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Martin Mollmann: First of all, I'd like to thank you for joining our Q4 and Full Year Earnings Call regarding our Annual Report we have published today. Within our release this morning, you found adesso confirming the preliminary full year 2025 figures published in February. Adesso showed another year of extraordinary growth. Sales reached EUR 1.47 billion and was up by 14% purely organic. EBITDA of EUR 123.6 million rose by 30% and reached the upper end of the guided range. So targets were fully met. Outlook for 2026 sees further growth in sales and earnings for the company, although macroeconomic situation remains challenging. I'd now like to welcome as well our CFO, Michael Knopp, who will give us a deeper insight into the last year's figures, the dividend proposal and the guidance for the current year. [Operator Instructions]. Thank you so far. And Michael, please go ahead. Michael Knopp: Thank you, Martin. Good morning, everybody. I will guide you now through our annual financials for 2025. And before I start, I need to highlight that we have restated our figures for 2024. I will explain this later to you. As always, we start with our sales. Sales last year came in with EUR 1.466 billion. That's an increase of [ 40% ] compared with our previous year, EUR 1.286 billion. We are very, very satisfied with these figures. I mean this is a very strong growth, purely organic within a tough market environment. And if we a little bit look back at the beginning of the year, at our expectations, 2023, 2024, Germany was in a recession, and Germany is our most important market. We generate 84% of our revenues in Germany. And therefore, the economic situation in Germany is pretty important to us. We expected for 2025 a little improvement, again, a slight growth of our gross domestic product. We knew there's the German election, which might have an impact on our revenues in the public services sector because there's always a slowdown before the election and also after the election until the new government, the new coalition is formed. At the beginning of Q2, we became a little bit more optimistic because we hope to get a little bit a tailwind from the 2 additional budgets, which were approved at that time regarding the infrastructure and armed forces. However, during Q3 and Q4, they turned out that there are no impacts visible so far. And therefore, it was just what we initially expected, tough market environment, but in general, a market which will support our business in the IT services. Let's have a look at our headcount. Headcount, the average figure of FTE grew by 8%. That's a little bit less what you might have seen in previous years, but that's also what we targeted for to be a little bit more cautious in adding headcount. At the end of 2025 on the 31st of December, we employed 11,298 headcounts. This is an increase of 978 compared to 10,320 at the end of 2024. If we look at this growth, roundabout [ 60% ] of the new headcount was added in Germany, roundabout [ 40% ] abroad. And around this 390 employees, roundabout 300 were added in those countries where we do shoring in Romania, Bulgaria and especially in India. In India, we increased our headcount from around about 100 at the beginning of the year to 300 employees at the end of 2025. That was an important goal for us to grow our activities in India, and we were pretty successful in doing that. Let's have a look at the sales split. And this slide, I think, shows you that we have very -- that we have a very diversified business, which is especially in these days, very important because it shows that adesso in terms of revenue has a very resilient business. If we look at our different sectors, none of our sectors contributed more than 20% if we look at our top 10 customers, they contributed 22% of our revenues and our -- in terms of revenue, most important customer contributed 3.2%. So we are not dependent on a single sector, on a single customer. This is a very nice status. And actually, if you look at the different sectors, it explains a little bit why we were able to grow our revenues by 40% because we are very strong in insurance, banking, health, public and also utilities. I mean, yes, all these sectors also are dependent on the development of our economy, but they are probably a little bit less impacted by all these tariff hiccups by volatile energy prices. And therefore, that's a good positioning. Insurance was pretty strong last year in sales, but also in order entry. We have seen very strong order entry, especially in Q4. Banking, a nice development as well, plus 9%. Health, again, plus 30%, driven by our bread and butter business, but also by one big project win in Q2 in the statutory health sector where we won with one of these companies, the building of a customer portal, public, I was complaining a few minutes ago about the missing tailwind from the government. However, despite that, we were able to grow it by 11%. We hoped to grow more, but I think 11% is a very strong figure. Automotive, minus 4% tough market environment and only a decrease by 4%. That's okay for us as well. Manufacturing, nice growth of 8%. And if we look at utilities, 24%. This was again driven by our strong foothold in this business in the SAP area there. Let's have a look at the sales split by regions. Our overall growth last year, 14%. In Germany, we even grow 15%. And it shows again, Germany is our main market. We are very strong there. Actually, last year, we became the #1 IT service provider with a purely German origin. There are 3 other companies, Accenture, Capgemini, IBM, who have higher revenues in Germany, but they are not German origin. So we are the biggest German company now in this area. And if we look at our sales development abroad, it's plus 7%. On the first view, this is disappointing. But if you dig a little bit more in detail into this, you notice that Switzerland has shown a decrease of 3%. Switzerland contributes a little bit more than 50% to our revenues abroad of roughly EUR 240 million. If you exclude Switzerland, growth rate abroad was 21%, which is fine for us. We have seen strong growth and also a very profitable business in Austria, same in Italy, Netherlands, also a nice growth rate. And coming back to Switzerland, we started with minus 7% at the beginning of the year. We recovered to minus 3% for the whole year. So it's already a nice turnaround during the year. We have seen strong order entry in Switzerland in Q4, but also now in Q1. So we will return to the growth path this year. And also important to mention, to avoid any misunderstanding, Switzerland is highly profitable. Let's have a look at our EBITDA or operating earnings. EBITDA came in with EUR 123.6 million. That's an increase of 30% compared to EUR 94.8 million. And if we look at the main contributors, #1 contributor is the capacity utilization. As hoped and expected, it was improved, especially in the first 4 to 5 months, it was significantly higher than what we have seen in 2024. For the remainder of the year, it was slightly better. But overall, we are satisfied with this development. We have improved our capacity utilization. As expected, we have seen a recovery in our IT Solutions business with the main contributor our insurance business with the Afida and adesso insurance solutions. This was supported by nice license sales in Q2 and Q4, where we achieved a single -- high single-digit million number in terms of revenue. That's what we, let's say, forecasted, what might be possible. And finally, we got it was waiting until mid of December to get it in, but we got the orders. So we are very happy with that. If you compare 2024, 2025, important to mention that in Q1 2024, we got EUR 2.6 million earnings from the reversal of a warranty accrual as a result of a tax audit. And we have also a disproportional increase of material costs. We will look at this in a few seconds when we look at the development of our gross profit. So some other KPIs. Let's start with the EBITDA margin. We targeted for an improvement there, 8% plus something. Finally, we arrived at 8.4%, which is what we wanted to achieve last year. It's a nice improvement compared to 2024 and 2023, but -- and that's also important to highlight, it's not where we want to be. We are targeting having EBITDA margin in a range between 11% and 13%. So we have done some steps, but some important part of steps have to be done in the future. 11% to 13% is possible. We have shown out it in the past, and we will work hard to get back to this level. If we look at EBIT, EBIT margin last year was 3.4% compared to 2.1% in 2024. Yes, key figures. We already have talked about the employee growth and our sales. Let's have a look at gross profit. Gross profit came in with a plus 12% compared to plus 14% in sales. That's because material costs have increased. There are several reasons for that. One reason is we have one more bigger project where you work with third-party suppliers. We are quite often within a consortium where we are the general contractor. Therefore, the cost go through our books. And we also have other third-party supplies, for example, cloud consumption or licenses, which also increased our material cost. If we look at our personnel costs, plus 11%, driven, first of all, by employee growth. In average, employees were 8% higher than compared to 2024. We have also the impact of salary growth from increasing salaries in line with inflation and then a little bit of change of mix of our headcount. We hired, especially in Germany, a little bit more senior people. On the other hand, we have also added people abroad in these countries where we do shoring. So we have a little bit changed the mix also of our salary composition. Other operating expenses, plus 8%, nothing special in there. Most of these lines have increased slightly. So let's have a look at the key profit drivers. Utilization, we have already spoken about that. Daily rates. Daily rates are also important for us. We have started an initiative at the end of 2024, beginning of 2025 to work on our daily rates. We have some -- seen some nice improvements in the first half of the year. In the second half of the year, the development was more flat. It was -- the macroeconomic environment is tough. So it was difficult to convince customers to agree to higher daily rates. Sometimes we were successful with that, but also sometimes customers negotiated a little bit lower prices. So at the end of the day, daily rates are slightly higher than in 2024. License sales, I already mentioned the nice license sales with adesso insurance solutions in total, EUR 13.5 million compared to EUR 3 million in 2024, so a very nice improvement. Maintenance revenue also increased. And what's also important, the level of Software-as-a-Service revenues is increasing from roundabout EUR 1 million in 2024 to EUR 3.9 million in 2025. Yes, personnel costs, I explained this already per FTE increasing slightly. Now we will come to our restatement. Preparing our annual closing, we noticed that we needed to reclassify to fixed price projects because actually, what we are doing there, building a Software-as-a-Service platform for our customers, which means we will run certain things for them on this platform, but we are the owner of the platform, not the customers. And therefore, we needed to reclassify that. If you have a fixed price project under IFRS, you have a percentage of completion method. You have some progress in the project, then you show additional revenues and hopefully additional margins. But as we now have been identified, these are not fixed price projects. Instead, we are building intangible assets. We have to account the development costs and development costs, the accounting without any margin. So what's the impact on that? The impact is that in 2024, revenues had to be decreased by EUR 11 million. And as the margin disappeared, EBITDA was reduced by EUR 3.6 million. Under German law, German accounting standards, intangible assets built by yourself cannot be put on the balance sheet. Therefore, it's an expense. And this increases, let's say, the loss. So you have more net operating -- net losses carried forward. And if you cannot put them on your balance sheet as a deferred tax asset, then the tax expenses increase. And so the consolidated earnings had a hit of EUR 6.1 million in 2024. What are the impacts on our balance sheet, an increase of intangible assets, a decrease of our equity. And if we look at cash flow and cash flow does not have any impact. It's just a reclassification. Operating cash flow, there's an increase of EUR 7.5 million investing cash flow as we now invest in intangible assets, there's an increase there, cash out of EUR 7.5 million. Everything is explained on Page 82 and our annual report. There is also some impact in the years of 2022, 2023. But this is everything included already in the figures starting on the 1st of January 2024. Now let's have a look at our earnings per share. Earnings per share came in with EUR 3.83, which is a nice improvement to the previous years. If we look at some other items on our P&L, depreciation increased slightly. This is mainly driven by the right-of-use assets under IFRS lease contracts for our offices and as well as company cars are put on the balance sheet as an asset, and therefore, you have depreciation from that, that's included in there. So if you look at the EUR 65.9 million, EUR 42.2 million from this right-of-use assets, EUR 7.1 million is depreciation of related to purchase price allocation from acquisitions we have done in the past. This figure will decrease over time until we do another M&A project. Income from investments, that's what we show at equity result and financial result is the interest rates were a little bit lower. So therefore, there was a positive impact on that. On the other hand, the loans we needed during the year so a little bit higher. So this was a negative impact. But overall, there are little savings in to the line interest. Earnings before tax, EUR 36.4 million. Income taxes, EUR 18.9 million. So tax rate is 52% compared with 69% in the previous year. Normally, you would expect to see as a German company, a rate of roundabout 33% in this line. However, our tax rate is a little bit higher as certain items are not tax deductible. And for example, based on the local trade tax, certain interest payments are not tax deductible. And you also have a negative impact if you have net operating losses carry forward and you cannot put them as an asset on your balance sheet. So there are 2 reasons for that, high tax rate. Let's look at our net working capital and some other items on our balance sheet. Net working capital increased by 28% to EUR 199 million. This development actually is a little bit disappointing for us. We have targeted a different figure there. If your revenues increased by 14%, the increase in this line should be 14%, at least [ 40% ] as well. We see an increase of 28%. So we needed EUR 20 million more in financial debt than what you normally would expect. That explains a little bit the development in the line financial debt and net debt. Cash is almost at the same. Goodwill is the same. And equity, I already explained this a little bit on the previous slide. Equity was a little bit reduced in 2024 due to the restatement. However, we recovered that, and we are now back again at a level of slightly above EUR 190 million equity. Equity ratio is 22.7%. If we look at 2 KPIs, return on net working capital, there you put the EBIT and the net working capital into a relation. It's 25.4% compared to 17.5% in the previous year. Return on equity, it's the income, the net income in relation to the equity, it's 9.1% compared to 2.3% in 2024. Cash development. Here, you can see the negative impact of our higher net working capital. Operating cash flow reduced to EUR 85.6 million. Then we have CapEx and also lease repayment as pointed out under IFRS 16. This payments for offices and company cars are treated as an asset. Therefore, it's shown under the interpretation according to the IFRS foundation in the cash flow statement in the line invest. And therefore, free cash flow is EUR 1.5 million in the end. Dividend, we -- in the last 13 years, we have always increased our dividend slightly. So therefore, the dividend proposal this year is EUR 0.78. This is in line with the improvement of our consolidated earnings, the development of our earnings per share. And if you look at the total amount, it's EUR 5 million compared to EUR 4.8 million last year. Now let's have a look at our guidance. The market demand in general for IT services, IT solutions will continue to be good. Despite the weak macroeconomic environment, we will -- it is expected to see a positive development of our gross domestic product in Germany. And this is important because that's our main market. However, there might be a negative impact due to the war in Middle East. It's very difficult to predict what the impact will be. The only thing which I think -- which is for sure, it will not be a positive one. We will see -- we already see increasing energy prices, fertilizer prices, shortages of certain products like helium. So it's very difficult to say what the impact will be at the time we have prepared our guidance. This was not a topic at all. However, it's still expected that the German gross domestic product will grow. And therefore, at the moment, we think we can cope with that. I think what's very important is that the market development in general. And there has been a tremendous shift in the last few months. Last year in Q4 at our last roadshow, we also talked about AI, and I explained that there is an impact, but it's difficult to foresee. We now believe the situation has changed in the last few months. We believe there is a good chance for a nice push on our business. I'll just give you one example, agent-based application modernization. What does it mean? There are a lot of companies out there with old, big want to reach architecture legacy systems, difficult to adapt to new needs. In the past, it was difficult to get these things changed and maybe rebuild with a new architecture, but that's something which is now possible because AI provides now tools since the beginning of the year, which are that mature that you can work with that within these big projects. And adesso was very, very well positioned within this environment. I mean, since our -- the inception of the company in the late '90s, developing these systems, these solutions, it's core of our business. We are very good in software engineering. We have all skills which are needed. We have the domain knowledge. We built a lot of these systems in the past. And we have the domain knowledge. We know what the customer needs, what he needs for his business. And we have experience with the usage of AI because we are working with that since 6 years. So we have all the ingredients to which are needed for customer projects. And these customer projects, you can analyze certain things today with AI, you can decide do you want to retain the old platform or better pass. Maybe we will rehost it, so you make -- maybe lift and shift to the cloud. You will rearchitecture this, rebuild this. So there are so many options, and this will be a huge market despite the general win in efficiency. We will -- we expect for 2025 stabilized utilization, so no further significant improvement there. We have still a continued reduced in hiring speed, which means bringing less people on board. We work on improved profitability and expect improved profitability, and this is supported by 2 additional working days in the second half of this year in Germany. It's also worth to mention, we had a slow start to the year this year. Competition is very tough at the moment. However, since March, everything is on track. And therefore, we are very happy with our guidance at the moment. We expect to grow our revenues to a range between EUR 1.6 billion and EUR 1.7 billion, which is an increase of 9% up to [ 60% ] and our EBITDA to a range of EUR 130 million to EUR 150 million. EBIT margin, we expect only a little improvement there in 2026, but we are working on that. Okay. That's all for the moment. Martin Mollmann: Thank you, Michael. That was very helpful, I think. We are now heading for the Q&A session. [Operator Instructions] And I see we have the first question from. Wolfgang Specht: Probably. Can you hear me? Michael Knopp: Yes, I think. Wolfgang Specht: I'll start with 3 questions before going back into the queue. First, on working capital and cash collection, definitely not a bright spot in the 2025 filings. Michael, could you give us some idea how -- what measures you put in place to improve that during 2026? That would be my first question. And then on IT Solutions, we still got a negative contribution here. Could you expect that we see a positive EBITDA in this segment in 2026? Or is there still a lot of restructuring work to be done before this segment turns positive? And then probably on the order book or order intake, you only give a, let's say, qualitative statement here. But can you share some information? Is the order book up year-on-year, reflecting your sales growth ambitions? Or do you still need a lot of new projects to come in? And are there already tendering processes from the public sector that are visible for you? Michael Knopp: Okay. Let's start with the first question regarding net working capital. Actually, that's a development which started somewhere in Q3 and accelerated a little bit in Q4. That development was pretty unfavorable. We have seen an increase -- a disproportionate increase in lines, accounts receivable and contract assets. We have -- which -- I mean, at the end of the year, it's something which sometimes can happen. However, it turned out that this is also a little bit of structural problem because we have seen that certain customers pay a little bit later, which does not mean that we have now a lot of overdue receivables. That's definitely not the case. But within this range, a customer is normally pays, we see a little shift to pay at the some days later. Currently, we are analyzing if this is just something which happens by accidentally in December or if this is a new structure, we will face also in the future. But it's a little bit too easy to say. But this actually caused, we have calculated that an impact this EUR 20 million impact, which is really not lies. If we look at IT Solutions, we have made some progress there. We also had one company in 2025, which was a little bit of a burden but this company in [indiscernible] which is our influencer business. It was restructured also as a new Managing Director now is on a good way. So from there, we will get no headwind. As pointed out in the past, this is a long way of turnaround. For 2026, we don't expect to see a positive EBITDA contribution, but hopefully, a further improvement. This is also a little bit depending on license sales. We have seen a very nice impact in 2025. And therefore, hopefully, we will see some license sales in 2026 again. Regarding order intake, if we look at our order intake in 2025, it has shown the growth rate, which is needed to support the assumption that we grow our business also in the future. Actually, this was also part why we have guided in this way. However, you always need order intake starting Q2, Q3, Q4 to achieve your revenues because certain order intake from the last year was already revenue last year. And some of the orders, for example, we got one very significant order in the insurance business. This is an order entry, which will show up in revenues for the next few years. So we need additional order entry. But so far, everything is on track this year. And therefore, we are at the moment happy with our tiny business. Martin Mollmann: The next question comes from [ Mr. Ziring ] Michchmeyer Petersen Capital Markets, respectively, Warburg Research. Unknown Analyst: Great. I would have 3 at this stage. The first one is on daily rates. So maybe you could talk about your expectation for daily rate growth in 2026. Do you think that you can regain the 2% minimum target? And also on daily rates, we saw a 2% decline in fixed price daily rates. Is it rather a mix effect? So do you see more Smart shore hours in the projects? Or is it really price pressure that you see here? So that would be on the fixed rates. And then the second one would be again on free cash flow and on cash conversion. Maybe you could talk about your expected peak investment level for the SaaS platforms and also the capitalized development costs that we have seen, maybe also here to quantify how much relates to the insurer versus other platforms, that would be very helpful. And then the last one is on the restatement. So thank you very much for the explanations. Maybe some more detail if you're able to provide it would be helpful. Can you quantify the P&L impact on the 2025 EBITDA? And also if on the 2026 EBITDA, if this is on a like-for-like basis or if we have to expect any further reclassification that would be helpful. Michael Knopp: Let's start with the daily rates. As actually expected, we have -- we were able to increase our daily rates in January and February because that's quite often, if you negotiate with the customer, the customer doesn't agree to change the increase the daily rate immediately. Quite often, you agree that, yes, we can do that, but let's start on the 1st of January. So we have seen an increase in January. The question for the future is, are we able to see further increases despite the tough market environment and some price pressures. So far, everything is on track and as we have budgeted for that. But at the moment, it's really, really difficult to get higher daily rates because there's a lot of price pressure there. If you, for example, look at all the consulting companies in the automotive sector and they had in the past, they have a lot of consulting companies there providing services. They are now looking for different work in other sectors, and this creates this pressure. Fixed price project -- fixed price project in general calculation is always a little bit complex. But you are right with your assumption that as we have roundabout 1,000 people in the shoring area in Turkey, in Bulgaria, Romania and also India that this has, let's say, also an impact on the daily rates that they are slightly reduced, which does not mean that our margins are reduced. It's just a different level. But it's necessary to be price competitive because all the big IT companies, our competitors are able to like Accenture or Sopra Steria, Capgemini, they have lots of people in India. And so we need to compete with them. And -- but it does not mean lower daily rates does not necessarily mean if you look at shoring that you have lower margins. If you look at fixed price projects, despite the rates at fixed price projects are lower, there are different reasons for that. One can be that [ example ] last year, there was one significant contributor to that. We have one fixed price project, and we knew already initially that we will accept here lower margins because it was strategic for us, and that's important. So you have lower margins and lower daily rates can also be impacted if you have an overspend project. So there are different reasons. It's difficult to explain in detail and to say that's the only reason because it's a mix of all. If we look at cash conversion, I mean, yes, we are working on that to improve this back to the level we have seen in 2024. The invest in platforms in terms of cash, that's something we have done in 2024, 2023 as well. It's just a different way how it showed in the cash flow statement, but it was -- it's still the cash out there has nothing been changed in terms of the reclassification. If we look what have we invested in these platforms at all, it's currently EUR 53 million and EUR 39 million is related to those 2 platforms in the insurance sector. Actually, we have one platform which was reclassified. It was lot of property and casualty insurance. So let's say, all insurances, which are not health and life insurance. And we have also one platform for the insurance business, a so-called runoff platform. There's also a press release from 2022. And on this platform, which is still in the building status, we have already 400,000 customer contracts. And these platforms will, in the future, create Software-as-a-Service revenues. And this will increase this year month by month because the more contracts you have on these platforms, the more revenues you will get. And yes, we don't have -- maybe something I need to mention there. At the moment, there is no other platform these 3 platforms described in the annual report, there's also one platform in the automotive sector, which we have since quite a long time there. And we also -- we don't expect any further restatement. I mean if we would know about the restatement, we would already have done it. Unknown Analyst: Great. One quick follow-up, if you allow. Can you quantify the P&L impact of the -- on EBITDA in 2025? So the development cost that previously was running through the P&L that is now capitalized. Do you have a number there? Michael Knopp: Actually, it was in it's not in the way that you -- in previous years, you have seen it in the P&L and now it's capitalized. If you have a fixed price project, only it goes through the P&L, but it's not a whole difference. It's just the margin. So if you look at 2024, the impact because we are not allowed to show the margin anymore, it was last year in 2024, EUR 3.6 million, the overall impact on margins. And we have not measured this what it would have been doing it in the same way than originally in 2024. But I suppose it's probably a similar impact. Martin Mollmann: Thank you for these questions. And we have another one from Lukas Spang from Tigris Capital. Mr. Spang, can you hear us? Maybe the question was already answered. So do we have further questions at this point in time? Yes, we have one from Sebastian. Unknown Analyst: Can you hear me? Sebastian from HC Capital. One question you mentioned AI as a positive factor going forward due to new projects that can be conducted. But basically, the market sees AI more as a threat for IT service companies, at least from what we see from the share price reactions due to the fact that software development cost goes down and everything. How do you see that midterm? And what could be negative impact from AI? So is the [ cake ] getting smaller because the productivity goes up and when you're getting charged by time and materials, so they can do more at the same time. And maybe you can give us more light on that? Michael Knopp: Yes, that's actually a pretty difficult question because you are totally right. I mean, I described the chances what we see for this year. However, there's sure there's also a threat because the way how we work will change. Productivity will increase significantly because these tools are used. This might have impact on the project structure because projects might be done in a faster way, maybe also calculated and built in a different way because it's not time and material purely time and material anymore. To be honest, it's very difficult to predict how it will be in the future. We spent a lot of thoughts actually on that. So we see big opportunities, big chances because we will be able to do projects which were impossible to do, at least if you to do them in a way that customer can pay for that with a reasonable budget. That's what I explained. But if we move too slowly and don't adapt to the changing environment, then it's also a risk. And by the way, also the way how we work internally changes, the way how we do proposals, how we prepare ourselves for customer presentations, my departments in finance, controlling or also HR, everything will change how we do things because we use AI tools, we will get more efficient to say. I believe that what we -- at the moment, what we read from all the analysts about the risk for software and IT solutions companies. Yes, yes, these risks are there, but I also believe it's too much exaggerated. They are all because the chances are disregarded. Unknown Analyst: I mean it's clear they want to raise a lot of money, so they have to sell something. But if you mentioned actually in the call that you're hiring more senior people. Is that the first effects of AI that you don't need so many juniors to help the seniors to generate revenues and they get more support from AI solutions? Is that already the first. Michael Knopp: I mean, in theory, this probably might happen as something which is not only linked to the IT services business. You probably read some of our statements to law firms and so on. But I think that's something which is a very dangerous approach because if we just look at certain work, which more junior people have done and say AI can do it, then how we become these people more senior and can do the work in the future. So currently, we have still our working students. And yes, we are maybe a little bit more carefully and -- but we will not change that because that's our future without young people and working students hiring now, people are missing, which get the experience to run the AI tools in the future. Martin Mollmann: And we have another try with Mr. Spang. Seems to be a technical problem. So then Mr. Specht, again. Wolfgang Specht: Yes. One additional one from my end. If I read the outlook in your full year report, there are some sentences on M&A ambitions. And it rather sounds there are limited ambitions to go for at least larger scale M&A. Is this a right interpretation? Michael Knopp: Yes. Wolfgang Specht: Do you currently prefer organic growth? Or do you simply do not want to burden the organization with another, let's say, inclusion story or implementation work? Michael Knopp: I mean we are currently growing last year with a growth rate of 14%. This year, we expect to grow between 9% and 16%. This is a very high growth rate. And therefore, we don't need that from the impact from M&A. And if you look at our EBITDA, EBITDA margin, EBIT margin, there's enough homework to do to also become more profitable to cope with the challenges we have just spoken about that of AI. And therefore, we believe it's well spent if we put all our management capacity, all our efforts into the existing business and grow this business organically. So no M&A on the agenda at the moment. Martin Mollmann: Mr. Freedman. Mr. Freedman. Unknown Analyst: Can you hear me now? Martin Mollmann: Yes. I can hear you. Unknown Analyst: On this restatement topic also from my side, if I read through the balance sheet, I find that there have been EUR 25 million of additions to R&D assets where there were only EUR 2.5 million in amortization for that. Now this can be a one-off. -- question is, looking forward, is the run rate of EUR 25 million additions for these platforms, is that a good assumption? Or is it much less? And when is the amortization going to pick up? Michael Knopp: Actually, it should decrease over time because the platforms are finalized. For example, the platform for the automotive industry there the development is flat. If you look at the value of the balance sheet. We have this platform for the runoff platform for the insurance industry. There, we have gone live with some contracts having done, I think, 3 migrations so far, others will follow. And therefore, this -- the rate of adding something will reduce. If you look at the amortization of these platforms, this will start when these platforms are, let's say, finished. So far, they are in the status that they are still built. So also the amortization will increase in the future. Unknown Analyst: And are we going to see restatements in the quarterly results in 2026? So you restate the first. Michael Knopp: Right. We will restate the '25 figures in terms of revenue and EBITDA, but this is more the way how it is shown within the quarters. The total do not change because everything for 2025 is in line and actually, these are very minor changes. Martin Mollmann: So with another try with Mr. Spang, I hope his technical problem is fixed. Mr. Spang, where you can put your questions to the chat. I will read them out loud. No, unfortunately, we can hear you. So do we have more questions? This does not seem to be the case. So Mr. Spang, can you give an update on federal spending? Michael Knopp: Yes. Actually, we -- I think the answer I missed. -- we see more public tenders now in the first quarter this year. So the activity which we were already expecting in Q3 and Q4 is happening now. So more public tenders, more public spending. Therefore, it seems to start. However, it's fair to assume that it's probably a little bit less than what we initially expected in Q2 last year. But the impact is now visible. Yes. Martin Mollmann: There is another question from Mr. Spang, you mentioned higher margin targets for the future, but margin is still muted for 2026 despite 2 more working days. What must happen to achieve the 11% to 13% midterm? Michael Knopp: Yes. It's -- I also pointed out that we don't expect an improvement at the utilization. That's one of the reasons. We need to improve our -- we need to see further progress in our capacity utilization. The turnaround further steps of the turnaround in our solutions sector is important, hopefully, some higher daily rates. That -- these are probably the 3 key ingredients and all of them, we see some improvements there in some of them, but especially daily rates and capacity utilization development is more or less flat, and that's important that we are able to change that. Martin Mollmann: So it's not much time left, but IT Solutions, you mentioned that 2026 will be still negative. What can we expect when this business will achieve black numbers on EBITDA level? Michael Knopp: Yes. Our initial target there that we started to turnaround was to see in 2027 kind of a breakeven, and that's still the agenda. Martin Mollmann: Okay. Thank you. Hopefully, all your questions are answered. Thank you very much for your interest in our call today and your participation. I wish you all the best, and I hope to see you soon in person again. For now, goodbye. Michael Knopp: Bye-bye.
Unknown Analyst: Good afternoon, and hello, everyone. Welcome to Bahana Sekuritas Corporate Access Group Call. Thank you for spending your valuable time to join us today. My name is Nicolas. I am the research analyst covering telco, tower and tech at Bahana Sekuritas. Today, I will be serving as your moderator. Please join me in welcoming today's speaker, Bapa Hartono Tanuwidjaja, Director of PT Sarana Menara Nusantara and Chief of Staff, accompanied by Bapa Adam Gifari, Adviser of PT Sarana Menara Nusantara and Group Investor Relations, who will present the company's full year 2025 financial results, operational performance and outlook for 2026. Without further ado, [ Hartono ], the floor is yours. Please Hartono. Adam Gifari: Thank you, Nico. Hi, everyone. Hartono is sitting next to me due to the technical glitch. So we'll be sharing the screen together. It's good that we're next to each other. So Hartono is our Director and Chief of Staff, covering Group Investor Relations. I'm adviser to this role. So let's start with what we have released for full year 2025 audited results that we announced March 2026, right before Lebaran break. So I'm going to share my screen. Let's go through the press release that we prepared, and we're going to go through the presentation for the full year. And after that, we will wait for more, if Hartono has more remarks on the results, and then we can go to Q&A. So as you can see here, we reached full year operating revenue of IDR 13.3 trillion, representing a IDR 4.6 trillion increase for 2025 compared to full year 2024. EBITDA reached IDR 10.97 trillion, growing by 2.5%, while net profit after minority interest stood at IDR 3.678 trillion, an increase of 10.3% year-on-year. So we think the result is because we look at what we see, what we have despite challenging industry and macroeconomic condition. We have refocused on our core strength while improving areas where we can see improvement for better results. We leverage our operational scale. We basically try to get more business by using our scale on towers and fiber and then maintaining strict cost management and drive ongoing efficiencies. As you know, we have a lot of different types of businesses, and we try to combine where we see -- we can see synergies between assets that we have. That has been the topic of management doing every week where we can see efficiencies and try to leverage higher utilization on our assets. So we are now -- given we have 170,000 kilometers of fiber, we have 35,000 towers. We see that we have one of the largest independent digital telecommunication infrastructure provider. And then we have the most comprehensive range of services. So it allows us to provide solutions for our clients to operate different conditions, including consolidation or mergers that we have seen recently during 2025. So the merger of XL Axiata and Smartfren, which opens up significant opportunities. They need us because more than 50% of the network is on our towers, and they use a lot of our fibers as well. And then we believe with 5G, further service enhancement will be -- will require our involvement with our services and assets, tower and fiber included. So now we see what we expect for the next 12 months that, firstly, we see consolidation can strengthen pricing discipline. I know that for the past quarters, we've been talking about pricing discipline. We think we -- in the infrastructure space, we are among the leaders of pricing discipline. That yield remain relatively low, but what we provide to the industry is actually something very efficient compared to where people would go out of pocket, spend their own capital to build towers and fiber. We believe we provide the value for money when it comes to their network enhancement or network expansion. So we think with competition becoming more healthier, and I think I invite everybody on this call to together monitor this, whether 4G and 5G monetization is improving going forward here. We see several signs of improvement. But hopefully, for Indonesians, give that the unique position as the fourth largest country in the world, so we think we should be monetizing this position better for everyone, for the telcos, for the fiber users, for the Internet service providers and then provide better revenue mix, better revenue growth and then better OpEx allowance that would work well for our ability to provide services and infrastructure. Second, the continued acceleration of economic digitalization. We are hearing, because of the war, the government is requiring 1 day of a week that ASN, the state apparatus to work from home or from anywhere, right? So that would drive further digitalization, similar to what we saw in COVID, right? Unknown Executive: Yes, during COVID time. Adam Gifari: COVID time. So I think there is an increase of independencies -- sorry, dependencies of people using Internet wherever they are, mobile or wired Internet. So data traffic is shown to be growing robustly over the years, like double-digit CAGR, and we expect this momentum to continue. And then the potential rollout of 5G will further support this trend. I think just as a matter of personal observation, before Lebaran, I experienced very bad 5G. But now after coming down, spending holiday for 2 weeks, I noticed that 5G in Jakarta is getting better. So I think that shows that better penetration of infrastructure in places like Jakarta even would still require more investment, and we will be there for people who ever need infrastructure in many forms. Number three, Indonesia is still in the early stages of AI and cloud technology, which will drive up -- will further increase data traffic and the demand for enhanced connectivity. So we expect further traffic growth. And then there will be requirement for data centers, fiber optic and power generations. We have iForte Energi. We have also several other functions under iForte that Hartono can surely add some more on later on during this call. And then number four, operators continue to adopt asset-light financial strategies for towers, fiber optic networks and provision of clean and renewable energy. I think we see this trend to continue. I think the requirement -- for instance, they require more dividends out of telcos, right? That means CapEx for sales should remain low and whatever existing infrastructure should be used more optimizely going forward. So that's what we see during 2025 and should hopefully continue until 2026 and for the future years. So I'm going to move Hartono, if you want to add something? Unknown Executive: Yes. I think Adam, it's already well summarized by you. Maybe you can see and the highlights, the financial unless there is any discussion. Adam Gifari: Yes. So I'm going to go through the presentation for the fourth quarter full year audited, so people can see and then we can discuss together. And then -- so we have 36,000 towers as of last December. For those of you who have not seen or have not gone through this presentation, we have more than 170,000 fiber optic network as of December. We still remain -- maintain a large percentage of our business model under a build-to-suit model for towers and fiber with long-term predictable cash flows. We maintain investment-grade ratings with S&P, even though there was a change in the sovereign rating for Indonesia. But Indonesia -- for us, we are still like with S&P BBB-. And with Fitch, we have a stable outlook and no change in the sovereign ceiling so far with Fitch. And then for return on investment, 8.3%; return on equity, 16%. Stock is included in many of these indices still. ESG footprint with IDX. And then we have MSCI ESG rating maintained at single A. Sustainalytics score us 24.2. S&P 40. So that's what we have achieved so far when it comes to ESG profile during 2026 -- 2025 and others. And then I think for number one, capital management, I think we discuss this every week as a management team. Access to low cost of funding is discussed all the time. We want to be sure that we have the best cost of capital in the country. But -- and the banking sector is pretty much liquid. So liquidity amount was $1.3 billion equivalent in rupiah mostly, given banks are also having trouble to find other businesses that is as stable as ours. And then low-risk business with digital infrastructure business, high demand, difficult to replace as we have exhibited with XL and Smartfren merger. So -- and then proven a possibility of long-term irrevocable contracts. ESG-conscious company, even smaller for our carbon footprint, I can say. We just discussed with many of our clients, and we have able -- we have been able to basically make the clients pay for their own electricity. So that should improve further our ESG profile in our tower business. And then now number four, box number four, the telecom space has come down to 3 players basically during 2025, as we all know, with the most recent merger, XL and Smartfren. And then opportunities for acquisitions still exist. We can discuss more later about this. And then valuation today is -- we have an annual free cash flow that funds CapEx, dividend and share buybacks, and we have been successfully consolidating assets that we see as accretive to the business. EBITDA and AFFO CAGR, 11.4% and 8.5%. ROE 2025 of 16% using the most recent numbers. What we tend to do is continue to invest our strong free cash flows using low cost of capital whenever we need to borrow. And then Indonesia is still at the start of 5G, if I may say, because we haven't heard anything when it comes to what is the time line for 5G spectrum auction. So we still think largely Indonesia is a 4G country. Penetration for towers is also still pretty much low. So I think for Indonesia, for the continuation of the trajectory is a matter of time because the consolidation has happened. We've been in the business for almost 20 years. And then for the longest time, we can remember, we were operating with more than 10 at the start of the business. And now we have 3 telco players, all intended are very eager to basically monetize whatever they have spent in 4G and 5G so far. So -- and then prepare for new opportunities. I think Hartono, you can add more later on. Obviously, for C, number one, expanding product offering. We -- I think for the past quarters, we mentioned about managed services, Power as a Service, and we now come -- we have come into green energy profession for our clients. And then strategy is driven by evolving customer needs, obviously. With high energy prices like now, it should be interesting for people to look into green energy, right Hartono, because solar panel, for instance, it's a matter of where we can find suitable property for us to invest in solar panels and then provide them -- provide our clients and other types of customers, not only telcos with green energy going forward. Fixed mobile convergence is also there. We can talk about what we see for 2026. And 5G obviously represents another set of opportunities. So I'm going to skip this Slide #5. So now Slide #6, we have 36,247 towers. I think I can say this number reflects majority, if almost all of Indosat and Hutchison relocation have been fulfilled. We have some carryover into 2026. So we expect a number of towers to increase for 2026 because of completion of Indosat Hutchison relocation towers, probably in the hundreds, no longer in the thousands when we spoke firstly about this. We still have about 1,400 to be completed during 2025. We should be about 400 by now that we need -- that we should conclude to basically finalize the towers that we built for IOH relocations. So the location of the towers mostly in Java, Bali, NTT and NTB. Sumatera approximately above 8,200. Kalimantan 3,000. Maluku and Papua still with the lowest number of towers given density. So obviously, we see this increase approaching that of Kalimantan is quite interesting because of the economic activity in that area, especially mining and plantations. And then our towers on our fiber, where we have our fiber, you see the difference between revenue-generating FTTT is basically where we charge our customers and then FTTT kilometer pole is the kilometer of physical cable that we own under FTTT category. So as you can see, Java utilization is high. Sumatera is high. Bali Nusra is also high. And then Kalimantan is lower. Sulawesi is a bit lower. It's a function of density basically where we see our customers need fiber to the tower as a means of data transport because of data traffic is increasing in those areas. And then our build-buy-return strategy. We invest in build-to-suit towers. So in the form of various contracts, mostly for 2025 is relocations and then expand fiber optic network, FTTH and then more slower growth in FTTT. FTTH, we expect to grow quite interesting. But when we say we have fiber, we can also use it for other types of business such as connectivity. And then during 12 months, we added 847 towers. So that's short of a couple of hundred towers that we need to conclude for Indosat, Hutchison. And then 6,789 kilometers of revenue-generating fiber. We added 9,000 activations. We added 89,000 home connects and then 31,000 home passes. So very good execution on the home connect side. Return that we mostly basically focus on protecting investment-grade ratings and then we maintain investment grade ratings. We distributed dividend IDR 1.2 trillion during 2025, based on past quarter's results. So diverse product portfolio. So we have 36,000 towers and 60,500 tenants as of December. Tenancy ratio 1.67. 53% of towers located in Java. Just in third quarter, I think this number is 52%, but we added towers more in Java. So that's also an interesting trend, ending the quarter with 53% of towers located in Java. And then MNOs have a growing need for additional scope. And then fiber to the tower, we -- basically, it's a function of our service to mobile network operators. So we have 224,000 kilometers of revenue generating by end of December. Network focus is to support surging data traffic. So if the traffic continues to increase, we are hopeful towers and fiber to the tower to be more correlated to that situation. And then we continue to basically provide the FTTT leases under long-term contracts, non-cancelable contracts and opportunity for high utilizations with other fiber solutions for our customers, namely connectivity business. To the right, we saw very nice growth in our connectivity business. Now it's over 25,000 activations. I think this number used to be below 20,000 by December 2024. So a very good growth in the connectivity side. FTTH also saw penetration reaching 14%. I think this number last quarter -- third quarter, I mean, was about 12%. And now going into where we spend our money. In 2025, as you can see, the amount of towers for non-towers -- CapEx for non-towers is approaching that of towers. And then for towers tenancy ratio is 1.67, slightly higher than 2024, because we basically restructured some reseller contracts to become direct lease to our towers. So we see -- in the past, we did not count reseller as part of tenancy ratios, but with reseller being direct leased into our towers as part of the XL, Smartfren merger, so tenancy ratio can go up. And then for fiber to the tower, I think we see impact of mergers. So a bit decline to 1.79 from previously -- on previous year, 1.84, but still at a very high utilization ratio approaching 1.8. And now our track record of consistent growth, we see towers is inching a bit in terms of tenants. As you can see, the darker blue chart there. And then with towers start to grow again after years of stagnant performance because of the years of Indosat merger. And then as you can see here, we were very busy with -- everybody is busy actually, towers and tenancies, how to manage 36,000 towers, locations, making sure we are basically getting what is our right under the contracts for towers and fiber has been the theme of 2025. That's why you saw 2025, a growth of 4% revenue. Basically, we look back at what we have in past contracts, and then we basically did a very thorough, very diligent review of what we have under our existing contracts with all of our customers. And then there -- from there, we take it that we can charge some money, we can get away from certain penalties, even though the theme of 2024 -- 2025 was mostly serving for IOH relocations for towers here, but we have been able to book higher revenue because of those very strict practices by management. And then for fiber to the tower, revenue-generating revenue increased by a little bit, about 3% there. So 7,000 kilometers compared to 2024. And the number of activations under connectivity actually grow very fast, very quickly. That's almost 9,000 activations during the course of 1 year because we have been very aggressively utilizing our existing fiber. We opened up new places where we can reach closer to our customers with new offices at [indiscernible]. And then use our existing fiber as much as we can, work together with our subsidiaries. We have many new names like [indiscernible] during the past year. We have [ Remala ], basically helping us utilize our fiber and work together to identify new location as opposed to working separately in the same market. Strong financial performance. You see the towers have been quite stable. Actually, we inched up a bit to IDR 8.7 trillion. And then for the yellow bar, which is the non-tower, we actually increased almost 10% there. CAGR, 7% from tower. The non-tower is almost 40%. If you look at the EBITDA growth CAGR, 11.5%; AFFO, 10.6%. So actually, given still high interest rate environment, if I may say, during 2025, even though we were among the lowest cost provider when it comes to borrowing cost, we're still seeing AFFO growing slower than EBITDA because of high interest rates environment in 2025. There were hopes -- there were hope actually in the market. I think as we all know, everyone that there was a hope that for rate cut during the year, but it was not sufficient to make it the AFFO growth as much as we grew EBITDA during 2025. And then leverage, 3.74, on this page, talking about our balance sheet. During the year, we paid down about IDR 7 trillion. The money from rights issue came in IDR 5.5 trillion. So we paid more than what we received in rights issue money, IDR 5.5 trillion. So we paid down IDR 1.5 trillion more than from our own operations. So leverage came down to 3.74. Interest coverage ratio, 3.9%. And borrowing cost at the end of 2026 -- 2025 was 6.0%. If you remember, this number used to be 6.5% at the start of 2025. So we cut down to 6.0%. I think we see a very close resemblance of what we saw in policy rate cut in Indonesia by Bank Indonesia. So we use -- we utilize different types of borrowing structures going into the bond market, going into the money market with the banks, going into different types of structure, even though I don't remember seeing going into foreign exchange transactions during 2025 because rupiah was so interesting to borrow in rather than going into ForEx market and then hedge it back to rupiah. So we used mostly rupiah during 2025 basically. And then corporate ratings remain BBB- with S&P; Fitch, AAA; and then Fitch Global, BBB flat. This is summarized profit and loss. So I think when it comes to performance of the company, revenues, gross income, EBITDA, I think we have been exhibiting a very good performance given where our competition is when it comes to these kind of metrics. Net income margin, 27%. I've been getting questions about tax expense. I can say it's rather difficult to project when it comes to tax expense given different policies during different times of, say, Finance Minister's financing strategy. So we see very difficult to forecast tax expense. But we do -- whenever we see -- we paid more in certain years like in 2024, wherever we no longer pay in 2025. So that should better reflect what we think is the taxation for the year, for instance. And then the financial position, I think these are -- we have discussed in previous slides when it comes to our balance sheet. And then this is our cash flows, beginning balance, IDR 940 million. We have basically adopted more stringent cash management policies starting 2023, basically. Whenever we have excess cash, we used to pay down debt or maybe make some down payments for future CapEx, where we see more efficient to do it that way. That's why you see cash management is very stringent. Collection comes to almost IDR 15 trillion and then CapEx plus OpEx is almost IDR 9 trillion. Interest expense is IDR 2.788 trillion, which is a marked below the run rate before, which is IDR 2.9 trillion. And then cash surplus from operations, IDR 4.1 billion. Business acquisition is smallish, IDR 579 billion. And then rights issue money, IDR 5.5 trillion that I mentioned. And then loan proceeds, we paid down basically IDR 7.2 trillion. So we paid more than we received in rights issue money. And then we paid dividend IDR 1.2 billion. So ending the cash with IDR 650 billion by end of December 2025. And then going to quarter-by-quarter analysis, 10% year-on-year as well as quarter-over-quarter. Basically, connectivity is the brighter spot that we have discussed with people before. The non-tower segment under connectivity is the brighter spot for the company. We see consolidation playing a big impact on our towers operations. But I think we -- what we have also experienced that if we look hard and then work diligent enough that we are able to basically collect better what we should be able to collect from tower businesses. And EBITDA, 6.7% year-on-year and an 8.5% growth quarter-over-quarter. And then net income attributable to parent, 24% Q-on-Q increase and then 26% year-on-year. Revenue analysis, 2.4% just by segment; and then fiber to the tower, 10%; connectivity, 4%; and then FTTH, 21%. And then total, we increased the business with 4.6%. Summary operational data, we have increased the number of towers, 847 and then tenants increased by 2,500 because of the reseller becoming direct tenancy to our towers. Fiber to the Tower, 6.7% -- 6,700 increased kilometers, 3.1%. Connectivity increased volume by 53% year-on-year. And then FTTH increased 53% because of past contracts that we delivered during 2025. Going into Slide 23, this is very much relevant. What we have been able to finance -- the sources that we financed of the company is using mostly rupiah during 2025 and then exploration profile is looking like this. So we have very much -- we are preparing for a new bond offering to replace our 2024 [indiscernible] facility. It's in the works right now. And then we have maturing USD loan in 2027. But the maturity -- the maturing debt in USD have all been hedged with FX 15,000, respectively. While we are on this slide, I received a question whether we would get a ForEx gain or ForEx loss if rupiah continues to depreciate. Like, for instance, today, it's past IDR 17,000 to the dollar. I think our response to that is that we do not have hedge accounting, which means there is not direct correlations between certain depreciation in rupiah with our P&L or appreciation in rupiah into our P&L. So only by the time we basically pay down the debt and we enjoy a positive mark-to-market by the time we pay, then we see a positive result in that moment, in that quarter, for instance, when we pay down the debt. So assuming, for instance, in 2027, rupiah maintained at IDR 17,000 or IDR 18,000 for this matter. So we should be able to achieve a positive mark-to-market when we pay down the debt in the USD on this chart, the red one, $130 million notional amount. So hopefully, the analysts or the investor who asked me the question is on this call, so he or she can basically get this response directly from us. Okay, Nico, I think that's all we have. Hartono? Unknown Executive: So yes, 2025, despite of the challenge, the merger on the Indosat, with Hutch and also XL, Smartfren. So we still able to print a good result from the revenue, EBITDA, net income, this we achieved through the several initiatives within our group, mainly synergy. And then we -- like Adam said, that we're carefully looking at every line of the expenses, which one that we can optimize or synergize. So I think that's the additional comment from me. Adam Gifari: Yes. So it's a very meticulous exercise. There is not one particular area of the company that we can say as when it comes to this exercise that Hartono was saying that, okay, towers or non-towers, I think we really relook at everything that we have in the company. So given the storm, the business of mergers are behind us. So we use the opportunity to basically relook at what we have in various contracts, and this is the result we see for 2025 book that have been audited by Ernst & Young. So now I think both of us have concluded. Nico, now coming back to you. Unknown Analyst: Okay. Thank you, Hartono and Adam, for your insightful presentation. [Operator Instructions] To start with, we have a question from Sabrina. Unknown Analyst: Congrats on the good set of results. Only 2 questions from me. So the first one is we actually noticed a meaningful Q-on-Q increase in the revenue from XL, Smart contracts. Could you share with us more colors on the nature of these deals? And what is actually driving the growth? And the second one is, as interest rates are likely to remain elevated for longer, how does the company plan to actually manage or balance its financing costs with ongoing organic expansion despite we have seen some efforts of deleveraging in full year '25. I'll stop there. Adam Gifari: So we -- like we said, we relook at what we have. So several of the collections were actually taking place in 4Q and then some additional run rate revenue also incurred during 2025 last quarter, fourth quarter. So I think going into 2026, we expect, given that we are now -- we'll be working very hard with XL and Smartfren to successfully create value for the merger. So we see us working more on the non-towers because they will need some restructuring on the non-tower side. So coming back to this question, so we expect for towers, again, before seeing some more upside. So we see towers to remain flat for now. And then we see additional incremental from the non-towers, which is fiber to the tower as required by XL, Smartfren. And then we expect to see some increase in penetration rates as well as some additional home passes business that we see during 2026. So this is also concludes a discussion about what we see for 2026. So overall, I think for towers, non-towers combined, we see the company to book basically low single-digit revenue growth, and then EBITDA also and then net profit before we see additional upside. Because we -- when we were discussing this, this was back when we prepared what we see for 2026, that was sometime in January, December that type of times. So we are hopeful that we can update the market what we see for the remainder of the year when we release our newer quarterly results because we see a lot of noise right now at the moment when it comes to what we see as the outlook for 2026. I think the requirement of merging parties is actually like we saw in IOH. So they see -- they want to see efficient use of assets, efficient use of leases on whatever they want, right? But since XL, Smartfren is focused also on 5G, so we see the need of fiberization to be higher at this stage. Does that make sense, Sabrina? Unknown Analyst: Okay. I understand. And what about on the interest rates? Adam Gifari: Yes. On the interest rates, I just had coffee with banks. They also have problems lending to various sectors in the country given elevated oil prices recently, which did not come into our picture when we prepare our budget. So we think the bond market may see some movement, but the banks are not that facing easy times for themselves to lend. So we expect the banks to remain liquid, in other words. So this answer may come to you differently if you asked me before the war, frankly speaking. But just talking to the banks, when they need to find good credit quality borrower to lend to, they have problems because everything has gone up in price, inflation. And then that's why you see equity prices come down because people expect inflation to be high. And then even though we have taken out a lot of the risk from our balance sheet, like, for instance, the fuel cost I mentioned in the first 10 minutes of our call. But again, the customers that have to bear those fuel costs, transportation costs will face difficult times here themselves. Frankly speaking, we have not taken into account a very significant rate cut in our projection. Some cut, but not so much. So we see we have some buffers there. So for instance, 2023, we were 6.1%. And in 2024, average cost 6.2%. 2025 is 6% like we just presented to you. In 2026, we are hopeful we don't have to go fix something longer dated, given liquidity is still abundant in the marketplace, in the bank's market, especially. Does that make sense, Sabrina? In other words, I don't have an answer right now because during the last Board meeting, we were not discussing about borrowing more. We are pretty much well-funded at this stage. And then we only have to talk about new interest rate with banks when it comes to the need of, say, IDR 5 trillion or IDR 10 trillion of new facility with banks. Does that make sense? And BI rate has remained stable, 4.75%, Sabrina. Does that make sense? So in other words, this quarter, maybe we don't see the impact yet of increased rates so much because of the war. The war only started at the beginning of March, yes. Unknown Analyst: Okay. So it will be pretty much at the same rate from 4Q... Adam Gifari: Probably slightly higher, yes, which is -- which means if it goes higher than what we saw in December 2025 or 6%, so that means the management has to work harder to find the savings elsewhere, right Hartono? Unknown Executive: Yes. Unknown Analyst: Okay. I think maybe one last question. Can you share how many kilometers of fiber connectivity services were actually added or deployed in 4Q? Adam Gifari: In 4Q, didn't you see in our presentation slide. Unknown Analyst: I think it wasn't there. Adam Gifari: Operational numbers. Unknown Executive: So Sabrina, for the connectivity, the metrics that we use is not the line of the cable, but actually the connection, the activation. So that's the metric for connectivity because different with FTTT, which is we bill the customer by kilometer per month. But for the connectivity is regardless how long the cable is, I think we charge them actually on the bandwidth, the dedicated bandwidth that we provide to them. So the measurement is not using the kilometer for the connectivity. Unknown Analyst: Okay. Yes, because I was seeing the numbers on the slides for 3Q, but it seems to be not there anymore for 4Q. So that's why. Adam Gifari: You mean the fiber run? You mean the fiber -- physical cable of fiber? Unknown Analyst: Yes. Adam Gifari: It's in Slide 7. Everything is -- together. You just have to basically take out the FTTT. And then everything is in there. We just decided not to be too detailed about that one for the fiber assets. Unknown Analyst: Okay. I would like to ask the next question. But I think we all recognize that the 2025 result, be it was partly driven by the tax. Can you please quantify normalized full year 2025 earnings if we take out the tax expense volatility and what would be the effective tax rate that we should assume for 2026? Adam Gifari: I think that's difficult because when we see, say, for instance, in 2024 year, if you look at Slide number, there's a P&L there. Slide #16. In 2024, there was a higher tax payment because of different opinions between our management and then tax office in 2024. So there was a slightly higher tax payment back then. And then whatever we paid, and then we just decided to expand it in that particular year. So 2025, the numbers still increase, but to say whether this is a run rate, it's very difficult for us. There's a new tax system, for instance, [ core tax ], right? So there could be different interpretations still about where the tax office sees, the tax expense should be. It's an ongoing process, Nico, to this now. So I think I'm hearing if it's -- right now, it's, I think, quite normalized tax rate, but no guarantee about that because of -- there's always a possibility of different tax opinion between us and tax office. Unknown Analyst: Okay. For the next question [indiscernible]. Unknown Analyst: Yes. I have 3 questions. My first question is regarding your reseller conversion -- reseller revenue conversion to direct revenue part. Can you please explain more about this conversion? And was this related to the XL, S revenue growth in... Adam Gifari: Mostly, yes. So IBST was a reseller, but the towers belonging to somebody else. Unknown Analyst: Okay. And the conversion, is it going to be a one-off in the 4Q? Or are we seeing for the conversion part? Adam Gifari: No, not anymore, not so much. So next year, 2026, I think we expect to see some increase in tenancy ratios because of Indosat start to -- and then Telkomsel also start to basically expand. And then their past -- especially with IOH, they no longer have relocation rights. So whenever they need new sites, it's going to be new colo in 2026. Unknown Analyst: Okay. So basically. Adam Gifari: A slight increase, not like a jump, but a slight increase. Under our base case, there's still a bit of an increase in tenancy ratios. Unknown Analyst: Okay. So the conversion is actually related to the IBST contract previously... Adam Gifari: In 4Q, yes. And don't forget, when we say revenue will be a bit flat in 2026, it's excluding potential consolidation of subsidiaries or acquisition of additional shares of our subsidiaries. So because some of the transaction is related to corporate actions that have not been disclosed yet. Unknown Analyst: Okay. And can you please share the CapEx guidance for '26? Adam Gifari: Yes. CapEx should be around IDR 5 trillion. Unknown Analyst: Okay. And can you share the like allocation for... Adam Gifari: Should be still similar with what you saw in full year 2025 when it comes to split, because we still have to -- we expect to build new towers also for XLS but not as in the tune of IOH relocations for the towers. So XLS, I think the required relocations is about 8,000 locations, but then a lot of that will be on existing towers. Unknown Analyst: Okay. And how many supposed to be in BTS form? Adam Gifari: About 1,000. Unknown Analyst: Only 1,000. Okay. And IDR 5 trillion CapEx already covering for that 1,000... Adam Gifari: Yes, yes, yes. Unknown Analyst: Okay. And my last question is the -- on the potential upside from the FWA deployment part. Can you share the color on that and the timing? Adam Gifari: So at the start of fasting, it was below 100, but now we see that number comes to about 400 coming from FWA colocations. Unknown Analyst: That's already being realized or that's for... Adam Gifari: Yes, in the works to be realized, you should be able to see some in our first quarter results. Unknown Analyst: I see. And that's for the full year or only for the first Q, I mean... Adam Gifari: Only for the first Q. Unknown Analyst: Okay. And can you share like what's the potential in the full year? Adam Gifari: Nothing that we have received as final number in our management meetings here. So they come in the batch of hundreds. Maybe if we talk again in 1 month, I'll be able to share more numbers with you. Unknown Analyst: Okay. And my last question is following up to that. So the low single-digit growth, is that already including the FY upside? Adam Gifari: Yes, yes, yes. That's why you see the unexpected inch in, increase in tenancy ratios for 2026. I mean we assume always possibility of not too strong wireless market churn, stuff like that. So we cannot always assume a positive net gain in tenancy ratios unless we see something different, materially different. So we're kind of a bit cautious in our assumptions. Unknown Analyst: Next, I will read out the question in the chat box from Julie. Was there an increase in average tower rental rate in 4Q 2025, what was the reason behind this? Adam Gifari: Yes, that's a function of what Hartono was saying that we relook at what we have in ability to charge our customers like occupancy of towers, space that we have originally stipulated in the original contract and then they end up occupying with more equipment. So that's why you saw average lease going up. But what we see is that base rent, I think we're pretty much quite stable. I don't have the number with me right now, but should be around $12 million something in average lease rate for tower leases, including colocations. Unknown Analyst: Next, I will take a question in the chat box from Selvi. Wi-Fi and MyRepublic are expanding to fixed wireless access. Will [indiscernible] become the tower partner for their [indiscernible] services? If yes... Adam Gifari: Yes, yes. Unknown Analyst: Okay. Adam Gifari: I think we already answered that in the immediately previous question from Sabrina, I think -- [indiscernible], sorry. Unknown Analyst: Yes. And could you please give color on the revenue expectation and EBITDA margin? Adam Gifari: We mentioned about the -- what we see 2026. We have devised a budget for 2026 under which management will be operating. So I think still low single-digit kind of revenue growth. Similarly with EBITDA. Again, the major driver for growth is connectivity, as Hartono has mentioned, because we see opportunities to basically cover more market under connectivity under our own discretion. We are hearing off and on mobile wireless operators being hesitant about spending CapEx. So that's why we think 2026 will still be -- the brighter spot is from connectivity... Unknown Executive: Yes. Still connectivity, we feel that there's still a room for quite an improvement, utilizing the kilometer fiber layout that we have across Indonesia. And also, we see that the needs for the Internet is increasing from year-to-year. So we see that connectivity, especially will book quite a growth. Adam Gifari: And then the growth from that connectivity, very strong growth from connectivity will lift the overall POW or performance for 2026. Unknown Analyst: Okay. Next, we will take a question from [ Eta ] and then we will take one last question as we approach the end of the call today. From Eta, what is the pricing trend for tower and fiber? What is the sustainable level in the industry? And then what is the typical tower required in 5G? Unknown Executive: Yes. I answer for the fiber -- for the pricing for fiber, if relate to the FTTT, I think it's already bottomed. I think we don't see any further decrease on that. For the connectivity, yes, we see that it's very natural the price will go down every year. However, what we do is we don't -- we try to maintain the price. Instead of lowering the price, we give them more bandwidth. So the revenue is still remained the same. So that's our strategy for the fiber. Adam Gifari: Yes. I think for towers, I think like, for instance, the new possibility of bigger volume with FWA. I think, again, what we -- what I mentioned during the first 5 minutes is that what we've been trying to do is that same with fiber with towers also, rather than these guys, whoever wants to expand the network or improve the network rather than them go out of pocket to build new infrastructure using other people or their own capital, I think we have the flexibility of very efficient CapEx and OpEx outlay on a per unit basis. I mentioned this a couple of times, I'm going to mention again. For instance, the number of people operating under towers, even though we were 15,000 towers or 20,000 towers, the headcount on the tower is still 900 people more or less. So that provides a very high tower count per headcount that we have under towers. For fiber, I think the same thing, if we reach certain scale, we've reached a certain scale with fiber optics, very good margins that we think we should be able to outperform the competition. Not to mention, we have also a very good access to capital, as you can see in our performance. What we want to avoid is going out there and then try to propose a new business proposal. And then the pricing is off, meaning it's just too expensive or what we want to be able to provide is earn the business by providing something very efficient. So if they do their own calculations, it's just better off to just lease, and that goes for colocation as well. So based on that, and we've been saying this for the many, many quarters already, pricing have been quite stable. So I think about IDR 12 million, for instance, for towers. So that's what we think should be the main focus of management going forward. Unknown Analyst: Okay. And for our last question today from [indiscernible]. Previously, you touched about acquisition opportunity. Can you give more details on that? Adam Gifari: Yes, nothing I can share actually. But you see some assets still left to be consolidated. We will look at those opportunities very carefully. At this stage, frankly speaking, we are looking at something very strategic where we can enhance value to the whole franchise. We own several subsidiaries. And then I think one transaction is pending to conclude in second Q, but not much that we can say at this stage. So when we say revenue growth is flattish, it's not including transactions like that. Unknown Analyst: Awesome. Before we end the call today, do you have any closing remarks, Adam or Hartono? Adam Gifari: Yes. So hopefully, all of you will be able to see more of us, Hartono and myself, talking about the business. It's just a matter of 5 weeks, and the whole world is different because of the war. Right now, fortunately, we don't have a funding need that really necessitates us to basically discuss a new term sheet. Fortunately, Bank Indonesia did not increase BI rate. So that reflects the banking system liquidity. We also price a lot of our loans based on that policy rate, BI rate with banks, the biggest banks in Indonesia also included state banks, commercial banks, and still, we have very much liquidity offering coming ourselves, coming our way from financial markets, including banks. So I think we are in a good position if we are to launch a bond, for instance, because we don't have a financing need that is necessitate us to borrow at a much higher borrowing cost at this stage, okay? I think this answer to Sabrina's question. I think for us, we are optimistically looking at where our customers are heading. Hopefully, this war doesn't cause any more concern than what we already see in our other type of business in our daily lives. Do you add, Hartono? Unknown Executive: No, that's it. Adam Gifari: Thank you, Nico and everybody. Unknown Analyst: Great. We come to the end part of the session. On behalf of Bahana Sekuritas, I would like to thank you, Hartono, Adam for the informative and interesting talk that we have today, and congratulations as well on your impressive results. And I would like to thank you, the audience for your participation. We hope this presentation is beneficial for everyone. Thank you, and see you in our next event. Thank you. Adam Gifari: Thank you, everyone. Unknown Executive: Thank you, Nico. Thank you. Bye. Unknown Analyst: Bye. Thank you.
Operator: Good morning, ladies and gentlemen, and welcome to today's Investcorp Credit Management BDC's Quarter ended December 31, 2025 Earnings Call. It is now my pleasure to turn the floor over to Andrew Muns, Chief Financial Officer. Andrew Muns: Thank you, operator. Welcome, everyone, to Investcorp Credit Management BDC's earnings call for the quarter ended December 31, 2025. I'm joined today by Suhail Shaikh, President and Chief Executive Officer of the company. I would like to remind everyone that today's call is being recorded and that this call is the property of Investcorp Credit Management BDC. Any unauthorized broadcast of this call in any form is strictly prohibited. An audio replay of the call will be available on the Investor Relations page of our website at icmbdc.com. I would also like to call your attention to the safe harbor disclosure in our press release regarding forward-looking information and remind everyone that today's call may include forward-looking statements and projections. Actual results may differ materially from these projections. We will not update forward-looking statements unless required by law. To obtain copies of our latest SEC filings, please visit the company's registration statement on the SEC's EDGAR platform or our Investor Relations page on our website. The format for today's call is as follows: Suhail will provide an overall business and portfolio summary, and then I will provide an overview of our results, summarizing the financials. This will be followed by Q&A. Please note that today's discussion will focus on our financial results. As stated in our press release, we do not intend to comment further regarding the review unless or until it determines that further disclosure is appropriate or necessary. As such, we will not be taking questions on the strategic review process during today's call. Management will be pleased to address questions related to our quarterly financial statements and business operations. At this time, I would like to turn the call over to Suhail. Suhail Shaikh: Good morning, everyone, and thank you, Andrew, and thank you, everyone, for joining our December 31, 2025 quarter-ended earnings call. As a reminder, ICMB provides flexible capital solutions to middle-market companies, primarily through first lien senior secured debt. Our disciplined underwriting approach focuses on downside protection while generating income for shareholders. We will begin with an update on the business, a review of our fourth quarter results and portfolio activity, and then Andrew will walk you through our financials in greater detail. Before we dive into the details, here are the key takeaways from the quarter. We formed a special committee of independent directors to review strategic alternatives and maximize value for shareholders. We successfully refinanced the $65 million notes due April 1 with new unsecured notes maturing in 2029. NAV per share declined to $4.25, primarily driven by fair value adjustments and dividend payout in excess of net investment income. Nonaccruals increased to 6.9% of the portfolio at fair value with Easy Way added to nonaccrual. We remain focused on liquidity, capital preservation and disciplined underwriting in a still uncertain market environment. As announced in our earnings press release, the Board of the company has formed a special committee of independent directors to review strategic alternatives to maximize value for shareholders and in parallel has decided to not declare a quarterly dividend for the current quarter. In addition, on March 30, we successfully refinanced the $65 million 4.875% notes due April 1 with new $65 million unsecured notes provided by our advisers affiliate. The unsecured notes bear a floating rate coupon of SOFR plus 550 basis points and are due on July 1, 2029. The market environment, macroeconomic and geopolitical uncertainty continues to shape the operating backdrop. Credit markets have remained open, but deal activity in our segment of the market has stayed below historical norms as sponsor-driven transaction volumes have yet to recover in a meaningful way. Our focus on disciplined underwriting and active portfolio management has not changed, and we remain in active dialogue with management teams and sponsors of our portfolio companies. Turning to our fourth quarter results. ICMB reported net investment income before taxes of $0.3 million or $0.02 per share before taxes, a decrease of $0.02 per share from the previous quarter. The sequential decline in NII was primarily driven by a reduction in income-producing assets, including the placement of Easy Way term loan on nonaccrual and an increase in professional fees and other expenses that is typically experienced in the December quarter. Nonaccruals increased to 6.9% of the portfolio at fair value compared to 4.4% last quarter, driven by the addition of Easy Way, as mentioned above. Easy Way is a manufacturer of customizable outdoor furniture products sold through retail channels. Net assets declined approximately 16% sequentially from the prior quarter, with net asset value per share decreasing to $4.25 from $5.04 in the previous quarter. This was largely the result of fair value adjustments and the payment of a dividend in excess of NII. These fair value adjustments primarily reflect changes in market valuation levels and updated exit timing assumptions in the current environment rather than broad-based deterioration across the rest of the portfolio. The portfolio remains diversified across 18 industries with no single investment representing more than approximately 3% of fair value. I would also like to note that our software exposure represented less than 3% of fair value at quarter end. Our focus during the quarter was on liquidity management. Hence, our new investment activity remained muted. During the quarter, ending December, we invested $1.5 million in the first lien term loan of Axiom Global, an existing portfolio company to fund the dividend to existing shareholders. Axiom is a leading provider of flexible expert legal talent for enterprise customers. We have been investing in Axiom across our platform since February 2021. Our yield at cost is approximately 8.8%. In the same period, we fully realized 3 portfolio company investments totaling $8.2 million in proceeds with an IRR of approximately 10.6%. This included the full realization of 2 term loan investments in existing portfolio companies, CareerBuilder and LABL, L-A-B-L as well as our preferred equity investment in Advanced Solutions International, which was recapitalized during the quarter. I'll now turn the call over to Andrew to review our financial results in more detail. Andrew Muns: Thanks, Suhail. Let me begin by providing you with highlights of our quarterly performance. For the quarter ended December 31, 2025, the fair value of our portfolio was $172.7 million compared to $196.1 million on September 30. Our net assets were $61.3 million, a decrease of $11.4 million from the prior quarter. This quarterly change in net assets consisted of a $9.4 million decrease from operations and a $2 million decrease related to our dividend, which was paid in excess of NII for the quarter. The weighted average yield of our debt portfolio was 10.6%, a small decrease of 31 basis points from the September quarter. As of December 31, our portfolio consisted of 37 borrowers, approximately 81% of these investments were in first lien debt and the remaining 19% was invested in equity, warrants and other positions. 98% of our debt portfolio was invested in floating rate instruments and 2% in fixed rate instruments. The weighted average spread on our floating rate debt investments was 4.5%, which is relatively unchanged from the prior quarter. The average investment size per portfolio company on a market value basis was approximately $4.7 million or 2.7% and our largest portfolio company investment on a fair market value basis, Bioplan at $11.4 million. Our largest industry concentrations by fair market value were professional services at 14.5%, IT services at 9.2%, insurance at 8.9%, diversified consumer services at 8.6% and commercial services and supplies at 7.9%. Overall, our portfolio companies are spread among 18 GICS industries as of quarter end, including our equity and warrant positions. Gross leverage at the end of the quarter was 2.02x and net leverage was 1.78x compared to 1.75x gross and 1.59x net, respectively, for the previous quarter. We paid down approximately $14 million of debt in February. On a simple pro forma basis, had this pay down occurred on December 31, our net leverage would have been closer to 1.8x, while our reported year-end net leverage remains 1.78x. This pay down improved our asset coverage ratio from 150% to 155%. With respect to liquidity, as of December 31, we had approximately $15 million in cash, of which approximately $10.4 million was restricted cash. In addition, we had $41.1 million of unused commitment under our revolving credit facility with Capital One, of which approximately $8.7 million was available under our borrowing base. Additional information regarding the composition of our portfolio and quarterly financial results are included in our Form 10-K. And with that, I would like to turn the call back over to Suhail. Suhail Shaikh: Thank you, Andrew. As we reflect on the quarter, we are operating in an environment with elevated uncertainty both across both the macro backdrop and broader market sentiment. Our priorities are clear. preserving capital, maintaining disciplined underwriting and actively managing our nonaccrual positions. To summarize, we have formed a special committee to pursue strategic alternatives focused on maximizing shareholder value. We refinanced our April notes and extended our maturity profile, and our portfolio remains predominantly first seen with broad industry diversification. While we expect market conditions to remain challenging in the near term, we believe our focus on liquidity and risk management positions ICMB to navigate this period and pursue opportunities as they arise. We appreciate your continued support and look forward to updating you on our progress next quarter. That concludes our prepared remarks. We will now open it up for questions regarding our quarterly financial performance and business operations. As noted earlier, we will not be commenting further on the strategic review. Operator, please open the line up for Q&A. Operator: [Operator Instructions] Our first question comes from Justin Scott, [indiscernible] Research. Unknown Analyst: First of all, I'd like to applaud the forming of the special committee. I know you can't take any questions on it, but I think we can all see that, unfortunately, it's an economic necessity for the fund. Just back of the envelope, fees and expenses of running this fund have now $0.48 a share. The additional interest on the shift from the previous loan notes costing the fund 4.9% to the current ones, 9.1%, add another $0.19 per share. So $0.67 per share of fees and expenses and additional interest, which is 15.8% of the net assets or 42% of the share price. Obviously, no matter how hard your team tries, those are unattainable investment skills to generate a return for the fund. So I fully understand why you had to do it. Obviously, most of the investors are in here for income, but applaud the decision. And I know you can't comment about the options you're looking into. One thing I'd like to ask is whether anything is being done to trying to put this tactically, closer align the interest of the manager with the shareholders, given that the fees that the manager takes and now with the new loan, the interest that the affiliate of the manager is earning is a very substantial part of the assets of the fund and whether during the interim period as you're doing the review, whether the manager will consider reducing their fees somewhat. Suhail Shaikh: Justin, thank you for your question, and thank you for your opening remarks as well. Look, I think, as you can see from our financials, we have been [ waiting ] fees on an ongoing basis, even when the fund is performing slightly better in a slightly better environment. So that tool always exists for us and if we have to. But I think what I more importantly note is, you should think about the managers sort of alignment with the shareholders. If an affiliate of the manager just provided $65 million of capital to refinance the notes. Affiliate of the manager also owns about 25% of the shares. So I think we are -- we consider ourselves fully aligned with shareholders, and we'll use whatever means necessary to keep that alignment going. Hopefully, that answers your question. Unknown Analyst: It's just that you are earning a substantial amount of money during the period when the fund is open, and I just concerned about that affecting the motivation. Basically, the adviser is going to be earning about $10 million in interest and fees during this period. And I think time is not on your side, and I guess I'm saying don't dilly-dally, so to speak. Suhail Shaikh: Understood. Operator: [Operator Instructions] I currently don't see anyone with questions. [Operator Instructions]. Suhail Shaikh: If no more questions, Luke, I think we can conclude the call, and thank you again for everyone joining in. And we look forward to talking to you again next quarter, and we'll see you then. Thank you, Luke. Operator: Thank you, everyone. And this concludes today's conference call. Thank you for attending.
Gilbert Avanes: Thanks for joining the 2025 Fourth Quarter and the Full Year Earnings Call for Reading International Inc. My name is Gilbert Avanes. I'm the company's Chief Financial Officer and the Treasurer. Joining me today is Ellen Cotter, President and CEO. Today, we're going to modify the order of our call. After I run through normal caveats, I'll start first by presenting the results from our 2025 fourth quarter and full year. I will also talk about our balance sheet, liquidity and provide a summary of our debt position. Then I'll turn the call over to Ellen, who will discuss our business strategy. After that, we'll address some specific questions that came in from our stockholders, understanding that we have tried to weave answers to many stockholders' questions into our prepared remarks. So let me start with running through the usual caveats. Some of the statements that we make today regarding our business, operations and financial performance may be considered forward-looking. Such statements are based on our current expectations and assumptions that are subject to a number of risks and uncertainties. We undertake no obligation to update any forward-looking statements. Actual results could differ materially. Please refer to our Forms 10-K and 10-Q, including the risk factors. During this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of non-GAAP and GAAP measures is included in our earnings release issued March 31, 2026, which is distributed and available to the public through our website located at investors.readingrdi.com. With that behind us, I will go over the results from Q4 2025 and the full year 2025. But before I do that, I want to point out a few important transactions completed in 2025. In Q1 2025, we completed the sale of our property assets in Wellington, New Zealand for NZD 38 million or USD 21.5 million. In May 2025, we completed the sale of our Cannon Park asset in Townsville, Australia for AUD 32 million or USD 20.7 million. On December 19, 2025, we completed the purchase of Sutton Hill Associates, a California General Partnership, which owned a 25% interest in Sutton Hill Properties, LLC, the owner of the Cinemas 1, 2 and 3. As part of this deal, we assumed certain indebtedness owned by Sutton Hill Associates to a third party. That indebtedness at December 31, 2025, had a face amount of $13.6 million with interest payable quarterly at 4.7% per annum with all principal due at payable in bullet payment on September 30, 2035. Now I'll turn to the fourth quarter results, which overall were somewhat disappointing compared to the prior period. Q4 2025 consolidated revenue decreased by $8.3 million to $50.3 million quarter-over-quarter. A few factors drove this decline. The film slate for the quarter in the U.S., Australia and New Zealand could not match the strength of the film lineup in Q4 2024. We closed 2 unprofitable theater, one in U.S. and one in New Zealand. A decrease in our Australia and New Zealand real estate rent revenue due to the sale of our Cannon Park and Wellington, New Zealand assets. At $203 million, our consolidated revenue decreased by 4% year-over-year. The same factors drove this decrease. Lingering impact from industry-wide movie release schedule changes, the closure of 2 unprofitable theaters, one in U.S. and one in New Zealand, the elimination of our property revenue generated from our Wellington and Cannon Park properties. In addition, the continued weakening of our Australia and New Zealand foreign exchange rate against the U.S. dollar negatively impacted our consolidated revenue. With respect to our net loss position for the quarter, our net loss attributable to Reading International Inc. increased by $0.3 million to a loss of $2.6 million quarter-over-quarter. Our basic loss per share for Q4 2025 increased by $0.01 to a loss per share of $0.11 compared to a basic loss per share of $0.10 for Q4 2024. Again, these results were primarily due to weaker cinema performance and a $2.2 million decrease in other income compared to the same period in 2024. This was offset by a $0.6 million reduction in interest expense and a gain on sale of $2.7 million due to the acquisition of non-controlling interest related to Sutton Hill Associates transaction. Our net loss attributable to Reading International Inc. for the full year improved by $21.2 million from a loss of $35.3 million to a loss of $14.1 million year-over-year. Our basic loss per share improved by $0.96 to a loss of $0.62 compared to a loss of $1.58 for the full year 2024. These improved results were primarily due to stronger income results from our segments, a $3.2 million reduction in interest expense, a $2.7 million gain on acquisition of noncontrolling interest of Sutton Hill Properties, LLC, an $8.4 million gain on sale of assets from the sale of our Cannon Park and Wellington properties in 2025 compared to a loss of $1.3 million on the sale of our Culver City office in 2024 and a $0.9 million reduction in G&A expenses, partially offset by a $3.7 million increase in other expenses. Our total company depreciation, amortization, impairment and G&A expenses for Q4 2025 decreased by $0.9 million to $7.3 million compared to $8.2 million for Q4 2024. For the year ended December 31, 2025, total company depreciation, amortization, impairment and G&A expenses decreased by $3.4 million to $32.5 million compared to the same period in the prior year, primarily driven by cinema closures in the U.S. and New Zealand, the sale of our Wellington and Cannon Park properties and delays in CapEx spending. Income tax expense for the year ended December 31, 2025, increased by $0.4 million to income tax expense of $0.9 million compared to an income tax expense of $0.5 million for the equivalent prior year period. The change between 2025 and 2024 is primarily due to increase in income tax expense from Australia in 2025. Our Q4 2025 global operating loss was $1 million compared to an operating income of $1.1 million in Q4 2024. At $5.1 million, our Q4 2025 adjusted EBITDA decreased by $1.7 million or 25% compared to the same time period last year. On a full year basis, our 2025 global operating loss of $5.3 million improved by $8.7 million or 62% from an operating loss of $14 million in Q4 2024. And at $17.8 million, our adjusted EBITDA increased by $15.7 million or 744% compared to the same time period last year. These annual improvements were due to $9.7 million increase in gain from our asset sales, $2.7 million gain on acquisition of noncontrolling interest and improved operating results primarily through the efficient management of operating expenses and reducing general and administrative expenses. Shifting to cash flow. For the full year 2025, net cash used in operating activities decreased by $2.2 million to $1.6 million compared to cash used in the same period of prior year of $3.8 million. This was primarily driven by a decrease in net operating loss of $11.5 million, partially offset by a $9.3 million decrease in net operating assets, primarily due to increase in receivables and a small increase in accounts payable and accrued expenses plus deferred revenues and other liabilities. Cash provided by investing activities during the 12 months ended December 31, 2025, increased by $33.1 million to cash provided of $37.1 million from a cash provided of $4 million in the same period of prior year. This was primarily due to higher proceeds from sale of our Cannon Park property assets in May 2025 and the Wellington property assets in January 2025 compared to proceeds from the sale of our Culver City office in February 2024 and a reduction in capital expenditures in 2025 compared to 2024. Cash used in financing activities for 12 months ended December 31, 2025, increased by $38.2 million from cash provided of $0.3 million to a cash used of $37.9 million. This was primarily due to the paydown of our debt in New Zealand with Westpac debt in U.S. with Bank of America and in Australia with NAB in 2025. Turning now to our financial position. As of December 31, 2025, our total assets were $434.9 million compared to $471 million on December 31, 2024. This decrease was driven by a $1.8 million decrease in cash and cash equivalents from which we funded our ongoing business operations, a $31.9 million decrease in land and property held for sale due to the sale of our Cannon Park and Wellington assets. As of December 31, 2025, our total outstanding borrowings were $185.1 million compared to $202.7 million on December 31, 2024. The net sale proceeds from the sale of Cannon Park and Wellington property funded this debt reduction. It was offset by the addition of $13.6 million in debt added in connection with the Sutton Hill deal that we took over after acquiring the 25% of minority interest in Cinemas 123 that we did not already own. Our cash and cash equivalent as of December 31, 2025, were $10.5 million. Further to address the liquidity pressure on our business, we continue to work with our lenders to amend certain debt facilities, and we continue to have our Newbury Yard Williamsport, Pennsylvania property classified as held for sale. Through 2025 and into early 2026, we have worked with our key lenders to extend maturity dates, modify principal repayment dates and adjust existing covenants. With respect to our 44 Union Square loan, in May 2025, we extended the maturity to November 6, 2026, with an option to extend further to May 6, 2027. And in February 6, 2026, we deferred a principal payment, which we have since paid in March 2026. With respect to our Bank of America Bank of Hawaii loan, in July 2025, we extended the maturity to May 18, 2026. On December 29, 2025, we further extended the maturity to September 18, 2026. And on February 27, 2026, we further modified the loan payment schedule. In July 2025, we extended the maturity of our loan on our live theater assets in New York to June 1, 2026. We're currently working on a refinancing option. On November 13, 2025, we extended the maturity of our Valley National Bank loan to October 1, 2026. With respect to our NAB loan on November 12, 2025, we extended the maturity to July 31, 2030, and modified the principal repayment schedule. Then just recently, we amended the loan to reduce our minimum liquidity covenant for a limited period of time. With respect to our debt position, as I just mentioned, as part of our Sutton Hill deal on December 31, 2025, we added debt in a face amount of $13.6 million interest payable quarterly at 4.75% per annum with all principals due and payable in a bullet payment on September 30, 2035. Our 2025 strategic asset sales have led to a significant debt reduction. From December 31, 2024, we have reduced our global debt balance from $202.7 million to $185.1 million or almost 10% as of December 31, 2025, including the newly added $13.6 million of new Sutton Hill debt. Our interest expense for 12 months ended December 31, 2025, has been reduced by $3.2 million or 15% since the same period last year. This follows an overall debt reduction of $99.9 million since December 31, 2020. Now let me turn it over to Ellen, who will give us an overview of the business in Q4 2025 and full year 2025. Ellen Cotter: Thanks, Gilbert, and welcome, everybody, to the call. While we are disappointed that the global box office resulted in our quarterly and annual revenue results trailing the same periods in 2024, our management teams worked hard through 2025, completing various deals and initiatives that should ultimately lead to a stronger Reading into '26 and beyond. As Gilbert mentioned, 2 major asset sales, Cannon Park and Wellington allowed us to make a sizable reduction in our debt, while we are also retaining the Reading Cinema opportunity through entering into agreements to lease on those properties. The acquisition of Sutton Hill Associates resulted in the company controlling 100% of the Cinema 1, 2, and 3 building and taking Ground Lessee's Interest in the Village East by Angelika Cinema in New York City. Various amendments with our lenders, as Gilbert just outlined, resulted in maturity date and principal payment date extensions. The implementation of key strategic operational initiatives that should result in an overall stronger cinema trading into the future as the box office improves. While the 2025 box office overall disappointed to date, in 2026, we've enjoyed better results. On a flash basis, our global cinemas are trading ahead in 2026 by over 11% on a U.S. dollar basis for the period from January 1 through yesterday, April 1, the very exciting opening day of the Super Mario Galaxy movie. In March 2026, the entirely original movie, Project Hail Mary, which opened to sensational box office and fanfare from critics and audiences reinforced our confidence in the theatrical experience and how movies with compelling stories and heart, coupled with amazing marketing campaigns can create cultural moments for global moviegoers. We're equally excited for the rest of 2026, which includes highly anticipated major releases like The Devil Wears Prada 2, Toy Story 5, Supergirl, Minions 3, Moana, The Odyssey, Spider-Man: Brand New Day, Cat in the Hat, Avengers: Doomsday, Dune Part 3 and Jumanji. Along with industry analysts and press, we believe that 2026 will be the best post-pandemic box office year to date. And picking up on Gilbert's presentation, let me mention a couple of operational highlights from Q4 '25 and the full year '25. Our 2025 revenue results were ultimately behind Q4 '24 and full year '24. The main driver for the declines came from the comparative film slates. We broke several box office records back in Q4 2024 when the trifecta of Wicked, Moana and Gladiator proved to be a near-perfect product mix for our circuit. The comparison was always going to be tough to beat. Our top fourth quarter 2025 film titles included Wicked for Good, Zootopia 2 and Avatar: Fire & Ash. While we were very encouraged with the strong global presale numbers for Wicked for Good, it unfortunately ended up underperforming its predecessor, Wicked. And our lofty expectations for Avatar: Fire & Ash were ultimately not fully achieved. 2025 reflects a reduction of our overall screen count by 4% through the elimination of 2 unprofitable theaters, one in the U.S. and one in New Zealand. While these results impacted our top line, we believe they'll ultimately improve cash flow in the long run as these theaters underperformed. I'll touch on this in a minute, but our teams continue to drive impressive food and beverage results, which are bolstered by the creation of movie theme menus and our marketing efforts to sell movie merchandise. Through 2025, our teams focused on the improvement and expansion of our loyalty programs across all cinema divisions. Across the global circuit, we're continuing to work with our landlords to reduce our overall occupancy costs to reflect the fact that attendance has not returned to pre-pandemic levels and our operating expenses for the most part have all increased. With respect to our property divisions, our lower revenues reflected the elimination of real estate revenues generated by our Cannon Park and Wellington property assets, which were sold in 2025 to raise liquidity to pay down debt. Despite the elimination of cash flow generated by these real estate assets sold in early '25, our global property team continues to drive productive changes in our 58 third-party tenant portfolio, which I'll touch on shortly. Our U.S. Real Estate division performed better year-over-year, mainly due to the favorable performance of our live theater division and increases in rent at 44 Union Square. Historically, around 50% of our revenues have been generated in Australia and New Zealand. But during the fourth quarter of '25, that slightly dipped with 48% of our revenues being generated internationally. In Q4 2025, our quarterly revenue was negatively impacted as the New Zealand dollar devalued against the U.S. dollar by 3% compared to the fourth quarter of '24. On an average annual basis, the Australian and New Zealand exchange rates are at historical lows compared to the last 20 years. We've delivered 6 straight quarters of positive EBITDA. Our balance sheet continues to be anchored by a strong real estate portfolio. An exciting and robust 2026 movie release schedule will enliven our global cinemas again. So we feel our company is well positioned to deliver a much stronger 2026 and beyond, having weathered a very challenging last 5 or 6 years. We're still absolutely committed to our 2 business, 3-country strategy. While we've monetized a number of our real estate assets, this has been done to strategically meet our liquidity needs in the face of the pandemic, the unprecedented 2023 Hollywood strikes, historic increases in interest rates and inflation. We chose those particular assets, which typically were either negative cash flow or which after debt service did not materially contribute to our cash flow and which, in our view, had reached the best value reasonably achievable without additional significant capital investment. We monetized our California headquarters building to cut administrative costs and have been able to work remotely now for 2 years. Since the pandemic started in early 2020, we've reduced our global cinema count by 8 theaters, all of which had experienced negative cash flow since 2022 and most since the pandemic or even earlier. As of today, we believe we continue to have a strong portfolio of cinema and real estate assets, most of which are cash flowing or expect to be cash flowing in the near future. We're proud to say we've navigated these treacherous waters without $0.01 of U.S. government assistance, without resorting to debtor rights of legal remedies and without diluting our stockholders. With that, let's take a closer look at our Q4 2025 global cinema business compared to the same period in '24. At $46.9 million, our Q4 2025 global cinema revenue decreased by 14%. At $900,000, our Q4 2025 global cinema operating income decreased by 76%. And turning to our full year 2025, our '25 global cinema revenue of $188.6 million decreased by 3% year-over-year. At $3.6 million, our 2025 global cinema operating income increased by 230% from a cinema operating loss of $2.8 million in 2024. As we've said, the overall weaker Q4 '25 performance was mostly attributable to a weaker film slate, which was also experienced on a yearly basis or on an annual basis. However, our particular results for the quarter and the full year were also impacted by, for the most part, unfavorable FX movements. The closure of 2 cinemas, while a positive impact to operating income negatively impacted our revenues and the partial closure of a 16-screen U.S. cinema that was under renovation towards the end of '25. When you look at the year-to-date through December 31, '25, as mentioned earlier, our global cinema operating income grew to $3.6 million, an increase of 230% despite a reduction in cinema revenues of 3%, which reflects the continuation of our disciplined management of our operating expenses. Let me highlight a few of those key strategic initiatives that we focused on throughout '25 and have supported our results through the year. Our F&B program remains a key area of focus for us, and we've set multiple records again for the fourth quarter and full year. When you include only periods when our circuits were fully operational, i.e., excluding pandemic closure periods, each of our 3 cinema divisions again established F&B spend per person records. In the fourth quarter '25, records were set for any fourth quarter and then in the full year '25, records were set for any prior year ever in our history. Additionally, our Q4 2025 Australian F&B spend per person was the highest quarter ever in our history. These strong F&B results were again positively impacted by the sale of increasingly popular movie merchandise that range from movies like Gabby's Dollhouse, to Zootopia, Avatar: Fire & Ash, Wicked for Good, Five Nights at Freddy's and Anaconda. We're also driving guests to our theaters through our new and improved loyalty programs, both free-to-join rewards and paid membership programs. In Australia and New Zealand, we recently revamped and relaunched our free-to-join Reading Rewards program to provide better perks and savings. Today, we have over 430,000 members, an 18% increase over the last quarter. With respect to our paid memberships in Australia and New Zealand for both of our Reading and Angelika brands, since our late Q4 2024 launch, we've signed up over 22,139 paid memberships, a 27% increase over last quarter. In December '25, we launched a new free-to-join rewards program and premium paid membership in Hawaii and in select U.S. Reading cinemas. In the U.S., our free-to-join Angelika membership program has approximately 183,000 members, a 7% increase from last quarter for our 8 Angelika branded theaters. And we expect to launch our paid premium Angelika monthly membership next quarter. A key initiative for our global executive teams has been working closely with our third-party cinema landlords to realign occupancy costs with the economic environment of recent years. During our negotiations with our third-party landlords, when we try to reduce our occupancy expense, we highlight the fact that operating expenses have increased, attendance continues to remain below pre-pandemic levels, and we have limited headroom to raise ticket and food and beverage prices. Let's take a closer look at the 2025 fourth quarter and yearly results for our U.S. cinemas. Our Q4 2025 revenue decreased by 12% to $25.8 million, and our Q4 '25 operating income decreased by 27% quarter-over-quarter. Our full year 2025 revenue remained relatively flat at $99.5 million compared to the full year of '24. While our full year 2025 operating loss improved by 103% to operating income of $200,000 from a loss of $7.3 million in the full year of '24. In addition to what I mentioned earlier, a couple of other milestones to mention. Our Q4 2025 average ticket price of $14.03 marks our highest quarter ever for our U.S. circuit. This is impressive in light of the strength of our discount Tuesdays, which are branded Mahalo Days in Hawaii and Half-Price Tuesday in the U.S. on the Mainland. During the fourth quarter of '25, we enjoyed box office success at the Angelika New York and other specialty theaters with movies like Frankenstein from Director Guillermo Del Toro released by Netflix, Neon's Sentimental Value, The Secret Agent and No Other Choice. And through the year 2025, specialty films like The Phoenician Scheme from Wes Anderson, Friendship and I'm Still Here drew audiences to our specialty theaters. Following the positive 2025 trends, we expect 2026 will deliver a similar result in the world of art house and specialty film. We received stockholder questions about the status of our CapEx spend in 2026. With respect to our U.S. circuit, we're in the process of renovating our Reading cinema at Bakersville, California. As of the end of January '26, we added heated recliners to our IMAX screen, which makes that auditorium the only IMAX with recliners within a 100-mile radius. We created a premium screen TITAN LUXE with the Dolby Atmos sound system and again, heated recliners. And we've added another 8 screens of luxury recliners. In the U.S., in '26, we're working through renovation plans, whereby we'll add luxury recliners, PLF screens and F&B upgrades to two of our U.S. cinemas. In addition, through 2026, we're continuing to refurbish many of our existing recliner seats that were damaged during the pandemic by mandated disinfectants. Turning to our cinemas in Australia and New Zealand. Following Q4 2025 box office trends and compared to Q4 2024, our Q4 2025 Australian cinema revenue decreased 13% to $18.6 million and our operating income decreased 92% to $139,000. Our Q4 2025 New Zealand cinema revenue decreased 36% to $2.4 million, and our operating income decreased 174% to an operating loss of $372,000. While comparing the full year '25 to the full year '24, in 2025, our Australian cinema revenue decreased 5% to $77.7 million, and our operating income decreased 3% to $3.9 million. In 2025, our New Zealand cinemas revenue decreased 14% to $11.4 million, and our operating income decreased 212% to an operating loss of $479,000. While the overall results for our international theaters was not positive, our box office results were in line with industry trends. During the fourth quarter of '25, our international cinemas delivered average ticket prices that established record highs. Each circuit reporting in local currency delivered fourth quarter highs for the fourth quarter of '25. Australia's average ticket price was $16.02, while New Zealand's average ticket price was $14.72. Interestingly, though, in February of '26, our international teams implemented a circuit-wide February flash sale, which gave those who signed up for our Reading Rewards program, a very discounted February ticket price. The program was very successful, leading to sizable market share increases in both Australia and New Zealand. With respect to our 2026 international CapEx spend, let me start with New Zealand. As we've reported, despite the sale of our Wellington assets, we continue to believe in the Wellington cinema market and entered into an agreement to lease back our Reading Cinema at Courtenay Central. I'm confirming we're still working through 2026 on the redesign of that theater in Wellington, and the renovation will be, as we've said before, a full top to bottom upgrade, where we'll add recliners to all 10 screens, at least 2 premium screen concepts such as TITAN LUXE or others and upgraded F&B offer, and it will follow the landlord seismic upgrade, which is underway right now. We anticipate that our renovation will be completed sometime in 2027. In Australia, we'll likely be adding a TITAN LUXE with Dolby Atmos and one premium screen with recliners to another key Reading Cinema location. Now let's turn to our global real estate business, which on a segment reporting basis includes not only our third-party rental income, but also our live theater business in New York City and our intercompany rents. Starting with the fourth quarter of '25, our global real estate results when compared to the same period in '24 were at $4.4 million, our Q4 2025 global real estate total revenue decreased 16% and at $1.5 million, our Q4 '25 total operating income slightly increased by 1%. During the full year, our '25 global real estate results compared to the same period in '24 were at $18.4 million, our '25 global real estate total revenue decreased by 8% and at $5.9 million, our full year '25 total operating income increased by 26%. As we've said earlier, the reason for these decreases was primarily driven by the elimination of revenue and property level cash flow from third-party rents because of our 2 asset sales. Breaking it down by division for the fourth quarter '25 and again compared to the same quarter in '24. With respect to Australia, our Q4 '25 real estate revenue decreased by 16% to $2.5 million, and our Q4 '25 operating income of $1.4 million decreased by 7% from Q4 '24. At $205,000, our Q4 '25 New Zealand real estate revenue decreased by 38% from $330,000 in Q4 '24. Our Q4 '25 New Zealand real estate operating loss of $3,000 improved 99% from an operating loss of $291,000 in the fourth quarter of '24. Our Q4 '25 U.S. real estate revenue of $1.6 million decreased by 10% and our operating income decreased by 64% to $100,000. On a full year basis, our Australian real estate revenue decreased by 14% to $10.7 million compared to '24, and our operating income of $5.3 million decreased by 12% compared to '24. At $881,000, our full year New Zealand real estate revenue decreased by 38% compared to the full year of '24 and our New Zealand real estate operating income of $51,000 improved by 105% from an operating loss of $933,000 during the full year of '24. At $6.9 million, our full year 2025 U.S. real estate revenue increased by 10% from $6.2 million, and our U.S. operating income increased by 262% to $600,000 from an operating loss of $400,000 during '24. These improvements were driven in large part by increases in rent at 44 Union Square and the improved performance of our live theater division. With respect to our Australian and New Zealand portfolio, as of December 31, '25, due to our asset sales in Wellington and Townsville at Cannon Park, the number of third-party tenants in our combined Australian and New Zealand real estate portfolio reduced to 58 and is now primarily made up of tenants at Newmarket Village in Brisbane and the Belmont Common in Perth. The quality of the remaining tenants is strong, and today, we have an occupancy rate of 98%. For the fourth quarter, our combined third-party tenant sales from our Australian real estate were AUD 27.5 million. During the quarter, 4 lease transactions were completed with existing tenants. These included 2 new leases and 2 lease renewals, reflecting continued tenant retention and portfolio stability. And as of the end of '25, we had completed 27 lease transactions through the 2025 year. To assist with liquidity needs and potential CapEx for the Reading Cinema at Courtenay Central, we reported that we signed an agreement to sell our property in Napier, New Zealand for NZD 2.5 million. Like our cinema in Wellington and Townsville, we expect to lease back the cinema on our Napier property. Though no assurances can be given, we would expect that, that sale will close within the next few months. Turning to our U.S. real estate business, which includes our 2 live theaters in New York City. Regarding our live theater segment, in Q4 2025, our results were not as strong due to the Orpheum being dark for most of the quarter. Unlike the Minetta Lane, which outperformed the same period in '24, thanks to the hip-hop musical Mexodus. On an annual basis, the live theater segment performed better in '25 compared to '24 because of the powerful shows mounted by Audible at the Minetta Lane, including Sexual Misconduct of the Middle Classes with Hugh Jackman and Ella Beatty, creditors featuring Leah Shriver. On an annual basis, the Orpheum Theatre also delivered a stronger show lineup than the prior year. Audible exercised its option to extend their license another year at the Minetta Lane through to March 2027. Looking ahead, 2026 at the Minetta Lane should be a very strong year again as Audible Theater and together, the theatrical partnership led by Sonia Friedman and Hugh Jackman are again mounting great shows led by the return of Hannah Moskovitch's Sexual Misconduct of the Middle Classes with Ella Beatty and Hugh Jackman with performances that began already in mid-March of '26. Since the departure of Stomp, the Orpheum Theatre continues to be in high demand with theatrical producers. During Q3 and part of Q4, Ginger Twinsies, a parody inspired by the iconic film, The Parent Trap received strong praise and played at the Orpheum for a while. Today, the Orpheum continues to host performances of 11 to midnight a theatrical dance experienced during TikTok viral sensation Cost n' Mayor, which has been extended into the second quarter of 2026. Turning to our property at 44 Union Square in New York City. While Petco continues to delight pet parents across New York City with its award-winning retail store, we still have 4 floors left to lease in the building. We switched brokers and reengaged Newmark, the same leasing team that successfully delivered the Petco deal for us. Newmark has created a new marketing campaign for the remaining space. They've relisted on CoStar, rebranded the marketing materials. They're creatively using social and AI technologies to assist in their leasing efforts. To date, Newmark has toured office users, but also potential tenants whose use focuses on wellness, education and entertainment. Newmark's renewed energy and focus on the space comes at a time when the industry data shows that the leasing environment appears to have meaningfully improved in Midtown South. And while we are working with Newmark, we continue to dialogue with one group that had presented a non-office use. Turning to the Reading Viaduct. Reflecting the importance of the Reading Viaduct as a property asset for the company, we received detailed questions from our stockholders about the range of values for this property, discussions with the city and how the outstanding legal matters may impact those values. On the STB case, we recently filed our appeal with the D.C. Circuit Court of Appeals. We expect that the D.C. Circuit Court may take between 6 months and a year to deliver a decision. We continue to believe we have a strong legal position. For further details about this asset, we'd ask you to go back and review the more detailed responses we put in our recently filed 10-K. But we'll point out again that the company believes that the Reading Viaduct is a valuable company asset and any transaction in the future tied to the Reading Viaduct should represent a fair value for the stockholders of Reading. Our Newbury Yard property in Williamsport, Pennsylvania remains classified as held for sale. However, we don't have any substantive updates for you for this earnings call and hope to have more to say on our next call. That now wraps up my business update. But before we address additional specific questions, I wanted to recognize and give a heartfelt thank you to Andrzej Matyczynski, who is with Reading for 27 years. Andrzej started with us in 1999 as our CFO and in 2015, became our Executive Vice President of Global Operations. When Andrzej started in 1999, Reading reported revenue of just under $4 million. For 2025, despite the pandemic, Hollywood strikes and interest rate hikes, we just reported about $203 million of total revenues with almost $435 million in total assets. As our CFO and Executive Vice President of Global Operations, Andrzej helped build the company brick by brick over the last few decades. He was instrumental in many foundational transactions and was a huge part of many aspects of our global business. Andrzej, on behalf of the Board, the Cotter family and the whole management team, we express our sincerest thanks and appreciation for your service and your amazing body of work. We miss working with you day-to-day, especially as each of those days usually came with a few great Andrzej jokes that kept us all laughing. We're collectively wishing you the best for your next chapter. Ellen Cotter: So with that, I'll take over the Q&A section, and I'll read out the first question, which is for Gilbert. The 10-K now shows the Bank of America facility maturing September 18, 2026, the Santander, Minetta and Orpheum loan maturing June 1, '26, the Valley National Cinema 1, 2, 3 loan maturing October 1, '26 and the 44 Union Square loan maturing November 6, '26, with an extension option to May 6, '27. Please walk through the Board's intended 2026 sequence for addressing these facilities, including which are expected to be repaid from asset monetization versus refinanced and in what order? Gilbert? Gilbert Avanes: To address the liquidity needs, the Board has decided to list the Cinemas 123 buildings for sale. With the sale of the proceeds from this property, we plan to pay off the Valley National loan, which has a current balance of $19.7 million and to pay off the Bank of America loan, which has a current balance of $6 million. While no assurance can be given, we believe it is reasonable to assume that this property can be monetized before the end of third quarter of this year. Regarding the Santander, Minetta and Orpheum loan and the 44 Union Square loan with Emerald Creek Capital, we're currently exploring with lenders to refinance and further extend the maturity dates. Ellen Cotter: Thanks, Gilbert. I'll read out the second question and provide an answer. Since 2020, you note that 8 cinemas have been wound up and all had negative cash flow in the year of closing. Beyond Queenstown and San Diego, how many additional cinemas are presently on a watch list for closure or lease restructuring? And what operating criteria drive those decisions. Well, at this point, we know we'll be closing at least one additional U.S. theater in 2026. The lease expired on the space without any remaining options, which gave the landlord the opportunity to take back the space and that has been confirmed. They'll do that. Across the U.S., we're in negotiation with most of our cinema landlords. We think that most landlords should be making some sort of occupancy adjustment to reflect the fact that operating expenses have increased across the board. And while we're hopeful that the global cinema business returns to pre-pandemic levels, we need to take a conservative approach in that regard. In Australia and New Zealand, our teams are likewise seeking occupancy reductions with certain third-party cinema landlords. As we work with our landlords in the U.S., Australia and New Zealand, we're evaluating the strength of the potential future cash flows in light of existing business circumstances. If we have an opportunity to exit a theater that we believe will not contribute to our overall circuit cash flow, we will look to exit. We expect over the next 12 to 18 months, there may be a few more cinema closures. But I'll also note that our confidence in the business remains strong, and we'll also continue to evaluate new cinema opportunities in compelling markets as those opportunities present themselves to us. So now there's a third question. I'm going to read out the question and provide the answer. The question is, my understanding is that the primary value of the Cinema 1, 2 and 3 property lies in its redevelopment rights rather than its current use. Could you elaborate on the terms of the intended sale? Specifically, will there be any conditions requiring the continuation of cinema operations at the site for a defined period prior to any potential redevelopment? And are there any covenants or requirements regarding the form of redevelopment, for example, an obligation to include a cinema lease as part of any new construction? As we just talked about, the Board recently decided to list the Cinema 1, 2 and 3 building for sale. We engaged a really good sales team at Newmark in New York City. Since the official marketing launch, the interest in the building has been really strong with Newmark. They've been marketing the building as an irreplaceable upper East side asset with great fundamentals. The building has proximity to luxury retail, Central Park, Park Avenue, Billionaires Row. It's got easy transportation options. In addition, it sits within one of Manhattan's most affluent and supply-constrained residential corridors. The current zoning on the building is expansive, which offers potential buyers the opportunity to build for a range of uses, including residential luxury condos, retail and/or office. In addition, one could develop a hotel if you obtained a special use permit. The sales market today has improved from where it was a few years ago. And I think that improvement is evident by the fact that Newmark has already signed up over 50 confidentiality agreements, which allows very qualified and skilled groups to come into our data room. We're intending to sell the property on an as is where is basis without any future cinema use requirements from us as a seller. We're not listing the price -- we're not listing the property with the sales price, rather, the market is going to dictate the price. And lastly, while no assurances can be given, we believe it's reasonable to assume that the Cinema 1, 2 and 3 building will be sold before the end of the third quarter of this year. I'll take the next question. It was a short question. Does Reading anticipate selling any further properties in 2026? And as we've just talked about in the prepared remarks, we've got 2 assets officially held for sale, our Newbury Yard property in Williamsport, Pennsylvania and the Cinema 1, 2 and 3 building in Manhattan. In addition, our property in Napier, New Zealand is under contract to sell for NZD 2.5 million. And while no assurances can be given, we believe it's reasonable to assume that these assets can be monetized before the end of the third quarter of this year. The Board has directed the management team to evaluate our current real estate portfolio for opportunities to monetize assets that after taking into account a number of factors, may assist in our debt reduction strategy and necessary CapEx requirements. However, as of today, outside the assets I just mentioned, we have no definitive plans to sell any other assets right now. So I'm going to read out the last question, which will be for Gilbert. We received questions about our general and administrative expense allocation. Our stockholder asked, the company reported G&A expenses of $19.3 million for the full year '25, which is a considerable amount relative to the operating results of both business segments. Could you provide additional color on how these costs are composed? Specifically, it would be helpful to understand the approximate split between corporate and holding level costs, costs that directly support the cinema and real estate operations, respectively. And as G&A is currently not allocated to the segments in your reporting, a clearer breakdown would help investors better assess the underlying profitability of each business on a stand-alone basis. Gilbert? Gilbert Avanes: Regarding our G&A expenses of $19.3 million, our Cinema business is responsible for $4.1 million or 21%, $0.7 million or 4% is attributable to real estate and $14.4 million or 75% attributable to corporate. Our corporate expenses are primarily incurred within the United States as most of the corporate employees are primarily located in Los Angeles area. We have made concrete efforts to lower our G&A expenses and created efficiencies wherever possible. And since 2019, we have lowered our G&A expenses by $6.1 million, which is about 24% reduction. That marks the conclusion of our fourth quarter and the full year 2025 conference call. We appreciate you listening to the call today. Thank you for your attention and support. Ellen Cotter: Thank you.
Martin Mollmann: First of all, I'd like to thank you for joining our Q4 and Full Year Earnings Call regarding our Annual Report we have published today. Within our release this morning, you found adesso confirming the preliminary full year 2025 figures published in February. Adesso showed another year of extraordinary growth. Sales reached EUR 1.47 billion and was up by 14% purely organic. EBITDA of EUR 123.6 million rose by 30% and reached the upper end of the guided range. So targets were fully met. Outlook for 2026 sees further growth in sales and earnings for the company, although macroeconomic situation remains challenging. I'd now like to welcome as well our CFO, Michael Knopp, who will give us a deeper insight into the last year's figures, the dividend proposal and the guidance for the current year. [Operator Instructions]. Thank you so far. And Michael, please go ahead. Michael Knopp: Thank you, Martin. Good morning, everybody. I will guide you now through our annual financials for 2025. And before I start, I need to highlight that we have restated our figures for 2024. I will explain this later to you. As always, we start with our sales. Sales last year came in with EUR 1.466 billion. That's an increase of [ 40% ] compared with our previous year, EUR 1.286 billion. We are very, very satisfied with these figures. I mean this is a very strong growth, purely organic within a tough market environment. And if we a little bit look back at the beginning of the year, at our expectations, 2023, 2024, Germany was in a recession, and Germany is our most important market. We generate 84% of our revenues in Germany. And therefore, the economic situation in Germany is pretty important to us. We expected for 2025 a little improvement, again, a slight growth of our gross domestic product. We knew there's the German election, which might have an impact on our revenues in the public services sector because there's always a slowdown before the election and also after the election until the new government, the new coalition is formed. At the beginning of Q2, we became a little bit more optimistic because we hope to get a little bit a tailwind from the 2 additional budgets, which were approved at that time regarding the infrastructure and armed forces. However, during Q3 and Q4, they turned out that there are no impacts visible so far. And therefore, it was just what we initially expected, tough market environment, but in general, a market which will support our business in the IT services. Let's have a look at our headcount. Headcount, the average figure of FTE grew by 8%. That's a little bit less what you might have seen in previous years, but that's also what we targeted for to be a little bit more cautious in adding headcount. At the end of 2025 on the 31st of December, we employed 11,298 headcounts. This is an increase of 978 compared to 10,320 at the end of 2024. If we look at this growth, roundabout [ 60% ] of the new headcount was added in Germany, roundabout [ 40% ] abroad. And around this 390 employees, roundabout 300 were added in those countries where we do shoring in Romania, Bulgaria and especially in India. In India, we increased our headcount from around about 100 at the beginning of the year to 300 employees at the end of 2025. That was an important goal for us to grow our activities in India, and we were pretty successful in doing that. Let's have a look at the sales split. And this slide, I think, shows you that we have very -- that we have a very diversified business, which is especially in these days, very important because it shows that adesso in terms of revenue has a very resilient business. If we look at our different sectors, none of our sectors contributed more than 20% if we look at our top 10 customers, they contributed 22% of our revenues and our -- in terms of revenue, most important customer contributed 3.2%. So we are not dependent on a single sector, on a single customer. This is a very nice status. And actually, if you look at the different sectors, it explains a little bit why we were able to grow our revenues by 40% because we are very strong in insurance, banking, health, public and also utilities. I mean, yes, all these sectors also are dependent on the development of our economy, but they are probably a little bit less impacted by all these tariff hiccups by volatile energy prices. And therefore, that's a good positioning. Insurance was pretty strong last year in sales, but also in order entry. We have seen very strong order entry, especially in Q4. Banking, a nice development as well, plus 9%. Health, again, plus 30%, driven by our bread and butter business, but also by one big project win in Q2 in the statutory health sector where we won with one of these companies, the building of a customer portal, public, I was complaining a few minutes ago about the missing tailwind from the government. However, despite that, we were able to grow it by 11%. We hoped to grow more, but I think 11% is a very strong figure. Automotive, minus 4% tough market environment and only a decrease by 4%. That's okay for us as well. Manufacturing, nice growth of 8%. And if we look at utilities, 24%. This was again driven by our strong foothold in this business in the SAP area there. Let's have a look at the sales split by regions. Our overall growth last year, 14%. In Germany, we even grow 15%. And it shows again, Germany is our main market. We are very strong there. Actually, last year, we became the #1 IT service provider with a purely German origin. There are 3 other companies, Accenture, Capgemini, IBM, who have higher revenues in Germany, but they are not German origin. So we are the biggest German company now in this area. And if we look at our sales development abroad, it's plus 7%. On the first view, this is disappointing. But if you dig a little bit more in detail into this, you notice that Switzerland has shown a decrease of 3%. Switzerland contributes a little bit more than 50% to our revenues abroad of roughly EUR 240 million. If you exclude Switzerland, growth rate abroad was 21%, which is fine for us. We have seen strong growth and also a very profitable business in Austria, same in Italy, Netherlands, also a nice growth rate. And coming back to Switzerland, we started with minus 7% at the beginning of the year. We recovered to minus 3% for the whole year. So it's already a nice turnaround during the year. We have seen strong order entry in Switzerland in Q4, but also now in Q1. So we will return to the growth path this year. And also important to mention, to avoid any misunderstanding, Switzerland is highly profitable. Let's have a look at our EBITDA or operating earnings. EBITDA came in with EUR 123.6 million. That's an increase of 30% compared to EUR 94.8 million. And if we look at the main contributors, #1 contributor is the capacity utilization. As hoped and expected, it was improved, especially in the first 4 to 5 months, it was significantly higher than what we have seen in 2024. For the remainder of the year, it was slightly better. But overall, we are satisfied with this development. We have improved our capacity utilization. As expected, we have seen a recovery in our IT Solutions business with the main contributor our insurance business with the Afida and adesso insurance solutions. This was supported by nice license sales in Q2 and Q4, where we achieved a single -- high single-digit million number in terms of revenue. That's what we, let's say, forecasted, what might be possible. And finally, we got it was waiting until mid of December to get it in, but we got the orders. So we are very happy with that. If you compare 2024, 2025, important to mention that in Q1 2024, we got EUR 2.6 million earnings from the reversal of a warranty accrual as a result of a tax audit. And we have also a disproportional increase of material costs. We will look at this in a few seconds when we look at the development of our gross profit. So some other KPIs. Let's start with the EBITDA margin. We targeted for an improvement there, 8% plus something. Finally, we arrived at 8.4%, which is what we wanted to achieve last year. It's a nice improvement compared to 2024 and 2023, but -- and that's also important to highlight, it's not where we want to be. We are targeting having EBITDA margin in a range between 11% and 13%. So we have done some steps, but some important part of steps have to be done in the future. 11% to 13% is possible. We have shown out it in the past, and we will work hard to get back to this level. If we look at EBIT, EBIT margin last year was 3.4% compared to 2.1% in 2024. Yes, key figures. We already have talked about the employee growth and our sales. Let's have a look at gross profit. Gross profit came in with a plus 12% compared to plus 14% in sales. That's because material costs have increased. There are several reasons for that. One reason is we have one more bigger project where you work with third-party suppliers. We are quite often within a consortium where we are the general contractor. Therefore, the cost go through our books. And we also have other third-party supplies, for example, cloud consumption or licenses, which also increased our material cost. If we look at our personnel costs, plus 11%, driven, first of all, by employee growth. In average, employees were 8% higher than compared to 2024. We have also the impact of salary growth from increasing salaries in line with inflation and then a little bit of change of mix of our headcount. We hired, especially in Germany, a little bit more senior people. On the other hand, we have also added people abroad in these countries where we do shoring. So we have a little bit changed the mix also of our salary composition. Other operating expenses, plus 8%, nothing special in there. Most of these lines have increased slightly. So let's have a look at the key profit drivers. Utilization, we have already spoken about that. Daily rates. Daily rates are also important for us. We have started an initiative at the end of 2024, beginning of 2025 to work on our daily rates. We have some -- seen some nice improvements in the first half of the year. In the second half of the year, the development was more flat. It was -- the macroeconomic environment is tough. So it was difficult to convince customers to agree to higher daily rates. Sometimes we were successful with that, but also sometimes customers negotiated a little bit lower prices. So at the end of the day, daily rates are slightly higher than in 2024. License sales, I already mentioned the nice license sales with adesso insurance solutions in total, EUR 13.5 million compared to EUR 3 million in 2024, so a very nice improvement. Maintenance revenue also increased. And what's also important, the level of Software-as-a-Service revenues is increasing from roundabout EUR 1 million in 2024 to EUR 3.9 million in 2025. Yes, personnel costs, I explained this already per FTE increasing slightly. Now we will come to our restatement. Preparing our annual closing, we noticed that we needed to reclassify to fixed price projects because actually, what we are doing there, building a Software-as-a-Service platform for our customers, which means we will run certain things for them on this platform, but we are the owner of the platform, not the customers. And therefore, we needed to reclassify that. If you have a fixed price project under IFRS, you have a percentage of completion method. You have some progress in the project, then you show additional revenues and hopefully additional margins. But as we now have been identified, these are not fixed price projects. Instead, we are building intangible assets. We have to account the development costs and development costs, the accounting without any margin. So what's the impact on that? The impact is that in 2024, revenues had to be decreased by EUR 11 million. And as the margin disappeared, EBITDA was reduced by EUR 3.6 million. Under German law, German accounting standards, intangible assets built by yourself cannot be put on the balance sheet. Therefore, it's an expense. And this increases, let's say, the loss. So you have more net operating -- net losses carried forward. And if you cannot put them on your balance sheet as a deferred tax asset, then the tax expenses increase. And so the consolidated earnings had a hit of EUR 6.1 million in 2024. What are the impacts on our balance sheet, an increase of intangible assets, a decrease of our equity. And if we look at cash flow and cash flow does not have any impact. It's just a reclassification. Operating cash flow, there's an increase of EUR 7.5 million investing cash flow as we now invest in intangible assets, there's an increase there, cash out of EUR 7.5 million. Everything is explained on Page 82 and our annual report. There is also some impact in the years of 2022, 2023. But this is everything included already in the figures starting on the 1st of January 2024. Now let's have a look at our earnings per share. Earnings per share came in with EUR 3.83, which is a nice improvement to the previous years. If we look at some other items on our P&L, depreciation increased slightly. This is mainly driven by the right-of-use assets under IFRS lease contracts for our offices and as well as company cars are put on the balance sheet as an asset, and therefore, you have depreciation from that, that's included in there. So if you look at the EUR 65.9 million, EUR 42.2 million from this right-of-use assets, EUR 7.1 million is depreciation of related to purchase price allocation from acquisitions we have done in the past. This figure will decrease over time until we do another M&A project. Income from investments, that's what we show at equity result and financial result is the interest rates were a little bit lower. So therefore, there was a positive impact on that. On the other hand, the loans we needed during the year so a little bit higher. So this was a negative impact. But overall, there are little savings in to the line interest. Earnings before tax, EUR 36.4 million. Income taxes, EUR 18.9 million. So tax rate is 52% compared with 69% in the previous year. Normally, you would expect to see as a German company, a rate of roundabout 33% in this line. However, our tax rate is a little bit higher as certain items are not tax deductible. And for example, based on the local trade tax, certain interest payments are not tax deductible. And you also have a negative impact if you have net operating losses carry forward and you cannot put them as an asset on your balance sheet. So there are 2 reasons for that, high tax rate. Let's look at our net working capital and some other items on our balance sheet. Net working capital increased by 28% to EUR 199 million. This development actually is a little bit disappointing for us. We have targeted a different figure there. If your revenues increased by 14%, the increase in this line should be 14%, at least [ 40% ] as well. We see an increase of 28%. So we needed EUR 20 million more in financial debt than what you normally would expect. That explains a little bit the development in the line financial debt and net debt. Cash is almost at the same. Goodwill is the same. And equity, I already explained this a little bit on the previous slide. Equity was a little bit reduced in 2024 due to the restatement. However, we recovered that, and we are now back again at a level of slightly above EUR 190 million equity. Equity ratio is 22.7%. If we look at 2 KPIs, return on net working capital, there you put the EBIT and the net working capital into a relation. It's 25.4% compared to 17.5% in the previous year. Return on equity, it's the income, the net income in relation to the equity, it's 9.1% compared to 2.3% in 2024. Cash development. Here, you can see the negative impact of our higher net working capital. Operating cash flow reduced to EUR 85.6 million. Then we have CapEx and also lease repayment as pointed out under IFRS 16. This payments for offices and company cars are treated as an asset. Therefore, it's shown under the interpretation according to the IFRS foundation in the cash flow statement in the line invest. And therefore, free cash flow is EUR 1.5 million in the end. Dividend, we -- in the last 13 years, we have always increased our dividend slightly. So therefore, the dividend proposal this year is EUR 0.78. This is in line with the improvement of our consolidated earnings, the development of our earnings per share. And if you look at the total amount, it's EUR 5 million compared to EUR 4.8 million last year. Now let's have a look at our guidance. The market demand in general for IT services, IT solutions will continue to be good. Despite the weak macroeconomic environment, we will -- it is expected to see a positive development of our gross domestic product in Germany. And this is important because that's our main market. However, there might be a negative impact due to the war in Middle East. It's very difficult to predict what the impact will be. The only thing which I think -- which is for sure, it will not be a positive one. We will see -- we already see increasing energy prices, fertilizer prices, shortages of certain products like helium. So it's very difficult to say what the impact will be at the time we have prepared our guidance. This was not a topic at all. However, it's still expected that the German gross domestic product will grow. And therefore, at the moment, we think we can cope with that. I think what's very important is that the market development in general. And there has been a tremendous shift in the last few months. Last year in Q4 at our last roadshow, we also talked about AI, and I explained that there is an impact, but it's difficult to foresee. We now believe the situation has changed in the last few months. We believe there is a good chance for a nice push on our business. I'll just give you one example, agent-based application modernization. What does it mean? There are a lot of companies out there with old, big want to reach architecture legacy systems, difficult to adapt to new needs. In the past, it was difficult to get these things changed and maybe rebuild with a new architecture, but that's something which is now possible because AI provides now tools since the beginning of the year, which are that mature that you can work with that within these big projects. And adesso was very, very well positioned within this environment. I mean, since our -- the inception of the company in the late '90s, developing these systems, these solutions, it's core of our business. We are very good in software engineering. We have all skills which are needed. We have the domain knowledge. We built a lot of these systems in the past. And we have the domain knowledge. We know what the customer needs, what he needs for his business. And we have experience with the usage of AI because we are working with that since 6 years. So we have all the ingredients to which are needed for customer projects. And these customer projects, you can analyze certain things today with AI, you can decide do you want to retain the old platform or better pass. Maybe we will rehost it, so you make -- maybe lift and shift to the cloud. You will rearchitecture this, rebuild this. So there are so many options, and this will be a huge market despite the general win in efficiency. We will -- we expect for 2025 stabilized utilization, so no further significant improvement there. We have still a continued reduced in hiring speed, which means bringing less people on board. We work on improved profitability and expect improved profitability, and this is supported by 2 additional working days in the second half of this year in Germany. It's also worth to mention, we had a slow start to the year this year. Competition is very tough at the moment. However, since March, everything is on track. And therefore, we are very happy with our guidance at the moment. We expect to grow our revenues to a range between EUR 1.6 billion and EUR 1.7 billion, which is an increase of 9% up to [ 60% ] and our EBITDA to a range of EUR 130 million to EUR 150 million. EBIT margin, we expect only a little improvement there in 2026, but we are working on that. Okay. That's all for the moment. Martin Mollmann: Thank you, Michael. That was very helpful, I think. We are now heading for the Q&A session. [Operator Instructions] And I see we have the first question from. Wolfgang Specht: Probably. Can you hear me? Michael Knopp: Yes, I think. Wolfgang Specht: I'll start with 3 questions before going back into the queue. First, on working capital and cash collection, definitely not a bright spot in the 2025 filings. Michael, could you give us some idea how -- what measures you put in place to improve that during 2026? That would be my first question. And then on IT Solutions, we still got a negative contribution here. Could you expect that we see a positive EBITDA in this segment in 2026? Or is there still a lot of restructuring work to be done before this segment turns positive? And then probably on the order book or order intake, you only give a, let's say, qualitative statement here. But can you share some information? Is the order book up year-on-year, reflecting your sales growth ambitions? Or do you still need a lot of new projects to come in? And are there already tendering processes from the public sector that are visible for you? Michael Knopp: Okay. Let's start with the first question regarding net working capital. Actually, that's a development which started somewhere in Q3 and accelerated a little bit in Q4. That development was pretty unfavorable. We have seen an increase -- a disproportionate increase in lines, accounts receivable and contract assets. We have -- which -- I mean, at the end of the year, it's something which sometimes can happen. However, it turned out that this is also a little bit of structural problem because we have seen that certain customers pay a little bit later, which does not mean that we have now a lot of overdue receivables. That's definitely not the case. But within this range, a customer is normally pays, we see a little shift to pay at the some days later. Currently, we are analyzing if this is just something which happens by accidentally in December or if this is a new structure, we will face also in the future. But it's a little bit too easy to say. But this actually caused, we have calculated that an impact this EUR 20 million impact, which is really not lies. If we look at IT Solutions, we have made some progress there. We also had one company in 2025, which was a little bit of a burden but this company in [indiscernible] which is our influencer business. It was restructured also as a new Managing Director now is on a good way. So from there, we will get no headwind. As pointed out in the past, this is a long way of turnaround. For 2026, we don't expect to see a positive EBITDA contribution, but hopefully, a further improvement. This is also a little bit depending on license sales. We have seen a very nice impact in 2025. And therefore, hopefully, we will see some license sales in 2026 again. Regarding order intake, if we look at our order intake in 2025, it has shown the growth rate, which is needed to support the assumption that we grow our business also in the future. Actually, this was also part why we have guided in this way. However, you always need order intake starting Q2, Q3, Q4 to achieve your revenues because certain order intake from the last year was already revenue last year. And some of the orders, for example, we got one very significant order in the insurance business. This is an order entry, which will show up in revenues for the next few years. So we need additional order entry. But so far, everything is on track this year. And therefore, we are at the moment happy with our tiny business. Martin Mollmann: The next question comes from [ Mr. Ziring ] Michchmeyer Petersen Capital Markets, respectively, Warburg Research. Unknown Analyst: Great. I would have 3 at this stage. The first one is on daily rates. So maybe you could talk about your expectation for daily rate growth in 2026. Do you think that you can regain the 2% minimum target? And also on daily rates, we saw a 2% decline in fixed price daily rates. Is it rather a mix effect? So do you see more Smart shore hours in the projects? Or is it really price pressure that you see here? So that would be on the fixed rates. And then the second one would be again on free cash flow and on cash conversion. Maybe you could talk about your expected peak investment level for the SaaS platforms and also the capitalized development costs that we have seen, maybe also here to quantify how much relates to the insurer versus other platforms, that would be very helpful. And then the last one is on the restatement. So thank you very much for the explanations. Maybe some more detail if you're able to provide it would be helpful. Can you quantify the P&L impact on the 2025 EBITDA? And also if on the 2026 EBITDA, if this is on a like-for-like basis or if we have to expect any further reclassification that would be helpful. Michael Knopp: Let's start with the daily rates. As actually expected, we have -- we were able to increase our daily rates in January and February because that's quite often, if you negotiate with the customer, the customer doesn't agree to change the increase the daily rate immediately. Quite often, you agree that, yes, we can do that, but let's start on the 1st of January. So we have seen an increase in January. The question for the future is, are we able to see further increases despite the tough market environment and some price pressures. So far, everything is on track and as we have budgeted for that. But at the moment, it's really, really difficult to get higher daily rates because there's a lot of price pressure there. If you, for example, look at all the consulting companies in the automotive sector and they had in the past, they have a lot of consulting companies there providing services. They are now looking for different work in other sectors, and this creates this pressure. Fixed price project -- fixed price project in general calculation is always a little bit complex. But you are right with your assumption that as we have roundabout 1,000 people in the shoring area in Turkey, in Bulgaria, Romania and also India that this has, let's say, also an impact on the daily rates that they are slightly reduced, which does not mean that our margins are reduced. It's just a different level. But it's necessary to be price competitive because all the big IT companies, our competitors are able to like Accenture or Sopra Steria, Capgemini, they have lots of people in India. And so we need to compete with them. And -- but it does not mean lower daily rates does not necessarily mean if you look at shoring that you have lower margins. If you look at fixed price projects, despite the rates at fixed price projects are lower, there are different reasons for that. One can be that [ example ] last year, there was one significant contributor to that. We have one fixed price project, and we knew already initially that we will accept here lower margins because it was strategic for us, and that's important. So you have lower margins and lower daily rates can also be impacted if you have an overspend project. So there are different reasons. It's difficult to explain in detail and to say that's the only reason because it's a mix of all. If we look at cash conversion, I mean, yes, we are working on that to improve this back to the level we have seen in 2024. The invest in platforms in terms of cash, that's something we have done in 2024, 2023 as well. It's just a different way how it showed in the cash flow statement, but it was -- it's still the cash out there has nothing been changed in terms of the reclassification. If we look what have we invested in these platforms at all, it's currently EUR 53 million and EUR 39 million is related to those 2 platforms in the insurance sector. Actually, we have one platform which was reclassified. It was lot of property and casualty insurance. So let's say, all insurances, which are not health and life insurance. And we have also one platform for the insurance business, a so-called runoff platform. There's also a press release from 2022. And on this platform, which is still in the building status, we have already 400,000 customer contracts. And these platforms will, in the future, create Software-as-a-Service revenues. And this will increase this year month by month because the more contracts you have on these platforms, the more revenues you will get. And yes, we don't have -- maybe something I need to mention there. At the moment, there is no other platform these 3 platforms described in the annual report, there's also one platform in the automotive sector, which we have since quite a long time there. And we also -- we don't expect any further restatement. I mean if we would know about the restatement, we would already have done it. Unknown Analyst: Great. One quick follow-up, if you allow. Can you quantify the P&L impact of the -- on EBITDA in 2025? So the development cost that previously was running through the P&L that is now capitalized. Do you have a number there? Michael Knopp: Actually, it was in it's not in the way that you -- in previous years, you have seen it in the P&L and now it's capitalized. If you have a fixed price project, only it goes through the P&L, but it's not a whole difference. It's just the margin. So if you look at 2024, the impact because we are not allowed to show the margin anymore, it was last year in 2024, EUR 3.6 million, the overall impact on margins. And we have not measured this what it would have been doing it in the same way than originally in 2024. But I suppose it's probably a similar impact. Martin Mollmann: Thank you for these questions. And we have another one from Lukas Spang from Tigris Capital. Mr. Spang, can you hear us? Maybe the question was already answered. So do we have further questions at this point in time? Yes, we have one from Sebastian. Unknown Analyst: Can you hear me? Sebastian from HC Capital. One question you mentioned AI as a positive factor going forward due to new projects that can be conducted. But basically, the market sees AI more as a threat for IT service companies, at least from what we see from the share price reactions due to the fact that software development cost goes down and everything. How do you see that midterm? And what could be negative impact from AI? So is the [ cake ] getting smaller because the productivity goes up and when you're getting charged by time and materials, so they can do more at the same time. And maybe you can give us more light on that? Michael Knopp: Yes, that's actually a pretty difficult question because you are totally right. I mean, I described the chances what we see for this year. However, there's sure there's also a threat because the way how we work will change. Productivity will increase significantly because these tools are used. This might have impact on the project structure because projects might be done in a faster way, maybe also calculated and built in a different way because it's not time and material purely time and material anymore. To be honest, it's very difficult to predict how it will be in the future. We spent a lot of thoughts actually on that. So we see big opportunities, big chances because we will be able to do projects which were impossible to do, at least if you to do them in a way that customer can pay for that with a reasonable budget. That's what I explained. But if we move too slowly and don't adapt to the changing environment, then it's also a risk. And by the way, also the way how we work internally changes, the way how we do proposals, how we prepare ourselves for customer presentations, my departments in finance, controlling or also HR, everything will change how we do things because we use AI tools, we will get more efficient to say. I believe that what we -- at the moment, what we read from all the analysts about the risk for software and IT solutions companies. Yes, yes, these risks are there, but I also believe it's too much exaggerated. They are all because the chances are disregarded. Unknown Analyst: I mean it's clear they want to raise a lot of money, so they have to sell something. But if you mentioned actually in the call that you're hiring more senior people. Is that the first effects of AI that you don't need so many juniors to help the seniors to generate revenues and they get more support from AI solutions? Is that already the first. Michael Knopp: I mean, in theory, this probably might happen as something which is not only linked to the IT services business. You probably read some of our statements to law firms and so on. But I think that's something which is a very dangerous approach because if we just look at certain work, which more junior people have done and say AI can do it, then how we become these people more senior and can do the work in the future. So currently, we have still our working students. And yes, we are maybe a little bit more carefully and -- but we will not change that because that's our future without young people and working students hiring now, people are missing, which get the experience to run the AI tools in the future. Martin Mollmann: And we have another try with Mr. Spang. Seems to be a technical problem. So then Mr. Specht, again. Wolfgang Specht: Yes. One additional one from my end. If I read the outlook in your full year report, there are some sentences on M&A ambitions. And it rather sounds there are limited ambitions to go for at least larger scale M&A. Is this a right interpretation? Michael Knopp: Yes. Wolfgang Specht: Do you currently prefer organic growth? Or do you simply do not want to burden the organization with another, let's say, inclusion story or implementation work? Michael Knopp: I mean we are currently growing last year with a growth rate of 14%. This year, we expect to grow between 9% and 16%. This is a very high growth rate. And therefore, we don't need that from the impact from M&A. And if you look at our EBITDA, EBITDA margin, EBIT margin, there's enough homework to do to also become more profitable to cope with the challenges we have just spoken about that of AI. And therefore, we believe it's well spent if we put all our management capacity, all our efforts into the existing business and grow this business organically. So no M&A on the agenda at the moment. Martin Mollmann: Mr. Freedman. Mr. Freedman. Unknown Analyst: Can you hear me now? Martin Mollmann: Yes. I can hear you. Unknown Analyst: On this restatement topic also from my side, if I read through the balance sheet, I find that there have been EUR 25 million of additions to R&D assets where there were only EUR 2.5 million in amortization for that. Now this can be a one-off. -- question is, looking forward, is the run rate of EUR 25 million additions for these platforms, is that a good assumption? Or is it much less? And when is the amortization going to pick up? Michael Knopp: Actually, it should decrease over time because the platforms are finalized. For example, the platform for the automotive industry there the development is flat. If you look at the value of the balance sheet. We have this platform for the runoff platform for the insurance industry. There, we have gone live with some contracts having done, I think, 3 migrations so far, others will follow. And therefore, this -- the rate of adding something will reduce. If you look at the amortization of these platforms, this will start when these platforms are, let's say, finished. So far, they are in the status that they are still built. So also the amortization will increase in the future. Unknown Analyst: And are we going to see restatements in the quarterly results in 2026? So you restate the first. Michael Knopp: Right. We will restate the '25 figures in terms of revenue and EBITDA, but this is more the way how it is shown within the quarters. The total do not change because everything for 2025 is in line and actually, these are very minor changes. Martin Mollmann: So with another try with Mr. Spang, I hope his technical problem is fixed. Mr. Spang, where you can put your questions to the chat. I will read them out loud. No, unfortunately, we can hear you. So do we have more questions? This does not seem to be the case. So Mr. Spang, can you give an update on federal spending? Michael Knopp: Yes. Actually, we -- I think the answer I missed. -- we see more public tenders now in the first quarter this year. So the activity which we were already expecting in Q3 and Q4 is happening now. So more public tenders, more public spending. Therefore, it seems to start. However, it's fair to assume that it's probably a little bit less than what we initially expected in Q2 last year. But the impact is now visible. Yes. Martin Mollmann: There is another question from Mr. Spang, you mentioned higher margin targets for the future, but margin is still muted for 2026 despite 2 more working days. What must happen to achieve the 11% to 13% midterm? Michael Knopp: Yes. It's -- I also pointed out that we don't expect an improvement at the utilization. That's one of the reasons. We need to improve our -- we need to see further progress in our capacity utilization. The turnaround further steps of the turnaround in our solutions sector is important, hopefully, some higher daily rates. That -- these are probably the 3 key ingredients and all of them, we see some improvements there in some of them, but especially daily rates and capacity utilization development is more or less flat, and that's important that we are able to change that. Martin Mollmann: So it's not much time left, but IT Solutions, you mentioned that 2026 will be still negative. What can we expect when this business will achieve black numbers on EBITDA level? Michael Knopp: Yes. Our initial target there that we started to turnaround was to see in 2027 kind of a breakeven, and that's still the agenda. Martin Mollmann: Okay. Thank you. Hopefully, all your questions are answered. Thank you very much for your interest in our call today and your participation. I wish you all the best, and I hope to see you soon in person again. For now, goodbye. Michael Knopp: Bye-bye.
Unknown Analyst: Good afternoon, and hello, everyone. Welcome to Bahana Sekuritas Corporate Access Group Call. Thank you for spending your valuable time to join us today. My name is Nicolas. I am the research analyst covering telco, tower and tech at Bahana Sekuritas. Today, I will be serving as your moderator. Please join me in welcoming today's speaker, Bapa Hartono Tanuwidjaja, Director of PT Sarana Menara Nusantara and Chief of Staff, accompanied by Bapa Adam Gifari, Adviser of PT Sarana Menara Nusantara and Group Investor Relations, who will present the company's full year 2025 financial results, operational performance and outlook for 2026. Without further ado, [ Hartono ], the floor is yours. Please Hartono. Adam Gifari: Thank you, Nico. Hi, everyone. Hartono is sitting next to me due to the technical glitch. So we'll be sharing the screen together. It's good that we're next to each other. So Hartono is our Director and Chief of Staff, covering Group Investor Relations. I'm adviser to this role. So let's start with what we have released for full year 2025 audited results that we announced March 2026, right before Lebaran break. So I'm going to share my screen. Let's go through the press release that we prepared, and we're going to go through the presentation for the full year. And after that, we will wait for more, if Hartono has more remarks on the results, and then we can go to Q&A. So as you can see here, we reached full year operating revenue of IDR 13.3 trillion, representing a IDR 4.6 trillion increase for 2025 compared to full year 2024. EBITDA reached IDR 10.97 trillion, growing by 2.5%, while net profit after minority interest stood at IDR 3.678 trillion, an increase of 10.3% year-on-year. So we think the result is because we look at what we see, what we have despite challenging industry and macroeconomic condition. We have refocused on our core strength while improving areas where we can see improvement for better results. We leverage our operational scale. We basically try to get more business by using our scale on towers and fiber and then maintaining strict cost management and drive ongoing efficiencies. As you know, we have a lot of different types of businesses, and we try to combine where we see -- we can see synergies between assets that we have. That has been the topic of management doing every week where we can see efficiencies and try to leverage higher utilization on our assets. So we are now -- given we have 170,000 kilometers of fiber, we have 35,000 towers. We see that we have one of the largest independent digital telecommunication infrastructure provider. And then we have the most comprehensive range of services. So it allows us to provide solutions for our clients to operate different conditions, including consolidation or mergers that we have seen recently during 2025. So the merger of XL Axiata and Smartfren, which opens up significant opportunities. They need us because more than 50% of the network is on our towers, and they use a lot of our fibers as well. And then we believe with 5G, further service enhancement will be -- will require our involvement with our services and assets, tower and fiber included. So now we see what we expect for the next 12 months that, firstly, we see consolidation can strengthen pricing discipline. I know that for the past quarters, we've been talking about pricing discipline. We think we -- in the infrastructure space, we are among the leaders of pricing discipline. That yield remain relatively low, but what we provide to the industry is actually something very efficient compared to where people would go out of pocket, spend their own capital to build towers and fiber. We believe we provide the value for money when it comes to their network enhancement or network expansion. So we think with competition becoming more healthier, and I think I invite everybody on this call to together monitor this, whether 4G and 5G monetization is improving going forward here. We see several signs of improvement. But hopefully, for Indonesians, give that the unique position as the fourth largest country in the world, so we think we should be monetizing this position better for everyone, for the telcos, for the fiber users, for the Internet service providers and then provide better revenue mix, better revenue growth and then better OpEx allowance that would work well for our ability to provide services and infrastructure. Second, the continued acceleration of economic digitalization. We are hearing, because of the war, the government is requiring 1 day of a week that ASN, the state apparatus to work from home or from anywhere, right? So that would drive further digitalization, similar to what we saw in COVID, right? Unknown Executive: Yes, during COVID time. Adam Gifari: COVID time. So I think there is an increase of independencies -- sorry, dependencies of people using Internet wherever they are, mobile or wired Internet. So data traffic is shown to be growing robustly over the years, like double-digit CAGR, and we expect this momentum to continue. And then the potential rollout of 5G will further support this trend. I think just as a matter of personal observation, before Lebaran, I experienced very bad 5G. But now after coming down, spending holiday for 2 weeks, I noticed that 5G in Jakarta is getting better. So I think that shows that better penetration of infrastructure in places like Jakarta even would still require more investment, and we will be there for people who ever need infrastructure in many forms. Number three, Indonesia is still in the early stages of AI and cloud technology, which will drive up -- will further increase data traffic and the demand for enhanced connectivity. So we expect further traffic growth. And then there will be requirement for data centers, fiber optic and power generations. We have iForte Energi. We have also several other functions under iForte that Hartono can surely add some more on later on during this call. And then number four, operators continue to adopt asset-light financial strategies for towers, fiber optic networks and provision of clean and renewable energy. I think we see this trend to continue. I think the requirement -- for instance, they require more dividends out of telcos, right? That means CapEx for sales should remain low and whatever existing infrastructure should be used more optimizely going forward. So that's what we see during 2025 and should hopefully continue until 2026 and for the future years. So I'm going to move Hartono, if you want to add something? Unknown Executive: Yes. I think Adam, it's already well summarized by you. Maybe you can see and the highlights, the financial unless there is any discussion. Adam Gifari: Yes. So I'm going to go through the presentation for the fourth quarter full year audited, so people can see and then we can discuss together. And then -- so we have 36,000 towers as of last December. For those of you who have not seen or have not gone through this presentation, we have more than 170,000 fiber optic network as of December. We still remain -- maintain a large percentage of our business model under a build-to-suit model for towers and fiber with long-term predictable cash flows. We maintain investment-grade ratings with S&P, even though there was a change in the sovereign rating for Indonesia. But Indonesia -- for us, we are still like with S&P BBB-. And with Fitch, we have a stable outlook and no change in the sovereign ceiling so far with Fitch. And then for return on investment, 8.3%; return on equity, 16%. Stock is included in many of these indices still. ESG footprint with IDX. And then we have MSCI ESG rating maintained at single A. Sustainalytics score us 24.2. S&P 40. So that's what we have achieved so far when it comes to ESG profile during 2026 -- 2025 and others. And then I think for number one, capital management, I think we discuss this every week as a management team. Access to low cost of funding is discussed all the time. We want to be sure that we have the best cost of capital in the country. But -- and the banking sector is pretty much liquid. So liquidity amount was $1.3 billion equivalent in rupiah mostly, given banks are also having trouble to find other businesses that is as stable as ours. And then low-risk business with digital infrastructure business, high demand, difficult to replace as we have exhibited with XL and Smartfren merger. So -- and then proven a possibility of long-term irrevocable contracts. ESG-conscious company, even smaller for our carbon footprint, I can say. We just discussed with many of our clients, and we have able -- we have been able to basically make the clients pay for their own electricity. So that should improve further our ESG profile in our tower business. And then now number four, box number four, the telecom space has come down to 3 players basically during 2025, as we all know, with the most recent merger, XL and Smartfren. And then opportunities for acquisitions still exist. We can discuss more later about this. And then valuation today is -- we have an annual free cash flow that funds CapEx, dividend and share buybacks, and we have been successfully consolidating assets that we see as accretive to the business. EBITDA and AFFO CAGR, 11.4% and 8.5%. ROE 2025 of 16% using the most recent numbers. What we tend to do is continue to invest our strong free cash flows using low cost of capital whenever we need to borrow. And then Indonesia is still at the start of 5G, if I may say, because we haven't heard anything when it comes to what is the time line for 5G spectrum auction. So we still think largely Indonesia is a 4G country. Penetration for towers is also still pretty much low. So I think for Indonesia, for the continuation of the trajectory is a matter of time because the consolidation has happened. We've been in the business for almost 20 years. And then for the longest time, we can remember, we were operating with more than 10 at the start of the business. And now we have 3 telco players, all intended are very eager to basically monetize whatever they have spent in 4G and 5G so far. So -- and then prepare for new opportunities. I think Hartono, you can add more later on. Obviously, for C, number one, expanding product offering. We -- I think for the past quarters, we mentioned about managed services, Power as a Service, and we now come -- we have come into green energy profession for our clients. And then strategy is driven by evolving customer needs, obviously. With high energy prices like now, it should be interesting for people to look into green energy, right Hartono, because solar panel, for instance, it's a matter of where we can find suitable property for us to invest in solar panels and then provide them -- provide our clients and other types of customers, not only telcos with green energy going forward. Fixed mobile convergence is also there. We can talk about what we see for 2026. And 5G obviously represents another set of opportunities. So I'm going to skip this Slide #5. So now Slide #6, we have 36,247 towers. I think I can say this number reflects majority, if almost all of Indosat and Hutchison relocation have been fulfilled. We have some carryover into 2026. So we expect a number of towers to increase for 2026 because of completion of Indosat Hutchison relocation towers, probably in the hundreds, no longer in the thousands when we spoke firstly about this. We still have about 1,400 to be completed during 2025. We should be about 400 by now that we need -- that we should conclude to basically finalize the towers that we built for IOH relocations. So the location of the towers mostly in Java, Bali, NTT and NTB. Sumatera approximately above 8,200. Kalimantan 3,000. Maluku and Papua still with the lowest number of towers given density. So obviously, we see this increase approaching that of Kalimantan is quite interesting because of the economic activity in that area, especially mining and plantations. And then our towers on our fiber, where we have our fiber, you see the difference between revenue-generating FTTT is basically where we charge our customers and then FTTT kilometer pole is the kilometer of physical cable that we own under FTTT category. So as you can see, Java utilization is high. Sumatera is high. Bali Nusra is also high. And then Kalimantan is lower. Sulawesi is a bit lower. It's a function of density basically where we see our customers need fiber to the tower as a means of data transport because of data traffic is increasing in those areas. And then our build-buy-return strategy. We invest in build-to-suit towers. So in the form of various contracts, mostly for 2025 is relocations and then expand fiber optic network, FTTH and then more slower growth in FTTT. FTTH, we expect to grow quite interesting. But when we say we have fiber, we can also use it for other types of business such as connectivity. And then during 12 months, we added 847 towers. So that's short of a couple of hundred towers that we need to conclude for Indosat, Hutchison. And then 6,789 kilometers of revenue-generating fiber. We added 9,000 activations. We added 89,000 home connects and then 31,000 home passes. So very good execution on the home connect side. Return that we mostly basically focus on protecting investment-grade ratings and then we maintain investment grade ratings. We distributed dividend IDR 1.2 trillion during 2025, based on past quarter's results. So diverse product portfolio. So we have 36,000 towers and 60,500 tenants as of December. Tenancy ratio 1.67. 53% of towers located in Java. Just in third quarter, I think this number is 52%, but we added towers more in Java. So that's also an interesting trend, ending the quarter with 53% of towers located in Java. And then MNOs have a growing need for additional scope. And then fiber to the tower, we -- basically, it's a function of our service to mobile network operators. So we have 224,000 kilometers of revenue generating by end of December. Network focus is to support surging data traffic. So if the traffic continues to increase, we are hopeful towers and fiber to the tower to be more correlated to that situation. And then we continue to basically provide the FTTT leases under long-term contracts, non-cancelable contracts and opportunity for high utilizations with other fiber solutions for our customers, namely connectivity business. To the right, we saw very nice growth in our connectivity business. Now it's over 25,000 activations. I think this number used to be below 20,000 by December 2024. So a very good growth in the connectivity side. FTTH also saw penetration reaching 14%. I think this number last quarter -- third quarter, I mean, was about 12%. And now going into where we spend our money. In 2025, as you can see, the amount of towers for non-towers -- CapEx for non-towers is approaching that of towers. And then for towers tenancy ratio is 1.67, slightly higher than 2024, because we basically restructured some reseller contracts to become direct lease to our towers. So we see -- in the past, we did not count reseller as part of tenancy ratios, but with reseller being direct leased into our towers as part of the XL, Smartfren merger, so tenancy ratio can go up. And then for fiber to the tower, I think we see impact of mergers. So a bit decline to 1.79 from previously -- on previous year, 1.84, but still at a very high utilization ratio approaching 1.8. And now our track record of consistent growth, we see towers is inching a bit in terms of tenants. As you can see, the darker blue chart there. And then with towers start to grow again after years of stagnant performance because of the years of Indosat merger. And then as you can see here, we were very busy with -- everybody is busy actually, towers and tenancies, how to manage 36,000 towers, locations, making sure we are basically getting what is our right under the contracts for towers and fiber has been the theme of 2025. That's why you saw 2025, a growth of 4% revenue. Basically, we look back at what we have in past contracts, and then we basically did a very thorough, very diligent review of what we have under our existing contracts with all of our customers. And then there -- from there, we take it that we can charge some money, we can get away from certain penalties, even though the theme of 2024 -- 2025 was mostly serving for IOH relocations for towers here, but we have been able to book higher revenue because of those very strict practices by management. And then for fiber to the tower, revenue-generating revenue increased by a little bit, about 3% there. So 7,000 kilometers compared to 2024. And the number of activations under connectivity actually grow very fast, very quickly. That's almost 9,000 activations during the course of 1 year because we have been very aggressively utilizing our existing fiber. We opened up new places where we can reach closer to our customers with new offices at [indiscernible]. And then use our existing fiber as much as we can, work together with our subsidiaries. We have many new names like [indiscernible] during the past year. We have [ Remala ], basically helping us utilize our fiber and work together to identify new location as opposed to working separately in the same market. Strong financial performance. You see the towers have been quite stable. Actually, we inched up a bit to IDR 8.7 trillion. And then for the yellow bar, which is the non-tower, we actually increased almost 10% there. CAGR, 7% from tower. The non-tower is almost 40%. If you look at the EBITDA growth CAGR, 11.5%; AFFO, 10.6%. So actually, given still high interest rate environment, if I may say, during 2025, even though we were among the lowest cost provider when it comes to borrowing cost, we're still seeing AFFO growing slower than EBITDA because of high interest rates environment in 2025. There were hopes -- there were hope actually in the market. I think as we all know, everyone that there was a hope that for rate cut during the year, but it was not sufficient to make it the AFFO growth as much as we grew EBITDA during 2025. And then leverage, 3.74, on this page, talking about our balance sheet. During the year, we paid down about IDR 7 trillion. The money from rights issue came in IDR 5.5 trillion. So we paid more than what we received in rights issue money, IDR 5.5 trillion. So we paid down IDR 1.5 trillion more than from our own operations. So leverage came down to 3.74. Interest coverage ratio, 3.9%. And borrowing cost at the end of 2026 -- 2025 was 6.0%. If you remember, this number used to be 6.5% at the start of 2025. So we cut down to 6.0%. I think we see a very close resemblance of what we saw in policy rate cut in Indonesia by Bank Indonesia. So we use -- we utilize different types of borrowing structures going into the bond market, going into the money market with the banks, going into different types of structure, even though I don't remember seeing going into foreign exchange transactions during 2025 because rupiah was so interesting to borrow in rather than going into ForEx market and then hedge it back to rupiah. So we used mostly rupiah during 2025 basically. And then corporate ratings remain BBB- with S&P; Fitch, AAA; and then Fitch Global, BBB flat. This is summarized profit and loss. So I think when it comes to performance of the company, revenues, gross income, EBITDA, I think we have been exhibiting a very good performance given where our competition is when it comes to these kind of metrics. Net income margin, 27%. I've been getting questions about tax expense. I can say it's rather difficult to project when it comes to tax expense given different policies during different times of, say, Finance Minister's financing strategy. So we see very difficult to forecast tax expense. But we do -- whenever we see -- we paid more in certain years like in 2024, wherever we no longer pay in 2025. So that should better reflect what we think is the taxation for the year, for instance. And then the financial position, I think these are -- we have discussed in previous slides when it comes to our balance sheet. And then this is our cash flows, beginning balance, IDR 940 million. We have basically adopted more stringent cash management policies starting 2023, basically. Whenever we have excess cash, we used to pay down debt or maybe make some down payments for future CapEx, where we see more efficient to do it that way. That's why you see cash management is very stringent. Collection comes to almost IDR 15 trillion and then CapEx plus OpEx is almost IDR 9 trillion. Interest expense is IDR 2.788 trillion, which is a marked below the run rate before, which is IDR 2.9 trillion. And then cash surplus from operations, IDR 4.1 billion. Business acquisition is smallish, IDR 579 billion. And then rights issue money, IDR 5.5 trillion that I mentioned. And then loan proceeds, we paid down basically IDR 7.2 trillion. So we paid more than we received in rights issue money. And then we paid dividend IDR 1.2 billion. So ending the cash with IDR 650 billion by end of December 2025. And then going to quarter-by-quarter analysis, 10% year-on-year as well as quarter-over-quarter. Basically, connectivity is the brighter spot that we have discussed with people before. The non-tower segment under connectivity is the brighter spot for the company. We see consolidation playing a big impact on our towers operations. But I think we -- what we have also experienced that if we look hard and then work diligent enough that we are able to basically collect better what we should be able to collect from tower businesses. And EBITDA, 6.7% year-on-year and an 8.5% growth quarter-over-quarter. And then net income attributable to parent, 24% Q-on-Q increase and then 26% year-on-year. Revenue analysis, 2.4% just by segment; and then fiber to the tower, 10%; connectivity, 4%; and then FTTH, 21%. And then total, we increased the business with 4.6%. Summary operational data, we have increased the number of towers, 847 and then tenants increased by 2,500 because of the reseller becoming direct tenancy to our towers. Fiber to the Tower, 6.7% -- 6,700 increased kilometers, 3.1%. Connectivity increased volume by 53% year-on-year. And then FTTH increased 53% because of past contracts that we delivered during 2025. Going into Slide 23, this is very much relevant. What we have been able to finance -- the sources that we financed of the company is using mostly rupiah during 2025 and then exploration profile is looking like this. So we have very much -- we are preparing for a new bond offering to replace our 2024 [indiscernible] facility. It's in the works right now. And then we have maturing USD loan in 2027. But the maturity -- the maturing debt in USD have all been hedged with FX 15,000, respectively. While we are on this slide, I received a question whether we would get a ForEx gain or ForEx loss if rupiah continues to depreciate. Like, for instance, today, it's past IDR 17,000 to the dollar. I think our response to that is that we do not have hedge accounting, which means there is not direct correlations between certain depreciation in rupiah with our P&L or appreciation in rupiah into our P&L. So only by the time we basically pay down the debt and we enjoy a positive mark-to-market by the time we pay, then we see a positive result in that moment, in that quarter, for instance, when we pay down the debt. So assuming, for instance, in 2027, rupiah maintained at IDR 17,000 or IDR 18,000 for this matter. So we should be able to achieve a positive mark-to-market when we pay down the debt in the USD on this chart, the red one, $130 million notional amount. So hopefully, the analysts or the investor who asked me the question is on this call, so he or she can basically get this response directly from us. Okay, Nico, I think that's all we have. Hartono? Unknown Executive: So yes, 2025, despite of the challenge, the merger on the Indosat, with Hutch and also XL, Smartfren. So we still able to print a good result from the revenue, EBITDA, net income, this we achieved through the several initiatives within our group, mainly synergy. And then we -- like Adam said, that we're carefully looking at every line of the expenses, which one that we can optimize or synergize. So I think that's the additional comment from me. Adam Gifari: Yes. So it's a very meticulous exercise. There is not one particular area of the company that we can say as when it comes to this exercise that Hartono was saying that, okay, towers or non-towers, I think we really relook at everything that we have in the company. So given the storm, the business of mergers are behind us. So we use the opportunity to basically relook at what we have in various contracts, and this is the result we see for 2025 book that have been audited by Ernst & Young. So now I think both of us have concluded. Nico, now coming back to you. Unknown Analyst: Okay. Thank you, Hartono and Adam, for your insightful presentation. [Operator Instructions] To start with, we have a question from Sabrina. Unknown Analyst: Congrats on the good set of results. Only 2 questions from me. So the first one is we actually noticed a meaningful Q-on-Q increase in the revenue from XL, Smart contracts. Could you share with us more colors on the nature of these deals? And what is actually driving the growth? And the second one is, as interest rates are likely to remain elevated for longer, how does the company plan to actually manage or balance its financing costs with ongoing organic expansion despite we have seen some efforts of deleveraging in full year '25. I'll stop there. Adam Gifari: So we -- like we said, we relook at what we have. So several of the collections were actually taking place in 4Q and then some additional run rate revenue also incurred during 2025 last quarter, fourth quarter. So I think going into 2026, we expect, given that we are now -- we'll be working very hard with XL and Smartfren to successfully create value for the merger. So we see us working more on the non-towers because they will need some restructuring on the non-tower side. So coming back to this question, so we expect for towers, again, before seeing some more upside. So we see towers to remain flat for now. And then we see additional incremental from the non-towers, which is fiber to the tower as required by XL, Smartfren. And then we expect to see some increase in penetration rates as well as some additional home passes business that we see during 2026. So this is also concludes a discussion about what we see for 2026. So overall, I think for towers, non-towers combined, we see the company to book basically low single-digit revenue growth, and then EBITDA also and then net profit before we see additional upside. Because we -- when we were discussing this, this was back when we prepared what we see for 2026, that was sometime in January, December that type of times. So we are hopeful that we can update the market what we see for the remainder of the year when we release our newer quarterly results because we see a lot of noise right now at the moment when it comes to what we see as the outlook for 2026. I think the requirement of merging parties is actually like we saw in IOH. So they see -- they want to see efficient use of assets, efficient use of leases on whatever they want, right? But since XL, Smartfren is focused also on 5G, so we see the need of fiberization to be higher at this stage. Does that make sense, Sabrina? Unknown Analyst: Okay. I understand. And what about on the interest rates? Adam Gifari: Yes. On the interest rates, I just had coffee with banks. They also have problems lending to various sectors in the country given elevated oil prices recently, which did not come into our picture when we prepare our budget. So we think the bond market may see some movement, but the banks are not that facing easy times for themselves to lend. So we expect the banks to remain liquid, in other words. So this answer may come to you differently if you asked me before the war, frankly speaking. But just talking to the banks, when they need to find good credit quality borrower to lend to, they have problems because everything has gone up in price, inflation. And then that's why you see equity prices come down because people expect inflation to be high. And then even though we have taken out a lot of the risk from our balance sheet, like, for instance, the fuel cost I mentioned in the first 10 minutes of our call. But again, the customers that have to bear those fuel costs, transportation costs will face difficult times here themselves. Frankly speaking, we have not taken into account a very significant rate cut in our projection. Some cut, but not so much. So we see we have some buffers there. So for instance, 2023, we were 6.1%. And in 2024, average cost 6.2%. 2025 is 6% like we just presented to you. In 2026, we are hopeful we don't have to go fix something longer dated, given liquidity is still abundant in the marketplace, in the bank's market, especially. Does that make sense, Sabrina? In other words, I don't have an answer right now because during the last Board meeting, we were not discussing about borrowing more. We are pretty much well-funded at this stage. And then we only have to talk about new interest rate with banks when it comes to the need of, say, IDR 5 trillion or IDR 10 trillion of new facility with banks. Does that make sense? And BI rate has remained stable, 4.75%, Sabrina. Does that make sense? So in other words, this quarter, maybe we don't see the impact yet of increased rates so much because of the war. The war only started at the beginning of March, yes. Unknown Analyst: Okay. So it will be pretty much at the same rate from 4Q... Adam Gifari: Probably slightly higher, yes, which is -- which means if it goes higher than what we saw in December 2025 or 6%, so that means the management has to work harder to find the savings elsewhere, right Hartono? Unknown Executive: Yes. Unknown Analyst: Okay. I think maybe one last question. Can you share how many kilometers of fiber connectivity services were actually added or deployed in 4Q? Adam Gifari: In 4Q, didn't you see in our presentation slide. Unknown Analyst: I think it wasn't there. Adam Gifari: Operational numbers. Unknown Executive: So Sabrina, for the connectivity, the metrics that we use is not the line of the cable, but actually the connection, the activation. So that's the metric for connectivity because different with FTTT, which is we bill the customer by kilometer per month. But for the connectivity is regardless how long the cable is, I think we charge them actually on the bandwidth, the dedicated bandwidth that we provide to them. So the measurement is not using the kilometer for the connectivity. Unknown Analyst: Okay. Yes, because I was seeing the numbers on the slides for 3Q, but it seems to be not there anymore for 4Q. So that's why. Adam Gifari: You mean the fiber run? You mean the fiber -- physical cable of fiber? Unknown Analyst: Yes. Adam Gifari: It's in Slide 7. Everything is -- together. You just have to basically take out the FTTT. And then everything is in there. We just decided not to be too detailed about that one for the fiber assets. Unknown Analyst: Okay. I would like to ask the next question. But I think we all recognize that the 2025 result, be it was partly driven by the tax. Can you please quantify normalized full year 2025 earnings if we take out the tax expense volatility and what would be the effective tax rate that we should assume for 2026? Adam Gifari: I think that's difficult because when we see, say, for instance, in 2024 year, if you look at Slide number, there's a P&L there. Slide #16. In 2024, there was a higher tax payment because of different opinions between our management and then tax office in 2024. So there was a slightly higher tax payment back then. And then whatever we paid, and then we just decided to expand it in that particular year. So 2025, the numbers still increase, but to say whether this is a run rate, it's very difficult for us. There's a new tax system, for instance, [ core tax ], right? So there could be different interpretations still about where the tax office sees, the tax expense should be. It's an ongoing process, Nico, to this now. So I think I'm hearing if it's -- right now, it's, I think, quite normalized tax rate, but no guarantee about that because of -- there's always a possibility of different tax opinion between us and tax office. Unknown Analyst: Okay. For the next question [indiscernible]. Unknown Analyst: Yes. I have 3 questions. My first question is regarding your reseller conversion -- reseller revenue conversion to direct revenue part. Can you please explain more about this conversion? And was this related to the XL, S revenue growth in... Adam Gifari: Mostly, yes. So IBST was a reseller, but the towers belonging to somebody else. Unknown Analyst: Okay. And the conversion, is it going to be a one-off in the 4Q? Or are we seeing for the conversion part? Adam Gifari: No, not anymore, not so much. So next year, 2026, I think we expect to see some increase in tenancy ratios because of Indosat start to -- and then Telkomsel also start to basically expand. And then their past -- especially with IOH, they no longer have relocation rights. So whenever they need new sites, it's going to be new colo in 2026. Unknown Analyst: Okay. So basically. Adam Gifari: A slight increase, not like a jump, but a slight increase. Under our base case, there's still a bit of an increase in tenancy ratios. Unknown Analyst: Okay. So the conversion is actually related to the IBST contract previously... Adam Gifari: In 4Q, yes. And don't forget, when we say revenue will be a bit flat in 2026, it's excluding potential consolidation of subsidiaries or acquisition of additional shares of our subsidiaries. So because some of the transaction is related to corporate actions that have not been disclosed yet. Unknown Analyst: Okay. And can you please share the CapEx guidance for '26? Adam Gifari: Yes. CapEx should be around IDR 5 trillion. Unknown Analyst: Okay. And can you share the like allocation for... Adam Gifari: Should be still similar with what you saw in full year 2025 when it comes to split, because we still have to -- we expect to build new towers also for XLS but not as in the tune of IOH relocations for the towers. So XLS, I think the required relocations is about 8,000 locations, but then a lot of that will be on existing towers. Unknown Analyst: Okay. And how many supposed to be in BTS form? Adam Gifari: About 1,000. Unknown Analyst: Only 1,000. Okay. And IDR 5 trillion CapEx already covering for that 1,000... Adam Gifari: Yes, yes, yes. Unknown Analyst: Okay. And my last question is the -- on the potential upside from the FWA deployment part. Can you share the color on that and the timing? Adam Gifari: So at the start of fasting, it was below 100, but now we see that number comes to about 400 coming from FWA colocations. Unknown Analyst: That's already being realized or that's for... Adam Gifari: Yes, in the works to be realized, you should be able to see some in our first quarter results. Unknown Analyst: I see. And that's for the full year or only for the first Q, I mean... Adam Gifari: Only for the first Q. Unknown Analyst: Okay. And can you share like what's the potential in the full year? Adam Gifari: Nothing that we have received as final number in our management meetings here. So they come in the batch of hundreds. Maybe if we talk again in 1 month, I'll be able to share more numbers with you. Unknown Analyst: Okay. And my last question is following up to that. So the low single-digit growth, is that already including the FY upside? Adam Gifari: Yes, yes, yes. That's why you see the unexpected inch in, increase in tenancy ratios for 2026. I mean we assume always possibility of not too strong wireless market churn, stuff like that. So we cannot always assume a positive net gain in tenancy ratios unless we see something different, materially different. So we're kind of a bit cautious in our assumptions. Unknown Analyst: Next, I will read out the question in the chat box from Julie. Was there an increase in average tower rental rate in 4Q 2025, what was the reason behind this? Adam Gifari: Yes, that's a function of what Hartono was saying that we relook at what we have in ability to charge our customers like occupancy of towers, space that we have originally stipulated in the original contract and then they end up occupying with more equipment. So that's why you saw average lease going up. But what we see is that base rent, I think we're pretty much quite stable. I don't have the number with me right now, but should be around $12 million something in average lease rate for tower leases, including colocations. Unknown Analyst: Next, I will take a question in the chat box from Selvi. Wi-Fi and MyRepublic are expanding to fixed wireless access. Will [indiscernible] become the tower partner for their [indiscernible] services? If yes... Adam Gifari: Yes, yes. Unknown Analyst: Okay. Adam Gifari: I think we already answered that in the immediately previous question from Sabrina, I think -- [indiscernible], sorry. Unknown Analyst: Yes. And could you please give color on the revenue expectation and EBITDA margin? Adam Gifari: We mentioned about the -- what we see 2026. We have devised a budget for 2026 under which management will be operating. So I think still low single-digit kind of revenue growth. Similarly with EBITDA. Again, the major driver for growth is connectivity, as Hartono has mentioned, because we see opportunities to basically cover more market under connectivity under our own discretion. We are hearing off and on mobile wireless operators being hesitant about spending CapEx. So that's why we think 2026 will still be -- the brighter spot is from connectivity... Unknown Executive: Yes. Still connectivity, we feel that there's still a room for quite an improvement, utilizing the kilometer fiber layout that we have across Indonesia. And also, we see that the needs for the Internet is increasing from year-to-year. So we see that connectivity, especially will book quite a growth. Adam Gifari: And then the growth from that connectivity, very strong growth from connectivity will lift the overall POW or performance for 2026. Unknown Analyst: Okay. Next, we will take a question from [ Eta ] and then we will take one last question as we approach the end of the call today. From Eta, what is the pricing trend for tower and fiber? What is the sustainable level in the industry? And then what is the typical tower required in 5G? Unknown Executive: Yes. I answer for the fiber -- for the pricing for fiber, if relate to the FTTT, I think it's already bottomed. I think we don't see any further decrease on that. For the connectivity, yes, we see that it's very natural the price will go down every year. However, what we do is we don't -- we try to maintain the price. Instead of lowering the price, we give them more bandwidth. So the revenue is still remained the same. So that's our strategy for the fiber. Adam Gifari: Yes. I think for towers, I think like, for instance, the new possibility of bigger volume with FWA. I think, again, what we -- what I mentioned during the first 5 minutes is that what we've been trying to do is that same with fiber with towers also, rather than these guys, whoever wants to expand the network or improve the network rather than them go out of pocket to build new infrastructure using other people or their own capital, I think we have the flexibility of very efficient CapEx and OpEx outlay on a per unit basis. I mentioned this a couple of times, I'm going to mention again. For instance, the number of people operating under towers, even though we were 15,000 towers or 20,000 towers, the headcount on the tower is still 900 people more or less. So that provides a very high tower count per headcount that we have under towers. For fiber, I think the same thing, if we reach certain scale, we've reached a certain scale with fiber optics, very good margins that we think we should be able to outperform the competition. Not to mention, we have also a very good access to capital, as you can see in our performance. What we want to avoid is going out there and then try to propose a new business proposal. And then the pricing is off, meaning it's just too expensive or what we want to be able to provide is earn the business by providing something very efficient. So if they do their own calculations, it's just better off to just lease, and that goes for colocation as well. So based on that, and we've been saying this for the many, many quarters already, pricing have been quite stable. So I think about IDR 12 million, for instance, for towers. So that's what we think should be the main focus of management going forward. Unknown Analyst: Okay. And for our last question today from [indiscernible]. Previously, you touched about acquisition opportunity. Can you give more details on that? Adam Gifari: Yes, nothing I can share actually. But you see some assets still left to be consolidated. We will look at those opportunities very carefully. At this stage, frankly speaking, we are looking at something very strategic where we can enhance value to the whole franchise. We own several subsidiaries. And then I think one transaction is pending to conclude in second Q, but not much that we can say at this stage. So when we say revenue growth is flattish, it's not including transactions like that. Unknown Analyst: Awesome. Before we end the call today, do you have any closing remarks, Adam or Hartono? Adam Gifari: Yes. So hopefully, all of you will be able to see more of us, Hartono and myself, talking about the business. It's just a matter of 5 weeks, and the whole world is different because of the war. Right now, fortunately, we don't have a funding need that really necessitates us to basically discuss a new term sheet. Fortunately, Bank Indonesia did not increase BI rate. So that reflects the banking system liquidity. We also price a lot of our loans based on that policy rate, BI rate with banks, the biggest banks in Indonesia also included state banks, commercial banks, and still, we have very much liquidity offering coming ourselves, coming our way from financial markets, including banks. So I think we are in a good position if we are to launch a bond, for instance, because we don't have a financing need that is necessitate us to borrow at a much higher borrowing cost at this stage, okay? I think this answer to Sabrina's question. I think for us, we are optimistically looking at where our customers are heading. Hopefully, this war doesn't cause any more concern than what we already see in our other type of business in our daily lives. Do you add, Hartono? Unknown Executive: No, that's it. Adam Gifari: Thank you, Nico and everybody. Unknown Analyst: Great. We come to the end part of the session. On behalf of Bahana Sekuritas, I would like to thank you, Hartono, Adam for the informative and interesting talk that we have today, and congratulations as well on your impressive results. And I would like to thank you, the audience for your participation. We hope this presentation is beneficial for everyone. Thank you, and see you in our next event. Thank you. Adam Gifari: Thank you, everyone. Unknown Executive: Thank you, Nico. Thank you. Bye. Unknown Analyst: Bye. Thank you.
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