don't cover well all the points, okay? On the first one about the contracts and assets. What's so sure is that when we look at contracts, the operational performance on contracts, fortunately, most of them are performing well and delivering results for the client and for ourselves. In cases, there are delivery issues, how do we provide for it? How do we make sure that we are investing into addressing those concerns and therefore, how does it change the financial profile of this deal. When we are in financial distress on an account, how do we handle it? Are we renegotiating with clients? Are we improving the way we are delivering? Or are we exiting the contracts? All these questions have been addressed and covered in the way we were looking at the contracts. And you're right regarding assets, I'll let Sebastien, but the point was, again, to look at assets we have. And are they long-term investments for us or not? Does it require decisions to be made? Over to you, Sebastien. Sebastien De Tramasure: So on the impact of the review of the contract and assets, the impact on underlying operating profit, so one part is really the assessment and the reassessment of the credit risk around 25%. And when we look at also contract and contract litigation related claims, so we have also covered all of that. It's again around 25% of the impact in terms of [ UOP ]. And then also, we have looked in this -- in the performance of the contract, and that impacted also for additional provision. And then on the write-off of assets, this is really the part impacting the other income and expenses below the line. And here, yes, we look at the footprint of our off-site production. And we took in some geographies, a very deliberate decision to consolidate part of that and this implies some write-offs and impairment in our balance sheet. Thierry Delaporte: Okay. Thanks. On the second point, management compensation, if you're talking about leadership compensation and [ I'll all ] mine. So let's cover both, if you want. So what I've done is for the leadership team is we have made sure that while they are committed to delivering the forecast of the budget of the year, we are refocusing in H2 more part of their incentive on the growth because this is what we need now to get ready for FY '27. And so I didn't want us to wait another 6 months and really push on the accelerator now. As for my compensation, I think, honestly, this is not me to comment them on. It's a Board decision that will have to be approved by the general assembly. All I can tell you is that it includes certainly financial KPIs about growth and profitability. So I'm not immune for sure. As for LTI plan, the LTI plan will be launched in the next weeks. It is not related with the communication today. It's -- I think last year was the same timing in the year. So I think it's just followed the same logic. But also, we are changing the scheme for our people to make it more a performance-based LTI as opposed to presence-based LTI. So that's the philosophy. Jaafar Mestari: And just on the contract we use and just to be very clear, should we expect that you formalize a revenue figure for contracts that you'll be exiting? Or is it less explicit than that? Sebastien De Tramasure: Yes. Again, at that time, when we look at this review of contracts and assets, it's really linked to -- its case by case. And it is not linked to exiting a large portfolio of activities or even any specific contract. We have booked some provisions for onerous contracts in that case because the contract was not performing at the right level. Thierry Delaporte: Let's be clear, we have done what we had to do. It's just normal practice. Probably I'm injecting my way of drive a certain level of prudence in the way we are looking at risk, for sure. Operator: Next question is from Estelle Weingrod, JPMorgan. Estelle Weingrod: You mentioned lower retention and volumes impacting the remainder of the year. Can you just provide -- I may have missed it, but can you provide details on the new contract process and who you lose them to? And what volumes you are budgeting for H2? Are they going to be in negative territory? Sebastien De Tramasure: Thank you, Estelle. So yes, when you look at our annual guidance between 0.5% and 1%, if you take the midpoint, it implies a negative organic growth in the second half of the year. If we look at the different drivers, pricing was 2.4% in H1, we are expecting something very similar for the second half of the year. And then you have the net new contributions, minus 0.6% in H1. And same here, we are expecting something very similar to the -- for the second half of the year. Then we need to -- you need to keep in mind, sorry, is that we also have the impact of the contract reclassification and then we will have a full semester impact on organic growth for around 100 basis points. And then the remaining part is linked to volume. And it's true that we are taking a more cautious stance regarding volume. This is clearly linked to the overall environment, macro, geopolitics as well. And we know also that we have some volatility in our revenues to volume what we decided to include. Estelle Weingrod: And your more cautious stance on volumes? Is it driven by a specific region? Like is it more North America? Or is it broad-based? Sebastien De Tramasure: It's broad-based. Operator: Next question is from Simon LeChipre with Jefferies. Simon LeChipre: Yes. Three questions, please. First of all, a follow-up on the margin bridge for H2. Could you be a bit more specific in terms of the investment, I mean should we expect this going to double in H2 relative to H1? And should we expect some incremental investment in 2027 as well? Second thing is in terms of top line going forward and looking at the last 12 months net new, it was minus 1.3%. You expect net new minus 0.5% in H2. Should we expect net new still be negative in the first part of '27? And more broadly speaking, how do you think about the path in terms of top line acceleration? And when do you expect to see the benefit of the actions you have taken and you are currently implementing? And lastly, in terms of the U.S. and the management team, I mean what's the road map? Are you actively looking for someone? Do you intend to still remain CEO for the region as of now? Thierry Delaporte: Yes. So Simon, thank you. So taking your questions in no particular order, if you don't mind. The first one on the U.S. management team. So I joined on November 10, literally first days, it appear to me that I needed to make something change in America. It's -- America is our greatest market, the biggest, and it's a strategic market for us. I was coming from a different industry, it was critical for me to dive into the operations. America was my priority. I dove into it. I took it over. It's basically what I decided, and I'm very pleased with that because it allows me to really spend time in America, as I said, 50% of it. I've spent 20 years in America. So I know well this market and shaping the team is absolutely key. We have great talent in America. We have great accounts, great team as well, and I have wonderful leaders. We had significant weaknesses as well. And so we had to fix it. I've been working on it. I've made a lot of changes in the leadership team over the last weeks and months and reinjecting energy and ambition in America. The timing -- the team is great, is well mobilized. In the meantime, I'm looking for talent to take over the North American role for me. And it's -- I'm not supposed to -- do not consider that I stay in this role forever. But I'm not in a hurry because I feel that being very close to the operations is a [ greatly full ] for me and for the operations. But yes, for sure, there will be a leader of America at some point in time. On the point #1, that is the margin -- also margin bridge for H2, we'll let you say it. But one thing I can tell you, because you were -- a question around the investment for FY '27. So for sure, we are doing investments now. We couldn't wait in the situation where we need to inject accelerate fuel, if you like, into our growth, it's the time to grow -- to invest. And so we have started to invest now. And we know them well that this is impacting our margin in H2. And for sure, we will not stop the investment on December 30 -- actually on August 31. So for sure, it will continue in FY '27. The objective for sure is that as we progress steadily, the growth will come back and pick up to supported by the investments we are making now. That's the whole logic. You know more about the sequence in the next interactions. Over to you, Sebastien. Sebastien De Tramasure: Yes. So on the margin, as I said, if you look at again at the bridge H1, H2 full year, the part related to operation and leverage remains the same, around minus 50 basis points, then you will have more impact on investment of the acceleration of the investment in the second half of the year. So with a higher weight of that on the bridge, and we will have lower impact coming from the review of contracts and assets for the second half of the year. Operator: Next question is from Kate Xiao, Bank of America. Kate Xiao: First, I want to follow up on -- I still want to ask a couple of questions on contract assessment and provisions. Has this process affected your retention rate and development numbers because both of these 2 numbers are down compared to FY '25 and as of last quarter? And would there be -- I understand that this is an ongoing process, would there be a scope for reversal for some of the provisions if contracts actually turned out to be better than expected? My second question -- sorry. And my second question is around just look, simple one. When you mentioned, Thierry, that there's early positive signals. Can you talk to us a little bit more about these signals? Thierry Delaporte: Yes, correct. Correct. Okay. So Kate, on the first one, contract assessment. It has been occasionally that indeed, but I don't think it's a huge impact on the retention, honestly. So those are 2 different things. For the scope for potential reversal of provision, for sure, that's the objective. I mean, we are covering the risk, but we are not giving up on it. We are fighting, but we are in a logic where when there is risk, we provide for it and then we try to mitigate the risk as opposed to we have a risk, and we hope it doesn't materialize and when it materializes, it blows up and we are surprised. So that's the change in philosophy. Last early positive signals, sales performance intensity in the market. There are several deals. I know for a fact, several deals that we were about to lose that we haven't lost. And the energy in the system, the mobilization from the team is really great. So a lot of good signals, honestly, okay. It's still early. I'm not going to tell you other than that. Kate Xiao: Can I just quickly follow up on retention rate, if there's not a big impact from the reassessment of contracts? What has led to the lower rate at 93.4% now versus 94%? Was there more contract losses that you can kind of tell us a bit more about? And would you see this as a trough? Thierry Delaporte: Well, let me tell you one thing first, Kate, on the assessment of retention rate. For us where it stands is a signal for sure. Every -- I consider that every time we lose a contract, it's dramatic, okay? So we have to stop accepting the fact that we are losing contracts. So it's in us, and we are very active on that. Now it's -- in a given quarter, you might have more or less contract to retain. And so just looking at this ratio just for 1 quarter or 2 is not necessarily enough to draw conclusion. Except that, our ambition is to be closer to 95%, 96%. I think today, 95%, but the objective is to continue to improve and we have some work to do. And that's what we are working on at the moment. Sebastien, you want to say more? No? All right. Operator: Next question is from Pravin Gondhale, Barclays. Pravin Gondhale: Firstly, on the incentives aligned to growth that you talked about. Sorry, if I'm being nuanced. But could you please clarify, are these incentives linked to gross growth or net growth, i.e. incentives for both gross development and retention or just the gross development here? And then secondly, on the review of contracts. Is this all done and then fully captured in your H2 guide annualizing in H1 next year? Or is there any tail left to review further down the line? Thierry Delaporte: So Pravin, thanks. I'll take the first one. On the incentive. First, KPIs have been reset for my direct report in H2 to really get the target -- the growth target for H2, and that's revised growth target. What does it entail? It's what we call commercial growth, net commercial growth, which basically takes net development, I mean, new development plus retention plus cross-sell, okay? So that's the combination of all, all right? And then after when you look at the organization, it depends, those who are focused on retention, those who are working on closing new deals, for sure, they have different set of KPIs. The objective here is to set clear accountability, but also drive focus across the organization. Okay. Now just to be clear, even if you haven't asked, gross incentives do not mean volume at any cost. We continue to keep an eye for sure on the level of profitability expected from the deals, for sure. Review of contract, is it all done? Well, first of all, we've done a very good job, I think, to review the contract in a very short time frame. And I think the team has done a great job. So I'm pleased about that. Will it be a continuation? I mean the fact that we will review contract and assess the risk is of discipline. We will do it every single quarter. So this will not change. Are we expecting further impact going forward? I mean our objective is precisely to have done the job. Operator: Next question is from Neil Tyler, Rothschild & Co Redburn. Neil Tyler: Two questions, please. Firstly, on the contract review, I wonder if you could share any sort of insights that you drew from those contracts that you've had to provide against, whether there's any commonalities emerging from the contracts either in terms of regions duration or sort of start point, those that needed to be reassessed. And then secondly, on the -- back to the incentive program, has the altered incentives been or will they reach further into the organization than they have done in the past in order to alter the selling behavior sort of deeper into the organization rather than just at the management level. Thierry Delaporte: You tell me if I do not address -- maybe I do not really understand your question, Neil, on incentives. But my point is we have implemented a new set of KPIs across the organization. It's not only for managers, it's across the organization for H2, okay? On the contract reviews, insights, you want to take this one, Sebastien? Sebastien De Tramasure: I can tell -- yes, I can take this one. So in terms of framework, I can tell you that we apply this framework across all regions, okay, all segments. Around 50% of the adjustment adding to the review related to Europe, 1/3 is North America and the remaining part is the Rest of the World. And when we look at the framework, again, was done really case by case, contract by contract, asset by asset. And on the commonalities, again, as I mentioned, it was linked to the credit risk, credit exposure, again, across a portfolio of contract. It was also linked to legal risk litigation, again, across all regions, and then we look at the performance of some of the contracts, as I said, and we apply again a new calculation again on the potential adjustment needed in terms of onerous provision. So it's really the same framework across the globe on a contract basis and the case by case basis approach. Neil Tyler: That's helpful. And can I just ask, within that, was there any difference between food service and facilities management contracts in terms of how those materialize? Sebastien De Tramasure: Type of risk may differ, but again, the methodology and the framework was exactly the same. Operator: Next question is from Andre Juillard, Deutsche Bank. Andre Juillard: First one is about CapEx. Could you give us some more color about what you plan to do considering that historically, Sodexo had a lower level compared to its main peers? And I wanted to understand if you have a clear view on what we could expect on that side. Second one, about dividend. We know that historically, the dividend has been important for Sodexo and for its main shareholder. So do you have a view on what you could do on that side? Thierry Delaporte: Thank you for the 2 questions. My answer is going to be quite similar on both. We'll meet at the Capital Markets Day. CapEx consider that, as I said, I said -- I covered it for me, right now, our strategy is to regain performance, focus on the performance, we'll discuss the capital allocation messages when we are together in July, July 16. On dividend, same thing. Too early to tell. We are very aware of this. We will certainly discuss at the Board as well. So we'll get back to you, not now. Operator: Next question is from Julien Richer, Kepler Cheuvreux. Julien Richer: A quick follow-up on growth and strategy. We recently had some comments from the French government about the structural decline in the number of kids at school due to the demographic situation in the country, and this is not only the case of France, I suppose. How do you see your education division going forward? Any view on this point? Thierry Delaporte: So for sure, this is a -- we are -- obviously, as you can imagine, as we are working on our strategy and refining it -- they are -- and we spend more time on it at the Capital Market Day. They are time focused on looking at for each of the segments we operate in where there is more growth to expect. Sometimes, you have different elements that have an implication. The market growth itself. There's the level of outsourced, right? So in some cases, you may have markets where the growth is not necessarily significant, but there's a wave of outsourcing that we can trigger to drive new type of clients, and they are, for sure, a prioritization on those investments. So without being specific, we are very aware of those declined head count or population decline in schools in France or in the next few years. It's elements that we are considering for our -- for the way we are investing into our segments and again, we do it by country. And within segments, we look at the services that are more relevant, the ones that are a little less. But to be clear, education is one of our big segments, and we'll continue to invest in education for sure. Operator: Next question is from Sabrina Blanc, Bernstein. Sabrina Blanc: I have 2 questions from my part. The first one is regarding the review of the contract. And just to understand if you have a schedule potentially to exit some contracts or potential to exit some assets. For example, we know already that the number of countries has been reduced. But do you intend to go further? And my second question, I can perhaps answer directly that I should expect this Capital Market Day. But could we have visibility on free cash flow and potentially on conversion rate? Thierry Delaporte: Okay. So thank you, Sabrina. First question, so the review of contracts. So again, we are taking decisions. We have taken decisions on some situations when there is -- if you do not -- if you are in a situation where you do not foresee opportunities to be profitable, this exit is one scenario. So I'll keep this freedom going forward. It may happen at times that -- and good decision sometimes is to recognize the fact that it's just not working. So we feel we have done the job and -- but we'll keep an eye on it and make sure that when we are signing contracts, we are signing good contracts and that it doesn't end up being an issue for the client, for ourselves. Exiting countries. No, we have no plans of exiting more countries. In fact, if I can tell you I believe it's a strength of Sodexo to offer to a lot of our global clients a global presence, and we want to build on this. As for free cash flow, over to you, Sebastien. Sebastien De Tramasure: Thank you, Thierry. So on the free cash flow, as I said, we remain a cash-generative business. So we'll keep a strong focus on that. And we are expecting again to have an underlying conversion rate, I mean, for this year that will be very in line with and consistent with prior years on the underlying part. And on the future, as you said, Sabrina, we will come back to that during the Capital Market Day. Thierry Delaporte: Finally one -- do we have someone? Operator: Next question is from [ Eva ] [indiscernible], UBS. Unknown Analyst: Welcome to the company, I suppose. I want to talk a little bit more about the market as a whole. I mean you mentioned commercial momentum being slightly weaker than expected. But is that an indication of any slowdown in the market itself? Or is it simply your execution? So in other words, I mean, are we still seeing the amount of new business in the market as a whole being strong or have recent developments had an impact on that? And secondly, I mean this might be slightly minutia to a certain extent, but you mentioned your refinancing costs associated with debt this year isn't going to be an issue, but you still have an awful lot of debt to refinance over coming years, which was issued at very, very low coupons. So as and when that gets refinanced, how is that actually going to be able to impact your ability to compete with peers who might not have the same level of pressure on that front? Thierry Delaporte: On the first question, the commercial momentum, it's a good question. And I spend time to review that with the team. The conviction we have is that the market is actually a rather good market, okay? So we do not -- we are not taking this on the back of any kind of slowdown. Yes, for sure, moments like what is happening in Middle East are elements of potential slowdown, although it has limited impact for us in terms of size, but the market continues to be good. I'm convinced that the answer is with us. So addressing our own structural and operational challenges will just make us stronger and able to win more. One argument for that supporting this is the fact that the pipeline is not going down. Actually, if we look at the pipeline, it's actually going slightly up. Still not big enough, okay? But again, it's the same -- going back to the same point, our intensity in the market and to grab opportunities and go after it. Sebastien? Sebastien De Tramasure: Yes. And on the cost of the financing, it's true that if we look at where we are today, the average interest rate on the bond is around -- we are around 2.7%. I told you about the cost -- financial cost for fiscal year '26 to be circa EUR 140 million. And then it's true that for the coming years, we are expecting also an increase of the financial cost, linked to the renewal and the refinancing of the bond in 2027. So yes, the cost of financing will increase again in the next 3, 4 years, around EUR 30 million. We would be around EUR 170 million, EUR 190 million in terms of annual cost in 3, 4 years. And this will be an average cost circa 4%, 4.5% depending on the cost. It will depend obviously on the market rates. Operator: Sodexo team, we have no more questions registered at this time. Thierry Delaporte: All right. Thank you for your questions. Thank you for the conversation today and for the time. We are very aware of where we need to improve, and we're fully focused on execution and getting the basics right again. So we'll have the opportunity, as we discussed, to go into our plan and ambitions in July, and I'm looking forward to continuing the dialogue with you. Thank you very much for joining us today. Operator: Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.
Operator: Good morning, and welcome to the MTY Food Group 2026 First Quarter Earnings Conference Call. [Operator Instructions] Listeners are reminded that portions of today's discussion may contain forward-looking statements that reflect current views with respect to future events. Any such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements. For more information on MTY Food Group's risks and uncertainties related to these forward-looking statements, please refer to the company's annual information form dated February 19, 2026, which is posted on SEDAR+. The company's press release, MD&A and financial statements were issued earlier this morning and are available on its website and on SEDAR+. All figures presented on today's call are in Canadian dollars, unless otherwise stated. This morning's call is being recorded on Friday, April 10, 2026 at 8:30 a.m. Eastern Time. I would now like to turn the call over to Mr. Eric Lefebvre, Chief Executive Officer of MTY Food Group. Please go ahead, sir. Eric Lefebvre: Thank you, and good morning, everyone. This morning, we released our 2026 first quarter results, which you can find posted on our website. The macroeconomic conditions remain challenging through the first quarter. Consumer confidence remains low and impacts consumer spending negatively, as reflected in our same-store sales figures and traffic trends. Encouragingly, early Q2 data shows signs of sequential improvement and gives us cautious optimism for the second quarter despite the broader global dynamics. Same-store sales for the first quarter were stronger in Canada than in the U.S. and International segments. Overall, same-store sales decreased by 2.5% in the quarter. Canada was down 0.8%, with the impact of last year's nonrecurring sales tax holiday being felt in most provinces, while U.S. locations were up 3.6%. Some of our seasonal brands had a soft first quarter, while for some of our other U.S. brands, we took some actions late in 2025 that are in the best interest of our brands in the long term, but that hurt us in the short term. For example, we interrupted gift card sales at Costco for some brands, resulting in reduced visits in the first few months of the year following the holiday period. Most U.S. brands did sequentially better in March than in the first quarter. Digital sales held steady at 23% of total sales in the quarter. Excluding foreign exchange, digital sales grew 3% compared to the same period last year. Digital sales in Canada were up 13%, while they remained flat in the U.S. with the positive momentum we are seeing across the basket of brands in the U.S., offset by the weakness of one brand. One of the areas we've been focused on is enhancing the digital experience for our guests. We continue to invest in technologies that improve the way we interact with our consumers to improve their overall experience by bringing a more personal touch to our marketing efforts. New tools are being deployed in the U.S. to achieve that, and Canada is finally catching up and should be able to begin deploying similar solutions in Q2. We believe digital sales are a key component for our growth in our industry. As we mentioned on our last call, Q1 is typically a seasonally weaker period for new location openings. We opened 52 locations in the quarter, and we closed 90. We also ended our master agreement with TCBY, which resulted in the elimination of 8 stores. The negative store growth in the first quarter was anticipated. We remain confident that 2026 will produce net locations growth as everything is in place to meet our objectives. We've had a good start in Q2, and we have a large number of stores in the pipeline. There are currently just under 200 locations under construction, and we expect new stores to be a bright spot for 2026. Our new store pipeline is robust and ranks among the strongest we've ever seen at MTY. A growing share of our new location is being driven by existing franchise operators. Today, a significant portion of our pipeline comes from these experienced franchisees will offer a stronger, lower-risk expansion profile. We're also investing in new tools that support identifying the best locations for new stores where white space exists in the market, and that shows signs of strong traffic flows. With that, I'll turn it over to Renee to discuss the financials. Renee? Renée St-Onge: Thank you, Eric, and good morning, everyone. Starting this quarter, we've transitioned to a 52-week reporting basis, ending on the Sunday closest to November 30th each year. This quarter reflects a 13-week period ending March 1, 2026, whereas the comparable period in 2025 is based on the calendar month-end basis ending February 28, 2025. Normalized adjusted EBITDA came in at $60.1 million for the first quarter, in line with the same period last year. This 2026 period benefited from a $5.5 million employee retention credit related to [ 2020 to 2022 ] fiscal year received from the U.S. government. Franchise normalized adjusted EBITDA was $43.2 million in the quarter, down slightly compared to $44 million reported in the same period last year. Franchise revenue was $90.7 million in the quarter compared to $92.9 million in the same period last year, primarily impacted by foreign exchange variations due to a weaker U.S. dollar as well as lower system sales. The Canadian segment was essentially flat, while the U.S. and International segment was down 3% compared to the prior year period. Franchise normalized operating expenses were also down in the quarter to $47.5 million compared to $48.9 million last year, primarily due to the impact of foreign exchange and lower gift card program costs. Normalized franchise EBITDA margins for the quarter improved slightly to 48% compared to 47% in the same period last year. As we continue to add higher quality new stores and capture efficiencies from our ongoing initiatives, we expect franchisee EBITDA growth to outpace same-store sales growth. Segment and normalized adjusted EBITDA for the Corporate Store segment came in at $13.2 million up 8% or $1 million from the same period last year. This includes the $5.5 million employee retention credits I mentioned previously. Excluding this, margins for the segment were 7% compared to 10% in the last period last year. Corporate segment's revenue was $109.7 million and operating expenses was $96.5 million in the quarter. Corporate revenue and expenses were tightly correlated to lower system sales and a decrease in the number of corporate-owned locations in the U.S. We are confident in our ability to drive improvements in the corporate store over time as macroeconomic trends improve and system sales accelerate. This would enable us to consistently deliver corporate segment margins in the high single-digit levels. Our Food Processing, Distribution and Retail segment delivered segment and normalized adjusted EBITDA of $3.7 million in the period off of a revenue of $40.8 million compared to EBITDA of $4 million and revenue of $38.2 million in prior year. Margins came in at 9% in the quarter, slightly below the 10% in the same period last year on account of higher supply chain costs. We believe meaningful opportunities exist within the retail channel for top line and margin expansion as we continue to build scale and strengthen our presence in underpenetrated markets. We reported $36.9 million in net income attributable to owners or $1.62 per share per diluted share compared to $1.7 million or $0.07 per diluted share in the prior year. As Eric mentioned earlier, our asset-light well diversified model continues to generate strong free cash flows. This performance provides us with significant optionality to reduce debt, invest for the future and return capital to shareholders. Cash flows from operations were $40.9 million compared to $64.6 million in the same period last year, and free cash flows net of lease repayments of $29 million in the quarter compared to $49.3 million in the same period last year. The change is mainly attributable to fluctuations in working capital and income taxes paid, partially offset by lower interest paid. The decrease in working capital is mostly due to variances in accounts receivable, payables and accruals due to timing of transactions and payments. We generated $59.9 million in cash flows from operations compared to $58.6 million last year, once you exclude variations in noncash working capital, income taxes and interest paid. We ended the quarter with net debt of approximately $549 million. Considering our strong cash flow generating ability, our debt-to-EBITDA of approximately 1.9x is at a level that gives us the opportunity to take advantage of the optionality we possess to deliver enhanced shareholder return. And with that, I'd like to take your time -- I'd like to thank you for your time and turn it back to Eric for closing remarks. Eric Lefebvre: Thank you, Renee. We've built a great business. Our asset-light model is well diversified across geographies, brands and formats, and we continue to invest in the business to drive long-term returns and growth. Our focus on further strengthening the business during the past 2 years has positioned us for stronger performance once the persistent macroeconomic conditions improve. The strength of our brands and the experience of our team and franchise owners have enabled us to manage through these challenging conditions. While we navigate the recent volatility of the consumer sentiment, we continue to believe in the long-term fundamentals of the business to deliver for shareholders. Before we open the lines for the question period, please note that I cannot comment on the strategic review process that is currently underway. We will provide an update or make announcements as appropriate or as required by law. We cannot provide a specific timeline or assurance that any transaction will result. In parallel, MTY continues to run the business as usual with the same discipline and long-term focus that's defined the company since our founding. With that, let's open the lines for questions. Operator? Operator: [Operator Instructions] Your first question comes from the line of John Zamparo with Scotia Bank. John Zamparo: I wanted to ask about the comment of sales in March improving from Q1. It's difficult to reconcile this against the timing of the war. So just wondering if you could elaborate on that? And do you see any impact in consumer sentiment from the start of the war? Eric Lefebvre: Well, it's hard to find any correlations now. I think it's too early, but all I can say is our sales have been significantly better in March and continues in April so far. We had a little period in mid-March where there was snowstorms and ice storms in most of Canada, and that also affected the U.S. But other than that, March and April are pretty strong. So I'm not sure if or what the impact of the war is, but so far, it's showing in our data that our consumers are resilient and showing up to our stores. John Zamparo: Okay. And in the outlook for this year, you've added some language about potential for higher inflation from higher oil and gas prices. I wonder if you could elaborate what the key components are through your supply chain from the potential for higher for longer inflation this year? Eric Lefebvre: Yes. Well, obviously, for supply chain shipping is complicated right now and the cost of shipping, whether it's ground or air or maritime is also becoming more expensive as fuel prices increase. Obviously, we don't know how long that's going to last, and we hope that the solution will come and fuel prices will go down. But for now, we're starting to see more and more fuel surcharges on our network. And obviously, that funnels through the chain. So there is inflation there that's coming only from fuel charges. And then we'll see if -- how the supply chain is affected depending on how long the problems last in the Middle East. John Zamparo: Okay. And then one more, and I'll pass it on. I wonder how you feel about the current corporate versus franchise mix at MTY? Should we expect that you might want to sell more corporate stores, if so, would those be more in casual or quick service? Anything you can say on that front? Eric Lefebvre: Yes, for sure. There's -- I mean, we're a little bit heavy on corporate right now. So we are selling some corporate stores. We don't have specific initiative to run a fire sale process where we liquidate everything because they do produce good EBITDA, and we don't want to give it away. But we are reducing the number of corporate stores. We have sold a few in Q1, and we have already a few that are sold in Q2 as well. So I mean, you should expect that -- well, not necessarily the number to go down because I can't control everything. But our desire is to reduce that number of corporate stores right now systematically, so it's not going to be a fire sale. But gradually, you should see some corporate stores go into the franchise world instead of being run by MTY. Operator: Your next question comes from the line of Vishal Shreedhar with National Bank. Vishal Shreedhar: I wanted to get your perspective on discounting, particularly as it relates to the pizza category, but more broadly and how you see that evolving and how you think MTY needs to respond? Eric Lefebvre: Yes. It's a competitive environment, for sure, and whether you look at one category or the other, ultimately, every time you miss a meal opportunity, you miss a meal opportunity that never comes back. So every food dollar that's spent is competitive. And I think we should not necessarily look at certain segments more than others just because we all compete for the same meal opportunity. It's competitive for sure. Discounting is part of what's necessary for a lot of our brands. It doesn't mean you need to discount all your products. You also don't want to offer discounts where it's not necessary, where you just basically reduce your revenues for consumers you would have had anyways. But you do need to have an entry point for every customer that will satisfy them and not push them away from your store because you don't want to miss on a group of 4, for example, if -- because 1 person looking for more discounts or was looking for an easier entry point. So we always have to be conscious of that. So the key for us is to offer something an entry point and hope that consumers won't necessarily go for it. And if they do go for it, that they buy something else with it, but it's become a necessity for a lot of our brands. We do have brands where it's not as required. You look at Cold Stone and Wetzel's, for example, you don't need to offer those discounts. But for the vast majority of the other brands, you do need to have an entry point that's a little bit easier for consumers. Vishal Shreedhar: Okay. So do you see through the course of the year discounting at MTY's brands going up? And I wanted to relate that as well? If so, how do you perceive the health of the franchisee at the MTY base? Eric Lefebvre: Yes. I don't think we need to ramp up more discounting. We have the programs we needed to have. I mean they're in place. They've been in place for some time. So I don't think we need to do more. What we need to do is make sure that we have a variety in that space and that the entry point is not always the same product and that these consumers that are looking for budget-friendly option that they also have some variety. So I don't expect that it would go up. And as far as franchisees are concerned, obviously, for us, it's always the #1 priority. It's easy as a franchisor to discount your product to a point where your franchisee no longer makes money. But that can only last so long for your franchisees get in trouble. So for us, the key is to have healthy franchisees that are financially sound and to offer discounts on products that are also profitable, and find ways -- to find creative ways to help everyone make money even with slightly discounted products. So if you have a higher discount, you'll probably want to have higher velocity to make up for the lost margin and ultimately have the same amount of dollars in the bank account. Vishal Shreedhar: Okay. And I was hoping to get your perspective on the customer -- the suite of customer-facing technologies scheduled to launch at Papa Murphy's and it's already launched, if I'm not mistaken. And to get your perspective on how we should anticipate that to benefit trends? Is it something that we'll see? Or is it more of a gradual benefit? Eric Lefebvre: Yes. I mean, that remains to be seen. I hope it will be seen. I think realistically, it's going to be seen over time. The goal here is -- I mean, there's many goals you have on one side, you have customer acquisition, which is always a little bit more challenging. And then you have your customer win back also for consumers you might have lost or that might have forgotten about you. And then you have initiatives for existing consumers to try to improve frequency or improve basket. So I mean, we have a number of tools that are already in place, especially for our main U.S. brands. We're improving those tools. We're adopting new technologies that we hope will help us communicate better with these consumers, and help us create frequency but also make sure that we don't lose them. And for the consumers that we might have lost try to win them back. In Canada, we don't really have anything in place at the moment. It's very primitive. So we feel the adoption of these technologies in the next few months should really create a lift. But that -- I mean, that remains to be tested. We've experienced really good trends when we adopted these technologies in the U.S., and we hope we're going to see the same thing in Canada. Operator: Your next question comes from the line of Derek Lessard with TD Cowen. Derek Lessard: So Eric, maybe could you just talk about the thinking behind the interrupted gift card sales, I think you said to Costco? And then in those comments, you also said that you have other actions going on. So maybe just talk about the other initiatives you got going on in this area. Eric Lefebvre: Yes. Well, for the gift cards at Costco specifically, I mean it's always difficult because of the discount that's required by Costco. So we did continue the Cold Stone program, for example, which is really key for Cold Stone. But for some other brands, financially didn't make sense anymore to have that program at Costco. So we might choose to do maybe some seasonal offers or timely offers for Costco again because I mean people do visit Costco. But we don't want it to become almost a cheat code where people go to Costco before they go to our restaurants by $100 of Costco gift cards for $75 and then go to our restaurants that they would have gone anyways. So we're trying to avoid that -- we're trying to avoid that discount that's given to consumers for the wrong reasons. But that does create a problem, especially after the holiday season, where we have fewer redemptions. But it's just a program we couldn't afford anymore with some specific brands. And we're suffering in the short term. There's no doubt about it. But that's going to free up a lot of resources for other initiatives that we're going to be putting forward with the team. Derek Lessard: Okay. And maybe one last one for me. In your prepared remarks, you did highlight some new tools for site selection. So curious on what you've seen so far? And any incremental results that you can share with us would be helpful. Eric Lefebvre: Yes. The tools are deploying as we speak. So I mean, again, this is something we're pretty positive about that we're going to be better -- even better at site selection. We did have some tools in the past that were good and served a purpose, but we feel like in today's world, the amount of data you can feed into a tool and how it processes it is really key. And the new tools we're deploying are far superior in our opinion and not only to evaluate a given property, but also to find white space where we might see our competitors are successful, and we have no restaurants. Sometimes you don't suspect some areas to be so productive, and then you realize from the data you now own that maybe you should have a restaurant in there, and the prospects are better. So again, everything we do is to try to find sites that are going to be productive for our franchisees and profitable, and try to avoid sites that might not necessarily be as productive as they might look. So it's all trying to find the right balance for our franchisees to be profitable. Operator: Your next question comes from the line of Michael Glen with Raymond James. Michael Glen: Eric, just in terms of the digital strategy that you're talking about, are you able just to elaborate a bit more? Is this something that is considered into your CapEx? Is it expensive? I'm just trying to understand how some of that spending gets funded? Eric Lefebvre: Yes. There's no CapEx there. Most of the funding is done by the advertising funds of the various brands that are using it. We do have some -- we do have like a data science team internally. That's grown quite a bit in the last few years because of how important it is, and that's funded by MTY. And they're allocated to certain projects right now that are marketing driven, but you won't see that in CapEx, and you also won't see a lift in the amount of OpEx because these people are already on payroll. So you won't see an impact of these new projects. Michael Glen: Okay. And is this -- do you think we could see for the company a common development or something along those lines? Or it would be a digital strategy, brand by brand? Eric Lefebvre: It's brand by brand. We've tried the common app in the past and it took us 2 years to be able to detangle everything. Different brands require different strategies and different promotions and different ways to address your consumers. So no, it's going to be a brand-by-brand thing. But what we're doing is building platform and all the connectors with the various new tools that we have, and then each brand is going to have their own strategy, their own set of data that they're going to be using. So it's going to be a common tool, but it's going to be a brand-by-brand strategy. Michael Glen: Okay. And then what are the -- like Digital is now becoming a larger portion of your sales? What are the franchise economics for digital sales equivalent to an in-store sale or just some insight into how digital sales impact the franchisee? Eric Lefebvre: It really depends which type of digital sales, because we tend to lump everything into the third-party aggregator world. But a lot of our digital sales are also first party. So on first party, if anything, it's probably better for the franchisee economically. The menu price is the same as in store, but it's also typically in order that's slightly larger. So we really like these first-party orders that go through our own websites or our own apps. And you have a lot of that. I'll give you the example of Papa Murphy's, almost 100% of our digital sales is done through our first-party app, which is really, really productive for everyone. So that's good economics. Now if you look at third-party aggregators, obviously, it's a little bit more complicated. The business model is interesting. As long as these sales are incremental sales, we can make it profitable. Obviously, our prices are slightly higher on these platforms, but the cost is also higher because of the commission and because of the packaging and everything. But if it's an incremental sale, it's still a profitable proposition for the franchisee where it gets less profitable if you have a substitution of an in-store order by third-party aggregator order, obviously, then that becomes a little bit more challenging. Michael Glen: Okay. Then on working capital, there was some investment in working capital that took place through the back half of last year Q2 to Q4. Are you able to give some outlook on how we should think about working capital for the balance of this year? Eric Lefebvre: Yes. I mean the way we look at working cap, I mean, there were some timing differences in Q1, and it seems that everything that had a potential to be in our face ended up in our face. But for 2026, we feel like working cap should be about flat compared to last year. So there's no reason why the investment we had this quarter wouldn't come back to us. Michael Glen: Okay. And then just one more for me. I mean, with your leverage where it is right now or should we think about you looking at M&A? Are you actively looking at M&A? Eric Lefebvre: Yes. We continue to look at M&A. So it's always a possibility. Obviously, no promises because we don't control the 100% of the sequence there. But yes, we continue to look at M&A. Our leverage is very favorable. As we mentioned, in previous calls, we wanted to create optionality for ourselves where we could go M&A, we could go NCIB or SIB or any possibility that's going to be deemed appropriate by the Board. So everything is on the table. Michael Glen: Okay. So we could expect you to become active on the share repurchase program in the near term as well? Eric Lefebvre: We have that option open. Operator: [Operator Instructions] Your next question comes from the line of Ryland Conrad with RBC. Ryland Conrad: I guess just to start off on the store network, I appreciate the seasonal weakness, but I was a bit surprised to see net closings increase year-over-year. Were there any one-offs to call out in the quarter? And I guess, bigger picture, just with respect to the construction pipeline. Are you able to characterize the strength that you're seeing relative to last year? Like correct me if I'm wrong, but I think you were previously referencing roughly 100 locations in the pipeline. Eric Lefebvre: Yes. I mean, I'll start off by saying I was disappointed by the Q1 numbers as well. So I mean, again, it was that type of quarter where we had a little bit more closures than anticipated a little bit fewer openings than anticipated. But again, the pipeline is really strong. We have just under 200 locations under construction at the moment in addition of the ones that we've already opened during the quarter. So what we're seeing now is that there's no reason to believe that 2026 would not be a positive net store opening. So nothing specific to call out. There were no major one-timers other than, obviously, TCBY master license being terminated. But other than that, there were no one-timers. It's just -- I mean the cards fell this way for Q1, but we're still feeling very bullish about 2026. We feel like the net store opening is going to be a bright spot for us, and the fact that we're swinging hammers on so many stores is really positive. Ryland Conrad: Okay. Got it. And then just the MD&A, I believe mentioned in organic system sales decline of about 8% for Papa Murphy's. Are you able to put that performance into context, just relative to recent quarters where I think you saw a bit of sequential improvement? Eric Lefebvre: Yes. I'm not sure exactly about the numbers you quote, but I mean, Papa Murphy's is certainly facing headwinds in terms of sales right now. We're -- again, they should benefit from the tools that we're deploying now. So hopefully, that's going to create a dent in the trajectory. We're also revising the way we do marketing and which promotions we want to push a little bit harder for Papa Murphy's. We have the Detroit pizza is out now. It seems to be doing a reasonable job in the PMIX and creating maybe some excitement around the brand. And hopefully, that's going to result in more repeat business going forward. But there's no doubt that Papa Murphy's, we had a reasonable 2024 with Papa Murphy's, but then '25 was complicated and it's continuing in '26. Ryland Conrad: Okay. And just on Papa Murphy's. I think you took ownership of about 50 underperforming locations last year. Could you give an update just where you're at with respect to turning those around and kind of getting them back to breakeven in refranchise? Eric Lefebvre: It's proving to be more complicated than anticipated. I won't lie to you. We do see somewhat of a sales mix and somewhat of an improvement, not a sales mix but a sales lift and some improvement in the way we operate the business, but it's taking longer than we thought to turn those around. We are suffering losses with these restaurants. At the moment, we did franchise a few, but not many. So I mean, we're not giving up. We still believe in these restaurants, the fundamentals that were there in the markets still exist, but it's not impossible that we might have to make decisions with certain stores if we're continuing to incur losses, and we see that there might be less hope. But for now, we're not giving up, but it's taking longer than anticipated. Ryland Conrad: I appreciate the color there. And then lastly for me, I was surprised to see the employee retention credit as I thought that was largely done last quarter. So could you just give an update there? And should we expect to see any more this year? Eric Lefebvre: Yes. We were surprised as well, to be honest. Pleasant surprise. But now we feel like it's really done done. So there should be no more ERCs in the future. Operator: We have no further questions. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.
Operator: Ladies and gentlemen, thank you for standing by, and welcome to Uxin's Earnings Conference Call for the quarter ended December 31, 2025. [Operator Instructions] Today's conference call is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the call over to your host for today's conference call, Ms. [ Ali Wang ]. Please go ahead, [ Ali ]. Unknown Executive: Thank you, operator. Hello, everyone. Welcome to Uxin's earnings conference call for the fourth quarter and full year ended December 31, 2025. On the call with me today, we have D.K., our Founder and CEO; and John Lin, our CFO. D.K. will review business operations and company highlights, followed by John, who will discuss financials and guidance. They will both be available to answer your questions during the Q&A session that follows. Before we proceed, I would like to remind you that this call may contain forward-looking statements, which are inherently subject to risks and uncertainties that may cause actual results to differ from our current expectations. For detailed discussions of the risks and uncertainties, please refer to our filings with the SEC. Now with that, I will turn the call over to our CEO, D.K. Please go ahead, sir. Dai Kun: [Interpreted] Good day to everyone, and thank you for your continued interest and support. It's a pleasure to welcome you on our earnings call today. To better communicate with our domestic and international investors, I will be discussing our performance over the last year as well as providing insights into our prospects in both Chinese and English. China's vehicle ownership has approached 370 million units, forming a large and growing base that continues to unlock significant potential for vehicle recirculation. In 2025, used car transaction volume in China exceeded 20 million units for the first time, accounting for approximately 5.5% of total vehicle ownership, well below the 10% to 15% level typically seen in more mature markets. As such percentage rises towards that level, annual used car transaction volume could reach 35 million to 50 million units based on current vehicle ownership alone. Consumer expectations for products, services and overall experience in the used car industry continue to rise. We have observed that they are no longer satisfied with availability alone and increasingly value transparency and vehicle conditions, fare pricing, professional service and reliable after-sales support. We believe that in the trillion RMB market, which remains at an early stage of development, those who can systematically address these pain points will be well positioned to lead the transformation and upgrading of China's used car industry. Against this backdrop, Uxin is redefining used car transactions through a modern retail approach. We leveraged our advanced self-operated reconditioning factory to ensure vehicle quality and provide a one-stop purchasing experience and comprehensive after-sales support through our off-line superstores and online marketplace. As a result, buying and selling used cars could become a simple, transparent and trustworthy as purchasing standardized retail products. In 2025, despite continued intense price competition in the new car market, which created challenges for the used car industry, our business maintained strong growth momentum. Our full year retail transaction volume reached 51,110 units, up 135% year-over-year, marking the second consecutive year of more than 130% growth. Total revenues reached RMB 3.24 billion, representing a 79% increase year-over-year. Meanwhile, as both inventory and sales continue to scale up, our inventory turnover days for vehicles available for sale remained stable at approximately 30 days. During the year, we also began large-scale replication and nationwide expansion of our superstore model. Building on our existing superstores in Hefei and Xi'an, we opened 3 new superstores in Wuhan, Zhengzhou and Jinan, establishing a scalable operating system that can be replicated across regions. Our mature superstores in Xi'an and Hefei continued to ramp up, each achieving over 20% market share in their respective cities. Wuhan as the first replicated superstore after our model has been validated, delivered stronger sales growth and profitability than our earlier superstores at the same stage. Zhengzhou and Jinan superstores further improved upon Wuhan's performance. These achievements are supported by core capabilities that we have built over time and continue to strengthen. First, our pricing capability continues to evolve. We have accumulated the industry's largest set of real transaction data from our self-operated used car sales, and this data continues to grow, roughly doubling each year. This enables our pricing model to become increasingly precise. Our digital systems respond rapidly to market changes, allowing us to maintain real-time pricing competitiveness on both sourcing and sales. As a result, we are well positioned to navigate industry volatility and systematically improve vehicle-level profitability while sustaining high inventory turnover efficiency. Second, we have built an innovative integrated factory warehousing retail business model. Each of our superstores is supported by a used car reconditioning factory forming China's largest, most advanced and most efficient supply system for high-quality used vehicles. We have established scalable advantages over traditional dealers in quality control, reconditioning efficiency and cost optimization. Leveraging the reconditioning capabilities at our self-operated factories, we have expanded the used car service value chain and are able to provide full life cycle vehicle services, including financing, insurance, extended warranties, accessories and repair and maintenance services, similar to those offered by new car dealers. Compared with traditional used car dealers that primarily offer financing services, our revenue streams are more diversified with greater potential for profitability improvement. Meanwhile, most of our superstores carry inventory of more than 2,000 vehicles and serves as a landmark used car retail destination in its local market. Landmark superstores help build customer trust. Through our in-store service, vehicle display and experience design, customers can enjoy a professional, transparent and trustworthy retail experience at our superstores. Our Net Promoter Score has reached 67 and customer satisfaction and brand reputation remain at industry-leading levels. We believe that our sales conversion efficiency, together with our ability to generate organic traffic through a strong word of mouth provides us with significant advantages over traditional used car dealers. We clearly see that Uxin is advancing rapidly along a validated and continuously strengthening development path. Looking ahead to 2026, we will continue to increase inventory and sales across our existing 5 superstores, and we plan to open 4 to 6 additional superstores during the year, further strengthening our nationwide network. Based on these plans, we expect both our full year retail transaction volume in 2026 and revenue to grow by more than 100%. The modernization of China's used car industry has only just begun, and Uxin is positioned to benefit from a significant market opportunity. We also recognize that truly sustainable growth is not simply about speed, but is built on the coordinated improvement of scalability, operational efficiency and customer value. We will remain focused on delivering better products and more professional services to our customers while driving higher standards for solutions across the industry and creating long-term value for our shareholders. Once again, thank you for your trust and support. With that, I'd like to turn the call over to our CFO to walk you through the financial results. John, please. Feng Lin: [Interpreted] Thank you, D.K., and hello, everyone. I will now share an update on our financial performance. We delivered another quarter of strong results in the fourth quarter of 2025. Retail transaction volume reached 19,160 units, representing a 37% sequential increase and a 124% increase year-over-year, significantly outperforming the overall China used car market, which recorded a year-over-year growth rate of approximately 6% during the same period. This demonstrates that our retail business remains firmly on a path of rapid growth. Total retail revenue for the quarter was RMB 1.129 billion, up 38% sequentially and 104% year-over-year. Our average selling price or ASP for retail vehicles decreased from RMB 65,000 in the same quarter last year to RMB 59,000 this quarter, but slightly increased from RMB 58,000 in the last quarter. While ASP declined as we shifted toward a more affordable inventory mix, the strong growth in transaction volume largely offset the pricing impact and supported overall revenue expansion. Our current inventory structure is well aligned with mainstream consumer demand, and we believe pricing has now stabilized at a rational level. As such, we expect ASP to remain relatively steady in the near term. On the wholesale side, we sold 2,474 units in the fourth quarter, up 31% sequentially and 180% year-over-year. Wholesale revenue for the quarter was RMB 38.2 million. Combining retail and wholesale operations, total revenue for the fourth quarter was RMB 1.198 billion, representing a 36% sequential increase and a 101% year-over-year increase. Our gross margin for the fourth quarter was 6.8%, down 0.7 percentage points from 7.5% in the last quarter. This was primarily due to promotional activities in the new car market during the fourth quarter, which put pressure on profitability across the used car industry. In addition, we opened a new superstore in Zhengzhou in September and another in Jinan in December. And newly opened superstores typically operate at lower gross margins during the early stages of ramp-up. Operating expenses also increased during the quarter, primarily due to the initial ramp-up of our new super stores, including investments in staffing and infrastructure. As a result, our adjusted EBITDA loss was RMB 27.2 million. Turning to our full year 2025 results. Retail transaction volume totaled 51,110 units, representing a 135% year-over-year increase. Full year retail revenue was RMB 3.021 billion, up 19% year-over-year. Total revenue reached RMB 3.24 billion, an increase of 79% year-over-year. In 2025, we opened 3 new superstores in Wuhan, Zhengzhou, and Jinan, marking a new phase of rapid nationwide replication and expansion. These new superstores have ramped up more quickly than our earlier locations, continuing to drive growth in both our sales volume and overall financial performance. Gross margin for the full year was 6.7%, remaining stable compared with last year despite lower margins during the early ramp-up stages of newly opened superstores. This continued improvement in profitability from our mature superstores enabled us to maintain stable margins while expanding rapidly. Turning to expenses. SG&A and R&D expenses totaled RMB 450 million, representing 13.9% of total revenue, a significant improvement from 24.3% last year, reflecting meaningful progress in cost control and operating leverage. Adjusted EBITDA loss for the full year was RMB 57.9 million, narrowing by 28% year-over-year. Adjusted EBITDA margin was minus 1.8%, an improvement of 2.7 percentage points from last year. We have disclosed additional details regarding our full year financial performance and our recently published fourth quarter and annual results. So I will not repeat all the figures here. Turning to our outlook for the first quarter of 2026. While the first quarter is traditionally a seasonally soft period for the used car industry due to the Chinese New Year holiday, we expect retail transaction volume to be between 16,200 and 16,500 units, representing year-over-year growth of over 110%. Total revenue is expected to be between RMB 1.05 billion and RMB 1.07 billion. Lastly, to reiterate D.K.'s comments on our full year outlook. In 2026, we plan to open 4 to 6 new superstores with sales volume and inventory continuing to ramp up at our existing superstores, along with new store openings, we are confident in achieving over 100% year-over-year growth in both retail transaction volume and revenues in 2026. This concludes our prepared remarks today. Operator, we're ready for questions. Operator: [Operator Instructions] The first question today comes from Dai Wenjie with SWS. Wenjie Dai: [Interpreted] My first question is the company delivered another quarter of strong growth in both sales volume and revenue. Management also provide some color on the changes in gross margin. So as you plan to open 4 to 6 new superstores in this year, how should we think about the gross margin going into 2026 and ASP? Could management share your latest view on used car pricing trends this year? Are you starting to see some signs of stabilization? Feng Lin: [Interpreted] Thank you for the question. Let me take this one. Okay. It's John. Gross margin declined sequentially in the fourth quarter, mainly due to the ramp-up of newly opened superstores. We opened our Zhengzhou superstore in September and our Jinan superstore in December. During the initial ramp-up phase, we adopt a more competitive pricing strategy to drive traffic and establish market presence, resulting in a narrower spread between sourcing costs and selling prices compared to our mature stores. In addition, the penetration of value-added services also takes time to ramp up as our market share and brand recognition improve in these markets. It generally takes around 6 to 9 months for new stores to reach the gross margin level of our mature stores. At the same time, our new car market experienced a slowdown in sales last December and dealers stepped up promotional activities, which put pressure on used car margins. According to our operating data for the first quarter of 2026, we have already seen meaningful improvement in the gross margins of our newly opened superstores in Zhengzhou and Jinan. Overall gross margin has begun to recover compared to the fourth quarter of 2025, and we expect it to return to above 7%. Regarding ASP, according to data from the China Automobile Dealers Association, the national average transaction price of used cars has started to recover since the fourth quarter of last year. We're seeing a similar trend in our own operating data. Our retail ASP increased sequentially for 2 consecutive quarters, reaching RMB 59,000 in the fourth quarter of 2025, and we expect it to exceed RMB 61,000 in the first quarter of 2026. In addition, due to factors such as rising raw material costs, the phaseout of purchase tax incentives and government subsidies as well as regulatory guidance aimed at reducing excessive price competition, we expect new car pricing to become more stable in 2026 compared with the past 3 years. More stable new car pricing will also support used car prices. As a result, we expect our retail ASP to show a stable to upward trend in 2026 compared with 2025. Given that we expect retail transaction volume to grow by over 100% year-over-year in 2026, revenue growth is expected to outpace transaction volume growth. That's my answer. Thank you. Operator: The next question comes from Fei Dai with TF Securities. Fei Dai: [Interpreted] I have a question on customer acquisition. How should we think about the customer acquisition channels for new superstores compared with your mature stores? Are there any key differences? Dai Kun: Thank you for the question. Let me address your question. Customer acquisition for new superstores mainly comes from 3 channels. First, Uxin is a well-recognized brand in China's used car market. As a result, whenever we enter a new city, we already have a certain level of traffic accumulation on the Uxin Used Car app in that market. This is a key difference compared with many regional dealers. In other words, during the initial ramp-up phase of a new superstore, we are able to leverage our existing brand awareness and online traffic base to reactivate and reengage existing users, bringing in the first batch of users and leads into the new market. Second, we typically carry out a series of marketing and PR campaigns around new superstore openings. In addition to targeted marketing on digital platforms, we also collaborate with local governments when launching new superstores. Local governments often provide promotional resources and local media support, which helps us quickly build awareness and reach potential customers in the new market. Third, we also partnered with vertical automotive platforms and media to capture traffic and leads from third-party channels. Given the competitiveness of our vehicle quality and pricing, we are able to achieve strong exposure and conversion on these platforms. As the new stores continue to operate and mature in local markets, the cities where our superstores are located to gradually become destination markets for car purchases and walking traffic increases over time. At the same time, as transaction volume scales up, customer distraction and brand reputation continue to build. And referrals from existing customers also increased, further improving conversion and creating a positive customer acquisition cycle. Service quality and customer experience continues to increase, and our customer acquisition costs continue to decline. That's my answer. Thank you. . Operator: The next question comes from [ Shinjing Li ] with China Merchant Securities. Unknown Analyst: [Interpreted] Congratulations on entering a new phase of nationwide expansion. From a long-term perspective, could management share some color on your store expansion potential across China and how many stores do you think you can ultimately roll out over time? Dai Kun: Thank you for the question. Let me take this one. As of the end of 2025, we had 5 superstores in operation. In March this year, we opened a new superstore in Tianjin. We expect to open 4 to 6 superstores in 2026 with a goal of having more than 10 stores in operation by the end of 2026. We are very confident in our long-term store expansion potential across China, primarily because of the sheer size of the used car market. China's vehicle ownership has already exceeded 350 million units. And on top of this large base, there are many cities that are well suited for deploying Uxin's large-scale used car superstores. Our assessment of store expansion potential is mainly based on the level of vehicle ownership in each city as well as our target market share. At a high level, for a city with vehicle ownership of 500,000, we believe it can support Uxin superstore with around 1,000 units of inventory, assuming 10% to 15% of vehicle ownership is transacted as used cars annually, such a city would generate annual used car transactions of approximately 50,000 to 80,000 units. Based on the over 20% market share that our mature stores have already achieved a Uxin superstore could achieve annual sales of over 10,000 units, which corresponds to an inventory level of around 1,000 units. Applying this framework today, there are more than 30 cities in China with vehicle ownership exceeding 3 million, which can support super stores with over 5,000 units of inventory. There are more than 70 cities with vehicle ownership exceeding 1 million, which can support superstores with over 2,000 units of inventory. In addition, there are more than 100 cities with vehicle ownership exceeding 500,000, which can support superstores with over 1,000 units of inventory. In the long run, we believe there are more than 200 cities across China where we can potentially operate supporting annual retail transaction volume of over 3 million units. Thank you. That was my answer. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks. Unknown Executive: Thank you all for participating on today's conference call. We look forward to reporting to you soon. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]
Operator: Good day, and welcome to Cogeco Inc. and Cogeco Communications Inc. Q2 2026 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Patrice Ouimet, Chief Financial Officer of Cogeco Inc. and Cogeco Communications Inc. Please go ahead, Mr. Ouimet. Patrice Ouimet: Good morning, and welcome to our second quarter results conference call. So as usual, before we begin the call, I'd like to remind listeners that today's discussion will include estimates and other forward-looking information. We ask that you review the cautionary language in the press releases and MD&A issued yesterday as well as in our annual reports regarding the various risks, assumptions and uncertainties that could cause our actual results to differ. With that, I'd like to pass the line to Fred Perron for opening remarks. Frederic Perron: Merci, Patrice. Good morning, everyone. We're pleased to report solid performance in Canada with positive year-on-year growth in adjusted EBITDA again this quarter. Our PSU growth was a bit more muted as expected, but we remain very confident about our customer momentum. As a reminder, in 3 of the past 4 quarters, we've had the best Internet customer base percentage growth in all of Canadian telecom. Our sales and marketing capabilities are strong and will continue to be a sustainable growth driver for us moving forward. In the U.S., we had indicated that we had another tough quarter ahead, which is the one we reported last night, but we now see signs of improvement in our financials as we progress into the second half of our fiscal year. Patrice will share more details about our outlook in a moment. We launched our new welo digital challenger brand in Ohio at the end of February and expect to expand it further across our footprint throughout the fiscal year. Welo is the American equivalent of our oxio Canadian digital brand, which is driving a big part of our success north of the border. As a reminder, in about half of our American footprint, we have around 20% market share. So there's room to grow. Our 3-year transformation remains on track. We're driving substantial OpEx and CapEx synergies and now have 4 new diversified businesses. Oxio , welo and wireless in both the U.S. and Canada, which are giving us additional sources of growth for the years to come. We've accelerated and broadened our work on AI throughout the quarter, building on the customer service chatbots we've already launched in recent years. Over the coming months, we'll be deploying AI agents to improve our full end-to-end Internet troubleshooting journey from network diagnostics to customer self-serve to call center support to home technician help. Our size, agile operating model and centralized data structure allow us to move very rapidly in this space. At Cogeco Media, our digital advertising solutions continue to steadily grow, backed by our strong market position even as the traditional radio advertising market remains pressured. In summary, our Canadian performance is strong, and we see signs of improvements in the U.S. We have one of the best balance sheets in the industry. Our free cash flow is growing. We're deleveraging. Our dividend growth -- our dividend is solid and well-funded, and we also have the option of resuming buybacks at some point in the future. For all these reasons, we feel quite positive about our ability to keep growing shareholder value over the coming quarters and years. On that, I'll pass it over to Patrice for more details about our outlook. Patrice? Patrice Ouimet: Thanks, Fred. So since our detailed financial results were published last night, I'll only focus on a few items and then open it up for questions. But first, you'll notice that the current income tax rate is negative this quarter. It is because we've recognized a $14.8 million retroactive benefit from the acceleration of tax depreciation on certain asset classes in Canada. As a result, the current tax rate should be approximately 8.5% for the year compared to our previous assumption of 11.5%. We have updated our financial guidelines for both companies. We now have a range of negative 2% to 4% for revenue versus negative 1% to 3% previously and negative 1.5% to 3.5% for adjusted EBITDA versus 0 to minus 2% previously. The changes reflect higher pressure on our U.S. business coming from competition than initially expected when we introduced guidelines in October. CapEx guidelines are unchanged, but we have lowered our range of CapEx for the network expansions and free cash flow guidelines remain unchanged as well. As a reminder, the guidelines are provided in constant currency since foreign exchange rates can be volatile and close to half of our revenue and EBITDA is generated in the United States. Note, however, that free cash flow is much less impacted by FX rates since U.S. denominated debt and CapEx served as a natural hedge against FX fluctuations. Looking at the balance of the year, we expect the Canadian business to continue to generate year-over-year revenue and adjusted EBITDA growth. In the U.S., on a constant currency basis or U.S. dollars, we expect revenue and adjusted EBITDA to be lower than the previous year, but at a smaller percentage decline than what was generated in the first half of the year. Finally, our debt leverage ratio stood at 3.2 turns during the second quarter, and we intend to continue to pay down debt with the goal of achieving 3x by the end of the fiscal year in August. And now Fred and I will be happy to take your questions. Operator, you can go ahead. Operator: [Operator Instructions] Your first question comes from Matthew Griffiths with Bank of America. Matthew Griffiths: Just wanted to ask in the U.S., just some color on the competitive environment. For me, when I look at the pricing across the market, it doesn't really appear that Breezeline is getting -- outcompeted on price. And so maybe you can delve a little bit into where you think the competition is being successful and like what you are trying to -- how you're trying to counter that? And maybe kind of in the same vein, historically, I think fixed wireless access has been a source of some of the competitive pressure. I'd be interested to hear your thoughts on how the increased emphasis on convergence in the U.S., particularly among fiber players might be contributing to like the next leg of competitive pressure or maybe not? I'd like to hear your thoughts. Frederic Perron: Matt, it's Fred. Thanks for your question. I'll comment on the U.S. competitive environment and your various questions. First, yes, we have seen a slight uptick even since our last earnings call, and that's the main reason for the adjustment in the guidance. Now let me elaborate on that a bit. It's not all pricing, Matt, but there is some pricing in there. For example, we saw one of our competitors start offering fiber for 6 months -- for the first 6 months for free. So these types of promotions certainly don't help. You've seen some of our large competitor offer -- promote even more aggressively a 5-year price lock as well. So even though we are equipped to compete price-wise, the accumulation of all of those things doesn't help. Plus there's always ongoing fiber upgrades from DSL to fiber for some of our competitors, and that's a factor as well. FWA, I wouldn't call an uptick for us in the quarter. FWA is something we've been dealing with for quite some time. It's still there, but we're able to deal with it. And you see some of the players also shift some of their FWA focus more towards the B2B segment. And therefore, that's a segment we're not as present in ourselves. I'd say these are the main factors. Convergence, yes, there is one of the large U.S. telcos that launched a new converged offer over the past couple of weeks. But I'd say the entry point for that offer is quite high. So it's something that we're watching, but that we're not feeling yet. Now on the positive side, a couple of things. One of the things that I know Maher has been very vocal on as well is very aggressive short-term customer attraction offers in the U.S. and something that we've had to match as well at times, things such as aggressive gift cards, for joining us and months for free. I would say we see more constructive behavior on those types of offers in recent weeks, and we've also pulled back ourselves. So we're less aggressive with gift cards. We've scaled back on months for free. So whereas the market got more aggressive, I would say, short-term unsustainable offers have been less pervasive, certainly for us. And the last thing I would add is that over the past couple of weeks, we've seen early signs of return on more constructive pricing behaviors, but it's too early to call it an improvement. That's why we remain cautious with the guidance. Matthew Griffiths: Okay. That's really helpful color. And maybe just a final thing. The introduction of the kind of oxio type brand, welo in the U.S. what is like the ramp-up period that you expect for that to have an impact? Obviously, it's starting from like a new fresh introduction. So is this like a 12-month or 24-month type of ramp-up period that we should expect before it starts to have an impact? Frederic Perron: Sure. So well, first of all, you don't see volume from it in the results that we just reported, just to be clear on that because it launched at the last 2 days of the quarter. In the next couple of quarters, it's still relatively small volumes, but every bit counts. It will be an S-curve for sure. That's what we saw with oxio as well. What is exactly the length of the S-curve, it's a little too soon to say, Matt. Operator: Your next question comes from Aravinda Galappatthige with Canaccord Genuity. Aravinda Galappatthige: I'll start with a quick clarification, Patrice. Your comments on Q3 expectations. So it sounds like when you say it's going to be better than in Q2, I assume you're referring to the sort of the constant currency number. It suggests sort of mid-single-digit type EBITDA declines. Is that the right way to kind of characterize that? Patrice Ouimet: Yes. So my comment was more on the balance of the year. So basically both Q3 and Q4 together because obviously, if we commented just on Q3, you have Q4 indirectly as well. So my comment was a bit more general. And yes, it is in constant currency. As you know, we provide guidance in constant currency. there has been more volatility in the FX rates recently because of what's going on around the world. So that's a part we don't control. But as I said, we are more naturally hedged from a free cash flow standpoint. So that's how we can manage the currency. But to your question, yes, my comments were in constant currency. And for what I said is for Canada, obviously, the currency doesn't really have an impact. We're planning for the balance of the year to the 2 quarters to see positive year-on-year growth. That's our current expectation, like we've had in the first 2 quarters. And in the U.S., we do see a decline in constant currency or in U.S. dollars, but the percentage decline should be better than what we've seen in Q1 and Q2. Aravinda Galappatthige: And then just sticking to Canada for a bit. I mean, as you pointed, I think as pointed out, the wireline performance in Canada is quite strong, better than most, if not all, kind of your peers. Maybe just talk to the sustainability of that. I know that there's been a little bit of promotional activity, but comments coming more recently from the carriers suggest that the level of discounting and aggression has eased on the wireline side of it. I know that you yourselves were a fair bit active several months ago. Maybe just give us a lay of the land there and your ability to kind of sustain price and perhaps maintain sort of the current trend. Frederic Perron: Aravinda, it's Fred. Thanks for pointing out our solid Canadian performance. And as Patrice said, we expect solid financials for the rest of the year in Canada as well. With regards to competition in Canada, we generally feel good about the market. There has been a bit of pullback in promotional intensity. We've also increased our prices as appropriate. So I would say cautiously optimistic in general about the Canadian market. Aravinda Galappatthige: Okay. And my last question, I was wondering if you can talk to sort of where we should be looking for the benefits of the transformation plan going forward for the rest of '26, but also fiscal '27. Maybe just an update there. Is it -- are there still more bottom line-oriented tailwinds from the program that we should be looking for? Frederic Perron: Sure. So the first half of our transformation was more focused on cost. As we go into the second half of our transformation, there will be or there is more of a focus on revenue as well. As I mentioned in my introductory comments, we're really starting to make good headways into AI agents across our operations. The example I gave in the introductory comments was more about technical troubleshooting and customer service. But we also are starting to deploy AI for ARPU management. And as you know, there's a lot of money in areas such as retention discounts, for example, in our P&L. And there's a real breakthrough right now in using AI to predict whether a customer is really likely to churn and optimize the allocation of our retention discounts based on that. That's just one example. So that's certainly an increasing area of focus for us. Of course, some of that is being erased by the headwinds -- the revenue headwinds in the U.S. but that's directionally where we're going, and there's a lot of money there. Operator: The next question comes from Drew McReynolds with RBC. Drew McReynolds: Maybe first a wireless question, Frederic. In Canada, obviously, the Street has seen some pretty unwelcoming promotional activity through a pretty seasonally low period here in Q1 by the Big 3 and to some extent, Quebecor. Just from a Cogeco perspective, just curious on your observation of that in terms of how you're wanting to grow your wireless business and whether that impacts kind of your plan as we go forward. And then maybe a second bigger picture question. I think, Fred, you talked about the 4 stages of telecom before, and it feels we're increasingly in that maturation and pricing pressure kind of the third stage, I think you referred to. In the U.S., how close or perhaps what's the path to the kind of steady state, the fourth state? Is it really about market share being more balanced in the U.S.? I know it's a pretty big question, but just at the highest level, just what are your working assumptions in terms of kind of getting to that steady state in the U.S. Frederic Perron: Sure. Thanks, Drew. Good question. So my answer may be a bit longer. So on wireless, first, when you look at a benchmark for wireless for us in both countries, actually, when you look at the U.S. cables deploying MVNO models, they've typically reached 20% wireless penetration of their wireline base after a few years and 20% may not sound like a lot, but it's clearly enough for it to be a materially positive P&L needle mover for them. So not stating a goal here, but that's not a bad benchmark to use for us. As it relates to our -- for both countries. As it relates to our wireless efforts in Canada, our sales have actually been slightly ahead of plan. And I would say that we're quite insulated from all the noise happening between the Big 3 or now the Big 4 in wireless in Canada. Our model is very different. We cross-sell to our existing customers in a more rurally skewed footprint. We also target lower data users, which we're doing successfully, and we're doing so by also reminding our customers that they can do automatic offload onto their Cogeco wireline network when they're at home. So I would say we're doing our own thing. We're not fighting in the excessively large data bundles that customers don't need, and we're doing just fine. So a long way of saying the recent price war in Canada wireless has not really impacted us. In terms of the 4 stages of telecom and just to remind everyone of what the 4 stages are, I have seen them in Europe before. So it's always the same story. There's growing penetration of telecom services, which is Chapter 1. Then there's share of wallet increase, which is Chapter 2, where you upsell customers and you do sometimes rate increases. And Chapter 3 is what I call the bursting of the bubble where prices start falling. And Chapter 4 is when things restabilize again at a lower price level that customers are comfortable with. And I'd say when I was in Europe, we've gone through Chapter 3 and many European countries are now in Chapter 4, where telecoms have regained renewed stability. Where are we in our 2 countries? I'm cautiously optimistic that Canada is approaching Chapter 4. Of course, we don't have a crystal ball. And -- but as I said to Aravinda before, we see more constructive behaviors in Canada and things seem to be settling down. The U.S. is still very much in Chapter 3, which is price wars. In terms of your question on what is the path to stabilization in the U.S., there are a couple of things. So some of the offers that we're seeing right now just simply don't seem sustainable from a net present value perspective from our competitors. So hopefully, somebody is going to wake up somewhere and realize that, that doesn't make sense. But also what we're doing is we're looking at our market share in every single one of our U.S. markets, and we're doing pretty granular predictions of given the number of players in that market, given the overbuild dynamics in that market, what is our fair share market share in that town. And there are places where our market share is still a little high, but there are places where we also have room to grow to reach our fair share. And as you net all of that out, what we see for us is that we're pretty close to fair share on the Breezeline brand because our market share is lower than most of the larger U.S. cable players. And with welo on top, we have an opportunity to grow share over time. So that's a long way of saying what is the path to more stability in the U.S.? Well, for us, it comes back to being close to fair share. And for each of the different players, I would ask where are they compared to their fair share. And more broadly, hopefully, people will realize over time that some of the offers we're seeing are not quite sustainable. Operator: Your next question comes from Vince Valentini with TD Cowen. Vince Valentini: And let me reiterate thank you for not repeating everything from the results and MD&A and start the call. Very efficient. I have a couple of questions. One, in your recap of the competitive drivers to Matthew's question earlier, one thing you didn't mention was Starlink. We're hearing more and more noise about them competing in selective urban markets with very aggressive offers, maybe just a hype thing around their IPO or maybe it's sustainable. Nobody is quite sure. But are you seeing any evidence of Starlink trying to steal any customers in any of your markets yet? Frederic Perron: No, we're not, Vince. It's Fred. Starlink, it's important to separate 2 things, right? There's Starlink on the cell phone as a complementary solution to the existing cell phone technologies. Obviously, we're less exposed to that. On the wireline side, we're not feeling it either. Maybe I can pass it to Patrice to share some of the observations and analysis we've done. Patrice Ouimet: Yes. Obviously, this is something that we're keeping in mind and looking at the development. But as Fred said, we're not really seeing it. Obviously, you can -- I'm sure you can look at the technology behind it and the capacity, including the new satellites that are going to come. Typically doesn't work well in regions that -- where you have some level of density of population. And that's usually where you have wired networks, whether it's cable or FTTH. You can always get -- I mean, the TAM is unlimited because basically satellite can reach everyone, but the capacity is quite limited in terms of spectrum usage in a specific area, and that spectrum has to be shared by all operators as well. And also at the consumer level, when you think about it, a lot of our -- well, I would say, a higher proportion of our customers in rural areas will have bundles, so with TV. So that's not something that's being offered by satellite right now. We typically see much lower speeds as well, something like 100 megabits per second. This can grow over time, but a lot of our customers take much faster speeds than this. It requires an external antenna as well, not something everybody wants to install on the side of the house compared to having an already wired house with traditional cable or FTTH. And in terms of stability, it's obviously different. It can usually provide a lesser stability of feed than what you'll have with wired network. And lastly, I'll say, as you touched on price, price can change quite a bit. But obviously, you need to take into account all the costs. So whether it's the monthly cost the equipment, which can come in different versions of pricing and again, the installation of antennas. So something we're watching. And obviously, newer versions of higher density satellites are going to come. They're not yet there, but they're going to come over the coming years. But today is not something that we're seeing. Vince Valentini: Okay. Second question, probably for you, Patrice. In terms of the outlook commentary for the second half of the year, in the second quarter, the revenue decline in the U.S. is very similar to the EBITDA decline. Is that the expectation in Q3 and Q4 as well? Or is there anything on the cost side that starts to cause a bit of a divergence there, like maybe some of the start-up marketing costs in Ohio and for welo or any of the transformation benefits. Is it possible that the EBITDA decline to be a little bit less than the revenue decline in constant currency at Breezeline in the second half? Or should we expect them to be pretty similar? Patrice Ouimet: Yes. I would say -- so first of all, just to be clear, we do expect for the balance of the year that both numbers will -- if you take the 2 quarters together, we'll have a lower percentage decline than in the first half. But to your point, they were exactly the same number in revenue decline and EBITDA decline in Q2. We anticipate that we'll have a lower decline on EBITDA in the future versus the revenue, which is your question, because of cost improvements over time. So yes, there should be some delta there. Vince Valentini: And to be double clear on what you just said, the decline rate in the second half of the year better than the first half of the year, not just better than the second quarter. Patrice Ouimet: Exactly. Yes. Vince Valentini: Okay. One last one just on CapEx. If I'm trying to understand your guidance correctly, it sounds like some of the rural expansion project spending in Ontario is not happening in fiscal '26. I assume that means a little bit more is deferred into fiscal '27. But on the flip side, you may have pulled forward some of the other -- the non-expansion CapEx into this year so that you can still keep the numbers across the 2 years stable, but you've just switched it from one pocket to another. Patrice Ouimet: Yes. So that's -- so the year is not finished, but that's something we're looking into exactly. So in construction of new areas, especially the subsidized areas in Canada, it's been taking a bit longer than planned for a portion of the work that we don't control that has to do with the access rights and permitting. So we're managing CapEx between the 2 years. But again, it's something -- there are certain things we can play around with between years and some that we don't. So that would be the plan. And maybe just before I forget, as you were talking in your previous question, I did not provide any commentary on Q3 versus Q4. I was talking about the balance of the year. But keep in mind that in Q4 last year, in the U.S., the comparative figures were lower than in Q3. So when we look at the balance of the year, that will play a role. So it will naturally help Q4 versus Q3. Operator: Your next question comes from Stephanie Price with CIBC. Stephanie Price: Just to follow up on one of Vince's questions there, just around first half results, looks like they came in a bit lower than the revised full year guide. Just curious what you're seeing in the second half that leads you to expect an improvement there? And maybe related, just the puts and takes to get to the top versus the bottom end of the new guide. Is it primarily the U.S.? Patrice Ouimet: Yes, sure. So in terms of the balance of the year, I guess you're focusing on the U.S. business. We're looking at more -- I guess I'm going to repeat some of the stuff we said before on the call. So we have more benefits coming from the transformation actions we're taking. And some of them have been in the works for a while, and now we're starting to see the benefits. It's just starting, especially the new AI tools that Fred was talking about, which will have a bigger impact next year, but we're starting to see the benefit this year. So that's one thing. We have made some price adjustments in the U.S. in January, February. So that fully benefits Q3 and Q4, but not so much the first half of the year. There's also some -- as part of our transformation, some other revenue generation activities that we are doing that will have some benefits on for the balance of the year. And I did mention the Q4, especially easier comps last year. So that will make a difference in the numbers, especially in Q4 this year. Frederic Perron: The second part of the question, Stephanie, was around what will be the drivers of reaching the top or bottom end of the guidance? And is it mostly in the U.S.? I guess the answer is yes, it's mostly in the U.S. I don't know if you want to add, Patrice. Patrice Ouimet: Yes. So I would say the U.S. is the key factor. When you look at the Canadian business, the first 2 quarters have been fairly stable. And in terms of growth year-over-year, we assume something in the same ballpark for the balance of the year and stability in growth. So this is where the U.S. has more impact. Now I won't necessarily comment on where we think we'll land in the ranges. So that's why we have ranges, but we still have 6 months to go. Stephanie Price: That's helpful. And then maybe digging into the U.S. a bit more. Just curious if some regions are -- what regions are more competitive than others. And you mentioned you've seen some improvement in the last few weeks. Has that been across the board in the U.S.? Or has it been certain regions that you've really been focused on here? Frederic Perron: Sure. It's Fred. So well, first of all, I'll remind everyone that we managed to grow our customer base in Ohio for a third consecutive quarter. And that we can consider that the new normal. You can't -- we don't -- again, we don't have a perfect crystal ball. There may be quarters that are tougher than others in the future, but we think in the large majority of quarters, we will be growing our customer base in Ohio. So there's a lot of potential there. As it relates to the other regions, without being too specific in terms of competitive intelligence, there's one region of the Northeast where one player was very price aggressive. And there are 2 other states where we saw -- in one state, we saw overbuild by one of the cables. It's nothing new, but it's something that we've had to deal with. And in the other state, there was a legacy DSL player upgrading to fiber. But by and large, we see Ohio and Florida, especially Florida residential continue to grow in the future. And the legacy market, it's going to depend on the ups and downs of the competitive dynamics. In recent weeks, I think the other part of your question is in recent weeks, where has the pullback been. We've seen actually some of the large national players actually pull back in some of their pricing. Let's see if that sticks. But overall, that's how it plays out. Operator: Your next question comes from Jerome Dubreuil with Desjardins. Jerome Dubreuil: First one is on CapEx. So hopefully, not dissimilar to Vince's question, but you've maintained your CapEx guidance for the year, but you're about 10% behind what you had done so far in the year versus last year. Any reason to be expecting some acceleration? Or we should be thinking more about targeting the lower end of the range there for the year? Patrice Ouimet: It's still a bit early days on this one. So we'll see what falls within which year. But I would say, as you've seen in prior years, the level of CapEx can change quite a bit between quarters. So we really manage the envelope on a yearly basis. I would say, given that we were changing guidance for other reasons, if we thought we'd come up short on this guidance, we would have moved it like we did for the one related to network expansions. But for now, we still feel we'll be within the range. And again, I don't want at this point still with 6 months to go to be too precise on where we would land within the range. Jerome Dubreuil: Yes. Makes sense. And maybe tying it back altogether, what needs to happen for you to report that $600 million free cash flow guidance that you are expecting for 2027? Patrice Ouimet: Yes. I would say, obviously, we provide the actual guidance on an annual basis, as you know. So we will come out with guidance for next year in October. But when you look at this year, we did not move the free cash flow guidance, and it's -- we're in the -- like midpoint is in the $530 million, $540 million, if you just use the midpoint of it in constant currency. And as we're eventually finishing all the network expansions, the ones that are subsidized, but we always do a bit of network expansion every year, we'll see an easing there. So if you take what we're planning to do this year, and we are still planning to grow free cash flow next year, you'll normally get in that range. So we'll see exactly where we'll land for next year. But our view is to grow free cash flow again next year and get to around that range. Frederic Perron: Yes. And Jerome, I'll simply add that even when we get a 1% EBITDA pressure, for example, due to U.S. dynamics, 1% at the consolidated level is $15 million or so of EBITDA, which is still a relatively small number relative to the size of our cash flow. So bottom line is the cash flow is growing faster than the EBITDA headwinds that we're seeing. Operator: Your next question comes from Maher Yaghi with Scotiabank. Maher Yaghi: I just wanted to go back on the guidance change. As you mentioned, it was driven by the U.S. business. Can you maybe provide, maybe dissect that? Is it -- in the MD&A, you mentioned it's a pricing issue. But any of the change in the guidance was the result of different outlook on subscribers or it's all pricing? Frederic Perron: It's both. It's U.S. revenue, Maher, and it's a combination of subscribers and ARPU. Simply put, a couple of things. As I mentioned on a couple of questions already, there has been more competitive intensity even since our last earnings call. And therefore, what you see is Q2 came in slightly below what we were expecting as a result of that. And things are turning around. It's just taking a little bit more time on both subs on subs and ARPU. The -- yes, because pricing dynamics impact both. As I mentioned on an earlier question, I know you've noted some unhealthy pricing dynamics in the market such as gift cards and months for free. The good news there is that we're starting to successfully pull back from some of that. So that's encouraging. And again, I want to remind everyone that even though we have a medium-term aspiration of growing our customer base in the U.S., that is not how we steer the business. We steer the business for value. And maybe one day growing the subscriber base will be an outcome, but really NPV and customer lifetime value is what we're steering for here. Maher Yaghi: Okay. Okay. So maybe on the subscriber trends, could you update us on your outlook for the U.S. broadband subscriber trends? Last quarter, if I rephrase maybe what you had mentioned is that you did expect Q2 to be worse than Q1 a little bit. but expected that the rest of the year, we should start to see improvements year-on-year. Are you still expecting Q3, for example, to be better than Q2 in terms of less losses? Frederic Perron: Yes. It's hard to be overly precise because we're still not even halfway through -- well, we're just roughly halfway through the quarter. So a lot can still happen. What I can say to you, Maher, is that the days where we were losing 8,000 and 10,000 subscribers a quarter are likely behind us. And in the medium term, we see -- over the quarters, we see a path to progressively improving subscriber performance in the U.S. To call a specific quarter that's not even finished is -- would be overly precise right now. Maher Yaghi: Okay. If you were to -- if you had to think about what's driving -- what drove the decline in subscribers in Q2 versus Q1, was it a churn issue? Or was it a gross addition issue? Frederic Perron: Yes. The easiest thing would be to give you the year-on-year, if I may, so because there's always seasonality. So -- and I'll do it by region instead of churn versus acquisition because churn and acquisition can be correlated sometimes. If acquisition is lower -- if churn is higher, acquisition is usually higher as well. So if you could compare Q2 that we just reported -- Internet subscribers in the U.S. compared to Q2 of the prior year, they were actually similar. But when you look under the hood, we're starting to look to do much better in Ohio. So we were ballpark 3,000 better year-on-year in Ohio, and that's something we see as sustainable. But we were 3,000 worse year-on-year in the other regions. Half of that is because we were connecting new bulk buildings in Florida in the prior year. So take 1,500 as being the real year-on-year pressure, and that's just ups and downs of certain competitive dynamics in our legacy market. Maher Yaghi: Okay. That's helpful. And maybe one last question on the pricing side. So can you -- I mean the pricing is dictated by how you react to your competitors or how you price your own product or price increases that you put in place, which obviously are built into the assumptions that you did when you first provided the guidance for 2026. So what has changed on the pricing side that is causing you to affect your new guidance? Is it that you're reacting more to the competition by reducing your own prices? Or there are prices that you wanted to implement price increases that you wanted to implement that you might not do going forward? Frederic Perron: Yes. I'd say price increases on our legacy customer base are still quite sticky. So that is not the main driver. I would say we're well -- in terms of new acquisition, customer acquisition in the market, as I was telling Matt earlier, I think we're quite equipped to be price competitive in the market. It's just when you see more players running more promotions, it just makes it harder. So that impacts both your volume, which you're seeing our sub trends are slightly behind what our ambitions were as well as your acquisition ARPU stays under pressure. However, as I said to you earlier, we're at least trying to do that in a more healthier fashion by pulling back from gift cards and things like months for free as well. So the short answer would be it's not the rate increases on the legacy base. We feel still quite confident about that. It's a combination of subs as well as acquisition ARPU. Operator: There are no further questions at this time. I will now turn the call over to Patrice Ouimet for closing remarks. Patrice Ouimet: All right. So thanks for participating today. We'll be happy to take other questions in the meantime, if you want, before we meet for Q3 in a few months. Thank you. Frederic Perron: Have a good day. Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.
Operator: Good morning, and welcome to the Rainbow Rare Earths Limited Investor Presentation. [Operator Instructions] Before we begin, I would like to submit the following poll. And I would now like to hand you over to CEO, George Bennett. Good morning to you. George Sidney Bennett: Good morning, and welcome to all viewers to the Investor Meet and Rainbow Rare Earths' presentation. I'd like to say we've chosen a good day with the two-week cease fire in the Iran war, which bodes well for the markets. I see all markets up this morning. So that's very, very positive for everybody concerned, and we're all relieved, I'm sure about that. Now to move on to Rainbow, which is developing two key rare earth projects. And basically, we -- I'll take you through the presentation and show that we're going to be a very low-cost producer of these rare earths and part of the independent supply chain being built out in the Western world at the moment. There's our disclaimer. There's just some key metrics for Rainbow at the moment that you can see on the screen there. As I said, we have pioneered the economic recovery of rare earths from phosphogypsum. It had been done previously on lab scale and academic papers, but never economically, and we've basically been able to do this in with an economic flow sheet. We've developed IP using proven technology, I must stress. And that also derisked -- we're not using any special reagents or any special resins that are bespoke for this project or any bespoke equipment for this project. It's all standard off-the-shelf reagents, resins that are available commercially and the equipment is standard equipment used in mineral processing plants around the world. As I said, we -- one of the key drivers for our low cost is that we exclude costs and risks typically associated with normal mining projects, and I'll go through that. And we've got -- and we're one of the only rare earth companies in the world that I'm aware of that's got two major diversified projects in different continents. So you've got diversified risk and you've got diversified project risk. And both of these are effectively near-term assets in terms of going into production. We've got good support from the U.S. government by the DFC that's the Development Finance Corporation. We've committed $50 million in project equity into the Phalaborwa project at FID when we go into construction, we have a very supportive shareholder in TechMet, which is also a critical minerals fund funded by both the DFC and the Qatari Sovereign Wealth Fund, and we have good support from Ecora where we have a small royalty. As mentioned, we have got two key projects and the project numbers speak for itself, where you can see that these are two major, major projects that are going to develop massive EBITDA revenues for Rainbow once both of these projects in production. The Phalaborwa project. These numbers were our last numbers published in December '24, using spot rare earth pricing at the time of $110 a kg for Nd Pr. And as you can see, that project has only got a 16-year life, but it's going to generate $181 million of EBITDA per annum based on those numbers at the time. And rare earth pricing has been higher since then. We saw neodymium and praseodymium trading at $140 a kg earlier this year, so way above the $110 that these numbers are based on. And our project CapEx of circa $320-odd million is at the very, very low end for rare earth projects, and that's what makes Rainbow uniquely low capital intensity. We've got a very, very low operating cost, and we've got exceptionally high, not only EBITDA margin but IRR as well. And we've been very conservative with our NPV. Discount rate at 10. When we do the deal with the DFC, our discount rate we've agreed is 9.5. So it's a slightly better discount rate for the project economics. And at Uberaba in Brazil, we published economic assessment last month on that project. And there, you can see those numbers speak for itself. The project's NPV also using a very conservative NPV of 10 of almost $1 billion. Our IRR is over 45% there. We've got -- that will generate $217 million of EBITDA per annum. EBITDA margin also way over 70% and a very low capital intensity, circa $280-odd million. So we [Technical Difficulty] very low compared to your traditional projects. And what's different about the Uberaba project is this is a live feed. In other words, the phosphogypsum being generated in Brazil is from a live phosphoric acid production facility with Mosaic, the global fertilizer business listed in New York who will be partnering with in Brazil. And this project has got a life of over 30 years. So it's a very, very long life project, very high grade for this type of asset, the PPM of the rare earths and the phosphogypsum are circa 5,100 ppm, TREO, and at [ Phalaborwa ] 4,400 ppm. We've got hard rock projects out there in the world of some are as low as 500 ppm and some are 5,000 ppm similar to where we are in Brazil, but they've still got to do all the mining and all the costs associated to get the rare earths into a situation where they can separate, which we don't have in these projects in both Phalaborwa and Brazil. This is -- we're running a pilot plant at Mintek in South Africa. We've been running a continuous pilot plant 24/7. It's a large-scale pilot plant, and we're producing intermediate product called it's a mixed rare earth product. As you can see, it's greater than 75% TREO, total rare earth oxides in this product, very, very high grade in rare earths as well as significantly low in terms of impurities. And this is actually a point of success for Rainbow because lots of rare earth projects stop one step before this, which is a mixed rare earth concentrate and then they crack it into a mixed rare earth carbonate or intermediate product, which this is -- we call it a mixed rare earth hydroxide in our case and then they stopped there. The projects have stopped there. So we could stop go as rainbow and this is a success. But we are doing what Lynas in Australia are doing going one step further down the beneficiation chain, which is to separate the Nd and Pr to 99.5% purity out of this product you see on the screen, and we'll produce an SEG+ group, which samarium, europium, and gadolinium with our very high-value heavies in there being dysprosium, terbium and yttrium. And that SEG+, we will then sell to somebody who will refine it further and separate those individual rare earth oxides out of the SEG+. Once again, I must stress this is similar to what Lynas have done for their whole production life when they started up some 12 to 14 years ago, they always separated Nd and Pr and produce some SEG+ product and they built a multibillion dollar business on going that far downstream. It's only recently in Malaysia that they've decided to separate the heavies themselves, but -- and they're one of the few companies in the Western world that will be separating those heavies in sort of totally integrated production line. In other words, they'll be producing the mixed rare earth concentrate. They'll be cracking it into intermediate product and then they'll be separating SEG+ in Malaysia, Nd Pr, they're separating in Australia. In terms of the market for rare earths, I think this is well understood, hopefully by most of the audience here is that there's massive demand for permanent magnets, which are driving the demand for neodymium and praseodymium key rare earths that make up a large part of the permanent magnet as well as dysprosium and terbium, which also require the permanent magnets to protect them against the heat generated by the motors. Now we've seen massive, massive increase of uses for the permanent magnets. Apart from your hybrid electric vehicles, your fully electric vehicles, wind turbines, consumer electronics like your cell phones, your airpods part, your Bose speakers, air conditioning units now use permanent magnet motors. But there's a massive, massive demand going forward for defense. And with geopolitics the way they are in the world these days, I think this is going to drive demand for those key rare earths even higher, even though it's not massive volume, it's very critical. We're seeing massive uses of drones and warfare at the moment in the Ukraine-Russian war at the moment, massive use of drones, that's going to increase and those need permanent magnet motors to drive those drones. We also see NATO almost tripling their defense spend over the next few years, and that's going to lead to a lot more demand for rare earths and all those military applications, including drones, tanks and so forth, aircraft. And then we just see the geopolitics the way they are, this Iran war, which thankfully is has a ceasefire right now. But those rockets that have been flung at by both sides require rare earths and then on the missile guidance systems, the ordnance, the Tomahawk missiles and rare earths. And so I see the strategic demand for rare earths increasing. And that means that there's even more emphasis to create this independent supply chain outside of China. And lastly, you've got robotics. I mean two years ago at a conference in Toronto, I highlighted to Rainbow audience that I thought robotics are going to be a major demand driver for rare earths going forward. They're talking about 10 billion robots by 2040. I see the next decade is a major, major frontier for demand for permanent magnets made of rare earths, and that's been driven by drones, as I say, not only warfare, but also drones used by people like Amazon to do deliveries in cities around the world. We're also seeing eVTOL that's Electric Vertical Takeoff and Landing vehicles starting to operate in the U.S. They were operating them in Dubai doing trial runs in Dubai until the war started. But these require lots of permanent magnets in them in terms of weight. And then, of course, your robotics. So even if you don't think they're going to be 10 billion robots on the planet by 2040, which I think is very optimistic, but just 1 billion robots on the planet by 2040, that's 1/10 of the forecast number of robots on the planet. They require 3x to 5x more permanent magnets in the EV. And if you think about what's been driving demand for permanent magnets over the last years being EVs and wind turbines, they only forecast 500 million EVs on the planet by 2040, but even at 1 billion robots, which is very conservative, that's double the number of EVs by taking 3x to 5x the number of permanent magnets in terms of weight. So I see the demand outlook for rare earths into these applications being very, very robust and increasing exponentially over the next 5 to 10 years. I've spoken about defense briefly, but just to give you an idea, an F-35 fighter jet has got almost half a tonne of rare earths in that. You've got a California class submarine has got 4 tonnes of rare earths that's figured there that's got 2-plus tonnes of rare earths, but also you see it in tanks, you see it, as I said, in the guidance systems, night vision goggles, all sorts of military applications require rare earths and the strategic nature of rare earths is not going to go away for anytime soon. This is where Rainbow's project differs from most projects around the world. As I said, what we got in both our projects in both South Africa and Brazil is that the phosphate hard rock mine, which has got rare earths in it, but not economic quantities to mine the hard rock phosphate for the rare earths. That phosphate rock is then through a flotation process concentrated into a phosphate slurry, and that slurry is then fed into a phosphoric acid plant to create phosphoric acid for the fertilizer for fertilizers. And add sulfuric acid and heat to that phosphate slurry and that generates waste residue called phosphogypsum. The rare earths are upgraded in the concentration but process in the phosphate slurry and they then the port with the gypsum into the waste residue at Phalaborwa. We have two stacks of 35 million tonnes. And in Brazil, we have a stack that's over 85 million tonnes. But more importantly, as I said, it's a live stack. They continue to produce about 4.5 million tonnes of phosphogypsum per annum. And the project in Brazil, we're going to be taking one of those -- the live stream of this phosphate slurry. Two phosphoric acid plants there, we'll be taking a live stream, feeding that into our rare earth chemical facility, extracting the rare earths and giving the phosphogypsum back. And the beauty about Brazil has got a long life, as I said, over 30 years. So -- we don't have -- as I said, it's a waste product. So it's a very environmentally friendly project in terms of we taking earths out of waste and adding value to the waste. And what we do is we just reclaim the phosphogypsum and put it straight into a leach circuit, and we then go into our first stage of beneficiation, which is produce a high-grade mixed rare earth product. And then we're going further downstream, as I said, to separate into Nd Pr, that's neodymium, praseodymium and produce that SEG+, which is all those which have high value. Now just to take you to the site in South Africa. This is your site at Phalaborwa. It's within 5 kilometers of the center of mining town has been in existence for over 60 years. Just north of that photo is a phosphate hard rock mine that produces the phosphate slurry. It was a phosphoric acid plant in the top right-hand corner -- top left-hand corner there. And that then created phosphoric acid, as I mentioned, for the fertilizer industry owned by Sasol in South Africa and create those two gypsum stacks you see in the photograph there. We're going to be lining the triangle on the bottom right of those stacks with a liner, claiming one stack, putting it on the line stack site. Then when that stacks at height, we'll then start reclaiming the second stack. We will line the area where the first stack has been reclaimed and then we'll put the balance of the phosphogypsum on the reline area. And so these stacks will sit on completely line sites. So that solves a big environmental issue for this area in Phalaborwa. Sasol do have a fund to cover any environmental liability around these stacks. They are ultimately liable for any environmental sort of claims that might come as a result of the stake. But we're actually cleaning up the stack, putting them on nine stack sites, and we'll be selling the phosphogypsum into the South market over a period of 30 to 40 years. And that means that eventually the site will be completely level and will be a complete rehabilitation of that site. So a very, very strong ESG and environmental sort of value to this project for Rainbow and for the community. The beauty about this that red border you see that's the fence, the site has been fenced for over 60 years. We don't have to displace any villages. We don't have to -- we're not cutting down pristine forest or pristine jungle like one might have to do if you've got a project in a remote site in Brazil. This is a brownfield site. And similarly, I'll show you for [indiscernible] It's a similar story. It's a brownfield site. It's within the existing fence of the current phosphoric acid production facilities. And this is -- there's three mines operating within 5 kilometers of the site. And so we've got a huge skilled workforce serviced by [indiscernible] highways and an airport at Phalaborwa. So, yes at Phalaborwa. It's a very, very well serviced town. And from a construction point of view, this is a breeze to build our processing plant at the site, which will start, and I'll talk about that shortly. Just in terms of the value of our phosphogypsum. On the left, you can see if we use Chinese pricing, Nd Pr represents about 86% of the value of our basket and the balances there we're showing the dysprosium and terbium and it's the SEG+ dysprosium and terbium and yttrium in it. Now if we look at what's happening in Europe over the last year or so, you've seen a bifurcation of pricing between Chinese pricing and European pricing. European pricing for yttrium for -- dysprosium and terbium was trading much, much higher. And if we put European pricing into our basket of rare earths, you can see the increase in revenue that we would realize from just selling the separating Nd Pr and then the SEG+, and all that accrual in revenue just flows to our bottom line. I've been very conservative. I'm not showing you those European numbers and the slide -- the upfront slide at the beginning of this presentation. But if we wanted to, you could calculate that many tens of millions of dollars would flow to our EBITDA bottom line if we can realize European pricing. But that's upside for the project and it's just what I think investors should be aware of, and we're very excited that we see this bifurcation of pricing getting even stronger over the next few years. And certainly, when we come into production, starting with our first project, which is late '28, early '29, which is the Phalaborwa project and then the Mosaic project in 2030, we would expect to be capturing some of that European pricing, and that's all upside to our financial model. Just to confirm, this has been done by Argus Media. It has not been done by Rainbow, but it confirms that Rainbow is the highest margin rare earth project in development in the world today. This was done at circa 2024 pricing, where at that stage, MP Materials in America was losing money and Mount Weld, which is Lynas in Australia was just breaking even and making a small profit. Rainbow is on the right-hand side there. The project on the right of Rainbow is another rare earth project, but it's actually -- it's a byproduct. So all the costs associated with that -- with generating those rare earths are covered by the production of another minerals. So the margin is actually misleading there. But in terms of the pure rare earth play, we know that we're the highest margin business in development in the world today. And our DFS will confirm that when we publish it later this year. We used our pilot plant last year to optimize our flow sheet, and we've been able to deliver a very cost-effective and efficient extraction process to extract rare earths from the phosphogypsum and then feed it downstream into the final separation circuit. The design of that final separation circuit was done initially by ANSTO and it's confirmed that we're going to have two circuits of circa 75 mixer settlers between both circuits. So it's a very, very small number of mixer settlers, and it's a very small solvent extraction circuit. But we decided to go solvent extraction because that's the industry standard. It completely derisked Rainbow. We were looking at going with continuous chromatography, which is a technology that's used in other industries around the world, that's never been used in rare earths. It's never been used with a successful pilot scale or commercial scale. And we were going -- we were looking at this opportunity with our technology partner in America, but they couldn't deliver on that. They couldn't achieve the results that they claim they would achieve. And when we realized that, we decided to bring our pilot plant from Florida back to South Africa, and we built our own state-of-the-art laboratory. You can see a photo of our laboratory in the slide in front of you, but that enabled us to try and replicate the tests that were supposed to be achieved in Florida. We didn't see them being achieved. And then we had such success with our continuous ion exchange part of our project, which reduces the volumetric flow of our pregnant leach solution coming into the -- out of the leach circuit from 340 cubes an hour to 40 or 50 cubes an hour and where we see significant impurity rejection at that stage of the CIX process, we then go into a few stages of what's known as a precipitation to drop out the balance of the impurities and our final feed into our downstream separation circuit now drops to about 3 to 4 cubes an hour. And with that, we realized we have a very small solvent extraction circuit, and that's why we decided to go solvent extraction. The industry standard used by all major rare earth projects around the world going downstream and separating. So we're very pleased that we finally realized that we needed to make this change and derisk Rainbow completely. But even though we had this year in our time line in terms of development, what it did do is allowed us to look at our front-end flow sheet where 80% of our CapEx sits, we optimized that while we were finalizing the route to final separation. And we use that time very, very effectively in our own in-house laboratory. We changed our leach circuit from three stages of leaching to two stages of leaching. By increasing the temperature in our leach circuit, we are able to improve our leach kinetics. And with our leach resins, our leach kinetics improving significantly, we're able to reduce our resins' time from 32 hours down to 8 hours. And that means you've got less tankage, you got less stainless steel, you've got less steel work around those tanks, you've got less [indiscernible], you've got less earthworks. All that is helping contain our overall capital number for this project within that $320 million that we published in December '24, and this is a significant achievement for rare earth projects, not only rare earth projects, but other projects which are significantly growing out the CapEx numbers around the world. And with a very experienced team at Rainbow and designing and building process plants all over the world, we have a very good handle on our CapEx, and we believe we'll still be within that range when we publish our DFS at the end of 2026. Our large-scale pilot plant, as I mentioned earlier, is producing about a kilogram of mixed rare earth hydroxide a day, which is intermediate, intermediate product. And as I said, that's a significantly large amount of product being produced. Most pilot plants, mineral pilot plants that are run produce grams of material. We're producing a kilogram a day. So we're very proud of that fact. This is our final flow sheet that we simplified from our initial PEA. All the work we've done has been to improve this flow sheet. We're in an economic flow sheet, but what we've done is we've been able to reduce CapEx, keep the overall CapEx number intact and also make improvements to our OpEx by optimizing our flow sheet. And that's why, as I said, when we publish our DFS, we believe we will be the lowest cost producer of separated rare earths in the Western world, and we believe we might be even below Chinese cost of production. We reclaim the gypsum. We slurry it with water and screen to just remove debris. There's not much debris in it, but just a small amount of debris removed going over a screen and will then go into two stages of counter-current leach circuit. Then the pregnant leach solution drops out into a continuous ion exchange circuit, which then recovers the rare earths of the resin. And at the same time, we see significant impurity rejection. We then go into a few stages of precipitation for final impurity rejection, then we feed the final SX separation circuit, which is the industry standard. In terms of prototype to production for -- this is for Phalaborwa now, as I said, we've -- the next steps are supported by the successful optimization of our flow sheet. And the most important work we did last year was not only deciding on our final route to separation, was also optimizing the front-end flow sheet with the majority of the CapEx sits. And that means that we've taken a bit longer on this project, but we end up with a much more robust and much better project. And I think the market will agree with me, that's far more important than trying to achieve a time line that you promised the market when you were getting the results as we're promised by our partner in America, and we pivoted to solvent extraction but this has led us to have a far more robust project and where we will have -- we won't have any issues when we commission this plant, and we believe it will operate very, very smoothly because rare earth projects, they are quite technical, but our optimization of the flow sheet that will effectively made it quite a simple flow sheet. The secret is how we put everything together, our reagents and our dosages and our resins times and so forth. And how we operate our continuous ion exchange circuit that's last piece of Rainbow and that we've been very successful in developing. Say our target is to finish the DFS. We are on track to finish by the end of this year. We will then go and at the same time, we're starting financing in parallel. I'm talking about project financing now to get project finance in place for this project. We believe we'll have 2/3 of debt and 1/3 will be equity. And then we believe FID, we're targeting the end of the third quarter of 2027 to start early works and front-end engineering and design for the project in Phalaborwa in the last quarter of '27, full construction '28, and to be commissioning and production late '28, first quarter of 2029, and that's a very achievable time line. And as I've indicated, it's a year below, a year longer than what we initially thought we'd be. But in terms of projects, this is still a very, very fast track project. We got hold of this project and realized the rare earth in the phosphogypsum in January '21. We're talking production end of '28. That's exceptionally fast. Most mining projects from discovery to production, the average is 20 years and 15 years is quick, 20 years average, other projects take 25, 35 years. Project like Simandou in Guinea, the iron ore project with Rio Tinto that's been around for 35 years before going to production my views and idea of the project time lines for rare earth projects. And the Uberaba project, I'm pleased to say is coming along even quicker. Mosaic are targeting us to get this into production in 2030. We only started on that project two years ago. And the reason why we can move that project along a lot quicker into production is because 80%, 90% of the flow sheet we've developed for Phalaborwa is applicable to Uberaba. So we get all the benefit of that IP has been applied to the project in Brazil. As you can see, this is the project in Brazil at Uberaba. It's very, very similar to what you saw with the project at Phalaborwa in terms of -- you see the big jumps and stack there. The bottom left is the ongoing operations at site. This is 500 kilometers from Sao Paulo serviced by a three-lane highway all the way to the city of Uberaba, and this is about 20 kilometers outside the city. It's in the middle of the sugarcane belt. So there's no pristine forest. There's no villages, Amazonian villages you've got to move or so forth or tribes or it's an industrial site. It's been operating for many, many, many years, probably 30 or 40 years at least, similar to Phalaborwa, it's completely fenced. We've got ground within the fenced area to build our processing facility. A lot of the reagents that are required by our process are being used on site already. So a lot of the permitting is already in place for those reagents. So we see the time line to permitting being very, very quick for this project, and in Brazil, we are in partnership with a global fertilizer producer, multibillion-dollar fertilizer producer being Mosaic. And of course, they've been in Brazil for a long time already. So we don't see any issues there. And we're very excited about this project as well because this is -- this project has got a life of exceeding 30-odd years. So this is a long life, high-grade project in terms of rare earth projects and compared to a mining project, very similarly very, very long life, very high grade. Because once again, we don't have all your costs associated with mining that normal rare earth projects. In other words, there you've got a drill and blast, you got a hole, stockpile rare earths, hard rock rare earths then you got a crush, you got a mill, then you got a flow flotation process, produce a mixed rare earth concentrate, then you crack that concentrate into a chemical form and only then can you go further downstream. As I mentioned, some projects stop at that once that cracked into a chemical form a mix rare earth carbonate and they sell that for further separation, we're going further downstream as Rainbow. But as I said, lots of projects stop there, we are going further downstream. You will have seen last week, we just announced a capital raise. We're very pleased. It was done at a very, very good price to where Rainbow is trading. We were trading between 19p and 21.5p for the week before our raise, we settled at 20p a raise. We've raised $14.6 million, and that gives us runway well into the end of 2027 and beyond and it also enables us to fund our pre-feasibility commitments with Mosaic on Uberaba. It allows us to complete the DFS as well as the EIA process and the permitting process as well as engage with debt financiers, which are expensive to engage with, but to keep our debt on track so we can keep our project on time lines on track, and we're very excited that we in the breakup market that we were able to successfully raise this money out of the U.S. 90% of it came from U.S. funders, backed two family offices as well as Traxys. Traxys, we know as a global trader that is one of the partners for Project Vault, which has been appointed by the U.S. government to source strategic and critical minerals, critical minerals for the $12 billion strategic stockpile that has been created by the U.S. government under Donald Trump, and that's not going to go away. So the fact that we have Traxys now as a significant shareholder, I think bodes very well for our interaction in the U.S. and raises our profile in the U.S. and also the fact that we are now seen as a major player going forward in the rare earth space. And I think this commitment by Traxys confirms that. What makes Rainbow different? We believe we've got a unique opportunity with two very, very robust projects to become a significant producer of separated rare earth oxides in the West. We've got a very experienced team, as you can see there, developed lots of projects in our careers out of the background, a lot of us come out of a background of a mining engineering business called MDM Engineering. And lots of those people who are in that business work for Rainbow. And between the three chief process engineers, you see there Dodd, Chris and Roux Wildenboer, between three of them, they've got three bankable feasibility studies under their belt in rare earth space, the Lofdal rare earth project in Namibia, the Peak Resources rare earth project in Tanzania and the Mkango rare earth project in Malawi. The tree guys on your screen there, you see there the guys who develop the process flow sheets for all of three those rare earth projects, and we have that experience within Rainbow, which is unusual for engineer miner like ourselves have so much experience in the rare earth space. And I don't think it's -- we have any other development project in the world today with that kind of experience. I would like to thank the audience. That's the end of my presentation, and we'll be opening up for questions now. Operator: That's great, George. Thank you very much indeed for your presentation. [Operator Instructions] While the company take few moments to review those questions submitted today I would like to remind you that recording of this presentation along with the corporate slides and the published Q&A can be accessed via Investor. And George, at this point, if I may hand back to you to take us through the Q&A session, read out the questions where appropriate, and I'll pick up from you at the end. George Sidney Bennett: Thank you. I just need to get access to my questions. I don't have access yet. Thank you. Operator: George, can you see on the right-hand side Q&A? George Sidney Bennett: Now I've got them now. Thank you. So, one of the questions is, can you review last year's milestone chart and explain why we are off target? Well, I think I've answered that in my presentation where we were looking -- the last year's milestone charts are all predicated on us achieving separation success. We never achieved that with the process, the continuous ion chromatography process that we are looking at doing with our technology partner in Florida. And as I said, when we realized that we were getting the results that they claimed and there was no backup data for their results that we started doing our own work, and we had such success with the continuous ion exchange step in our process that we realized that our flows going downstream were now significantly reduced. And that meant the solvent extraction circuit would be a very small solvent extraction circuit and fairly low CapEx, which will keep us within our overall CapEx parameters, and that's what we have then decided to do. But that added circa a year to our time line. But as I said, we also use that to optimize our front-end flow sheet significantly, and it's made for much better for robust project. So, as I've mentioned, you rather take a year longer and have a better project than try to keep a time line and you end up with a project with massive technical problems like we've seen in some other projects in South America that have needed more funding from the U.S. government to them because they've got huge technical issues. As I said, we've successfully produced a commercial product in the mixed rare earth hydroxide, and we now control the process and the timetable to the final separation, which is solvent extraction. So the delay with the American technology has turned into a blessing where we've, as I've mentioned, got a far more efficient process and with a very, very small solvent extraction circuit. Next question is why are we seeing -- we are seeing increasing numbers of motor turbines without permanent magnets. Do you see headwinds on the demand side? And why not? Well, once again, I went through this in my presentation. Actually, I don't believe that. We've seen lots of people talk about using substitution or ferrite magnets for motors, but these motors are not efficient. Permanent magnets are the most efficient way of turning energy into motion and vice versa. And the only thing that's driving guys looking at alternatives is they worry about security of supply. But as more projects come on stream like Rainbow's two projects and other projects that have been committed to the West, so the security of supply becomes more widely spread in the West, and that will mean that people will stop looking at substitution and will continue to focus on using permanent magnets. But once again, I don't believe there is real substitution taking place. And then we see massive demand, as I've indicated from drones, EV tolls and robotics making up for any slight slippage. I don't believe there's slippage, by the way. As I said, it's just been -- we've seen reports in the press, but there's no backup numbers for those reports. We also see that permanent magnets are critical and even internal combustion engine vehicles. So your typical diesel/petrol car still has a kilogram of permanent magnets in it in your steering column in your a brake system in your wing motors and your seat motors, your electric window motors and so forth. So there's still massive demand for permanent magnets even in those vehicles, never mind EVs. And we see year-on-year EV sales continuing to surpass the previous year. So I don't believe there's any slowdown in demand. Next question is Rainbow is trading at a steep discount to peers, will Rainbow pursue a U.S. listing, and what is the time line for that? All I can say is that we agree with you, we are trading at a big discount to our peers. If you look at our EBITDA numbers forecast of green production in our two projects in 2030, we will -- our EBITDA numbers will be -- if I can look at what Lynas are publishing today, they will be in line with Lynas or not exceeding Lynas. Lynas is a AUD 22 billion business today. So you can see the upside for Rainbow over the next three to four years that I believe will -- that is there. And yes, U.S. listing will unlock some of that discount. So we are considering the routes and what to do about the U.S. strategy, and we'll update the market in due course. What is the current cash burn rate on average per month, how much CapEx is required until FID at Phalaborwa. Well, our current burn rate is about $400,000 a month. And if you see what we raised $14.6 million, we've got about 35 months of cash burn. We do see a slight increase in the cash burn as we pursue some of these other work streams. But if you look at Rainbow's G&A compared to what we spend on projects, it's very, very well contained compared to some other companies out there. So we're very proud of that fact that we have a very good percentage of our G&A compared to what the amount of money we spend on actually delivering value for shareholders, and we don't see that changing. To conclude the whole DFS on Phalaborwa, including all the technical environmental and permitting work streams, we don't see this being more than $4 million to $4.5 million. So that's well within the number we've raised. And we -- as I said, we'll be able to complete the pre-feas at Uberaba, which we believe will deliver very, very robust numbers. The initial economic assessment numbers are exceptionally strong, and we see that trend continuing when we produce pre-feas at Uberaba and we've got runway further. So we are well cashed up, which is the first time in my life as CEO of Rainbow that we've been so well cashed up to deliver on our work streams. Are there growth opportunities to beyond Uberaba, which Rainbow actively are looking into. As I mentioned, we've got two large projects that we are focusing on delivering. Those two large projects have the ability to make Rainbow into a multibillion-dollar business. And that's -- if you look at what MP are going to produce as EBITDA, ad what could Lynas, that's my yardstick. So you can make that assessment yourself. But -- so we are focusing on delivering those two high-value projects for Rainbow. But at the same time, we're not close to other opportunities. We are aware of some other opportunities out there, but our focus is on the two key projects right now. Is the current pilot operation for the DFS a locked cycle pilot or several batches? As I mentioned earlier, this is a large-scale continuous pilot running 24/7. I think that answers that project. Next question is, will the DFS provide long duration resin degradation data? Can you share how the CIX process is going? Well, firstly, I'm surprised resin is not a major issue for us in terms of OpEx. But to answer the question, we see no major degradation of our resin. We're using a very robust resin. It's commercially available, as I indicated earlier. This resin is showing very, very little degradation after hundreds and hundreds and hundreds of uses of this resin. So we're very pleased about that. But if we take a very conservative approach to our resin, we see ourselves replacing it once every five years, and we believe we'll be even far better than that. So resin is not an issue and it's not a major cost in our OpEx at that rate of degradation, which is, as I mentioned, very conservative. And the CIX process has been very successful and it's going very well. As I mentioned earlier, we take 340 cubes of pregnant leach solution into our CIX circuit and we get 40 to 50 cubes an hour coming out of there that then goes into our stages of precipitation. But we see significant impurity rejection after that first stage of the CIX. So the CIX is working very, very well, and we're very pleased about it. The Rainbow team, as I mentioned earlier, is very experienced coming out of the mining engineering background where we've designed and built a number of uranium process plants where we use continuous ion exchange, we use resin. So we well aware with the CIX and with resin, and we're very pleased that we've seen far better resin use compared to what we see in uranium plants. We've not seen as much degradation as we've seen with the rare earths in our pregnant leach solution. Is the purity bleed through iron, calcium and phosphate increasing over time and affecting downstream SX? We see no increase in impurity bleed through our process. We see the iron and calcium and so forth being rejected as a solid and that will then be fed back into the gypsum stacks. So we don't see this as an issue. We don't see a buildup and we're using our pilot plant in South Africa is running for a few months now. It will be -- at the time we stop, it will run for about 3.5 months in a continuous fashion. We don't see any significant buildup of these impurities. As I said, we know because it's a closed loop circuit that we're running in South Africa, we know exactly where to bleed. And the bleed stream will then go back into the gypsum stack. So there's no issue there. For the transition from pilot to commercial plant, is a linear scale up assumed? What I can say is that we're running a large-scale pilot plant that's 5x to 10x larger than the typical mineral processing pilot plant and we don't see any issue with scale up. Are you considering increasing Rainbow's ownership of the Phalaborwa or Uberaba project? Well, it's well documented in our financials that we will be issuing 38 million shares to acquire the final 15% of Phalaborwa. It's a [indiscernible] election, and we'll do it between now and July 2027. And then in terms of Uberaba in the announcement at the beginning of March, you will have noticed that we footprinted our ownership there at 49% with Mosaic having 51%, and we don't see that changing going forward. Please explain in the context of the Phalaborwa ownership structure, how much of the downstream value addition through processing is captured by Rainbow Rare Earths. Thank you. Well, typically, the payability for crack MREC is 65% to 70%. Payability, we know that with our high-grade mix hydroxide that we already been offered a payability of circa 70%. So we -- as I said, we could stop there. That is a success. We've got a very high payability of our MREC, but we're going further. And when I mean we're going further, we will see that we will be achieving 100% payability for our separated Nd Pr, which is 75% of the value of the project if we use Chinese pricing. So that's why it makes sense for us to go further downstream and separate. And then we produce in the SEG+ group. And because we originally were only targeting getting payability for dysprosium and terbium, now that we're going to get payability for dysprosium, terbium and yttrium and part of the SEG, the samarium, europium, and gadolinium, I'll get some payability there. The overall payability, the overall turnover captured from SEG+ at 70% payability is actually higher than what Rainbow would have achieved by separating the Dy and Tb. So, in the end, we've come out with a better result and with better revenue numbers, which you'll see in our financial model when we publish our DFS at the end of 2026, as I've mentioned. We do not intend going further downstream into the midstream, which is your metallization, which is turning your separated rare earth oxides into metal and then alloys, which you then feed into a permanent magnet facility. Those downstream projects are very low margin additions to a project, and we don't see any benefit in trying to go further downstream. We leave other guys to create that value chain downstream, but Rainbow not going to be doing that. We're happy to partner with guys who will be doing that, but we as Rainbow will not be doing that. Help us understand your reasoning and explain your rationale why Rainbow pivoted away from SX to CIX, and how does CapEx, OpEx and technical execution risk when scaling up compare. Well, as I indicated earlier, I think I've covered this is that we made this pivot to solvent extraction when we realized that continuous ion chromatography wasn't delivering the results that we've been claimed. And it's been a very, very good move because solvent extraction is completely derisking. It's a gold standard for final separation. And we're having a very small solvent extraction circuit compared to typical solvent extraction circuit. So we see no risk execution as a team, we've built many solvent extraction circuits in the zinc space in the copper space as well as the uranium space. So we don't see an issue, technical issues in our solvent extraction circuit when we go into production. As I said, we've got a team well okay with commissioning solvent extraction circuits and other commodities, and it's a small solvent extraction circuit for rare earths. So no issue there. And scaling up, as I've indicated earlier, it's scaling up is not an issue at all from what we're running our pilot plant at and all the -- I mean, this is just leach tanks in the front-end circuit, pumps, filters, filters. Once again, these are standard in mineral processing operations. So there's no issue of scale up there. We continuous ion exchange circuit. We've been involved in designing similar sized circuits and uranium projects around the world. So there's no issue there in the continuous ion exchange circuit that we're going to build for Rainbow. And once again, the extraction circuit is very, very small in terms of what's typical in the industry. So no issues there. Very strange question. AI Gemini suggests that Pensana's switch to USA leaves Rainbow in a stronger position in Europe. Please expand if you agree? Well, I can't really comment on Pensana switch once again. But Rainbow, we know that with people like Traxys being a shareholder in Rainbow that we've got an opportunity to negotiate with the partners of Project Vault who are looking to build strategic stockpile. We also know we have lots of interest from European separators to take up our product, our SEG+ as well as our Nd Pr. And we have other companies in the U.S. looking for our supply of Nd Pr as well as SEG+. So we basically see that we've got lots and lots of opportunity for Rainbow in both Europe, Japan as well, by the way, as well as the U.S. So we think Rainbow sits in a very strong position to choose what's best for our shareholders in terms of where our product ends up. Any news from Burundi? We are continuing to evaluate all options and realize value for our shareholders in Burundi, and we'll keep you updated on that once again. Is there any prospect for the other Mosaic stacks in Brazil and elsewhere to be investigated for processing. There are some phosphogypsum stacks in Brazil, but we've got the jewel in the crown as Mosaic will tell you themselves, which is the Uberaba phosphogypsum stacks are the only ones that Mosaic has in Brazil. The other phosphogypsum stacks that Mosaic have are in Florida, and those are sedimentary sources of phosphogypsum, and therefore, totally different in terms of grade compared to what we have at Phalaborwa and Mosaic. Those are long-term opportunities that we might work with Mosaic on realizing value, but they are much, much longer term, as I mentioned. And right now, we've got two projects in the current Uberaba operation and Phalaborwa to make Rainbow, as I said, a multibillion dollar business and I think that should be our focus for now to deliver massive uplift in value for our shareholders by delivering on that -- on those opportunities, which, as I think you would agree, are more than enough for the management team to focus on right now. You see far too many juniors. They have 10 different projects across five different countries. And of course, they end up never delivering on any of those. We're not going to make the same mistake. We've got two very near-term projects, which will deliver massive value and we'll focus on those. And once again, are there any other sites -- how the other sites progressing like Saudi and OCP and Morocco. Once again, these are sedimentary sources of phosphogypsum stacks. We are engaged in a test work program with both of those opportunities. But once again, similar to the phosphogypsum in Florida, this is a very, very long-term way to eventually may be creating or extracting value, but these are very, very long-term projects, which are going to move ahead very slowly, we believe, and we've got more than enough to focus on that in Rainbow at the moment. I'll just see if there's any other questions at the moment. Is there a cash cost to Rainbow for the 49% stake in Brazil besides providing IP and your 49% of CapEx. I'm pleased to say that -- no, there's no cash cost. It's a very, very big deal that we've done. I think the market should complement Rainbow on the deal that we've secured 49% of the project is valuable at this with no cash outlay. It's just our IP and our project experience that we've been able to negotiate this deal with Mosaic, we're very happy about that, and it adds massive value to Rainbow for minimal cost. What are the flow sheet challenges in Phalaborwa compared to the likes of MP Materials or Lynas? I think it speaks for itself. Those projects are hard rock projects. They have to crush more, produce a mixture of concentrate and to crack concentrate before they can go downstream. Rainbow starts with the cracked chemical stockpile in terms of the phosphogypsum at Phalaborwa. We'll be taking the phosphogypsum as a feed directly from the phosphoric acid plant at Uberaba. And so all those processes, we don't incur, which is why our CapEx and OpEx is significantly lower than any of those projects. If you look at the CapEx for those projects that they've spent over the years it runs into the billions of dollars on both projects, we're going to be circa $600 million to produce an EBITDA number that will be better than both those projects. I think that speaks for itself. And I don't see any more. Operator: That's great, George. If I may just jump back in there as we approach the hour, and thank you for addressing those questions for investors today. But George, before I redirect investors to provide you with their feedback, which is particularly important to yourself and the company. Could I just please ask you for a few closing comments? George Sidney Bennett: Sure. I think I've outlined the opportunity for the listeners or the viewers quite well in the sense that, once again, we know that we are going to be a low capital intensity development company in terms of both projects, one in Brazil and in South Africa. South Africa will come on stream first. It's going to confirm the high margins that we experienced in both projects. And both these projects are more than enough to make Rainbow not only one of the leading producers of separated rare earths and SEG+ in the world in the Western world, but certainly, as I said, probably the highest margin and very, very economic. These -- we've got the building blocks to create, as I said, a multibillion dollar business here, and we don't see any obstacle to creating that value for our shareholders going forward. Thank you. Operator: Fantastic. Thank you very much once again for updating investors today. Could I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback, which will help the company to better understand your views and expectations. On behalf of the management team, we would like to thank you for attending today's presentation, and good morning to you all.
Operator: Good morning, and welcome to the Rainbow Rare Earths Limited Investor Presentation. [Operator Instructions] Before we begin, I would like to submit the following poll. And I would now like to hand you over to CEO, George Bennett. Good morning to you. George Sidney Bennett: Good morning, and welcome to all viewers to the Investor Meet and Rainbow Rare Earths' presentation. I'd like to say we've chosen a good day with the two-week cease fire in the Iran war, which bodes well for the markets. I see all markets up this morning. So that's very, very positive for everybody concerned, and we're all relieved, I'm sure about that. Now to move on to Rainbow, which is developing two key rare earth projects. And basically, we -- I'll take you through the presentation and show that we're going to be a very low-cost producer of these rare earths and part of the independent supply chain being built out in the Western world at the moment. There's our disclaimer. There's just some key metrics for Rainbow at the moment that you can see on the screen there. As I said, we have pioneered the economic recovery of rare earths from phosphogypsum. It had been done previously on lab scale and academic papers, but never economically, and we've basically been able to do this in with an economic flow sheet. We've developed IP using proven technology, I must stress. And that also derisked -- we're not using any special reagents or any special resins that are bespoke for this project or any bespoke equipment for this project. It's all standard off-the-shelf reagents, resins that are available commercially and the equipment is standard equipment used in mineral processing plants around the world. As I said, we -- one of the key drivers for our low cost is that we exclude costs and risks typically associated with normal mining projects, and I'll go through that. And we've got -- and we're one of the only rare earth companies in the world that I'm aware of that's got two major diversified projects in different continents. So you've got diversified risk and you've got diversified project risk. And both of these are effectively near-term assets in terms of going into production. We've got good support from the U.S. government by the DFC that's the Development Finance Corporation. We've committed $50 million in project equity into the Phalaborwa project at FID when we go into construction, we have a very supportive shareholder in TechMet, which is also a critical minerals fund funded by both the DFC and the Qatari Sovereign Wealth Fund, and we have good support from Ecora where we have a small royalty. As mentioned, we have got two key projects and the project numbers speak for itself, where you can see that these are two major, major projects that are going to develop massive EBITDA revenues for Rainbow once both of these projects in production. The Phalaborwa project. These numbers were our last numbers published in December '24, using spot rare earth pricing at the time of $110 a kg for Nd Pr. And as you can see, that project has only got a 16-year life, but it's going to generate $181 million of EBITDA per annum based on those numbers at the time. And rare earth pricing has been higher since then. We saw neodymium and praseodymium trading at $140 a kg earlier this year, so way above the $110 that these numbers are based on. And our project CapEx of circa $320-odd million is at the very, very low end for rare earth projects, and that's what makes Rainbow uniquely low capital intensity. We've got a very, very low operating cost, and we've got exceptionally high, not only EBITDA margin but IRR as well. And we've been very conservative with our NPV. Discount rate at 10. When we do the deal with the DFC, our discount rate we've agreed is 9.5. So it's a slightly better discount rate for the project economics. And at Uberaba in Brazil, we published economic assessment last month on that project. And there, you can see those numbers speak for itself. The project's NPV also using a very conservative NPV of 10 of almost $1 billion. Our IRR is over 45% there. We've got -- that will generate $217 million of EBITDA per annum. EBITDA margin also way over 70% and a very low capital intensity, circa $280-odd million. So we [Technical Difficulty] very low compared to your traditional projects. And what's different about the Uberaba project is this is a live feed. In other words, the phosphogypsum being generated in Brazil is from a live phosphoric acid production facility with Mosaic, the global fertilizer business listed in New York who will be partnering with in Brazil. And this project has got a life of over 30 years. So it's a very, very long life project, very high grade for this type of asset, the PPM of the rare earths and the phosphogypsum are circa 5,100 ppm, TREO, and at [ Phalaborwa ] 4,400 ppm. We've got hard rock projects out there in the world of some are as low as 500 ppm and some are 5,000 ppm similar to where we are in Brazil, but they've still got to do all the mining and all the costs associated to get the rare earths into a situation where they can separate, which we don't have in these projects in both Phalaborwa and Brazil. This is -- we're running a pilot plant at Mintek in South Africa. We've been running a continuous pilot plant 24/7. It's a large-scale pilot plant, and we're producing intermediate product called it's a mixed rare earth product. As you can see, it's greater than 75% TREO, total rare earth oxides in this product, very, very high grade in rare earths as well as significantly low in terms of impurities. And this is actually a point of success for Rainbow because lots of rare earth projects stop one step before this, which is a mixed rare earth concentrate and then they crack it into a mixed rare earth carbonate or intermediate product, which this is -- we call it a mixed rare earth hydroxide in our case and then they stopped there. The projects have stopped there. So we could stop go as rainbow and this is a success. But we are doing what Lynas in Australia are doing going one step further down the beneficiation chain, which is to separate the Nd and Pr to 99.5% purity out of this product you see on the screen, and we'll produce an SEG+ group, which samarium, europium, and gadolinium with our very high-value heavies in there being dysprosium, terbium and yttrium. And that SEG+, we will then sell to somebody who will refine it further and separate those individual rare earth oxides out of the SEG+. Once again, I must stress this is similar to what Lynas have done for their whole production life when they started up some 12 to 14 years ago, they always separated Nd and Pr and produce some SEG+ product and they built a multibillion dollar business on going that far downstream. It's only recently in Malaysia that they've decided to separate the heavies themselves, but -- and they're one of the few companies in the Western world that will be separating those heavies in sort of totally integrated production line. In other words, they'll be producing the mixed rare earth concentrate. They'll be cracking it into intermediate product and then they'll be separating SEG+ in Malaysia, Nd Pr, they're separating in Australia. In terms of the market for rare earths, I think this is well understood, hopefully by most of the audience here is that there's massive demand for permanent magnets, which are driving the demand for neodymium and praseodymium key rare earths that make up a large part of the permanent magnet as well as dysprosium and terbium, which also require the permanent magnets to protect them against the heat generated by the motors. Now we've seen massive, massive increase of uses for the permanent magnets. Apart from your hybrid electric vehicles, your fully electric vehicles, wind turbines, consumer electronics like your cell phones, your airpods part, your Bose speakers, air conditioning units now use permanent magnet motors. But there's a massive, massive demand going forward for defense. And with geopolitics the way they are in the world these days, I think this is going to drive demand for those key rare earths even higher, even though it's not massive volume, it's very critical. We're seeing massive uses of drones and warfare at the moment in the Ukraine-Russian war at the moment, massive use of drones, that's going to increase and those need permanent magnet motors to drive those drones. We also see NATO almost tripling their defense spend over the next few years, and that's going to lead to a lot more demand for rare earths and all those military applications, including drones, tanks and so forth, aircraft. And then we just see the geopolitics the way they are, this Iran war, which thankfully is has a ceasefire right now. But those rockets that have been flung at by both sides require rare earths and then on the missile guidance systems, the ordnance, the Tomahawk missiles and rare earths. And so I see the strategic demand for rare earths increasing. And that means that there's even more emphasis to create this independent supply chain outside of China. And lastly, you've got robotics. I mean two years ago at a conference in Toronto, I highlighted to Rainbow audience that I thought robotics are going to be a major demand driver for rare earths going forward. They're talking about 10 billion robots by 2040. I see the next decade is a major, major frontier for demand for permanent magnets made of rare earths, and that's been driven by drones, as I say, not only warfare, but also drones used by people like Amazon to do deliveries in cities around the world. We're also seeing eVTOL that's Electric Vertical Takeoff and Landing vehicles starting to operate in the U.S. They were operating them in Dubai doing trial runs in Dubai until the war started. But these require lots of permanent magnets in them in terms of weight. And then, of course, your robotics. So even if you don't think they're going to be 10 billion robots on the planet by 2040, which I think is very optimistic, but just 1 billion robots on the planet by 2040, that's 1/10 of the forecast number of robots on the planet. They require 3x to 5x more permanent magnets in the EV. And if you think about what's been driving demand for permanent magnets over the last years being EVs and wind turbines, they only forecast 500 million EVs on the planet by 2040, but even at 1 billion robots, which is very conservative, that's double the number of EVs by taking 3x to 5x the number of permanent magnets in terms of weight. So I see the demand outlook for rare earths into these applications being very, very robust and increasing exponentially over the next 5 to 10 years. I've spoken about defense briefly, but just to give you an idea, an F-35 fighter jet has got almost half a tonne of rare earths in that. You've got a California class submarine has got 4 tonnes of rare earths that's figured there that's got 2-plus tonnes of rare earths, but also you see it in tanks, you see it, as I said, in the guidance systems, night vision goggles, all sorts of military applications require rare earths and the strategic nature of rare earths is not going to go away for anytime soon. This is where Rainbow's project differs from most projects around the world. As I said, what we got in both our projects in both South Africa and Brazil is that the phosphate hard rock mine, which has got rare earths in it, but not economic quantities to mine the hard rock phosphate for the rare earths. That phosphate rock is then through a flotation process concentrated into a phosphate slurry, and that slurry is then fed into a phosphoric acid plant to create phosphoric acid for the fertilizer for fertilizers. And add sulfuric acid and heat to that phosphate slurry and that generates waste residue called phosphogypsum. The rare earths are upgraded in the concentration but process in the phosphate slurry and they then the port with the gypsum into the waste residue at Phalaborwa. We have two stacks of 35 million tonnes. And in Brazil, we have a stack that's over 85 million tonnes. But more importantly, as I said, it's a live stack. They continue to produce about 4.5 million tonnes of phosphogypsum per annum. And the project in Brazil, we're going to be taking one of those -- the live stream of this phosphate slurry. Two phosphoric acid plants there, we'll be taking a live stream, feeding that into our rare earth chemical facility, extracting the rare earths and giving the phosphogypsum back. And the beauty about Brazil has got a long life, as I said, over 30 years. So -- we don't have -- as I said, it's a waste product. So it's a very environmentally friendly project in terms of we taking earths out of waste and adding value to the waste. And what we do is we just reclaim the phosphogypsum and put it straight into a leach circuit, and we then go into our first stage of beneficiation, which is produce a high-grade mixed rare earth product. And then we're going further downstream, as I said, to separate into Nd Pr, that's neodymium, praseodymium and produce that SEG+, which is all those which have high value. Now just to take you to the site in South Africa. This is your site at Phalaborwa. It's within 5 kilometers of the center of mining town has been in existence for over 60 years. Just north of that photo is a phosphate hard rock mine that produces the phosphate slurry. It was a phosphoric acid plant in the top right-hand corner -- top left-hand corner there. And that then created phosphoric acid, as I mentioned, for the fertilizer industry owned by Sasol in South Africa and create those two gypsum stacks you see in the photograph there. We're going to be lining the triangle on the bottom right of those stacks with a liner, claiming one stack, putting it on the line stack site. Then when that stacks at height, we'll then start reclaiming the second stack. We will line the area where the first stack has been reclaimed and then we'll put the balance of the phosphogypsum on the reline area. And so these stacks will sit on completely line sites. So that solves a big environmental issue for this area in Phalaborwa. Sasol do have a fund to cover any environmental liability around these stacks. They are ultimately liable for any environmental sort of claims that might come as a result of the stake. But we're actually cleaning up the stack, putting them on nine stack sites, and we'll be selling the phosphogypsum into the South market over a period of 30 to 40 years. And that means that eventually the site will be completely level and will be a complete rehabilitation of that site. So a very, very strong ESG and environmental sort of value to this project for Rainbow and for the community. The beauty about this that red border you see that's the fence, the site has been fenced for over 60 years. We don't have to displace any villages. We don't have to -- we're not cutting down pristine forest or pristine jungle like one might have to do if you've got a project in a remote site in Brazil. This is a brownfield site. And similarly, I'll show you for [indiscernible] It's a similar story. It's a brownfield site. It's within the existing fence of the current phosphoric acid production facilities. And this is -- there's three mines operating within 5 kilometers of the site. And so we've got a huge skilled workforce serviced by [indiscernible] highways and an airport at Phalaborwa. So, yes at Phalaborwa. It's a very, very well serviced town. And from a construction point of view, this is a breeze to build our processing plant at the site, which will start, and I'll talk about that shortly. Just in terms of the value of our phosphogypsum. On the left, you can see if we use Chinese pricing, Nd Pr represents about 86% of the value of our basket and the balances there we're showing the dysprosium and terbium and it's the SEG+ dysprosium and terbium and yttrium in it. Now if we look at what's happening in Europe over the last year or so, you've seen a bifurcation of pricing between Chinese pricing and European pricing. European pricing for yttrium for -- dysprosium and terbium was trading much, much higher. And if we put European pricing into our basket of rare earths, you can see the increase in revenue that we would realize from just selling the separating Nd Pr and then the SEG+, and all that accrual in revenue just flows to our bottom line. I've been very conservative. I'm not showing you those European numbers and the slide -- the upfront slide at the beginning of this presentation. But if we wanted to, you could calculate that many tens of millions of dollars would flow to our EBITDA bottom line if we can realize European pricing. But that's upside for the project and it's just what I think investors should be aware of, and we're very excited that we see this bifurcation of pricing getting even stronger over the next few years. And certainly, when we come into production, starting with our first project, which is late '28, early '29, which is the Phalaborwa project and then the Mosaic project in 2030, we would expect to be capturing some of that European pricing, and that's all upside to our financial model. Just to confirm, this has been done by Argus Media. It has not been done by Rainbow, but it confirms that Rainbow is the highest margin rare earth project in development in the world today. This was done at circa 2024 pricing, where at that stage, MP Materials in America was losing money and Mount Weld, which is Lynas in Australia was just breaking even and making a small profit. Rainbow is on the right-hand side there. The project on the right of Rainbow is another rare earth project, but it's actually -- it's a byproduct. So all the costs associated with that -- with generating those rare earths are covered by the production of another minerals. So the margin is actually misleading there. But in terms of the pure rare earth play, we know that we're the highest margin business in development in the world today. And our DFS will confirm that when we publish it later this year. We used our pilot plant last year to optimize our flow sheet, and we've been able to deliver a very cost-effective and efficient extraction process to extract rare earths from the phosphogypsum and then feed it downstream into the final separation circuit. The design of that final separation circuit was done initially by ANSTO and it's confirmed that we're going to have two circuits of circa 75 mixer settlers between both circuits. So it's a very, very small number of mixer settlers, and it's a very small solvent extraction circuit. But we decided to go solvent extraction because that's the industry standard. It completely derisked Rainbow. We were looking at going with continuous chromatography, which is a technology that's used in other industries around the world, that's never been used in rare earths. It's never been used with a successful pilot scale or commercial scale. And we were going -- we were looking at this opportunity with our technology partner in America, but they couldn't deliver on that. They couldn't achieve the results that they claim they would achieve. And when we realized that, we decided to bring our pilot plant from Florida back to South Africa, and we built our own state-of-the-art laboratory. You can see a photo of our laboratory in the slide in front of you, but that enabled us to try and replicate the tests that were supposed to be achieved in Florida. We didn't see them being achieved. And then we had such success with our continuous ion exchange part of our project, which reduces the volumetric flow of our pregnant leach solution coming into the -- out of the leach circuit from 340 cubes an hour to 40 or 50 cubes an hour and where we see significant impurity rejection at that stage of the CIX process, we then go into a few stages of what's known as a precipitation to drop out the balance of the impurities and our final feed into our downstream separation circuit now drops to about 3 to 4 cubes an hour. And with that, we realized we have a very small solvent extraction circuit, and that's why we decided to go solvent extraction. The industry standard used by all major rare earth projects around the world going downstream and separating. So we're very pleased that we finally realized that we needed to make this change and derisk Rainbow completely. But even though we had this year in our time line in terms of development, what it did do is allowed us to look at our front-end flow sheet where 80% of our CapEx sits, we optimized that while we were finalizing the route to final separation. And we use that time very, very effectively in our own in-house laboratory. We changed our leach circuit from three stages of leaching to two stages of leaching. By increasing the temperature in our leach circuit, we are able to improve our leach kinetics. And with our leach resins, our leach kinetics improving significantly, we're able to reduce our resins' time from 32 hours down to 8 hours. And that means you've got less tankage, you got less stainless steel, you've got less steel work around those tanks, you've got less [indiscernible], you've got less earthworks. All that is helping contain our overall capital number for this project within that $320 million that we published in December '24, and this is a significant achievement for rare earth projects, not only rare earth projects, but other projects which are significantly growing out the CapEx numbers around the world. And with a very experienced team at Rainbow and designing and building process plants all over the world, we have a very good handle on our CapEx, and we believe we'll still be within that range when we publish our DFS at the end of 2026. Our large-scale pilot plant, as I mentioned earlier, is producing about a kilogram of mixed rare earth hydroxide a day, which is intermediate, intermediate product. And as I said, that's a significantly large amount of product being produced. Most pilot plants, mineral pilot plants that are run produce grams of material. We're producing a kilogram a day. So we're very proud of that fact. This is our final flow sheet that we simplified from our initial PEA. All the work we've done has been to improve this flow sheet. We're in an economic flow sheet, but what we've done is we've been able to reduce CapEx, keep the overall CapEx number intact and also make improvements to our OpEx by optimizing our flow sheet. And that's why, as I said, when we publish our DFS, we believe we will be the lowest cost producer of separated rare earths in the Western world, and we believe we might be even below Chinese cost of production. We reclaim the gypsum. We slurry it with water and screen to just remove debris. There's not much debris in it, but just a small amount of debris removed going over a screen and will then go into two stages of counter-current leach circuit. Then the pregnant leach solution drops out into a continuous ion exchange circuit, which then recovers the rare earths of the resin. And at the same time, we see significant impurity rejection. We then go into a few stages of precipitation for final impurity rejection, then we feed the final SX separation circuit, which is the industry standard. In terms of prototype to production for -- this is for Phalaborwa now, as I said, we've -- the next steps are supported by the successful optimization of our flow sheet. And the most important work we did last year was not only deciding on our final route to separation, was also optimizing the front-end flow sheet with the majority of the CapEx sits. And that means that we've taken a bit longer on this project, but we end up with a much more robust and much better project. And I think the market will agree with me, that's far more important than trying to achieve a time line that you promised the market when you were getting the results as we're promised by our partner in America, and we pivoted to solvent extraction but this has led us to have a far more robust project and where we will have -- we won't have any issues when we commission this plant, and we believe it will operate very, very smoothly because rare earth projects, they are quite technical, but our optimization of the flow sheet that will effectively made it quite a simple flow sheet. The secret is how we put everything together, our reagents and our dosages and our resins times and so forth. And how we operate our continuous ion exchange circuit that's last piece of Rainbow and that we've been very successful in developing. Say our target is to finish the DFS. We are on track to finish by the end of this year. We will then go and at the same time, we're starting financing in parallel. I'm talking about project financing now to get project finance in place for this project. We believe we'll have 2/3 of debt and 1/3 will be equity. And then we believe FID, we're targeting the end of the third quarter of 2027 to start early works and front-end engineering and design for the project in Phalaborwa in the last quarter of '27, full construction '28, and to be commissioning and production late '28, first quarter of 2029, and that's a very achievable time line. And as I've indicated, it's a year below, a year longer than what we initially thought we'd be. But in terms of projects, this is still a very, very fast track project. We got hold of this project and realized the rare earth in the phosphogypsum in January '21. We're talking production end of '28. That's exceptionally fast. Most mining projects from discovery to production, the average is 20 years and 15 years is quick, 20 years average, other projects take 25, 35 years. Project like Simandou in Guinea, the iron ore project with Rio Tinto that's been around for 35 years before going to production my views and idea of the project time lines for rare earth projects. And the Uberaba project, I'm pleased to say is coming along even quicker. Mosaic are targeting us to get this into production in 2030. We only started on that project two years ago. And the reason why we can move that project along a lot quicker into production is because 80%, 90% of the flow sheet we've developed for Phalaborwa is applicable to Uberaba. So we get all the benefit of that IP has been applied to the project in Brazil. As you can see, this is the project in Brazil at Uberaba. It's very, very similar to what you saw with the project at Phalaborwa in terms of -- you see the big jumps and stack there. The bottom left is the ongoing operations at site. This is 500 kilometers from Sao Paulo serviced by a three-lane highway all the way to the city of Uberaba, and this is about 20 kilometers outside the city. It's in the middle of the sugarcane belt. So there's no pristine forest. There's no villages, Amazonian villages you've got to move or so forth or tribes or it's an industrial site. It's been operating for many, many, many years, probably 30 or 40 years at least, similar to Phalaborwa, it's completely fenced. We've got ground within the fenced area to build our processing facility. A lot of the reagents that are required by our process are being used on site already. So a lot of the permitting is already in place for those reagents. So we see the time line to permitting being very, very quick for this project, and in Brazil, we are in partnership with a global fertilizer producer, multibillion-dollar fertilizer producer being Mosaic. And of course, they've been in Brazil for a long time already. So we don't see any issues there. And we're very excited about this project as well because this is -- this project has got a life of exceeding 30-odd years. So this is a long life, high-grade project in terms of rare earth projects and compared to a mining project, very similarly very, very long life, very high grade. Because once again, we don't have all your costs associated with mining that normal rare earth projects. In other words, there you've got a drill and blast, you got a hole, stockpile rare earths, hard rock rare earths then you got a crush, you got a mill, then you got a flow flotation process, produce a mixed rare earth concentrate, then you crack that concentrate into a chemical form and only then can you go further downstream. As I mentioned, some projects stop at that once that cracked into a chemical form a mix rare earth carbonate and they sell that for further separation, we're going further downstream as Rainbow. But as I said, lots of projects stop there, we are going further downstream. You will have seen last week, we just announced a capital raise. We're very pleased. It was done at a very, very good price to where Rainbow is trading. We were trading between 19p and 21.5p for the week before our raise, we settled at 20p a raise. We've raised $14.6 million, and that gives us runway well into the end of 2027 and beyond and it also enables us to fund our pre-feasibility commitments with Mosaic on Uberaba. It allows us to complete the DFS as well as the EIA process and the permitting process as well as engage with debt financiers, which are expensive to engage with, but to keep our debt on track so we can keep our project on time lines on track, and we're very excited that we in the breakup market that we were able to successfully raise this money out of the U.S. 90% of it came from U.S. funders, backed two family offices as well as Traxys. Traxys, we know as a global trader that is one of the partners for Project Vault, which has been appointed by the U.S. government to source strategic and critical minerals, critical minerals for the $12 billion strategic stockpile that has been created by the U.S. government under Donald Trump, and that's not going to go away. So the fact that we have Traxys now as a significant shareholder, I think bodes very well for our interaction in the U.S. and raises our profile in the U.S. and also the fact that we are now seen as a major player going forward in the rare earth space. And I think this commitment by Traxys confirms that. What makes Rainbow different? We believe we've got a unique opportunity with two very, very robust projects to become a significant producer of separated rare earth oxides in the West. We've got a very experienced team, as you can see there, developed lots of projects in our careers out of the background, a lot of us come out of a background of a mining engineering business called MDM Engineering. And lots of those people who are in that business work for Rainbow. And between the three chief process engineers, you see there Dodd, Chris and Roux Wildenboer, between three of them, they've got three bankable feasibility studies under their belt in rare earth space, the Lofdal rare earth project in Namibia, the Peak Resources rare earth project in Tanzania and the Mkango rare earth project in Malawi. The tree guys on your screen there, you see there the guys who develop the process flow sheets for all of three those rare earth projects, and we have that experience within Rainbow, which is unusual for engineer miner like ourselves have so much experience in the rare earth space. And I don't think it's -- we have any other development project in the world today with that kind of experience. I would like to thank the audience. That's the end of my presentation, and we'll be opening up for questions now. Operator: That's great, George. Thank you very much indeed for your presentation. [Operator Instructions] While the company take few moments to review those questions submitted today I would like to remind you that recording of this presentation along with the corporate slides and the published Q&A can be accessed via Investor. And George, at this point, if I may hand back to you to take us through the Q&A session, read out the questions where appropriate, and I'll pick up from you at the end. George Sidney Bennett: Thank you. I just need to get access to my questions. I don't have access yet. Thank you. Operator: George, can you see on the right-hand side Q&A? George Sidney Bennett: Now I've got them now. Thank you. So, one of the questions is, can you review last year's milestone chart and explain why we are off target? Well, I think I've answered that in my presentation where we were looking -- the last year's milestone charts are all predicated on us achieving separation success. We never achieved that with the process, the continuous ion chromatography process that we are looking at doing with our technology partner in Florida. And as I said, when we realized that we were getting the results that they claimed and there was no backup data for their results that we started doing our own work, and we had such success with the continuous ion exchange step in our process that we realized that our flows going downstream were now significantly reduced. And that meant the solvent extraction circuit would be a very small solvent extraction circuit and fairly low CapEx, which will keep us within our overall CapEx parameters, and that's what we have then decided to do. But that added circa a year to our time line. But as I said, we also use that to optimize our front-end flow sheet significantly, and it's made for much better for robust project. So, as I've mentioned, you rather take a year longer and have a better project than try to keep a time line and you end up with a project with massive technical problems like we've seen in some other projects in South America that have needed more funding from the U.S. government to them because they've got huge technical issues. As I said, we've successfully produced a commercial product in the mixed rare earth hydroxide, and we now control the process and the timetable to the final separation, which is solvent extraction. So the delay with the American technology has turned into a blessing where we've, as I've mentioned, got a far more efficient process and with a very, very small solvent extraction circuit. Next question is why are we seeing -- we are seeing increasing numbers of motor turbines without permanent magnets. Do you see headwinds on the demand side? And why not? Well, once again, I went through this in my presentation. Actually, I don't believe that. We've seen lots of people talk about using substitution or ferrite magnets for motors, but these motors are not efficient. Permanent magnets are the most efficient way of turning energy into motion and vice versa. And the only thing that's driving guys looking at alternatives is they worry about security of supply. But as more projects come on stream like Rainbow's two projects and other projects that have been committed to the West, so the security of supply becomes more widely spread in the West, and that will mean that people will stop looking at substitution and will continue to focus on using permanent magnets. But once again, I don't believe there is real substitution taking place. And then we see massive demand, as I've indicated from drones, EV tolls and robotics making up for any slight slippage. I don't believe there's slippage, by the way. As I said, it's just been -- we've seen reports in the press, but there's no backup numbers for those reports. We also see that permanent magnets are critical and even internal combustion engine vehicles. So your typical diesel/petrol car still has a kilogram of permanent magnets in it in your steering column in your a brake system in your wing motors and your seat motors, your electric window motors and so forth. So there's still massive demand for permanent magnets even in those vehicles, never mind EVs. And we see year-on-year EV sales continuing to surpass the previous year. So I don't believe there's any slowdown in demand. Next question is Rainbow is trading at a steep discount to peers, will Rainbow pursue a U.S. listing, and what is the time line for that? All I can say is that we agree with you, we are trading at a big discount to our peers. If you look at our EBITDA numbers forecast of green production in our two projects in 2030, we will -- our EBITDA numbers will be -- if I can look at what Lynas are publishing today, they will be in line with Lynas or not exceeding Lynas. Lynas is a AUD 22 billion business today. So you can see the upside for Rainbow over the next three to four years that I believe will -- that is there. And yes, U.S. listing will unlock some of that discount. So we are considering the routes and what to do about the U.S. strategy, and we'll update the market in due course. What is the current cash burn rate on average per month, how much CapEx is required until FID at Phalaborwa. Well, our current burn rate is about $400,000 a month. And if you see what we raised $14.6 million, we've got about 35 months of cash burn. We do see a slight increase in the cash burn as we pursue some of these other work streams. But if you look at Rainbow's G&A compared to what we spend on projects, it's very, very well contained compared to some other companies out there. So we're very proud of that fact that we have a very good percentage of our G&A compared to what the amount of money we spend on actually delivering value for shareholders, and we don't see that changing. To conclude the whole DFS on Phalaborwa, including all the technical environmental and permitting work streams, we don't see this being more than $4 million to $4.5 million. So that's well within the number we've raised. And we -- as I said, we'll be able to complete the pre-feas at Uberaba, which we believe will deliver very, very robust numbers. The initial economic assessment numbers are exceptionally strong, and we see that trend continuing when we produce pre-feas at Uberaba and we've got runway further. So we are well cashed up, which is the first time in my life as CEO of Rainbow that we've been so well cashed up to deliver on our work streams. Are there growth opportunities to beyond Uberaba, which Rainbow actively are looking into. As I mentioned, we've got two large projects that we are focusing on delivering. Those two large projects have the ability to make Rainbow into a multibillion-dollar business. And that's -- if you look at what MP are going to produce as EBITDA, ad what could Lynas, that's my yardstick. So you can make that assessment yourself. But -- so we are focusing on delivering those two high-value projects for Rainbow. But at the same time, we're not close to other opportunities. We are aware of some other opportunities out there, but our focus is on the two key projects right now. Is the current pilot operation for the DFS a locked cycle pilot or several batches? As I mentioned earlier, this is a large-scale continuous pilot running 24/7. I think that answers that project. Next question is, will the DFS provide long duration resin degradation data? Can you share how the CIX process is going? Well, firstly, I'm surprised resin is not a major issue for us in terms of OpEx. But to answer the question, we see no major degradation of our resin. We're using a very robust resin. It's commercially available, as I indicated earlier. This resin is showing very, very little degradation after hundreds and hundreds and hundreds of uses of this resin. So we're very pleased about that. But if we take a very conservative approach to our resin, we see ourselves replacing it once every five years, and we believe we'll be even far better than that. So resin is not an issue and it's not a major cost in our OpEx at that rate of degradation, which is, as I mentioned, very conservative. And the CIX process has been very successful and it's going very well. As I mentioned earlier, we take 340 cubes of pregnant leach solution into our CIX circuit and we get 40 to 50 cubes an hour coming out of there that then goes into our stages of precipitation. But we see significant impurity rejection after that first stage of the CIX. So the CIX is working very, very well, and we're very pleased about it. The Rainbow team, as I mentioned earlier, is very experienced coming out of the mining engineering background where we've designed and built a number of uranium process plants where we use continuous ion exchange, we use resin. So we well aware with the CIX and with resin, and we're very pleased that we've seen far better resin use compared to what we see in uranium plants. We've not seen as much degradation as we've seen with the rare earths in our pregnant leach solution. Is the purity bleed through iron, calcium and phosphate increasing over time and affecting downstream SX? We see no increase in impurity bleed through our process. We see the iron and calcium and so forth being rejected as a solid and that will then be fed back into the gypsum stacks. So we don't see this as an issue. We don't see a buildup and we're using our pilot plant in South Africa is running for a few months now. It will be -- at the time we stop, it will run for about 3.5 months in a continuous fashion. We don't see any significant buildup of these impurities. As I said, we know because it's a closed loop circuit that we're running in South Africa, we know exactly where to bleed. And the bleed stream will then go back into the gypsum stack. So there's no issue there. For the transition from pilot to commercial plant, is a linear scale up assumed? What I can say is that we're running a large-scale pilot plant that's 5x to 10x larger than the typical mineral processing pilot plant and we don't see any issue with scale up. Are you considering increasing Rainbow's ownership of the Phalaborwa or Uberaba project? Well, it's well documented in our financials that we will be issuing 38 million shares to acquire the final 15% of Phalaborwa. It's a [indiscernible] election, and we'll do it between now and July 2027. And then in terms of Uberaba in the announcement at the beginning of March, you will have noticed that we footprinted our ownership there at 49% with Mosaic having 51%, and we don't see that changing going forward. Please explain in the context of the Phalaborwa ownership structure, how much of the downstream value addition through processing is captured by Rainbow Rare Earths. Thank you. Well, typically, the payability for crack MREC is 65% to 70%. Payability, we know that with our high-grade mix hydroxide that we already been offered a payability of circa 70%. So we -- as I said, we could stop there. That is a success. We've got a very high payability of our MREC, but we're going further. And when I mean we're going further, we will see that we will be achieving 100% payability for our separated Nd Pr, which is 75% of the value of the project if we use Chinese pricing. So that's why it makes sense for us to go further downstream and separate. And then we produce in the SEG+ group. And because we originally were only targeting getting payability for dysprosium and terbium, now that we're going to get payability for dysprosium, terbium and yttrium and part of the SEG, the samarium, europium, and gadolinium, I'll get some payability there. The overall payability, the overall turnover captured from SEG+ at 70% payability is actually higher than what Rainbow would have achieved by separating the Dy and Tb. So, in the end, we've come out with a better result and with better revenue numbers, which you'll see in our financial model when we publish our DFS at the end of 2026, as I've mentioned. We do not intend going further downstream into the midstream, which is your metallization, which is turning your separated rare earth oxides into metal and then alloys, which you then feed into a permanent magnet facility. Those downstream projects are very low margin additions to a project, and we don't see any benefit in trying to go further downstream. We leave other guys to create that value chain downstream, but Rainbow not going to be doing that. We're happy to partner with guys who will be doing that, but we as Rainbow will not be doing that. Help us understand your reasoning and explain your rationale why Rainbow pivoted away from SX to CIX, and how does CapEx, OpEx and technical execution risk when scaling up compare. Well, as I indicated earlier, I think I've covered this is that we made this pivot to solvent extraction when we realized that continuous ion chromatography wasn't delivering the results that we've been claimed. And it's been a very, very good move because solvent extraction is completely derisking. It's a gold standard for final separation. And we're having a very small solvent extraction circuit compared to typical solvent extraction circuit. So we see no risk execution as a team, we've built many solvent extraction circuits in the zinc space in the copper space as well as the uranium space. So we don't see an issue, technical issues in our solvent extraction circuit when we go into production. As I said, we've got a team well okay with commissioning solvent extraction circuits and other commodities, and it's a small solvent extraction circuit for rare earths. So no issue there. And scaling up, as I've indicated earlier, it's scaling up is not an issue at all from what we're running our pilot plant at and all the -- I mean, this is just leach tanks in the front-end circuit, pumps, filters, filters. Once again, these are standard in mineral processing operations. So there's no issue of scale up there. We continuous ion exchange circuit. We've been involved in designing similar sized circuits and uranium projects around the world. So there's no issue there in the continuous ion exchange circuit that we're going to build for Rainbow. And once again, the extraction circuit is very, very small in terms of what's typical in the industry. So no issues there. Very strange question. AI Gemini suggests that Pensana's switch to USA leaves Rainbow in a stronger position in Europe. Please expand if you agree? Well, I can't really comment on Pensana switch once again. But Rainbow, we know that with people like Traxys being a shareholder in Rainbow that we've got an opportunity to negotiate with the partners of Project Vault who are looking to build strategic stockpile. We also know we have lots of interest from European separators to take up our product, our SEG+ as well as our Nd Pr. And we have other companies in the U.S. looking for our supply of Nd Pr as well as SEG+. So we basically see that we've got lots and lots of opportunity for Rainbow in both Europe, Japan as well, by the way, as well as the U.S. So we think Rainbow sits in a very strong position to choose what's best for our shareholders in terms of where our product ends up. Any news from Burundi? We are continuing to evaluate all options and realize value for our shareholders in Burundi, and we'll keep you updated on that once again. Is there any prospect for the other Mosaic stacks in Brazil and elsewhere to be investigated for processing. There are some phosphogypsum stacks in Brazil, but we've got the jewel in the crown as Mosaic will tell you themselves, which is the Uberaba phosphogypsum stacks are the only ones that Mosaic has in Brazil. The other phosphogypsum stacks that Mosaic have are in Florida, and those are sedimentary sources of phosphogypsum, and therefore, totally different in terms of grade compared to what we have at Phalaborwa and Mosaic. Those are long-term opportunities that we might work with Mosaic on realizing value, but they are much, much longer term, as I mentioned. And right now, we've got two projects in the current Uberaba operation and Phalaborwa to make Rainbow, as I said, a multibillion dollar business and I think that should be our focus for now to deliver massive uplift in value for our shareholders by delivering on that -- on those opportunities, which, as I think you would agree, are more than enough for the management team to focus on right now. You see far too many juniors. They have 10 different projects across five different countries. And of course, they end up never delivering on any of those. We're not going to make the same mistake. We've got two very near-term projects, which will deliver massive value and we'll focus on those. And once again, are there any other sites -- how the other sites progressing like Saudi and OCP and Morocco. Once again, these are sedimentary sources of phosphogypsum stacks. We are engaged in a test work program with both of those opportunities. But once again, similar to the phosphogypsum in Florida, this is a very, very long-term way to eventually may be creating or extracting value, but these are very, very long-term projects, which are going to move ahead very slowly, we believe, and we've got more than enough to focus on that in Rainbow at the moment. I'll just see if there's any other questions at the moment. Is there a cash cost to Rainbow for the 49% stake in Brazil besides providing IP and your 49% of CapEx. I'm pleased to say that -- no, there's no cash cost. It's a very, very big deal that we've done. I think the market should complement Rainbow on the deal that we've secured 49% of the project is valuable at this with no cash outlay. It's just our IP and our project experience that we've been able to negotiate this deal with Mosaic, we're very happy about that, and it adds massive value to Rainbow for minimal cost. What are the flow sheet challenges in Phalaborwa compared to the likes of MP Materials or Lynas? I think it speaks for itself. Those projects are hard rock projects. They have to crush more, produce a mixture of concentrate and to crack concentrate before they can go downstream. Rainbow starts with the cracked chemical stockpile in terms of the phosphogypsum at Phalaborwa. We'll be taking the phosphogypsum as a feed directly from the phosphoric acid plant at Uberaba. And so all those processes, we don't incur, which is why our CapEx and OpEx is significantly lower than any of those projects. If you look at the CapEx for those projects that they've spent over the years it runs into the billions of dollars on both projects, we're going to be circa $600 million to produce an EBITDA number that will be better than both those projects. I think that speaks for itself. And I don't see any more. Operator: That's great, George. If I may just jump back in there as we approach the hour, and thank you for addressing those questions for investors today. But George, before I redirect investors to provide you with their feedback, which is particularly important to yourself and the company. Could I just please ask you for a few closing comments? George Sidney Bennett: Sure. I think I've outlined the opportunity for the listeners or the viewers quite well in the sense that, once again, we know that we are going to be a low capital intensity development company in terms of both projects, one in Brazil and in South Africa. South Africa will come on stream first. It's going to confirm the high margins that we experienced in both projects. And both these projects are more than enough to make Rainbow not only one of the leading producers of separated rare earths and SEG+ in the world in the Western world, but certainly, as I said, probably the highest margin and very, very economic. These -- we've got the building blocks to create, as I said, a multibillion dollar business here, and we don't see any obstacle to creating that value for our shareholders going forward. Thank you. Operator: Fantastic. Thank you very much once again for updating investors today. Could I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback, which will help the company to better understand your views and expectations. On behalf of the management team, we would like to thank you for attending today's presentation, and good morning to you all.
Jonathan Charles Morley-Kirk: Good morning. This is Jonathan Morley-Kirk. I'm the FD of Jubilee. Today, I'll be going through the interim financials. This will mercifully be a very short jaunt. The interims have been out for about a week, so I anticipate that most of the investors have had a look at them, and I go forward on that basis. I will not be updating all the company's projects, but just really focusing on the interim financials. This is a departure from previous years, but it's more in tune with the spirit of the FRC expectations. Morley-Kirk alone, I hear you cry. No sign of Leon. What a dull presentation on a dull subject. For this, I can only apologize. Leon is back soon for a presentation on the Molefe mine. It will be within a month. It is proposed to have a series of presentations on the various company projects in separate discrete presentations. The presentation on Molefe is likely to be insightful and interesting, 2 adjectives that are unlikely to apply to any presentation on financial statements. The presentation will attempt to answer questions posed by investors, and thank you for all those who have sent in their questions. Some of these questions I've amalgamated to stop repetition and to make it easier. There were some extremely detailed accounting and tax questions, which were very unexciting, and I have addressed those directly with the senders and will not be in this presentation. Thankfully, I hear you cry. The main and recurring question is on the structure and the content of the accounts in the present past. If we go to the next slide, please. This just shows the interims and the annual financial reports and what's included and what's not. As you can see, Zambia has always been included, but South Africa was included, and then it's been excluded. All pretty predictable until the '25 annual report, the annual financial report, which had a post-balance sheet event that required the -- when the South African operating companies were sold, and they were formed into a disposal group. They were not sold by the time of the audit opinion was signed, and that transaction was legally completed only on the 31st of December '25. This gets a bit murky. Under IFRS, the disposal consideration was present-valued back to the 30th of June '25, although it was not completed until the 25th -- sorry, the 31st of December '25. This goes against the contract. Indeed, even the comparatives were restated, so as though the disposal had taken place a year earlier. Thus, the '24 annual financial report numbers do not tally with the comparative 2025 numbers. It gets more murky. The '26 interims have been produced on the basis of the '25 annual financial report, but the '25 interims have been changed to follow suit. So that's as clear as mud, but it is a very strict IFRS interpretation. Investors who are expecting to see the results of the South African ops in the 6 months to 31 December, '25 will be disappointed that they are again accounted for as a disposal group, but at this time, as a discontinued activity, which again makes it a bit unclear again. The interims do show the results of Zambia operations in isolation as such. Tjate and the group or head office costs are now covered in the -- which were previously covered by the South African ops are now lumped in with the Zambian operations. If we go to the next schedule, please. Here are the key highlights from the interim financials. These are, as you see there, factually correct. They are what they are. They all seem to be up and an improvement on previous years, but that's not the entire story. If we just flip to the next schedule, please. There were a few adjustments to these earnings. And those ancients among investors may remember when accounts made sense and there were extraordinary items or exceptional items that were disclosed. This schedule highlights the main extraordinary and exceptional items that are unlikely to reoccur. Shareholders may make adjustments to their EBITDA numbers as they see fit. Personally, I would strip out all one-off nonrecurring items. If we could go to the next schedule, please. Jonathan Charles Morley-Kirk: These are the main questions we received from shareholders, and thanks again for them. Question one, "Is Jubilee Metals a going concern?" Well, the audit of the annual financial report for the -- to the 30th of June, '25 had to have a going concern signed by the auditors and by the Board. 12 months after the sign-off from the auditors, which takes us to December '26, which is about the same sort of time as 12 months from the reporting date of these interims. So technically, nothing has happened to the audit opinion from '25 nor the directors' evaluation. I believe Jubilee Metals is a going concern. But I don't have a crystal ball. And if anybody has one, I'd like to borrow it, please. Second question is, "Is any provision required against the receivable from One Chrome?" You may remember that when we sold the businesses, we were to receive over a period of time, $90 million, of which $25 million has already been received. The receipts were absolutely on time. There was no delays. There were no deductions. There were no changes to it. So as far as we're concerned, One Chrome have honored the contract perfectly. So therefore, there is no impairment review so far. We do keep the situation under close watch. Leon and Riaan Smit are in very close contact with the management of One Chrome. As you can imagine, whenever a large deal is transacted, there are always 1 or 2 small wrinkles that need to be ironed out after the contract is signed. And this is the case. The relationship with One Chrome is cordial and professional. And we don't see or foresee any problems at this stage. The accounting for a receivable over a number of years is quite clear under IFRS. It is present value back to today's value. There is a provision in our accounts for about $12 million, $13 million. This is just a present value adjustment and not an impairment charge against the creditworthiness of One Chrome, just to make that clear. "Were the results of the South African operations in line with management's expectations?" That's a tricky one. The Chrome operations were impacted mainly by the strength of the rand against the U.S. dollar. Maybe this was the dollar weakening rather than the rand getting stronger as such. But the cost of Chrome or the Chrome operations are largely rand-denominated. So when the rand increases in value relative to dollars and we report in dollars, our costs become higher, which is not good. Chrome is sold in dollars, which is fine, but you therefore have a currency mismatch, and it worked against us at this time. I believe over the next few years, the rand will depreciate relative to the dollar. But at the moment, it has been very strong. So that hasn't helped. PGMs had a much greater increase in prices that nobody could have foreseen, which is great news. And I hope it stays that way. The -- just going back to the PGMs, the volumes are broadly in line with our expectations. The prices are in line with the market. Obviously, we sell concentrate. We don't sell the final PGM prices. So we generally get 75%, 76%, 77% of PGM prices. But 77% of a large increase is welcome. However, the PGMs and Chrome together, if you look at them, produced a net loss of $4.5 million for the 6 months. And that was much lower than the management of the South African operations was expecting, largely because of the rand depreciation -- appreciation. Turning to Zambia, where the Zambian production is in line with internal expectations. We saw earlier that the revenues were up and the profits were up and everything else looked good, but the results are slightly misleading to the extent that management expected a higher production level in Zambia. There are many reasons why it didn't happen, but the results look in percentage terms good. They are good, but they should have been better. The rains didn't help. That's one of the main problems. We're looking forward to putting a few tweaks to production, which will increase it going forward. We'll see how that goes. People are aware that we've got a CapEx program in Zambia, which should help production. And the first stage of that is the centrifuge, which is just about to go online in the next couple of weeks, and we'll just have to see how that goes. Sulfuric acid. Now that's one of the main ingredients for our copper production. Now we have 2 suppliers generally. First one is Mopani, which has a contract with Jubilee, has done for a long time. Leon and I met with Charles Sakanya, the CEO of Mopani, about 3 weeks ago. And we discussed, amongst other things, the sulfuric acid issue. They have stopped production. This doesn't seem to be anything other than a problem with their production facilities. It's not a management decision just to stop production because the price is going up. I don't believe that for a moment. But they are working on it, and they gave us assurances that they were trying to fix things as soon as possible. The other contract we have is with a large Chinese producer who has just reduced modestly their production of sulfuric acid. This is slightly worrying, and we're told it's not a long-term issue, just a small reevaluation of where they are. However, the copper -- the association of copper producers has been talking to government, as have Jubilee, just to see what we can do to make sure that sulfuric acid doesn't become a bigger problem. The government has been very open to listening to our concerns. They have stopped the export of sulfuric acid to the DRC, and it has to remain within Zambia, which has helped. The war between Iran and Donald Trump has not helped, as you can imagine. And what happens going forward may or may not impact on the price of sulfuric acid. Personally, I've been looking at combining purchase orders of Jubilee with 2 or 3 other copper producers to see if we can club together and probably get a convoy of sulfuric acid from another jurisdiction and send it into Zambia. This is fraught with transportation issues, customs duties and the like. However, it's early days, and we'll see if that takes us anywhere. On balance, sulfuric acid is a worry. It's not a big worry at the moment, but it is a worry, and we're keeping it very much under review. Following on from the Trump-Iran war is diesel. And I'll just mention it here. We don't have diesel power other than for emergency generators. We don't have trucks which take diesel. However, we do use transportation companies and contractors, which have trucks. And we expect the price of diesel to go up in Zambia. It goes up every quarter, and it's just gone up yesterday, I believe. That is likely to lead to increases in transportation costs. What those are likely to be and for how long, we're unsure at the moment, but it's not going to go the right way for us in the short term. I have a couple of questions on tailings and waste. And people were asking how are they measured? You don't sort of have a great big tailings dump hundreds of meters long and 100 meters wide and at differing heights. You can't measure it with a tape measure or a ruler. We fly drones over it, and those drones have got very complicated volumetric calculators on board. They work out the volumes of the site. They compare the height to the ground level, and they come up with a pretty good volume. Now sometimes we fly them twice just to make sure that the first volume metric is in line with the second, but that's only a control. The problem is not the volume as such. It's working out the density. And with rains, rains generally compact the surface, and that will have a difference to density as it might have in the middle of the waste or the tailings or indeed at the bottom. So from time to time, we will drill a few wells through the tailings just to see what the density is and then apply it to the volumetrics. In a similar way, I might add that if we want to measure how much resource or overburden has been removed from Molefe mine, for example, we would fly drones over there, and we can work it out that way. Last question is on guidance. "What are the issues and when it can be expected?" There are a lot of post-balance sheet events from the 31st of December, which impact or may impact guidance, making it rather tricky. The availability of sulfuric acid could be one and the impact of diesel prices might be another. We've got the centrifuge coming online this month at Roan. It will be set up, tested and then ramped up. How it works, we don't know at this stage. We're always hopeful, but we don't know. The mine plan at Molefe, you may have seen recently, that's up and running. Again, when you're changing a mine plan, it's never clicking your fingers and it's straight line to heaven, but it may have 1 or 2 gremlins. The rains are still with us and not as bad as they were, but they're still with us. And what management have decided to do is just wait to see how these pan out, so we've got some certainty. We could stick some numbers out there, but they would be a little bit open to interpretation. So to avoid that, we decided just to hold off a little bit, wait and see how things go and tell you as soon as we are comfortable that the results are as expected. That's about all I can say on guidance at the moment. There was just one other question I was -- I received just before we went on the air. And that was on the financing costs on the South African operations after the sale to One Chrome. You may recall that the net assets were $90-odd million. The debt, which was trade finance of $40 million plus a bank loan of about $16 million, totaled $56 million, which gave an enterprise value of $146 million. All that trade finance and the bank loan has rolled over to One Chrome. Therefore, the costs or the finance costs in relation to the South African operations has reduced, and it will not come back. The only asset we have in South Africa now is Tjate. Tjate has got no lending secured against it. It's completely free. Zambia, in a similar way, does have some trade finance and some bank debt against various parts of it. This was put on over a number of years and what I can only say is, a suboptimal manner. It may have seemed right and relevant at the time. But now that South Africa has gone, the management team have got -- really got to grips with what we've got in Zambia. And where we have -- what we have in Zambia is that we have some short-term financing against long-term assets. This is a mismatch, and it needs to be resolved. The finance team and I are working hard to rejig the financial liabilities we have in Zambia. We are looking to work with our banks to get a more appropriate form of funding. And so we will have long-term assets funded by long-term liabilities, and we will have short-term funding for short-term assets. And therefore, we will be more like most mining companies. That's work in progress, and I hope to report on that in the next 6-month update. That's all the questions I have to answer today. I'm always very welcome to receive questions from shareholders if they want of a financial nature. I can't really comment on production and stuff as I'm not a production or chemical engineer. But if you want a dull, boring accountant to have a rummage through some questions on tax and accounting, please feel free to send a question to myself or to Kathy. Thank you very much. Operator: Perfect. Jonathan, that's great. Thank you for updating investors today. Could I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback. On behalf of the management team of Jubilee Metals Group plc, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all.
Operator: Good morning. Thank you for standing by, and welcome to Sodexo's H1 Fiscal Year 2026 Results Conference Call. [Operator Instructions] I advise you that this conference is being recorded today on Friday, April 10, 2026. At this time, I would like to hand the conference over to the Sodexo team. Please go ahead. Juliette Klein: Good morning, everyone, and thank you for joining us for our H1 fiscal 2026 Results Call. I'm Juliette Klein, Head of Investor Relations. With me on the call today are Thierry Delaporte, our CEO; and Sebastien De Tramasure, our CFO. Thierry will start by sharing his assessment and key messages, followed by Sebastien, who will cover the financials. After that, we will open the line for questions. [Operator Instructions] If you have additional questions after the call, please don't hesitate to reach out to the IR team. With that, I'll now hand over to Thierry. Thierry Delaporte: Thank you, Juliette. Good morning, everyone, and thank you for joining the call. This is my first earnings call as CEO of Sodexo. I'm very pleased to be speaking with you today. What I'll do is I'll share my perspective on where the company stands today, what we are already doing but also the priorities we are setting. We are preparing a more comprehensive update for July 16. Based on our current assessment of the business and the actions we are implementing, there are also some near-term financial considerations. So I want to provide context on how this shape our outlook for 2026. Over the last 5 months, I've spent most of my time in the field with clients, with teams in operations and with our partners. I've been traveling across the U.S. where I'm spending half of my time but also in Asia, in Europe. I joined Sodexo because I'm genuinely attracted to this business. I know B2B, people-intensive service as well. I know how much value can be created when execution, discipline and client focus come together. Sodexo, let me tell you, is a special company. The quality of our people, the pride they take in serving clients every day and the expertise on the ground absolutely stands out. We often operate in an environment where reliability, quality, continuity are critical. So delivering this consistently every day and that our scale is no mean feat. The group was built by Pierre Bellon on a clear entrepreneurial ambition and a strong client mindset. I fully adhere to these foundations. Our priority now is to bring them back to life everywhere. At the same time, this business is different from what I have known before. It's complex in a different way. It's operational, physical highly decentralized and diversified by nature. We have thousands of sites running every day in real time. Disciplined execution and attention to every single detail make the difference. The real challenge, therefore, is driving rigor, discipline and consistent performance at scale. It's about how we lead, organize and execute. Too often, great people are held back by layers, processes and administration instead of being fully focused on clients. So my conviction is clear, growth is the solution. And growth comes from an obsession with clients on the ground every single day. It's earned contract by contract, side by side, by building trusted relationships and creating value at the client level. In our model, growth is not just an outcome. It's a catalyst. It drives operating leverage to support profitability enhancement. It basically fuels the organization with energy, talent and confidence. So let me start with a balanced picture of Sodexo today, our strengths and the realities we need to address. We operate in resilient and growing markets with strong long-term growth drivers. Demand for outsourced services in both food and facility management continues to expand. We also have a global and highly diversified client portfolio, as I said, across geographies, segments, services. In many cases, we are the best partner to self-deliver an integrated proposition with one governance across multiple geographies. This strengthens client relationships and gives us additional levers to grow alongside them. Another key strength is our people-led service culture. Teams who care, who show up for clients every day, and we take pride in delivering. In a people-intensive business like ours, this is fundamental. It's a foundation we will build on as we restore execution and growth. But we also have to face the facts. And the facts are we have consistently underperformed our market and our peers. We underinvested in key capabilities that are critical to run well this business at scale and build a repeatable model. We have not been consistent enough in deploying a best-in-class offer in execution and in the predictability of our delivery and guidance. So what has held us back? The root cause is go back a long time, and there is no [ synoptics ]. First, commercial intensity. We have not shown enough appetite to win, not enough hunger to fight for clients to stay close to them, to truly understand their expectations, to anticipate and even surprise them. We have not been consistent enough in the way we drive growth and retention, winning, defending, expanding key accounts always with discipline and cadence. In a service business, you just can't review sales momentum once in a while and expect intensity to magically appear. It requires systematic follow-up and accountability and sharper engagement with clients. That is changing. Second, empowerment and decisiveness. Decision rights, accountability have become diluted across layers. The heavy structure will slow you down, creating [ interference ] and reduces the permission to act close to the clients and the operations. And third, the prioritization and focus, past organizational choices and too many parallel initiatives wasted attention and [ to resources ]. We were not consistently putting our people and capital towards the highest value priorities. Sometimes, short-term trade-offs prevailed over long-term value creation. As a consequence, we have not invested enough in the capabilities that make execution predictable, sales effectiveness, account management, processes, systems and tools. Now let me move to what we are doing differently starting now, and with a clear focus. We are turning the entire organization towards growth, restoring execution discipline and creating a real sense of accountability and urgency across the board. The first decision I made was to take direct leadership of North America, I wanted to go deep into the business, understand what works and what doesn't and make the necessary changes at the right pace. Over the past months, we have changed around 2/3 of the leadership team in North America. This is about bringing the right mix of experience, energy, accountability. We combine internal talent with external hires to better serve our clients and execute more consistently across America. In parallel, we simplified the global leadership structure, and we reshaped the executive committee to be more execution focused. We removed the zone layer with regional CEOs now reporting directly to me. This, inevitably, short-term decision paths strengthens accountability and brings leadership much closer to clients and operations. The Executive Committee now brings together the business leaders and a very limited number of global functions. And it has a clear mandate, enable execution across the group with discipline and urgency. We also we anchored incentives on growth to reinforce focus and accountability across the organization. In parallel, we are reinforcing sales capabilities, not only in the U.S. but everywhere. Beyond resources, we are strengthening our commercial engine by tightening discipline and governance. We are now consistently running a monthly review of commercial performance, which was not the case, clarifying account ownership and reinforcing the role of account managers. There are key leaders in the organization, fully accountable for client development and retention. We are also accelerating investments in technology. This work has already started. You know that, but it's clear we need to move faster. The focus is on strengthening our core systems, notably finance and HR, and scaling client-facing digital solutions. To me, these are no option. They are required to improve the productivity, speed and overall performance for our teams and for our clients. Finally, we have reinforced a disciplined and systematic reassessment of contract and assets taking into account changes in the environment, but also the strategic choices we make. Sebastien will explain how this has translated into the numbers. These measures, for sure, have a short-term impact on margin. This is deliberate. We are choosing to fix the engine properly rather than optimize around the ages that allow us to raise execution start-ups immediately, then over time to reaccelerate growth in a sustainable way. Now looking forward, our next priority are also very clear. First, we are aligning the organization around a single execution agenda, one set of priorities and clear choices on where we play, how we operate and where we invest. Our choices grounded in one -- in our strengths, our clients' needs and market trends. We call this program shift and grow because that is what it is about shifting the business to grow faster. Second, we are changing how we run the company. Decision-making is being pushed closer to the clients. Operational teams are being empowered. Headquarters are refocused on supporting execution rather than adding layers. At the same time, we are restoring competitiveness across the model, starting with labor. In my view, while a lot has already been done on supply, workforce management is where we see the biggest opportunity, actively managing the workforce pyramid, improving on-site utilization better matching staffing to client demand. That's what I've done for years. We're going to do it here. All of this supported by stronger processes and tools. And let's be clear, these actions are already in motion. Finally, we are reinforcing a strong client focus every day. I'm talking to some of our clients. I make a priority. In all our leadership meetings, we start with client cases, we're keeping this focus front and center, and I want every leader to personally own the client relationship and performance. We are also strengthening our performance culture. We are developing internal talent, bringing in external capabilities where needed and raising the bar on delivery. This is about empowerment and accountability. All of this has clear implications for how we invest, allocate capital and approach the year ahead. That brings me to the recalibrated baseline. We are setting for the fiscal year '26. Turning to H1. The numbers reflect both ongoing execution challenges and deliberate management actions to establish a more disciplined baseline. Organic growth was plus 1.7%, consistent with what we laid out in January, but frankly, below what this business should be delivering. Looking at our commercial indicators, retention over the last 12 months was 93.4%, and development, 5.3%. That's leading to negative net new business levels that are not where they should be, reflecting both execution issues, and an insufficient quality of pipeline and win rates. The underlying operating profit margin was 3.7%, which is down 140 basis points year-on-year. This reflects operational challenges in specific areas, for sure, and the impact of the deep review of contracts and assets we have conducted in the last few weeks and days. As we look to the full year, weaker than net new business in the first half will obviously weigh on organic growth in the second half as well as lower volumes in an uncertain external environment. Lower operating leverage, execution issues in H1 and the actions we are taking are reflected in our outlook. Taken together, this leads to a recalibrated starting point for FY '26 with now an organic growth expected between plus 0.5% and 1% and an underlying operating profit margin between 3.2% and 3.4%. So before I hand over to Sebastien, I want to say, I'm confident in the direction we are taking. The work is well underway. We clearly see where the levers are for improvements. We are operating in markets that are fundamentally attractive, and we are convinced of the relevance of our model. We are already seeing tangible changes in how teams work together, how decisions are made and how we go to market. With that, I now hand over to Sebastien to walk you through the H1 performance in more detail, and we'll talk later. Thank you. Sebastien De Tramasure: Thank you, Thierry, and good morning, everyone. So I will now walk you through our first half financial performance in more detail, and let me start with revenue and organic growth at group level. So reported revenue growth in the first half was significantly impacted by foreign exchange with a negative impact of 5.3%, mainly driven by the U.S. dollar depreciation. M&A had no material impact in the first half as the acquisition of Mediterránea was completed at the very end of February. Organic growth for the group was plus 1.7%. Pricing contributed around 2.4%. Like-for-like volume growth was around 0.2%, supported by cross-selling, especially in Healthcare, offset by a strong comparable in Sodexo Live! in the first half of last year, which benefited from an exceptional level of events. Net new business was negative at around minus 0.6%, reflecting prior year contract losses, mainly in Education and Business & Administration. And finally, we had an impact of around minus 0.3% from a contract reclassification in North America Business & Administration. And this followed the renewal of a contract where the economics and [ contractual ] terms evolved, leading to revenue being recognized on a net basis, rather than on a growth basis, fully in line with IFRS requirements. And as a reminder, the annualized impact of this reclarification is around 100 basis points at group level and will, therefore, weigh more in the second half of the year. Turning now to underlying operating profit margin, which stood at 3.7%. Year-on-year, the group's underlying profit margin declined by approximately 150 basis points in the first half, including a negative foreign exchange impact of 6 basis points. And this evolution can be explained by 3 main factors. First, operations, mix and leverage representing around minus 50 basis points. This reflects mobilization cost and new contract under performance on a limited number of contracts and unfavorable portfolio mix and softer organic growth in the first half. At the same time, we are actively addressing these execution challenges and continuing to drive efficiency and productivity across the group, especially through shared service and efficiency initiatives. Second, the acceleration of investments for around minus 20 basis points. These are deliberate investment, notably in technology, system, supply and commercial capabilities fully aligned with the execution priorities Thierry outlined earlier. And finally, the review of contract and asset that Thierry mentioned had an impact of around minus 70 basis points. And depending on their nature, the outcome of this review affect either underlying operating profit or other operating income and expenses. The impact at underlying operating profit level mainly reflects contract-specific provision following a detailed assessment of actual contract performance, credit risk exposure and litigation matters based on an updated assumption in the current market environment where appropriate. This review was also about improving visibility, reducing future volatility, reflecting clear management choices to address risk earlier and establish a more robust and predictable baseline going forward. Now that we have covered the group picture on both growth and margin, let me turn to the regional view. Starting with North America. Organic growth was down 1.8%, mainly due to contract losses in Education and Business & Administration, changes in scope on certain Business & Administration contract and the one-off reclassification effect. Healthcare continued to deliver strong growth driven by new contracts while Sodexo Live! softer due to a tough prior year comparison. In Europe, organic growth was 2.8%, supported by Healthcare & Senior as well as strong activity in Sodexo Live! across airport lounges and events, while education remains softer. Rest of the World delivered organic growth of 9.2%, driven by new contract ramp-ups and strong underlying dynamic across markets, especially in India, Australia and Brazil. From a margin perspective, the decline was more pronounced in North America where the underlying operating margin decreased by around 200 basis points year-on-year and this largely reflects the execution challenges, the accelerated investment and the action referenced earlier. In Europe and Rest of the World, margins also declined year-on-year mainly reflecting the impact of management actions related to the review of contracts and assets while underlying operational performance remain broadly stable. Now moving to the income statement. So having covered revenue and underlying profit and before coming back to the other operating income and expenses in the next slide, let me complete the picture with financial results, tax and net profit. Net financial expense increased by EUR 24 million year-on-year, mainly reflecting a higher gross cost of debt following the issuance of the U.S. dollar bonds in May 2025 at higher coupons. As a reminder, these bonds were issued in anticipation of the April and June 2026 debt maturities, which we intend to repay from cash reserves. The effective tax rate was 25.9% compared to 19.5% last year. Last year was impacted by one-off positive items, including the update of tax risk related to the Sodexo S.A. tax audit. And net profit for the first half was EUR 188 million. And on an underlying basis, net profit was EUR 285 million, down 37% year-on-year, reflecting lower underlying operating profit and adverse currency effect currencies. Turning to other operating income and expenses. The increase versus last year mainly reflects higher restructuring and rationalization costs linked to organizational changes, leadership adjustment and transformation project. Amortization of purchased intangible assets was stable year-on-year, and other items mainly reflect some assets and footprint rationalization decision, including the write-off of certain production and operational assets, for example, following the rationalization of central production units where capacity has been consolidated into fewer, more efficient sites. They also include pension-related items driven by legislative change in labor law in India as well as the recognition of one-off costs related to multiemployer pension plan in the U.S. Turning now to cash flow. Operating cash flow was EUR 616 million, up EUR 16 million year-on-year and this reflects the fact that last year included an exceptional tax outflow related to the Sodexo S.A. tax audit, partially offset this year by lower operating profit. The change in working capital was negative EUR 490 million and as a reminder, the first half is seasonal low point of our cash generation, and we expect working capital to normalize by the end of the year. Net capital expenditure increased year-on-year mainly due to one-off client investment in the context of contracts renewals. Free cash flow was therefore broadly flat year-on-year at negative EUR 243 million. Net acquisition amounted to EUR 256 million, mainly reflecting the acquisition of Mediterránea alongside smaller bolt-on acquisition in Europe. As a result, our net debt increased to EUR 3.6 billion, corresponding to a net debt-to-EBITDA ratio of 2.7x. This reflects the usual seasonality of cash flow in the first half, but also lower EBITDA days than last year. And as always, we expect a seasonal improvement in net debt in the second half. That said, based on the revised full year fiscal 2026 guidance and the recalibrated baseline, it implies we now expect to end the year with a net debt-to-EBITDA ratio above our target range of 1 to 2x. Let me close by coming back to our guidance for the year and giving you a bit of additional color. So Thierry outlined, this is the guidance we are providing today, reflecting our current assumption and the action we are taking. We now expect fiscal year 2026 organic growth to be between 0.5% and 1%. So this reflects weaker-than-expected commercial performance and in particular, in retention impacting the second half as well as lower volume in an uncertain external environment. Underlying operating profit margin is now expected to be between 3.2% and 3.4%. This reflects reduced operating leverage from a softer top line, ongoing operational execution challenges, the continued impact of our review of contract and asset over the full year and the accelerated investments we are making to strengthen execution. Let me also share a few key modeling assumptions for clarity. So based on current spot rates, we assume a full year 2026 currency impact of around minus 3% on reported revenue. We also assume a positive M&A impact of around 0.5% on revenue, mainly from the acquisition of Mediterránea offset by a few small disposals. On other operating income and expenses, reflecting the level already recorded in the first half, we now expect the full year amount in fiscal 2026 to be around minus EUR 300 million, of which roughly half is restructuring. Net financial expenses are still expected to be around minus EUR 140 million and our effective tax rate to be around 26%. So to conclude, the first half reflects a demanding environment, but also clear and decisive management action on contracts, asset, organization and investment now reflected in today's guidance. As Thierry outlined earlier, this action weighed on the near term but are necessary to reset a realistic deadline and strengthen execution, competitiveness and sustainable performance over the time. With that, Thierry and I will be happy to take your questions. Operator: [Operator Instructions] First question is from Jamie Rollo, Morgan Stanley. Jamie Rollo: So 2 questions. The first one is just on the margin guidance, 3.2% to 3.4%. That's obviously a very helpful clear range, but there's a lot of numbers in that. And you've given us a helpful bridge for the first half, it would be quite helpful to get that bridge for the full year margin, particularly to quantify the contract asset write-down because obviously, that's a one-off and that suggests that 2027 margin should increase naturally. But then again, Thierry, maybe your July review will lead to another step-up in investment next year. So any sort of flavor for what the real underlying base margin might be would be very helpful. And then the second question was just on the leverage as you say, well above the target. I appreciate you've got no covenants, you're pretty well all fixed debt. But what sort of constraints might this have on CapEx spend or bolt-on M&A going forward? Thierry Delaporte: Jamie, thank you. So what I'll do is I'll take the first part of your question and give a little bit of context, and then I'll take the second one on the leverage. And then I'll ask Sebastien to add a lot more details and probably on the bridge you're asking for H2. What we've done, Jamie, is clear. We've done, as we said, clearly the objective and that's why it's my [ ask ] for Sebastien and the team is do a comprehensive review of contracts, asset, risk by the end of the quarter. So literally in the last -- and you know that we do, at Sodexo things are going to change. But until now, there is one single process of forecast per quarter. This is changing to a monthly process now. So what we've done is a very deep reviews of the risks in the contracts and really assess the situation and provision where appropriate. This is not a [indiscernible]. This is really looking at the existence of risk that we have and the level of provision we have against that. For sure, given this -- there's a disciplined risk review embedded into our processes going forward at each closing, but this review we've done is a pretty extensive one for sure. Objective. Simple, improve visibility, reduce the volatility and limit the surprise which has been the issue of Sodexo for the last quarters. So let's be honest, what we've done is create a more solid earnings floor and a stronger base for growth. So that's the philosophy. Now to your point on the guidance and the bridge for H2, you want to cover it, and then I'll come back on the leverage target, connection, okay? Sebastien De Tramasure: So thank you, Jamie. So if you look at the bridge, we shared with you for H1, 3 drivers. So when we look at the full year bridge drivers are broadly the same as the one in the first half. I would say that the impact of the operation mix and leverage, we are not expecting any change between H1 in H2. Then we will accelerate investments. So we mean that the investment rate will be a little bit more on the full year and in H2. And the review of the contract and asset will be lower in the second half of the year. Thierry Delaporte: You asked for '27 as well, Jamie. So for sure, we're not guiding for '27. All I can say is I think you can consider '26 guidance as a floor. Now to your second point, leverage, right? You're absolutely right. The capital allocation framework is the result of a strategy. It's not -- and right now, the strategy is to regain performance, let's be clear, okay? So it's a special year. You can see that. And it wouldn't make much sense to, I would say, give detailed capital allocation messages without first setting a clear direction of travel. So that's what we will do in July. So if you can hold on this 1 for 2 months, 3 months, we'll tell more. Until then, priority is execution and performance recovery. Everything else follows from that. The leverage fully aware, maybe temporarily above our historical range, you know that reflecting lower margins during the reset phase and the investments we are making to stabilize the execution, but also rebuild the business. But this -- and that's an important point as well. To me, this does not limit our flexibility or block any of our actions. Sebastien De Tramasure: And if I may, just we remain a strong cash-generative business, and we will keep and retain a good access to funding. And again, this temporary effect on average are clearly not structural. Jamie Rollo: Okay. So just to clarify then, we'll hear more about the capital allocation in July? And also in July, you're going to be giving, I assume, some medium-term targets and framework? Anything else we should be expecting in July? Thierry Delaporte: So the investor update in July will give for sure, greater visibility on FY '27. And in the, yes, medium-term financial ambition. What we'll do there, Jamie, is we will articulate where we want to position the group versus the best-in-class benchmarks. That's our ambition for sure, including a clear ambition to narrow the growth gap, okay, versus the strongest players in the market. We will also, for sure, present a detailed action plan, underpinning that ambition with you will see clear strategic priorities and financial levers over the medium term, right? So that's what you should expect. Operator: Next question is from Jaafar Mestari, BNP Paribas Exane. Jaafar Mestari: I have 2 questions, please. The first one is just an open-ended question on the review of contracts and assets. Can you give us more concrete examples of what you're reviewing and changes you're making? It was interesting. You mentioned some central [ kitchens ] are being consolidated into a smaller number of sites, for example. Just keen to hear more on those, what sort of measures you're taking? It seems pretty broad ranging. And I'm really mostly interested in the ones that fall into adjusted profits, not on the stuff that is exceptionals, please? And then secondly, on management compensation, there was an undisclosed margin target for full year '26 in your cash bonus for this year. You never said what it was because it was commercially sensitive. Can I ask you if you're basically accepting that you're not getting paid on this part of the targets because you've ended up lower? Or would you expect the Board to adjust these compensation targets because of the voluntary nature of some of the measures you're taking? And related to that, can you remind us factually what's the policy on stock option awards. If I'm correct, Mr. Delaporte, you still have not been awarded your performance shares for this year and understand why the Board did this after disappointing full year results, but if you were awarded them immediately after today's announcement, you would also look perhaps like you're not exactly in the same boat as investors yet? Thierry Delaporte: So Jaafar, I'll try to take the point, and I hope -- you tell me if I don't cover well all the points, okay? On the first one about the contracts and assets. What's so sure is that when we look at contracts, the operational performance on contracts, fortunately, most of them are performing well and delivering results for the client and for ourselves. In cases, there are delivery issues, how do we provide for it? How do we make sure that we are investing into addressing those concerns and therefore, how does it change the financial profile of this deal. When we are in financial distress on an account, how do we handle it? Are we renegotiating with clients? Are we improving the way we are delivering? Or are we exiting the contracts? All these questions have been addressed and covered in the way we were looking at the contracts. And you're right regarding assets, I'll let Sebastien, but the point was, again, to look at assets we have. And are they long-term investments for us or not? Does it require decisions to be made? Over to you, Sebastien. Sebastien De Tramasure: So on the impact of the review of the contract and assets, the impact on underlying operating profit, so one part is really the assessment and the reassessment of the credit risk around 25%. And when we look at also contract and contract litigation related claims, so we have also covered all of that. It's again around 25% of the impact in terms of [ UOP ]. And then also, we have looked in this -- in the performance of the contract, and that impacted also for additional provision. And then on the write-off of assets, this is really the part impacting the other income and expenses below the line. And here, yes, we look at the footprint of our off-site production. And we took in some geographies, a very deliberate decision to consolidate part of that and this implies some write-offs and impairment in our balance sheet. Thierry Delaporte: Okay. Thanks. On the second point, management compensation, if you're talking about leadership compensation and [ I'll all ] mine. So let's cover both, if you want. So what I've done is for the leadership team is we have made sure that while they are committed to delivering the forecast of the budget of the year, we are refocusing in H2 more part of their incentive on the growth because this is what we need now to get ready for FY '27. And so I didn't want us to wait another 6 months and really push on the accelerator now. As for my compensation, I think, honestly, this is not me to comment them on. It's a Board decision that will have to be approved by the general assembly. All I can tell you is that it includes certainly financial KPIs about growth and profitability. So I'm not immune for sure. As for LTI plan, the LTI plan will be launched in the next weeks. It is not related with the communication today. It's -- I think last year was the same timing in the year. So I think it's just followed the same logic. But also, we are changing the scheme for our people to make it more a performance-based LTI as opposed to presence-based LTI. So that's the philosophy. Jaafar Mestari: And just on the contract we use and just to be very clear, should we expect that you formalize a revenue figure for contracts that you'll be exiting? Or is it less explicit than that? Sebastien De Tramasure: Yes. Again, at that time, when we look at this review of contracts and assets, it's really linked to -- its case by case. And it is not linked to exiting a large portfolio of activities or even any specific contract. We have booked some provisions for onerous contracts in that case because the contract was not performing at the right level. Thierry Delaporte: Let's be clear, we have done what we had to do. It's just normal practice. Probably I'm injecting my way of drive a certain level of prudence in the way we are looking at risk, for sure. Operator: Next question is from Estelle Weingrod, JPMorgan. Estelle Weingrod: You mentioned lower retention and volumes impacting the remainder of the year. Can you just provide -- I may have missed it, but can you provide details on the new contract process and who you lose them to? And what volumes you are budgeting for H2? Are they going to be in negative territory? Sebastien De Tramasure: Thank you, Estelle. So yes, when you look at our annual guidance between 0.5% and 1%, if you take the midpoint, it implies a negative organic growth in the second half of the year. If we look at the different drivers, pricing was 2.4% in H1, we are expecting something very similar for the second half of the year. And then you have the net new contributions, minus 0.6% in H1. And same here, we are expecting something very similar to the -- for the second half of the year. Then we need to -- you need to keep in mind, sorry, is that we also have the impact of the contract reclassification and then we will have a full semester impact on organic growth for around 100 basis points. And then the remaining part is linked to volume. And it's true that we are taking a more cautious stance regarding volume. This is clearly linked to the overall environment, macro, geopolitics as well. And we know also that we have some volatility in our revenues to volume what we decided to include. Estelle Weingrod: And your more cautious stance on volumes? Is it driven by a specific region? Like is it more North America? Or is it broad-based? Sebastien De Tramasure: It's broad-based. Operator: Next question is from Simon LeChipre with Jefferies. Simon LeChipre: Yes. Three questions, please. First of all, a follow-up on the margin bridge for H2. Could you be a bit more specific in terms of the investment, I mean should we expect this going to double in H2 relative to H1? And should we expect some incremental investment in 2027 as well? Second thing is in terms of top line going forward and looking at the last 12 months net new, it was minus 1.3%. You expect net new minus 0.5% in H2. Should we expect net new still be negative in the first part of '27? And more broadly speaking, how do you think about the path in terms of top line acceleration? And when do you expect to see the benefit of the actions you have taken and you are currently implementing? And lastly, in terms of the U.S. and the management team, I mean what's the road map? Are you actively looking for someone? Do you intend to still remain CEO for the region as of now? Thierry Delaporte: Yes. So Simon, thank you. So taking your questions in no particular order, if you don't mind. The first one on the U.S. management team. So I joined on November 10, literally first days, it appear to me that I needed to make something change in America. It's -- America is our greatest market, the biggest, and it's a strategic market for us. I was coming from a different industry, it was critical for me to dive into the operations. America was my priority. I dove into it. I took it over. It's basically what I decided, and I'm very pleased with that because it allows me to really spend time in America, as I said, 50% of it. I've spent 20 years in America. So I know well this market and shaping the team is absolutely key. We have great talent in America. We have great accounts, great team as well, and I have wonderful leaders. We had significant weaknesses as well. And so we had to fix it. I've been working on it. I've made a lot of changes in the leadership team over the last weeks and months and reinjecting energy and ambition in America. The timing -- the team is great, is well mobilized. In the meantime, I'm looking for talent to take over the North American role for me. And it's -- I'm not supposed to -- do not consider that I stay in this role forever. But I'm not in a hurry because I feel that being very close to the operations is a [ greatly full ] for me and for the operations. But yes, for sure, there will be a leader of America at some point in time. On the point #1, that is the margin -- also margin bridge for H2, we'll let you say it. But one thing I can tell you, because you were -- a question around the investment for FY '27. So for sure, we are doing investments now. We couldn't wait in the situation where we need to inject accelerate fuel, if you like, into our growth, it's the time to grow -- to invest. And so we have started to invest now. And we know them well that this is impacting our margin in H2. And for sure, we will not stop the investment on December 30 -- actually on August 31. So for sure, it will continue in FY '27. The objective for sure is that as we progress steadily, the growth will come back and pick up to supported by the investments we are making now. That's the whole logic. You know more about the sequence in the next interactions. Over to you, Sebastien. Sebastien De Tramasure: Yes. So on the margin, as I said, if you look at again at the bridge H1, H2 full year, the part related to operation and leverage remains the same, around minus 50 basis points, then you will have more impact on investment of the acceleration of the investment in the second half of the year. So with a higher weight of that on the bridge, and we will have lower impact coming from the review of contracts and assets for the second half of the year. Operator: Next question is from Kate Xiao, Bank of America. Kate Xiao: First, I want to follow up on -- I still want to ask a couple of questions on contract assessment and provisions. Has this process affected your retention rate and development numbers because both of these 2 numbers are down compared to FY '25 and as of last quarter? And would there be -- I understand that this is an ongoing process, would there be a scope for reversal for some of the provisions if contracts actually turned out to be better than expected? My second question -- sorry. And my second question is around just look, simple one. When you mentioned, Thierry, that there's early positive signals. Can you talk to us a little bit more about these signals? Thierry Delaporte: Yes, correct. Correct. Okay. So Kate, on the first one, contract assessment. It has been occasionally that indeed, but I don't think it's a huge impact on the retention, honestly. So those are 2 different things. For the scope for potential reversal of provision, for sure, that's the objective. I mean, we are covering the risk, but we are not giving up on it. We are fighting, but we are in a logic where when there is risk, we provide for it and then we try to mitigate the risk as opposed to we have a risk, and we hope it doesn't materialize and when it materializes, it blows up and we are surprised. So that's the change in philosophy. Last early positive signals, sales performance intensity in the market. There are several deals. I know for a fact, several deals that we were about to lose that we haven't lost. And the energy in the system, the mobilization from the team is really great. So a lot of good signals, honestly, okay. It's still early. I'm not going to tell you other than that. Kate Xiao: Can I just quickly follow up on retention rate, if there's not a big impact from the reassessment of contracts? What has led to the lower rate at 93.4% now versus 94%? Was there more contract losses that you can kind of tell us a bit more about? And would you see this as a trough? Thierry Delaporte: Well, let me tell you one thing first, Kate, on the assessment of retention rate. For us where it stands is a signal for sure. Every -- I consider that every time we lose a contract, it's dramatic, okay? So we have to stop accepting the fact that we are losing contracts. So it's in us, and we are very active on that. Now it's -- in a given quarter, you might have more or less contract to retain. And so just looking at this ratio just for 1 quarter or 2 is not necessarily enough to draw conclusion. Except that, our ambition is to be closer to 95%, 96%. I think today, 95%, but the objective is to continue to improve and we have some work to do. And that's what we are working on at the moment. Sebastien, you want to say more? No? All right. Operator: Next question is from Pravin Gondhale, Barclays. Pravin Gondhale: Firstly, on the incentives aligned to growth that you talked about. Sorry, if I'm being nuanced. But could you please clarify, are these incentives linked to gross growth or net growth, i.e. incentives for both gross development and retention or just the gross development here? And then secondly, on the review of contracts. Is this all done and then fully captured in your H2 guide annualizing in H1 next year? Or is there any tail left to review further down the line? Thierry Delaporte: So Pravin, thanks. I'll take the first one. On the incentive. First, KPIs have been reset for my direct report in H2 to really get the target -- the growth target for H2, and that's revised growth target. What does it entail? It's what we call commercial growth, net commercial growth, which basically takes net development, I mean, new development plus retention plus cross-sell, okay? So that's the combination of all, all right? And then after when you look at the organization, it depends, those who are focused on retention, those who are working on closing new deals, for sure, they have different set of KPIs. The objective here is to set clear accountability, but also drive focus across the organization. Okay. Now just to be clear, even if you haven't asked, gross incentives do not mean volume at any cost. We continue to keep an eye for sure on the level of profitability expected from the deals, for sure. Review of contract, is it all done? Well, first of all, we've done a very good job, I think, to review the contract in a very short time frame. And I think the team has done a great job. So I'm pleased about that. Will it be a continuation? I mean the fact that we will review contract and assess the risk is of discipline. We will do it every single quarter. So this will not change. Are we expecting further impact going forward? I mean our objective is precisely to have done the job. Operator: Next question is from Neil Tyler, Rothschild & Co Redburn. Neil Tyler: Two questions, please. Firstly, on the contract review, I wonder if you could share any sort of insights that you drew from those contracts that you've had to provide against, whether there's any commonalities emerging from the contracts either in terms of regions duration or sort of start point, those that needed to be reassessed. And then secondly, on the -- back to the incentive program, has the altered incentives been or will they reach further into the organization than they have done in the past in order to alter the selling behavior sort of deeper into the organization rather than just at the management level. Thierry Delaporte: You tell me if I do not address -- maybe I do not really understand your question, Neil, on incentives. But my point is we have implemented a new set of KPIs across the organization. It's not only for managers, it's across the organization for H2, okay? On the contract reviews, insights, you want to take this one, Sebastien? Sebastien De Tramasure: I can tell -- yes, I can take this one. So in terms of framework, I can tell you that we apply this framework across all regions, okay, all segments. Around 50% of the adjustment adding to the review related to Europe, 1/3 is North America and the remaining part is the Rest of the World. And when we look at the framework, again, was done really case by case, contract by contract, asset by asset. And on the commonalities, again, as I mentioned, it was linked to the credit risk, credit exposure, again, across a portfolio of contract. It was also linked to legal risk litigation, again, across all regions, and then we look at the performance of some of the contracts, as I said, and we apply again a new calculation again on the potential adjustment needed in terms of onerous provision. So it's really the same framework across the globe on a contract basis and the case by case basis approach. Neil Tyler: That's helpful. And can I just ask, within that, was there any difference between food service and facilities management contracts in terms of how those materialize? Sebastien De Tramasure: Type of risk may differ, but again, the methodology and the framework was exactly the same. Operator: Next question is from Andre Juillard, Deutsche Bank. Andre Juillard: First one is about CapEx. Could you give us some more color about what you plan to do considering that historically, Sodexo had a lower level compared to its main peers? And I wanted to understand if you have a clear view on what we could expect on that side. Second one, about dividend. We know that historically, the dividend has been important for Sodexo and for its main shareholder. So do you have a view on what you could do on that side? Thierry Delaporte: Thank you for the 2 questions. My answer is going to be quite similar on both. We'll meet at the Capital Markets Day. CapEx consider that, as I said, I said -- I covered it for me, right now, our strategy is to regain performance, focus on the performance, we'll discuss the capital allocation messages when we are together in July, July 16. On dividend, same thing. Too early to tell. We are very aware of this. We will certainly discuss at the Board as well. So we'll get back to you, not now. Operator: Next question is from Julien Richer, Kepler Cheuvreux. Julien Richer: A quick follow-up on growth and strategy. We recently had some comments from the French government about the structural decline in the number of kids at school due to the demographic situation in the country, and this is not only the case of France, I suppose. How do you see your education division going forward? Any view on this point? Thierry Delaporte: So for sure, this is a -- we are -- obviously, as you can imagine, as we are working on our strategy and refining it -- they are -- and we spend more time on it at the Capital Market Day. They are time focused on looking at for each of the segments we operate in where there is more growth to expect. Sometimes, you have different elements that have an implication. The market growth itself. There's the level of outsourced, right? So in some cases, you may have markets where the growth is not necessarily significant, but there's a wave of outsourcing that we can trigger to drive new type of clients, and they are, for sure, a prioritization on those investments. So without being specific, we are very aware of those declined head count or population decline in schools in France or in the next few years. It's elements that we are considering for our -- for the way we are investing into our segments and again, we do it by country. And within segments, we look at the services that are more relevant, the ones that are a little less. But to be clear, education is one of our big segments, and we'll continue to invest in education for sure. Operator: Next question is from Sabrina Blanc, Bernstein. Sabrina Blanc: I have 2 questions from my part. The first one is regarding the review of the contract. And just to understand if you have a schedule potentially to exit some contracts or potential to exit some assets. For example, we know already that the number of countries has been reduced. But do you intend to go further? And my second question, I can perhaps answer directly that I should expect this Capital Market Day. But could we have visibility on free cash flow and potentially on conversion rate? Thierry Delaporte: Okay. So thank you, Sabrina. First question, so the review of contracts. So again, we are taking decisions. We have taken decisions on some situations when there is -- if you do not -- if you are in a situation where you do not foresee opportunities to be profitable, this exit is one scenario. So I'll keep this freedom going forward. It may happen at times that -- and good decision sometimes is to recognize the fact that it's just not working. So we feel we have done the job and -- but we'll keep an eye on it and make sure that when we are signing contracts, we are signing good contracts and that it doesn't end up being an issue for the client, for ourselves. Exiting countries. No, we have no plans of exiting more countries. In fact, if I can tell you I believe it's a strength of Sodexo to offer to a lot of our global clients a global presence, and we want to build on this. As for free cash flow, over to you, Sebastien. Sebastien De Tramasure: Thank you, Thierry. So on the free cash flow, as I said, we remain a cash-generative business. So we'll keep a strong focus on that. And we are expecting again to have an underlying conversion rate, I mean, for this year that will be very in line with and consistent with prior years on the underlying part. And on the future, as you said, Sabrina, we will come back to that during the Capital Market Day. Thierry Delaporte: Finally one -- do we have someone? Operator: Next question is from [ Eva ] [indiscernible], UBS. Unknown Analyst: Welcome to the company, I suppose. I want to talk a little bit more about the market as a whole. I mean you mentioned commercial momentum being slightly weaker than expected. But is that an indication of any slowdown in the market itself? Or is it simply your execution? So in other words, I mean, are we still seeing the amount of new business in the market as a whole being strong or have recent developments had an impact on that? And secondly, I mean this might be slightly minutia to a certain extent, but you mentioned your refinancing costs associated with debt this year isn't going to be an issue, but you still have an awful lot of debt to refinance over coming years, which was issued at very, very low coupons. So as and when that gets refinanced, how is that actually going to be able to impact your ability to compete with peers who might not have the same level of pressure on that front? Thierry Delaporte: On the first question, the commercial momentum, it's a good question. And I spend time to review that with the team. The conviction we have is that the market is actually a rather good market, okay? So we do not -- we are not taking this on the back of any kind of slowdown. Yes, for sure, moments like what is happening in Middle East are elements of potential slowdown, although it has limited impact for us in terms of size, but the market continues to be good. I'm convinced that the answer is with us. So addressing our own structural and operational challenges will just make us stronger and able to win more. One argument for that supporting this is the fact that the pipeline is not going down. Actually, if we look at the pipeline, it's actually going slightly up. Still not big enough, okay? But again, it's the same -- going back to the same point, our intensity in the market and to grab opportunities and go after it. Sebastien? Sebastien De Tramasure: Yes. And on the cost of the financing, it's true that if we look at where we are today, the average interest rate on the bond is around -- we are around 2.7%. I told you about the cost -- financial cost for fiscal year '26 to be circa EUR 140 million. And then it's true that for the coming years, we are expecting also an increase of the financial cost, linked to the renewal and the refinancing of the bond in 2027. So yes, the cost of financing will increase again in the next 3, 4 years, around EUR 30 million. We would be around EUR 170 million, EUR 190 million in terms of annual cost in 3, 4 years. And this will be an average cost circa 4%, 4.5% depending on the cost. It will depend obviously on the market rates. Operator: Sodexo team, we have no more questions registered at this time. Thierry Delaporte: All right. Thank you for your questions. Thank you for the conversation today and for the time. We are very aware of where we need to improve, and we're fully focused on execution and getting the basics right again. So we'll have the opportunity, as we discussed, to go into our plan and ambitions in July, and I'm looking forward to continuing the dialogue with you. Thank you very much for joining us today. Operator: Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.
Jonathan Charles Morley-Kirk: Good morning. This is Jonathan Morley-Kirk. I'm the FD of Jubilee. Today, I'll be going through the interim financials. This will mercifully be a very short jaunt. The interims have been out for about a week, so I anticipate that most of the investors have had a look at them, and I go forward on that basis. I will not be updating all the company's projects, but just really focusing on the interim financials. This is a departure from previous years, but it's more in tune with the spirit of the FRC expectations. Morley-Kirk alone, I hear you cry. No sign of Leon. What a dull presentation on a dull subject. For this, I can only apologize. Leon is back soon for a presentation on the Molefe mine. It will be within a month. It is proposed to have a series of presentations on the various company projects in separate discrete presentations. The presentation on Molefe is likely to be insightful and interesting, 2 adjectives that are unlikely to apply to any presentation on financial statements. The presentation will attempt to answer questions posed by investors, and thank you for all those who have sent in their questions. Some of these questions I've amalgamated to stop repetition and to make it easier. There were some extremely detailed accounting and tax questions, which were very unexciting, and I have addressed those directly with the senders and will not be in this presentation. Thankfully, I hear you cry. The main and recurring question is on the structure and the content of the accounts in the present past. If we go to the next slide, please. This just shows the interims and the annual financial reports and what's included and what's not. As you can see, Zambia has always been included, but South Africa was included, and then it's been excluded. All pretty predictable until the '25 annual report, the annual financial report, which had a post-balance sheet event that required the -- when the South African operating companies were sold, and they were formed into a disposal group. They were not sold by the time of the audit opinion was signed, and that transaction was legally completed only on the 31st of December '25. This gets a bit murky. Under IFRS, the disposal consideration was present-valued back to the 30th of June '25, although it was not completed until the 25th -- sorry, the 31st of December '25. This goes against the contract. Indeed, even the comparatives were restated, so as though the disposal had taken place a year earlier. Thus, the '24 annual financial report numbers do not tally with the comparative 2025 numbers. It gets more murky. The '26 interims have been produced on the basis of the '25 annual financial report, but the '25 interims have been changed to follow suit. So that's as clear as mud, but it is a very strict IFRS interpretation. Investors who are expecting to see the results of the South African ops in the 6 months to 31 December, '25 will be disappointed that they are again accounted for as a disposal group, but at this time, as a discontinued activity, which again makes it a bit unclear again. The interims do show the results of Zambia operations in isolation as such. Tjate and the group or head office costs are now covered in the -- which were previously covered by the South African ops are now lumped in with the Zambian operations. If we go to the next schedule, please. Here are the key highlights from the interim financials. These are, as you see there, factually correct. They are what they are. They all seem to be up and an improvement on previous years, but that's not the entire story. If we just flip to the next schedule, please. There were a few adjustments to these earnings. And those ancients among investors may remember when accounts made sense and there were extraordinary items or exceptional items that were disclosed. This schedule highlights the main extraordinary and exceptional items that are unlikely to reoccur. Shareholders may make adjustments to their EBITDA numbers as they see fit. Personally, I would strip out all one-off nonrecurring items. If we could go to the next schedule, please. Jonathan Charles Morley-Kirk: These are the main questions we received from shareholders, and thanks again for them. Question one, "Is Jubilee Metals a going concern?" Well, the audit of the annual financial report for the -- to the 30th of June, '25 had to have a going concern signed by the auditors and by the Board. 12 months after the sign-off from the auditors, which takes us to December '26, which is about the same sort of time as 12 months from the reporting date of these interims. So technically, nothing has happened to the audit opinion from '25 nor the directors' evaluation. I believe Jubilee Metals is a going concern. But I don't have a crystal ball. And if anybody has one, I'd like to borrow it, please. Second question is, "Is any provision required against the receivable from One Chrome?" You may remember that when we sold the businesses, we were to receive over a period of time, $90 million, of which $25 million has already been received. The receipts were absolutely on time. There was no delays. There were no deductions. There were no changes to it. So as far as we're concerned, One Chrome have honored the contract perfectly. So therefore, there is no impairment review so far. We do keep the situation under close watch. Leon and Riaan Smit are in very close contact with the management of One Chrome. As you can imagine, whenever a large deal is transacted, there are always 1 or 2 small wrinkles that need to be ironed out after the contract is signed. And this is the case. The relationship with One Chrome is cordial and professional. And we don't see or foresee any problems at this stage. The accounting for a receivable over a number of years is quite clear under IFRS. It is present value back to today's value. There is a provision in our accounts for about $12 million, $13 million. This is just a present value adjustment and not an impairment charge against the creditworthiness of One Chrome, just to make that clear. "Were the results of the South African operations in line with management's expectations?" That's a tricky one. The Chrome operations were impacted mainly by the strength of the rand against the U.S. dollar. Maybe this was the dollar weakening rather than the rand getting stronger as such. But the cost of Chrome or the Chrome operations are largely rand-denominated. So when the rand increases in value relative to dollars and we report in dollars, our costs become higher, which is not good. Chrome is sold in dollars, which is fine, but you therefore have a currency mismatch, and it worked against us at this time. I believe over the next few years, the rand will depreciate relative to the dollar. But at the moment, it has been very strong. So that hasn't helped. PGMs had a much greater increase in prices that nobody could have foreseen, which is great news. And I hope it stays that way. The -- just going back to the PGMs, the volumes are broadly in line with our expectations. The prices are in line with the market. Obviously, we sell concentrate. We don't sell the final PGM prices. So we generally get 75%, 76%, 77% of PGM prices. But 77% of a large increase is welcome. However, the PGMs and Chrome together, if you look at them, produced a net loss of $4.5 million for the 6 months. And that was much lower than the management of the South African operations was expecting, largely because of the rand depreciation -- appreciation. Turning to Zambia, where the Zambian production is in line with internal expectations. We saw earlier that the revenues were up and the profits were up and everything else looked good, but the results are slightly misleading to the extent that management expected a higher production level in Zambia. There are many reasons why it didn't happen, but the results look in percentage terms good. They are good, but they should have been better. The rains didn't help. That's one of the main problems. We're looking forward to putting a few tweaks to production, which will increase it going forward. We'll see how that goes. People are aware that we've got a CapEx program in Zambia, which should help production. And the first stage of that is the centrifuge, which is just about to go online in the next couple of weeks, and we'll just have to see how that goes. Sulfuric acid. Now that's one of the main ingredients for our copper production. Now we have 2 suppliers generally. First one is Mopani, which has a contract with Jubilee, has done for a long time. Leon and I met with Charles Sakanya, the CEO of Mopani, about 3 weeks ago. And we discussed, amongst other things, the sulfuric acid issue. They have stopped production. This doesn't seem to be anything other than a problem with their production facilities. It's not a management decision just to stop production because the price is going up. I don't believe that for a moment. But they are working on it, and they gave us assurances that they were trying to fix things as soon as possible. The other contract we have is with a large Chinese producer who has just reduced modestly their production of sulfuric acid. This is slightly worrying, and we're told it's not a long-term issue, just a small reevaluation of where they are. However, the copper -- the association of copper producers has been talking to government, as have Jubilee, just to see what we can do to make sure that sulfuric acid doesn't become a bigger problem. The government has been very open to listening to our concerns. They have stopped the export of sulfuric acid to the DRC, and it has to remain within Zambia, which has helped. The war between Iran and Donald Trump has not helped, as you can imagine. And what happens going forward may or may not impact on the price of sulfuric acid. Personally, I've been looking at combining purchase orders of Jubilee with 2 or 3 other copper producers to see if we can club together and probably get a convoy of sulfuric acid from another jurisdiction and send it into Zambia. This is fraught with transportation issues, customs duties and the like. However, it's early days, and we'll see if that takes us anywhere. On balance, sulfuric acid is a worry. It's not a big worry at the moment, but it is a worry, and we're keeping it very much under review. Following on from the Trump-Iran war is diesel. And I'll just mention it here. We don't have diesel power other than for emergency generators. We don't have trucks which take diesel. However, we do use transportation companies and contractors, which have trucks. And we expect the price of diesel to go up in Zambia. It goes up every quarter, and it's just gone up yesterday, I believe. That is likely to lead to increases in transportation costs. What those are likely to be and for how long, we're unsure at the moment, but it's not going to go the right way for us in the short term. I have a couple of questions on tailings and waste. And people were asking how are they measured? You don't sort of have a great big tailings dump hundreds of meters long and 100 meters wide and at differing heights. You can't measure it with a tape measure or a ruler. We fly drones over it, and those drones have got very complicated volumetric calculators on board. They work out the volumes of the site. They compare the height to the ground level, and they come up with a pretty good volume. Now sometimes we fly them twice just to make sure that the first volume metric is in line with the second, but that's only a control. The problem is not the volume as such. It's working out the density. And with rains, rains generally compact the surface, and that will have a difference to density as it might have in the middle of the waste or the tailings or indeed at the bottom. So from time to time, we will drill a few wells through the tailings just to see what the density is and then apply it to the volumetrics. In a similar way, I might add that if we want to measure how much resource or overburden has been removed from Molefe mine, for example, we would fly drones over there, and we can work it out that way. Last question is on guidance. "What are the issues and when it can be expected?" There are a lot of post-balance sheet events from the 31st of December, which impact or may impact guidance, making it rather tricky. The availability of sulfuric acid could be one and the impact of diesel prices might be another. We've got the centrifuge coming online this month at Roan. It will be set up, tested and then ramped up. How it works, we don't know at this stage. We're always hopeful, but we don't know. The mine plan at Molefe, you may have seen recently, that's up and running. Again, when you're changing a mine plan, it's never clicking your fingers and it's straight line to heaven, but it may have 1 or 2 gremlins. The rains are still with us and not as bad as they were, but they're still with us. And what management have decided to do is just wait to see how these pan out, so we've got some certainty. We could stick some numbers out there, but they would be a little bit open to interpretation. So to avoid that, we decided just to hold off a little bit, wait and see how things go and tell you as soon as we are comfortable that the results are as expected. That's about all I can say on guidance at the moment. There was just one other question I was -- I received just before we went on the air. And that was on the financing costs on the South African operations after the sale to One Chrome. You may recall that the net assets were $90-odd million. The debt, which was trade finance of $40 million plus a bank loan of about $16 million, totaled $56 million, which gave an enterprise value of $146 million. All that trade finance and the bank loan has rolled over to One Chrome. Therefore, the costs or the finance costs in relation to the South African operations has reduced, and it will not come back. The only asset we have in South Africa now is Tjate. Tjate has got no lending secured against it. It's completely free. Zambia, in a similar way, does have some trade finance and some bank debt against various parts of it. This was put on over a number of years and what I can only say is, a suboptimal manner. It may have seemed right and relevant at the time. But now that South Africa has gone, the management team have got -- really got to grips with what we've got in Zambia. And where we have -- what we have in Zambia is that we have some short-term financing against long-term assets. This is a mismatch, and it needs to be resolved. The finance team and I are working hard to rejig the financial liabilities we have in Zambia. We are looking to work with our banks to get a more appropriate form of funding. And so we will have long-term assets funded by long-term liabilities, and we will have short-term funding for short-term assets. And therefore, we will be more like most mining companies. That's work in progress, and I hope to report on that in the next 6-month update. That's all the questions I have to answer today. I'm always very welcome to receive questions from shareholders if they want of a financial nature. I can't really comment on production and stuff as I'm not a production or chemical engineer. But if you want a dull, boring accountant to have a rummage through some questions on tax and accounting, please feel free to send a question to myself or to Kathy. Thank you very much. Operator: Perfect. Jonathan, that's great. Thank you for updating investors today. Could I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback. On behalf of the management team of Jubilee Metals Group plc, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all.
Operator: Good day, and thank you for standing by. Welcome to Lotus Technology, Inc. Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I'd now like to hand the conference over to your first speaker today, Ms. Michelle Ma, Head of Investor Relations. Please go ahead. Michelle Ma: Thank you, and welcome to Lotus Tech Fourth Quarter and Full Year 2025 Earnings Call. My name is Michelle Ma, the Head of Investor Relations here at Lotus. With me today are the CEO, Mr. Qingfeng Feng; and the CFO, Dr. Daxue Wang. Our conference call materials were issued today and are available on our Investor Relations website. We are also broadcasting this call via webcast. Before we continue, please be reminded that today's discussion will contain forward-looking statements pursuant to the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's actual future results may be materially different from the views expressed today. Further information regarding risks and uncertainties is included in Lotus Tech's relevant filings with the U.S. Securities Exchange Commission. The company undertakes no obligation to update any forward-looking statements, except as required under applicable law. Please also note that our earnings press release and this conference call will include disclosure of unaudited GAAP financial information as well as other non-GAAP financial measures. You can find a reconciliation of receivers in the press release available on our Investor Relations website at ir.group/lotus.com. With that, I'm delighted to turn the call over to our CFO, Dr. Wang, please. Daxue Wang: Good morning, good afternoon and good evening to our shareholders, analysts and media friends. Thank you very much for joining us for Lotus Fourth Quarter and Full Year 2025 earnings discussion. I'm Daxue Wang, Chief Financial Officer of Lotus Tech, to my privilege to once again present the company's unaudited financial results. In the fourth quarter, the company delivered 1,108 vehicles, including 1,239 lifestyle [indiscernible] and 670 sports cars. For the full year 2025, total deliveries reached 6,120 units. While this represents a 64% year-on-year decrease. These figures reflect a traditional year marked by the impact of tariffs, the phase start of the upgraded models deliveries an intensified market competition. Total revenues for the fourth quarter were USD 163 million, a 40% year-on-year decrease. For the full year 2025, total revenues were USD 519 million, down 44% year-on-year. Sales of goods fell 48% year-on-year to $463 million, driven by lower sales volume, while services revenue surged 69% year-on-year to USD 36 million, primarily due to the R&D service revenue. The commercialization of our intellectual properties through technical licensing and other channels has demonstrated significant market recognition of our pioneering technologies. Gross margin improved significantly to 10% in the fourth quarter compared to negative 11% in the same period of 2024. For the full year, gross margin improved to 9% from 3% in 2024. This improvement was driven by the global rollout of upgraded model deliveries, a favorable shift in our sales mix, higher [indiscernible] inventory dynamics and disciplined cost control. We continued our track record of displayed cost management, operating loss narrowed by 65% year-on-year to $66 million [indiscernible] in the fourth quarter, consecutive sequential quarterly reductions in operating losses demonstrate the company's commitment to operational efficiencies. In fiscal year 2025, Lifestyle vehicles deliveries accounted for 7% of the total. With sports car making up the remaining 30%. Deliveries were primarily driven by the China and the European markets. Importantly, growth in Chinese deliveries outpaced the broader premier of the segments, underscoring the competitive strength of our product portfolio within China. By region, China accounted for 45% of full year deliveries, Europe, 34%; North America, 60% and the rest of the world, 5%. In the fourth quarter of 2025, our sports car deliveries to North America [indiscernible] remarkable Q-o-Q growth, even with a 5% local price increases. [indiscernible] 2 sales part by the U.S., adjusting U.K. auto import tariffs start to 10% broad policy clarity. The recovery of sports car sales in the U.S. during the third and fourth quarters fully demonstrated our strong brand appeal on the price acceptability in the region, driving a due rebound in sales volume and gross profit margin. Research and development expenses were USD 171 million for the full year, down from USD 275 million [indiscernible], reflecting targeted prioritization of our technology investments, selling and marketing expenses decreased to USD 153 million from USD 322 million, and general and administrative expenses declined to USD 136 million, from USD 227 million. These reductions underscore our strong commitment to enhancing regional efficiency. Together with gross profit increased in 2025, operating loss narrowed 46% year-on-year and net loss decreased 58% year-on-year. On a non-GAAP adjusted basis, adjusted EBITDA for the full year improved by 63% year-on-year [indiscernible] a loss of USD 356 million from USD 961 million in 2024. Beyond these numbers, I would like to reiterate that we have not reduced operating expenses for multi consecutive quarters through value-added measures. Our improved margin performance in the fourth quarter and full year of 2025 demonstrated our continued focus on cost optimization and operational efficiency. And this was also reflected in our significantly improved bottom line of results. Going forward, we expect the global launch of our PHEV model for me to drive sales and revenue growth. Additionally, we packed up the combination of focusing on revenue growth efforts maximizing product positioning and enhancing margins through strict cost reductions will allow our business to progress towards profitability and enable us to deliver long-term value to shareholders. With that, I will now turn the floor over to Ms. Feng. Thank you. Feng Qingfeng: [Interpreted] Hello, everyone. This is Qingfeng Feng, CEO of Lotus Group. Thank you for joining the Lotus Technology Quarter 4 and Full Year 2025 Earnings Conference Call. Last year, 2024 was a really important year for us. A true turning point in our strategic transformation, even with other global markets, ups and downs and higher tariffs, we made solid progress on our core operating metrics by staying focused on smart execution, pushing technological innovation and tighten up how we run the business every day. I'll walk you through the latest development in 4 key areas. Our recent highlights market strategy, product lineup and the progress on our new hybrid model for me or Electrox. With our 78-year racing heritage, building the Lotus brand has always been front and center for us. In 2025, we scored some real breakthroughs on both the business and the brand front. In motorsports, we wrapped up for the very first Lotus cars, [indiscernible] in Malaysia back in November last year, 44 raise-back floater scenarios heat to the track and was a sensational [indiscernible] of the brand's rating DNA. The 2026 season actually kicks off on April 3 of this year and we will keep using this platform to share our motor sports spirit and cutting-edge tech with fans everywhere. In equity financing, we secured a strategic access investments with USD 23 million from ECAREX, deepening our global strategic partnership through capital price. Going forward, we will jointly accelerate innovation in next-gen intelligent copies, ecosystems to deliver AI-driven experiences to consumers and collectively enhanced product competitiveness. On the tax side, our [indiscernible] became the first and only Chinese-made electric vehicle to earn UN-R171.01 certification for highway navigation systems. [indiscernible] is also only the second automaker in the world to achieve this which is a huge validation of our advanced driver assistance systems and opens more doors in the premium European markets. On brand development, we teamed up with a house [indiscernible] for the exclusive in progress acquisition after the 2026 Milan design week. We showcased our industrial design philosophy and to the [indiscernible] of car, proving once again how Lotus, blends, technology and aesthetics in a way that fills a luxurious and a forward thinking. For our market strategy, Lotus is continuing to refine our global footprint and make ourselves channel more efficient. We now have a well-balanced distribution network across 4 major regions as of the end of December, we had a 211 cells [indiscernible] in Europe, 58 in China, 48 in North America and 38 in the rest of the world. In China, we kept expanding and upgrading our dealer network. We opened a new store in the city of Italian in China and refreshed to several others. Dealers have been hiring more staff, adding more outlets and ramping up our online marketing, which has clearly improved to both customer acquisition and satisfaction. And in North America, we plan to grow our Canadian dealer network on the basis of existing channels. Now we have 6 dealers in Canada. We are expected to expand to sell by the end of the year. What [indiscernible] local tariff policy opportunities. The electro is the only Chinese made electric vehicle priced above USD 80,000 that's fully certified for the North American market. So we expect a strong sales growth there we will start customer deliveries in Canada in May. In Europe, we streamlined our organization and [indiscernible] and gave each region more freedom to tailor strategies to local needs. For example, we introduced the business addition models and vehicle value production plan in Germany and by expanding corporate and leasing business in the U.K. As I previously mentioned in the quarter 3 earnings conference call notice stained discipline on costs. We are closing a few underperforming stores, expanding the high-performing ones and redirecting resources to the market [indiscernible]. On our product line, we are driving product competitive by expanding both our truck range and powertrain options playing to our strengths while fixing any gaps. The expansion and upgrading of the portfolio were core highlights of our work through the year. In 2025, new variance of [indiscernible] and EMEA were launched and delivered in major markets, receiving positive market feedback. The sales proportion of new models continue to increase helping stabilize product sales. In 2025, we also focused on hybrid product development and in the first quarter of this year, we launched our all new [indiscernible] and delivery started just 1 day after the launch. This hybrid model is mainstream luxury buyers and other great option and this reach markets that are moving more slowly towards the 4 EVs like Italy, Spain and Saudi Arabia, it's also bringing in a broader mix of customers. In the future, we will keep strengthening both the Sport Sky lifestyle vehicle to our lineup and we will roll out some more hybrid spills on our new [indiscernible] real architecture. This gives consumers real choice, combustion, battery electric or hybrid, whatever feeds their means. And also allow me to share with you the progress of the launch of FMI, which is the first hybrid in low to 78 years. In the EU, it is based as [indiscernible], like I previously mentioned, this completely changes what the [indiscernible] can do. [indiscernible] was launch in China on March 29, 2026, and deliveries began on March 30. Before the launch, we actually invited the dealers and media outlets from the EU to test the ride and to test the drive for this particular vehicle, and we have received a wide positive feedback. [indiscernible], runs on our ex hybrid architecture, a 900-volt high-voltage platform paired with a 70-kilowatt hour battery and a total output of 952-horsepower in CRTC testing, it delivers more than 1,400 kilometers of total range. Fuel consumption is just 0.7 liters per 100 kilometers in WLTC. And even when the battery is depleted, it's only 6.1 liter per 100 kilometers. From 0 to 100 kilometers of hour, Lotus [indiscernible] electric only takes 3.3 seconds. And even when the battery is down to 10%, it still hit 3.5 seconds. And in other words, performance stays strong at massive battery level. Breaking is equally impressive, 120 kilometers power in just 33.9 meters and the car state of both international [indiscernible] decision after 12 heavy stores in a row, plus at high speeds, the 4 speed active railing conflicting to air break at 170-kilometer hour, generating 120 kilograms of downforce to help shorten the stopping distance and keep the car stable, bringing safety protection and driving confidence to drivers and passengers. Aerodynamics remain a Lotus signature for me carriers forward our porosity design language with a low purpose for fans and functional [indiscernible] every line has a purpose [indiscernible] use the entry effects to boost the downfalls and the 206-degree wind showed angle cost drive effectively. [indiscernible], while we gradually launched to the global market in the second half of the year, wholesale deliveries in the EU states at the end of October, certification for mill is will wrap up by year-end with orders opening in October, official launch in November and the deliveries in December. In the U.K., we expect the wholesale to begin in mid-2027. Looking ahead, we will keep accelerating product updates and the market expansion. On the one hand, we will ramp up 4 new global deliveries and at the same time, an advance the R&D and launch of new models as planned. On the other hand, we will deepen our channel partnerships and technical collaborations to make the Lotus name even stronger worldwide. Thank you again for your time and support. I will now hand it back to the host for your questions. Operator: [Operator Instructions] We will now take our first question from the line of Laura Lee of Deutsche Bank. Unknown Analyst: I want to ask about -- just thinking about the total delivery rates of 2025. We actually went down year-on-year by almost half. So what are the main drivers of this volume decline in '25? And how should we think about the potential impact of geopolitical situation on the future sales? Feng Qingfeng: [Interpreted] Yes, I do see there's a decrease -- delivery volume decrease year-on-year, and it has been affected by a lot of elements. The first one is the uncertainty of tariffs. It has negatively impacts our production and also inventory. For example, the U.S. tariff to U.K. make vehicles affected our volumes about 60%. In addition to that, the EU and U.S. tariffs against Chinese made EVs have also exerted pressure on our pricing in the EU. And for the U.S. market, basically, it is impossible for us to enter. For those influences, they have also affected our inventory management and our destocking progress. We actively started destocking in 2025 and adjusted our product lineup. But after the adjustment, the logistics have also take some time and leading us to some late entry to some markets. In 2025, our stock level has been reduced dramatically by 43% to a very healthy level and is set a very solid accounts for our 2026. In addition to that, we've also adopted a lean efficient organization to help us boost our profit margin. Despite the negative impact of geos and tariffs, we do see some new opportunities. For example, the tariff between U.S. and U.K. have been settled. The U.K. making vehicles to the U.S. will be charged to 10% tariff and it is beneficial news for our Emera cells. And actually, the Emera cells in the U.S. have been recovered to a normal status. In addition to that, Canada has also announced a policy towards China-made EV, the tariff will be lowered from 100% to 6.1%. And it is conducive to our exploration in North America, given we have already certified our electro for U.S., it's a good opportunity to leverage such chance to boost our sales volume. In addition to that, for our PHEV, EU at this moment, currently kept 10% tariff to Chinese-made PHEV. So this is also a good window opportunity for us to launch PHEV in October to EU markets. Despite the challenges that we've seen in the U.S. and the EU markets, we do see some positive feedback from China market. Our sales volume have been increased from 2,900 to -- from 2,800 to 2,900 , an increase of 3% year-on-year. And actually, in 2025, the luxury market in China priced over RMB 400,000, dropped to 4.4%. But in that circumstances, we actually kept a 3% increase and it is a demonstration that the Lotus product is very competitive. We can achieve stable increase in such a year's competition and the brand of Lotus have been gradually recognized in China market. In 2026, as we are going to roll out the PHEV in different markets, it will help us to reach a wider market. For example, some markets with the slow adoption of EUV, such as Italy or in Spain, and it also helped us to touch a wider customer group who may have a range [indiscernible] and in the future, we are pretty confident that '26 is going to a year for notice to recover. In addition to that, we're also exploring new markets such as South America, Brazil, we've already had a dealer there. [indiscernible] to be opened in mid of this year and the first batch of the vehicle has been wholesale. Again, in summary, despite there is a negative influence the last year, we see some positive opportunities lying ahead. Thank you. Unknown Analyst: Okay. Great. Appreciate the color. Just to follow up on this volume perspective. So after the launch of Lotus For Me, the [indiscernible] model, which I believe should have started the release by the end of last month. Could you provide an update on the current order intake and delivery programs? And could you like elaborate more about the volume expectation and the strategic [indiscernible] Feng Qingfeng: [Interpreted] After the launch For Me on 29th of March, the auditor status is actually telling our expectation for me is the first hybrid model of Lotus in the past for 17 years. It redefined the hypers to cover all scenario. And this is one of the reasons that we can reach a wider customer group. Our consumer assets have been increased by 5x. And on the OEM, the [indiscernible] platform, we ranked the 20th on the vehicle consultation target. And on other integration platform, for the vehicle price above RMB 500,000, you ranked the 10th. And in other words, this indicates that For Me and Lotus gains greater visibility and exposure and wider [indiscernible]. For PHEV, particularly PHEV priced about 400,000 and in China, we see a trend of increasing. In 2022, the total volume of such segment is around in 2024, it's increased to 280,000. And in 2025, we see this getting closer to 30,000. In other words, for PHEV in China, now it is a good time to enjoy the benefits. [indiscernible] helped Lotus to reach a wider customer group in the past the customers who are interested in our BEV of offerings are most entrepreneurs under the owner of the business or business owners. Now the company management actually shows their interest in our products. And of our target customer group, previously, it's a bit younger. Now we reached to a more senior age level. Among all those customer groups, the owners of the BMW X5 and also ask shows greatest interest on our products. [indiscernible] launch this For Me or [indiscernible] in the second half of the year to EU market and for EU market per se, the PHEV penetration rate is also getting higher given the emission regulation is getting stricter. The tariffs for Chinese-made in EU is 10%. And for Chinese made EV is 28.8%. There's a difference 8%, which means this is a good opportunity that we can leverage. In the EU, [indiscernible] are increasing, particularly from 2024 to 2025, there's an increase of 7.2% in some major cities, Spain, Italy and Germany. And in 2025 December itself, we see an increase of 30% year-on-year. And overall speaking, the PHEV is going to help us to have a well-balanced product lineup and product portfolio and give our targeted luxury, we can see there's more options to choose. The BEV and PHEV from Lotus will help us to acquire more market share and wider marquee coverage. Operator: We will now take our next question from Brian Lantier of Zacks Small-Cap Research. Brian Lantier: It was really encouraging to see the improvement in gross margin going up to 9% for the full year and 10% in Q4. Obviously, services appear to have driven a lot of that. How recurring do you think that is? And do you have any guidance for 2026 gross margins? Daxue Wang: Thank you, Brian. The company's gross margin improvement in 2025 driven by 3 key factors. First, as [indiscernible] has just elaborated, we successfully clear aged vehicle inventories in the first half of the year than the second half saw a higher portion of new vehicle sales and a significant reduction in overall variable sales subsidies. And second, continuously reduced material costs through TD's centralized procurement platform as third, we increased the share of the high-margin service revenue, which lifted the overall gross margin. Looking hard 2026, despite significant external headwinds such as continued price increase for car components like batteries and tips, which will put pressure our gross margin expect total procurement costs, production costs and unit D&A to our decline. At the same time, let's start to maintain the overall production pricing at count levels leading to further gross margin improvement. And in addition, the ongoing merger with the U.K. local cars is expected to enhance the production and R&D efficiency and further support our gross margin growth. Brian Lantier: Great. That's helpful. Obviously, operating expenses were cut significantly in 2025, which helped to narrow your operating loss. Could you talk about any key cost control measures that you've implemented? And whether you feel like they're sustainable in 2026? Daxue Wang: Yes. Thank you. So the company's cost control plan consists of structural long-term initiatives rather than these temporary measures. On the MB front, the company fully leverages GD's R&D and resources enabling us to reduce investment in general-purpose technologies and focus on technology development, [indiscernible] improving our R&D efficiency. And on the marketing front, the company dynamically and flexibly manage its marketing plan to enhance marketing efficiency, [indiscernible] collaborated. And on the management front, the company strictly controls administrative expenses streamlined organizational structure and optimizes the personal management reworks to improve operational efficiency, and we believe these factors will continue to play a positive role in 2026. Thank you. Operator: I'll now turn it back to the room for questions from the webcast. Unknown Executive: Thank you for all questions on our conference call. We will now be answering investor questions a webcast. Our first question is Service revenue grew 69% year-over-year in 2025. What are its core breakdown and the key drivers behind? Daxue Wang: Yes, I'll take this question. The company's service revenue primarily consists of R&D service revenue and vehicle service income. In 2025, R&D service revenue accounted for over 75% of the total with the customers, including first tier OEM manufacturers. This fully demonstrates the market's strong recognition of company's MB capabilities as well as the company's ability to commercialize our intellectual properties. Unknown Executive: Our second question from the webcast is what's the implication that the risk of rising global oil price has on the company? Feng Qingfeng: [Interpreted] Well, I think it's a good news [indiscernible] new energy vehicle and a good opportunity for us, particularly for PHEV because for me, our first PH model can be solely present by gasoline fill or solely driven by battery. It's a case or different tax of needs from our consumers. And it's a consumption of both the fuel and the late are very low. As I previously mentioned, the comprehensive fuel consumption is only 0.07 liters per 100 kilometers. And even at the depleted status, the fuel consumption is only 6.1 liters, 100 kilometers. So overall, this is a good opportunity for us to catch. Especially in the markets such as Middle East, where the charging infrastructure has not been very mature. The BEV adoption rate is slow. In those markets, we believe the PHEV model for me is going to play an important role. Of course, we do see some headwinds given the hikes of oil price. For example, the cost of our supply chain might be increased under the bomb cost might be also increased correspondingly and those are some negative influence we may see. And some of these established luxury OEMs may take this opportunity or field pressure to accelerate their pace into PHEV arena, such as we see March has been releasing the KN BEV model. And we also see the [indiscernible] are launching some ranging standard models. Of course, for Lotus, we would keep demonstrate our spirits to be differentiated and the customization and player leading round in this front. Operator: [indiscernible] the question-and-answer session. And with that, I'll now hand the conference back to Ms. Michelle Ma for her closing comments. Michelle Ma: Thank you all again for joining us today. We will conclude the call now. The Investor Relations team remains available to answer any further questions you may have. Please feel free to contact us through the contact information on our website. Have a great day. Thank you. Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect your lines.
Operator: Good day, and welcome to the FGI Industries, Inc. Fourth Quarter 2025 Results Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Jae Chung, CFO. Please go ahead. Jae Chung: Thank you. Welcome to FGI Industries 2025 fourth quarter results conference call. Leading the call today are Chief Executive Officer, David Bruce; and Chief Financial Officer, Jae Chung. We issued a press release after the market closed yesterday detailing our recent operational and financial results. I would like to remind you that management's commentary and responses to questions on today's conference call may include forward-looking statements, which, by their nature, are uncertain and outside of the company's control. Although these forward-looking statements are based on management's current expectations and beliefs, actual results may differ materially. For a discussion of some of the factors that could cause actual results to differ, please refer to the Risk Factors section of our latest filings with the SEC. Additionally, please note that you can find reconciliations of historical non-GAAP financial measures in the press release issued yesterday and in the appendix of this presentation, which is available on the company's website. Today's call will begin with a performance review and strategic update from Dave Bruce, followed by a financial review from Jae Chung. At the conclusion of these prepared remarks, we will open the line for questions. With that, I'll turn the call over to Dave. David Bruce: Thank you, Jae. Good morning, everyone, and thank you for joining our call today. I am pleased to share that our fourth quarter results reflect the strategic investments we've made in our organic growth initiatives across our brands, products and channels or BPC strategy. While the broader industry navigated a fluid environment following the Supreme Court decision in February and subsequent tariff actions, FGI's strategic focus has allowed us to maintain a solid foundation. When evaluating our fourth quarter revenue of $30.5 million, it is important to consider 2 primary factors: prior year comparatives. We were up against a significant order pull forward in the fourth quarter of 2024 as customers accelerated purchases ahead of anticipated trade policy shifts. Tariff headwinds. The industry outlook remains uncertain due to the current tariff environment, which impacted volumes in our sanitaryware and shower systems businesses despite positive underlying demand trends. However, despite these quarterly timing shifts and macro volatility, FGI's full year performance remained remarkably stable. On a full year basis, revenue and gross profit were each down less than 1% compared to prior year. This stability, coupled with our ability to drive revenue growth well above the broader market, underscores the strength of our strategic initiatives. Furthermore, we continue to high-grade our portfolio. Our gross margin expanded by 210 basis points to 26.7% this quarter, driven by the better relative performance of our higher-margin businesses. While we saw temporary revenue pressure in the U.S., Canada and Europe, our geographic expansion into India and our continued growth in Covered Bridge Kitchen Cabinetry hold significant promise for driving growth in the coming quarters. I want to commend the FGI team for their dedication to our long-term objectives. By navigating the volatility of 2025 with agility, we have protected our margins and positioned the company for future success. With that, I'll hand it over to Jae for a more detailed financial review. Jae Chung: Thank you, Dave, and good morning, everyone. I will begin by providing additional details on the quarter, followed by an update on our current liquidity and balance sheet. Finally, I will conclude with our guidance for the full year 2026. For the fourth quarter of 2025, revenue totaled $30.5 million, a decrease of 14.4% compared to the fourth quarter of 2024. Gross profit was $8.1 million in the quarter, a decrease of 6.8% year-over-year. Our gross margin increased to 26.7% in the quarter compared to 24.6% in the prior year, driven by better relative performance of some of our higher-margin businesses. Our operating expenses decreased to $8.8 million compared to $10 million in the prior year period due primarily to optimizing our warehouse operations. GAAP operating loss was $0.7 million, improving from an operating loss of $1.3 million in the prior year period. The improvement in the operating loss was a result of a decrease in selling and distribution costs as well as lower R&D costs. GAAP net loss attributable to shareholders was $2.6 million compared to a net loss of $0.4 million in the same period last year. Net loss for the fourth quarters of 2025 and 2024 included a valuation allowance on deferred tax assets, business expansion expense and nonrecurring IPO-related compensation. Excluding these items, adjusted net loss for the fourth quarter of 2025 was $0.6 million versus an adjusted net loss of $0.7 million in the same prior year period. Moving to our balance sheet. At the end of the fourth quarter, FGI had $8.5 million in total liquidity. We are providing our 2026 guidance as follows: our revenue guidance is $134 million to $141 million. The adjusted operating income guidance is $0.7 million to $2.5 million. The adjusted net income guidance is a loss of $0.3 million to a positive $1.1 million. Please note that the guidance for adjusted operating income excludes certain nonrecurring items. Adjusted net income excludes certain nonrecurring items and includes an adjustment for minority interest. That concludes our prepared remarks. Operator, we are now ready for the question-and-answer portion of our call. Operator: [Operator Instructions] Our first question today comes from Reuben Garner with Benchmark Co. John Joseph McGlade: This is John McGlade on for Reuben. First, congratulations on the quarter. Just a few questions. If maybe you could go into a little bit more detail on what assumptions in the end markets you're assuming relative to the full year guide? David Bruce: John, this is Dave Bruce. Yes, it's a great question. We had a lot of momentum going into 2025. And then, of course, the global trade issues hit and disrupted some of that. And we were -- we feel really comfortable in all of our broader category momentum that we have right now. I think you're going to see, for sure, a bit of uncertainty until the trade and tariff situation sort of equalized to some degree. There's still a lot of uncertainty out there. And of course, not to mention what's happening now with the war in the Middle East. But for our own particular position, we're pretty comfortable with where we're going with some of our key customers. We have a lot of new programs that are being implemented. Some were delayed. I think I mentioned last quarterly due to some of the tariff uncertainty. But for the most part, we feel pretty good about the foundational part of our business in each of our -- the broader categories. John Joseph McGlade: Okay. And then I guess along with that, obviously, you've mentioned that the recent tariff decisions are kind of impacting demand to a sense so far this quarter. Could you talk about really what demand has looked like year-to-date versus how it closed through the fourth quarter, where it appears like it was somewhat weak. And then also, too, with that tariff decision, do you anticipate that you or your customers would be the ones to benefit from any refunds if they were to come? David Bruce: Yes. So to answer your first part of your question, we like what we're seeing so far in Q1 based on our expectations and based on what we've built into our guide. We -- as you can imagine, there's still a lot of uncertainty. But because we have some good momentum in some of our key categories, like I mentioned, the expectation is through Q1, we've been pretty happy with what we've been seeing for the most part. As far as any tariff adjustments, I think that's way too early to tell. We're going to evaluate everything as we move along. We fully expect, at least from a perspective of planning that a lot of the tariffs, particularly the IEEPA tariffs that were negated by the Supreme Court, most likely will come back in other forms and sectorial tariffs as the year goes on. So we're not anticipating that things are going to remain static as they are today. So that's something that we'll evaluate as we continue to move forward through this uncertain period, probably for the balance of the year. Operator: The next question comes from Greg Gibas from Northland Securities. Gregory Gibas: I was wondering if you could maybe elaborate or speak to the pickup inactivity that you were seeing in Q1 of 2026 versus maybe the order activity that you saw in Q4. David Bruce: Yes. I think I mentioned on the opening -- if we think back to Q4 of 2024, there was a lot of order pull forward happening then with a lot of anticipation for tariffs to come, which was the correct anticipation, obviously, in early 2025. So we faced -- that was part of our comp problem or issue or challenge for comparing to year-over-year. Secondly, because of the major tariff impact in Q2 in 2025, it was a real whipsaw effect. We had a lot of customers pause orders as we did with some of our inventory at the time until we can fully understand the tariff situation. And some of those situations obviously have whipsawed inventory momentum and ordering patterns that interrupted those ordering patterns for the year. So that also contributed to a timing effect for the quarter's business as well. Gregory Gibas: Okay. Fair enough. And I guess I wanted to follow up too on any progress as you evaluate that China Plus One strategy in terms of diversifying geographic sourcing? Maybe what's come of your evaluation, like where you stand today in terms of continuing to move forward in diversification there? David Bruce: Yes, yes. No, we've made some really good progress there. We are -- have secured some additional partnerships outside of China. And not a lot of detail to give you today, but we will have impact to our business from diversification and sources such as Thailand and others that will have migrated business outside of China, which will help lessen the impact of the uncertainties that occur over there. And we're looking at other areas of the world as well outside of Southeast Asia. We're working diligently with some new partners as well. So we've been pretty thrilled with some of the activity that we've seen, and we're pretty confident we're going to be able to execute on several of those in the short term. Gregory Gibas: Got it. And I guess lastly, if you're able to -- I wanted to dive a little bit deeper on, I think, the last analyst questions as it related to, obviously, things being out of your control, geopolitical, certainly, the Middle East having an impact. But as we think about your BPC strategy and your ability to execute on that, I know you mentioned India again and adding more dealers there. But if you could maybe explain what you're kind of excited about in terms of those growth opportunities, right? I mean, obviously, there are these headwinds outside of your control, but India probably being one of them. But could you go through a few in terms of the new program launches that are perhaps exciting in '26? David Bruce: Yes, absolutely. You bring up India, which is a great one. And we've been seeing it on a weekly and monthly basis with the addition of the dealers. They just continue to grow. We've also -- a large part of that growth in India has come from the Mumbai area, but we're now starting to penetrate Delhi slowly, but surely. We've started to add distributors up there along with several new dealers. Outside of India, something that we haven't talked too much about is a new wholesale bath initiative in Germany. And we've been very successful. We opened up a small distribution center in Germany, and we've been -- we hired a gentleman who will be -- is concentrating solely on the wholesale bath business in Germany, and that's been going very, very well for the last 8 to 10 months. That's continuing to grow. And then on the U.S. side as well, we have been -- I think I've mentioned on previous calls, really making headway in establishing proper representation and distribution throughout the country for the wholesale business in the United States. And we're -- at the same time, we're evaluating our logistics footprint and distribution center footprint in the U.S. that may be able to better serve some of those newer markets as we expand into some of those new customers and new territories as well. Operator: [Operator Instructions] This concludes our question-and-answer session. I would like to turn the conference back over to David Bruce for any closing remarks. David Bruce: Thank you, everybody, for your time and interest today. We really do appreciate your continued support of FGI. Stay well. And if we don't connect during the quarter, we look forward to speaking with you on our next call. Thank you. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
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