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Operator: Good afternoon, and welcome to ImmunityBio's Full Year 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's call is being recorded, and a replay will be available on the Investor Relations section of ImmunityBio's website. Before we begin, I'd like to remind you that this presentation and accompanying discussion will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact, are forward-looking statements, including, but not limited to, statements regarding our future financial performance, expected revenues, operating expenses, cash runway, clinical development plans, regulatory submissions and approvals, strategic collaborations, manufacturing capabilities, commercial launch planning and timing, market opportunities, and business strategy. These statements involve risks and uncertainties that could cause actual results to differ materially from those described. For a discussion of risk factors that could cause these differences, please refer to ImmunityBio's most recent filings with the Securities and Exchange Commission, including our Form 10-K filed on February 23, 2026. The company cautions you not to place undue reliance on any forward-looking statements, which speak only as of today's date. The company will not be providing forward financial guidance on today's call. Joining us today are Dr. Patrick Soon-Shiong, Founder, Executive Chairman, and Global Chief Scientific and Medical Officer; and Richard Adcock, President and Chief Executive Officer. I'll now turn the call over to Dr. Patrick Soon-Shiong. Patrick Soon-Shiong: Welcome, everybody, to our conference call, and it's really a seminal moment for the company where on an annual basis, we provide an update. But this year, it's really very special because not only do we have an approval, we have the commercial results that we can show that's operational excellence on execution. We will have Rich Adcock, the CEO, present that. But before we go into the commercial launch of ANKTIVA, I would like to take this opportunity to really give a little context and history of ImmunityBio, its evolution, and more importantly, the strategy that we've embarked on since 2015 when NantKwest went public and then all the way to its merger with NantCell and the public offering of ImmunityBio. I want to indulge in doing so because I think it explains to our audience the platform of the products that make up the BioShield platform. On the one hand, we have ANKTIVA, which is truly the backbone of this entire BioShield platform. And the reason it's a backbone is: one, it is approved; two, its mechanism of action is unique. It's the first time in medical history, quite literally, that there is a cytokine molecule called IL-15 that is now approved that one has been identified by the National Cancer Institute as the #1 molecule to cure cancer as far back as 2007. And by 2024, the FDA affirmed this IL-15 by stating in the package insert, its mechanism of action is to stimulate the NK cells, CD4, CD8 T cells, and memory T cells without upregulating Treg cells. That's a mouthful. But that mouthful as a backbone serves as the foundation to take ANKTIVA and combine it with standard of care or combine it with our natural killer cell therapy and combine it all with the adenovirus. Most importantly, it serves as a backbone to treat this condition, which we will talk about called lymphopenia. So again, welcome to all. I will take the first opportunity to present the evolution and history of ImmunityBio and how through our ambition is to actually truly make a different impact in patients with cancer, patients with infectious disease, and patients with lymphopenia. After my presentation, which I will then turn the call over to Richard Adcock, the CEO, to present the current commercial status of the company, and then we'll open it up for questions. So let me proceed. So let me level set. Some of you may be aware that over the past maybe 3 to 6 months, we've described the mission and vision of ImmunityBio on TV shows or podcasts, including the show at NewsNation on killing cancer and the exciting meeting which we had with the Director of the NIH and Director of the NCI together with our patients. And I think it's very important for me to step back and explain the strategy from the outset. So if you would give me the luxury of going back in history a decade ago from July 2015 to today, I think it is important for us to trace that back to understand both the strategy of the molecules that ImmunityBio develops, the strategy of how we build our own manufacturing facilities and control the master cell banks ourselves so that combinations can occur, the strategy of proving and testing that the immune system is the core root cause and the collapse of such, the immune system, is a core root cause of cancer, and how by addressing the immune system in totality -- and I mean in totality, from the innate and the adaptive immune system -- we can change the course of cancer. So it has taken us a decade from the first IPO of NantKwest. So in July 2015, after having identified NK-92, a natural killer cell that's off the shelf, the company went public and a successful IPO occurred in July 2015. By 2016, we were asked to launch the Cancer Moonshot. I provided a whitepaper, and some of you may have seen this collage drawing that I completed in January 2016, and showed this program to the then Vice President Biden as the Cancer Moonshot that we would pursue. It was my goal and understanding that this would be a collaborative effort on behalf of the nation, in which all Big Pharma, all FDA, all NIH would collaborate to take on this very ambitious task of integrating multiple platforms that all focus on activating the innate and adaptive immune system to allow the human body, your own body, to kill the cancer from within. This proceeded to multiple meetings in which we had with all the thought leaders, all the scientific leaders. But sadly, it became apparent that we would have to go alone. The Biden Cancer Moonshot went separately with regard to Big Pharma and the academic centers, and we pursued this effort on our own, and this has become ImmunityBio. So it is important for our investors to understand that this is not an overnight strategy. This is a strategy that we undertook all the way from 2016 in which this diagram, or what I call the mind map, and the concept of quantum oncotherapeutics. Let me briefly just describe that to you today so that you understand how our thinking and our strategy relates directly to the products and the goal of us towards the cure of cancer. So there were many concepts that I had to challenge when the concept of starving the tumor arose with the development of Avastin. I challenged that, and that was the basis of my developing Abraxane to, in fact, feed the tumor. And very early on in my career, I realized that this anti-angiogenesis Avastin theory was a flawed theory because what you do if you starve the tumor, you would induce micrometastasis, and that was not the answer. But then saying that in the face of a huge company like Genentech and Roche developing Avastin was really going against the thought process of everybody at that point in time. Sadly, when I thought about the biology, I thought that would be completely different. In a sense, what that would do is actually cause micrometastasis because the tumor would shape shift. You start the tumor, it would actually move to different places where you couldn't recognize it until you get metastasis. So contrary to starving the tumor, I think quite the opposite. You should feed the tumor. And since the tumor devoured albumin as a delivery system to feed itself, why not create a nanoparticle of albumin, allow the tumor to feed thinking it's feeding the albumin, and within the core of that albumin have a chemotherapeutic agent called paclitaxel. So that was what I called Abraxane. So rather than starve the tumor, feed the tumor, and it was going against the grain. So we developed Abraxane. So the next question is, what is this tumor microenvironment. That around that time was a complete new concept that the tumor microenvironment consisted of what we call our lymphocytes. I want you to understand that word lymphocytes because lymphocytes and depletion of lymphocytes results in a disease state called lymphopenia. We will come back to lymphopenia. But what are lymphocytes? Lymphocytes are the natural killer cells and the T cells and most importantly, the crosstalk between a CD4 and a CD8 T cell and a natural killer cell to generate a memory T cell. That is the holy grail, the generation of a memory T cell so that your body can remember if this tumor ever comes back and prevent and give you long-term duration. You will hear throughout our conversations in ImmunityBio duration matters. It is a proxy to saying you've generated memory T cells. It's a proxy to say that you're free of cancer, and you are in remission so that cancer is now a chronic disease. We will get to the point where we'll call it a cure. But at this point, we all want to take cancer all the way so that you are free of disease with the highest quality of life over 10 years, which meant you needed to deal with the tumor microenvironment. Well, what was in the tumor microenvironment? And this is where the world quantum came into it. Not only did the tumor shape shift, and we'll get into the tumor how it shapeshifts, how it avoids T cells, or how it exposes itself to [ actually grabbing ] albumin, how it avoids natural killer cells even. But the tumor microenvironment of the killer side and the suppressor side both shapeshift, meaning you have natural killer cells and T cells that are designed in your body to kill abnormal cells. But at the same time, as these cells get activated, you also have in your body to create balance of suppressor cells. So a killer T cell can become -- killer T cells can become a regulatory suppressor cell. A killer macrophage called M1 could become a macrophage suppressor cell called M2. Even a neutrophil that is supposed to kill and participate in killing infection could become a suppressor neutrophil from an N1 to N2. So we need to take this balance into consideration, and therefore, engineer products to not only activate the killers, but to suppress the suppressors. So this quantum war that is happening literally within minutes, hours, days in real time needs to be accommodated and the change and the shapeshifting is dependent on what you're doing or what you're treating on behalf of the patient. That is this paradigm change. That is this complexity that I have tried since 2016 over multiple meetings, which I call breakthroughs in medicine and brought thought leaders along with me, including Dr. Jeffrey Schlom and Dr. James Gulley from the National Cancer Institute, for which we have been collaborating happily and excitingly for the last decade. We instituted what we call a CRADA, a Cooperative Research and Development Agreement. And for the last decade, between ourselves and the National Cancer Institute and academic and community doctors have gone ahead to prove this theory. So what was the seminal moment? Well, the seminal moment was in 2016 -- September 2016. I visited the FDA and was invited by Sean Khozin to present to the entire leadership of the OCE, the Oncology Center for Excellence, that had just been formed to provide this concept of quantum oncotherapeutics and the concept of a QUILT trial, constructed this wording, the QUILT trial, so that people can understand the elements of QUantum Immuno-oncology Lifelong Trial. That was what QUILT stand for. QU is quantum, Immuno-oncology Lifelong Trial. The FDA at that point said, this is exciting. We will allow you to file an IND. That was the changing moment. And by 2017, and I apologize going into this history because you now will see the development from 2017, and you will see maybe a decade from now, 2027, not only the development, but the execution of this incredible paradigm change. And I will go into that further in this call. We will show you how ANKTIVA becomes a backbone to multiple ailments, how ANKTIVA becomes a backbone to current standard of care. For example, ANKTIVA will be the backbone to chemotherapy, but chemotherapy at a lower dose. ANKTIVA could be the backbone to radiation, but radiation at a lower dose. ANKTIVA could be the backbone to BCG, but BCG even in the failure. ANKTIVA could be the backbone to checkpoint inhibitors. That we do not need to abandon the standards of care so that the current learnings of what we've learned, but enhance an adjuvate, or call as an adjuvant of the current standards of care. But we wanted to go beyond that. We want to now step back and say, okay, how do we actually use not just the standard of care, but how do we actually now generate a cancer vaccine, and that's where this becomes exciting. In order to do that, we needed to activate the dendritic cells. And therefore, the opportunity to actually use either an adenovirus or molecules that would activate the dendritic cells with antigens that the tumor would recognize and now train or create educated T lymphocytes. Now there's opportunity to combine ANKTIVA with molecules that would activate the dendritic cells. But there is yet a further opportunity. We could then harvest your NK cells. Imagine if we could harvest your NK cells from you as a person and give it to anybody as allogeneic, but stimulate those NK cells, not only with IL-15 and ANKTIVA, but IL-12 and IL-18 to make them memory-like. And now they're not only sustained, but they're active and supercharged. That combination of ANKTIVA plus m-ceNK is what we will discuss. However, we need to address the suppressors and how do we outsmart the suppressors. So what if we actually then created targeted NK cells such as PD-L1 NK, CAR-NK where we could use that off-the-shelf to go after the suppressors or we could target liquid tumors such as diffuse large B-cell lymphoma or Waldenstrom lymphoma with CD19 and so forth and even PSA. So you begin to see the ambition. So we have taken you through this mind map through January 2016. And that was the thinking as I went to the FDA. And I am forever grateful for the FDA allowing us to file the IND and approving the IND in 2017. So the next discussion is for me to reveal to the public the actual language that I put in front of the FDA as part of the IND to initiate the QUILT trials. And quite literally, I have pulled out the cover letter that I filed with the FDA under the umbrella of NantCell, and I will read to you the cover letter. The cover letter says, dated March 2017, "Initial investigational new drug submission and a request for regenerative medicine advanced therapy designation: as early as 2017, we recognized that this was what we call an RMAT opportunity. This was an opportunity for us to take combination ANKTIVA as a backbone to combine with a cell therapy, whether it be NK, whether it be CAR-T, whether it be CAR-NK, and apply as an RMAT designation." I will read the basis, the one paragraph and the intent. It says, "The Nant Cancer Vaccine is a modern approach to cancer therapy, a regenerative advanced therapy to maximize immunogenic cell death while maintaining and augmenting the patient's antitumor, adaptive, and innate responses to cancers." That's a mouthful. That is not only regulatory speak, but scientific speak on the second paragraph of the submission in 2017 to the FDA. I go on to say, "The Nant Cancer Vaccine makes use of lower metronomic doses of both cytotoxic chemotherapy and radiation therapy, with the aim of causing tumor cell death while minimizing suppression of the immune system." There, in that sentence, I was trying to explain in a very subtle way that the current standard of care maximizes the death of our lymphocytes. It maximizes what I call lymphopenia. The concept of absolute lymphocyte count was unknown, ignored, not taught, and there was a need for us to change that thinking process. The third sentence goes on to say, "These treatments are combined with immunomodulatory agents that serve to augment and stimulate patient's adaptive, innate immune responses." What I was saying there is we can use chemotherapy, for example, Abraxane. But guess what Abraxane does, it would actually go into the tumor microenvironment, it would convert M2s to M1s, it will wake up the tumor by allowing to express on its surface these what we call DAMPs and induce the ability for our T cells and NK cells to recognize it and kill it from the outside in. That is the concept of what is going on here. So if you don't mind indulging me, this is such an important cover letter. I will maybe put this cover letter together with the slides, and I want to show you -- read you the next paragraph. "The intent of the Nant Cancer Vaccine development effort," remember this is 2017 now, "is to employ this novel treatment protocol in a series of clinical trials in which the therapy was investigated across multiple oncology indications." Again, the basis of that simple sentence was to say, T cells don't have a tumor address. They know exactly where a bad cell is, regardless of its anatomy or regardless of its location, same for natural killer cells. So we were trying to indicate to the FDA by activating the immune system, it's a complete paradigm change. It's not indication by indication. If you have cancer, regardless of the location and the type, these natural killer cells and T cells, if activated, will kill them. I go on to say, "Small variations in the chemotherapies and the doses will be based upon past experiences with these therapies in a given indication." And what was I saying here? Well, there were things like FOLFOX, there's things like Gem/Abraxane, there's things like different combinations of chemotherapy. And what we did not realize as chemotherapeutic oncologists trained with a hammer of just wiping out the tumor and seeing a response rate is that these chemotherapeutic agents have novel properties that could modulate the tumor microenvironment. For example, gemcitabine I chose, because it inhibit the suppressors. So there were subtle insights that was not taken into account of generating what I call immunogenic cell death rather than what is called tolerogenic cell death. So that little sentence that says, small variations in the chemotherapies and the doses were based upon experiences, meaning past experiences, with these therapies in a given indication. So we were given the green light to go after patients who have failed all standards of care. Excitingly, this progressed to be given the greenlight to patients who failed all standard of care for lung cancer, for triple-negative breast cancer, and multitude of other cancers, which then said, I was given the greenlight to use ANKTIVA as the backbone and the entire ImmunityBio platform, which I will now show you, as part of the development program that took us a decade to complete all the way until the approval of the first indication in bladder cancer, where ANKTIVA plus BCG was just the beginning. We have already shown data on ANKTIVA plus checkpoint inhibitor, and this now is the status of where we are. And I think it puts into context the event we just had on Friday with NewsNation and Chris Cuomo and the Director of the NIH and Director of the NCI and the audience. What I discussed at that meeting was a workshop report that we just discovered recently that was published in 2007. It was really an exciting workshop report where the NCI, the NIH, the FDA, AACR, all the scientific thought leaders were asked to rank the most important molecules in your body that could cure cancer. #1 ranked was IL-15, i.e., what they called a T cell growth factor. And #2 ranked was a checkpoint inhibitor such as KEYTRUDA that took the brakes off T cells. So the revelation that the scientific community as far back as 2007 had identified, based on the science, that the IL-15s acting as a superagonist, which is today ANKTIVA, was ranked #1, and the checkpoint inhibitor, today known as KEYTRUDA, was ranked #2, was an exciting discovery. I think if you think about the biology, in order to take the brakes off T cells, which is the #2 molecule, you actually need T cells around in the tumor microenvironment, and that's what ANKTIVA provides. If you have lymphopenia induced by chemotherapy and radiation and you have no T cells, you may take the brakes off the T cells that remain and then all of a sudden, the checkpoint inhibitor fails. And that is what's happening. And I will show you another slide in 2024, how at ASCO, desperate oncologists say, "Now that we've failed in lung cancer and any other tumors, all these 40 tumor types, what we call checkpoint inhibitor failures and standard of care failures, we have nothing else to offer other than more chemotherapy, specifically docetaxel. And the docetaxel has been tested in literally thousands of patients as a single arm, again, as a control against multiple cancer trials. And regardless of the trial, it shows a median overall survival of 7 to 9 months." I want you to put that into a little memory box because we'll come back to that when we talk about QUILT-3.055 and why the Saudi FDA approved ANKTIVA for lung cancer for the first time in the world. So before I hand over to Rich Adcock to talk about the commercialization program, let me also highlight a very important discussion that occurred in the presence of the NCI and NIH Directors during that evening show. This concept of the plausible mechanism of action, which is the new policy put forth by Dr. Makary at the -- and published in the New England Journal of Medicine, speaks to a very exciting opportunity that the plausible mechanism of action is a pathway. And obviously, the mechanism of action of checkpoint inhibitors was to take the brakes off T cells. The mechanism of action of ANKTIVA is actually to grow T cells and to grow NK cells. This mechanism of action has been affirmed in 2 tests: one, by the 2007 NCI report, which affirmed that IL-15, which is basically ANKTIVA, is a T cell growth factor and ranked #1 out of over 100 molecules to be the most important molecule to cure cancer. And checkpoint inhibitor was ranked #2. So the important discussion was it is very clear that ANKTIVA falls within the plausible mechanism of action concept. And interestingly enough, as we will proceed, and I'll discuss it more further after Richard Adcock's presentation, is that the mechanism of action, not just of ANKTIVA, but the mechanism of action of the Nant Cancer Vaccine or the therapeutic vaccine, which uses ANKTIVA as a backbone, which we'll discuss later on in this call, also falls within the plausible mechanism of action of inducing both the innate and adaptive immune system for long-term memory. So with that, let me turn this over to Richard so that he can now present the commercial progress, the clinical progress of ImmunityBio with the first approval, not just only in bladder, but the first worldwide approval of ANKTIVA for lung cancer in combination with checkpoint inhibitors. Richard? Richard Adcock: Thank you, Patrick. Good afternoon, everyone. I appreciate you all joining us today, and I'm excited to walk you through what was truly a transformational year for ImmunityBio. Before I get into the numbers, I want to reinforce a point that Patrick made. ImmunityBio is not a single-product company. ANKTIVA is our lead commercial asset and the backbone of our platform. Still, we are a multi-platform, multi-indication immunotherapy company with many trials completed and many more trials in progress across multiple tumor types, a proprietary NK cell and DNA vaccine vector platform, and a growing portfolio of regulatory designations. The commercial and financial results I'm about to walk you through reflect the strong execution of our broader strategy. With that context, I am pleased to report that ImmunityBio delivered a transformational year in 2025. Full year net product revenue for ANKTIVA was $113 million, representing a 700% year-over-year increase. To put that in context, we generated $14.1 million in net product revenue in 2024, the year of our FDA approval. In 2025, with the addition of our billing J-code, that number grew to $113 million. That is a fundamental shift in the company's trajectory and tells you that the commercial opportunity for ANKTIVA is real and growing. We also achieved a 750% increase in unit sales volume over the same period. This is an important metric because it indicates revenue growth is driven by real clinical adoption, not pricing. Clinicians are choosing ANKTIVA for their patients. And with that adoption, it is accelerating. We closed the year with a 20% quarter-over-quarter revenue growth from Q3 to Q4, demonstrating the commercial momentum we built in 2025 has continued and strengthened as we exited the year. That trajectory matters because it tells you we are not just growing off a small base, we are sustaining and accelerating growth as our base scales. Each sequential quarter in 2025 was stronger than the one before it. ANKTIVA is now authorized across 33 countries with 4 major regulatory jurisdictions: the United States, the United Kingdom, the Kingdom of Saudi Arabia, and the entire European Union. All of these were achieved within 2 years from our initial FDA approval. We believe this represents the most rapid international expansion for an immunotherapy in this indication and reflects both the strength of the clinical data and the global unmet need in bladder cancer and beyond. Let me walk you through our commercial performance, then I will cover our financial results and our strategic outlook. Starting with the United States, ANKTIVA continues to see strong and growing uptake among urologists and oncologists treating BCG-unresponsive nonmuscle-invasive bladder cancer, CIC plus and minus papillary disease. The clinical unmet need in this population is well understood. These are patients who have exhausted standard of care BCG therapy and face the prospect of a radical cystectomy, which is the removal of the bladder that is a life-altering surgery with significant morbidity. ANKTIVA offers these patients a treatment that has demonstrated a durable complete response while preserving the bladder, and clinicians are responding to that value proposition. We are seeing adoption across both community urology practice and academic medical centers. The feedback we received from treating physicians consistently highlights the favorable tolerability profile and the durable response they are seeing in their patients. Importantly, we are also seeing repeat prescribing behavior where physicians who treat continue to treat additional patients with ANKTIVA. That repeating prescribing dynamic is a strong indicator of physician confidence in the product and a key driver to the growth trajectory you are seeing in our numbers. We have invested in building our sales force and medical affairs infrastructure throughout 2025 to support this growth. Our commercial team has established strong relationship with key opinion leaders and high-volume treatment centers across the country, and we continue to expand our reach into community practice where most bladder cancer patients are seen and treated today. We are generating real-world evidence strengthening the clinical case for ANKTIVA as a routine practice. The vast majority of our $113 million in net product revenue was driven by U.S. commercial performance, and we are confident in the durability and the continued growth of that demand base as we enter into 2026. The U.S. remains our largest and most mature commercial market, and we see meaningful room for continued penetration as awareness of ANKTIVA grows amongst the broader urology and oncology communities. Turning to Europe. The European Commission granted conditional marketing authorization for ANKTIVA in February of 2026, covering all 27 European Union member states plus Iceland, Norway, and Lichtenstein. This is a major milestone that opens an enormous patient population to this treatment and represents our second largest regulatory jurisdiction after the United States. To ensure we can move rapidly towards commercial launch across this complex and diverse European regulatory landscape, we've partnered with Accord Healthcare. Accord will deploy over 100 dedicated sales, medical, and marketing professionals across 31 countries in the EU, U.K., and the European Free Trade Association member states. Accord brings a proven commercial infrastructure, established payer relationships, and deep experience with oncologists and specifically urologists in this region. This partnership allows us to access a pan-European commercial footprint without the time and capital required to build that infrastructure from scratch. We have also established an Irish subsidiary in Dublin to support European distribution and the commercialization strategy. This structure positions us for efficient coordinated execution across the region as we work through a country-by-country reimbursement and market access process. While market access time lines will vary by country, we are prioritizing the 5 largest European markets: Germany, France, Italy, Spain, and the United Kingdom, where we expect the highest patient volumes and where Accord has particularly strong commercial capabilities. In the Kingdom of Saudi Arabia, we received 2 approvals from the Saudi FDA in January of 2026. The first is the approval of ANKTIVA for BCG-unresponsive nonmuscle-invasive bladder cancer, CIS plus and minus papillary disease. The second is the conditional approval for ANKTIVA in combination with checkpoint inhibitors for metastatic nonsmall cell lung cancer. That nonsmall cell lung cancer approval is significant because it marks Saudi Arabia as first jurisdiction worldwide to authorize ANKTIVA for lung cancer, and it validates ANKTIVA's broader platform beyond bladder cancer. We recognize the ongoing global challenges and especially those affecting the Middle East today, but cancer never pauses and neither does ImmunityBio. We are actively preparing to launch ANKTIVA in Saudi Arabia for both lung and bladder cancers, with product shipments ready to commence. We will work closely with the Kingdom of Saudi Arabia to manage imports amid the current escalating circumstances. The Saudi Arabia market is increasingly important for oncology therapies as the Kingdom continues to invest heavily in health care infrastructure under its Vision 2030 program. We have partnered with Biopharma and Cigalah to expand access across and through the region with ANKTIVA to the broader Middle East and North Africa region. Biopharma and Cigalah bring deep regional expertise and established relationships with oncology centers and regulatory authorities across the Middle East and North African region. We have formed a subsidiary of the Kingdom of Saudi Arabia to support commercial launch operations in country. The Middle East-North Africa region represents a significant and underpenetrated market for advanced immunotherapies, and we believe our early-mover position gives us a meaningful competitive advantage as we build out this commercial territory. Turning now to our financial performance for the full year. 2025 was a year of significant financial progress. And I want to take you through the numbers in detail because they reflect both the commercial momentum we are generating and the discipline with which we are managing the business. As I mentioned, full year net product revenue was $113 million compared to $14.1 million in fiscal year 2024. That growth was driven by accelerating commercial uptake of ANKTIVA following our FDA approval. On a unit basis, we achieved a 750% increase in sales volumes compared to 2024, which underscores that the revenue growth reflects real clinical adoption. In the fourth quarter, net product revenue increased from $31.1 million to $38.3 million. On a sequential basis, Q4 represents a 20% increase over Q3, reflecting sustained commercial momentum through year-end. That sequential acceleration is important as it signals as we head into 2026 that the European and Saudi launches will allow for additional growth. Full year research and development expenses were $218.6 million compared to $190.2 million in 2024. The increase was driven by accelerating clinical trial expenses our programs are rapidly advancing, combined with manufacturing costs for expanding production capabilities in ANKTIVA, our CAR-NK, and DNA vaccine vectors, as well as a normal course $14 million onetime fixed asset write-off for manufacturing equipment. Our full year selling, general, and administrative expenses, or SG&A, decreased to $150 million from $168.8 million in 2024, an $18.8 million reduction. This reflects lower consulting activities as we internally developed and expanded our commercial teams as we scale our sales and expand our marketing operations. Full year net loss attributable to ImmunityBio common stockholders was $351.4 million compared to $413.6 million in 2024. The reduction of approximately $62 million in net loss is meaningful because it reflects the significant progress we have made in converting revenue growth into a narrowing loss profile. Even as we continue to invest aggressively in our clinical programs, commercially globally growing and expanding as well as our manufacturing capabilities expanding, we are on a clear trajectory towards a favorable financial profile as revenue continues to scale. As of December 31, 2025, we had a consolidated cash, cash equivalent, and marketable securities of $242.8 million. Net cash used before operating activities in the full year was $304.9 million. The major liabilities at the year-end include $505 million in related-party convertible notes and approximately $325 million in revenue interest liability on the balance sheet. For full details on the balance sheet and capital structure, I refer you to our 10-K with the SEC filing. Before I hand the call over to Patrick, let me step back and frame our 3-year global clinical and commercial strategy. We have a clear road map for how we intend to grow this company from a commercial-stage immunotherapy business into a diversified oncology platform, and it is built on our 3 platform technologies. First, ANKTIVA, our IL-15 super agonist. ANKTIVA is the backbone of our approach with its application across bladder cancer, lung cancer, colorectal cancer, pancreatic cancer. This platform leverages the approved and authorized indications we have today and the near-term label expansions we are pursuing, including BCG-naive bladder cancer and the international expansion of nonsmall cell lung cancer. The second platform is our off-the-shelf CAR-NK cell therapy programs, including our PD-L1 and CD19 CAR-NK, as well as our memory cytokine enhanced natural killer cells, or m-ceNK. This is where the combination with ANKTIVA becomes a differentiator. We are pursuing the combination of ANKTIVA and our natural killer cells in glioblastoma, non-Hodgkin's lymphoma, pancreatic cancer, triple-negative breast cancer, amongst others. Patrick will take you through the clinical data supporting this platform in detail. The third platform is our DNA vaccine vector technology, which has demonstrated a targeted immune response against specific tumor-associated antigens. We are advancing clinical programs targeting PSA in prostate cancer, HPV in cervical and head and neck cancers, as well as our NCI-NIH sponsored trial in Lynch syndrome. Our DNA vaccine platform, used in combination with ANKTIVA in treatment of Lynch syndrome, we believe represents a potential paradigm shift towards cancer prevention. ANKTIVA activates the immune system. Our natural killer cells provide direct tumor killing, and our DNA vaccine vectors deliver targeted antigen-specific responses. These modalities can be deployed individually or in combination, depending upon the tumor type and clinical setting. This versatility is a strategic advantage because it allows us to pursue multiple high-value indications from a shared manufacturing and commercial infrastructure. ImmunityBio additionally is confronting a prolonged 13-year global shortage of BCG. We have worked directly with the FDA and launched an FDA-authorized expanded access program for our recombinant BCG. This expanded access program has approximately 100 clinical sites that are active or activating, consisting of both academic medical centers and community urology practices. Today, there are more than 500 patients that have received eBCG. As a result, we have delivered several thousand doses in either a monotherapy or in combination with ANKTIVA. Across ImmunityBio's pipeline, the BCG-naive indication represents one of the most immediate commercial catalysts as we have reached 100% of the enrollment. We intend to submit a BLA, or biologics licensing application, for this indication in the fourth quarter of 2026. Approval of this would considerably broaden the addressable market for bladder cancer for ImmunityBio. Last but not least, I am pleased today to introduce you to askIB. This is ImmunityBio's internally developed and hosted artificial intelligence solution. askIB utilizes advanced large language models and parallel agentic frameworks to integrate with our global enterprise application suite directly. This integration will drive AI-powered advancements across all areas of ImmunityBio, from our cutting-edge research and development to our fully robotic manufacturing to predictive analytics that generate real-time operational insights. askIB will transform how ImmunityBio operates and innovates as we prepare for global expansion across our pipeline. In summary, we have a clear commercial franchise that is growing at 700% year-over-year. Our global footprint is now spanning 33 countries, 3 major markets that are underway, a narrowing loss profile, a 3-year platform strategy that positions us for sustained growth across multiple tumor types and modalities, and now askIB powering AI-driven innovation across the enterprise. With that strategic overview, let me hand the call over to Dr. Soon-Shiong, who will take you through the deep science and clinical data and the pipeline priorities for this platform moving forward. Patrick? Patrick Soon-Shiong: Let me take you through the portfolio of the products that we already have, the stages of where they are, the commercialization stages at the bladder cancer level, and the opportunity for us to have a paradigm-changing platform, all housed thankfully in one single company, without any single large pharma control, any single large pharma role, participation, so that this biotech platform could be made available to the country, to the nation, and to the world. So now let me turn my attention to the entire platform under ImmunityBio. I call this platform Immunotherapy 2.0, which combines cytokines, which is ANKTIVA; with vaccines, which is the adenovirus platform; with cell therapy platforms, which is the off-the-shelf NK-92 as well as the Apheresis Leonardo Platform. And this slide spells out this entire platform. And obviously, each of these elements of the platform are under clinical trials. So the focus of clarity will start with ANKTIVA, which is really the backbone of the 4 programs at ImmunityBio. First, ANKTIVA when combined with just standard of care, and we'll get into that; second, ANKTIVA when combined with ImmunityBio's off-the-shelf CAR-NKs, which are either PD-L1 t-haNK or CD19 t-haNK or ANKTIVA combined with ImmunityBio's apheresis program of m-ceNK. So that's ANKTIVA combined with cell therapy. Third is ANKTIVA combined with the vaccine program of adenovirus, and we'll get into that in patients with Lynch syndrome, patients with HPV, patients with colon cancer. And then finally, ANKTIVA in its own right in the treatment of lymphopenia. So these are the 4 pillars of therapies that are all in phases of clinical trials, some already approved, obviously, for bladder cancer, where I would like to take you through not only the scientific rationale, but the exciting data we're already seeing as we do these combinations. So starting with ANKTIVA plus the standard of care. So today's standard of care for bladder cancer is BCG. You have BCG patients with bladder cancer, what you call nonmuscle-invasive bladder cancer with BCG. My first discussion with regard to bladder cancer to describe to the lay public, this is what we call nonmuscle-invasive bladder cancer, which is one of the highest incidence of bladder cancer, where the cancer is still on the mucosa and hasn't invaded the muscle. So that's why it'll be nonmuscle-invasive bladder cancer. Patients who have this type of cancer have 2 types -- 2 subtypes from the same clonal origin called CIS, C-I-S, and the other one is papillary. CIS is bladder cancer where the tumor is flat and papillary where the tumor is raised like that of a grape. So we have initiated a trial called QUILT-2.005 in patients who are first time first-line diagnosis of BCG nonmuscle-invasive bladder cancer with CIS and/or papillary disease. The randomized study called QUILT-2.005, in which 366 patients were randomized between BCG alone versus BCG plus ANKTIVA. Obviously, it was our hypothesis that BCG plus ANKTIVA would stimulate the NK cells and result in prolonged survival. We just announced in February of this year that we are now fully enrolled the 366 patients in this QUILT-2.005 study. Importantly, however, but very early on in the development of this study, the FDA requested us to unblind at their request and perform an interim analysis of the patients that were enrolled at that time. And what we were able to show then was complete response rates of 85% when ANKTIVA was combined with BCG versus 57% when BCG was given alone at 6 months. And at 9 months, it reached statistical significance even further with 84% complete response that was durable versus 52% with BCG alone. So this represents a statistically significant improvement in duration of complete response and is consistent with the hypothesis that ANKTIVA activates the memory cell -- memory T cell and consistent with the package insert for the approval already for BCG-unresponsive nonmuscle-invasive bladder cancer. I would like to report, and we have said, now that we've accrued the patients completely, we've targeted the BLA submission for these naive patients in Q4 2026. I would like to emphasize that these studies that are now relating of the interim analysis to the FDA, and the trial remains blinded for final analysis, and we're not aware of the data yet until we unblind the complete results. Let's move on to the patients who are BCG-unresponsive, and that is what we call QUILT-3.032. What does that mean BCG-unresponsive? So in these patients with nonmuscle-invasive bladder cancer, the FDA, together with the American -- AUA, the urologists -- the consortium of urologists, came up with guidelines to create a definition of BCG unresponsive. It means that these patients have this nonmuscle-invasive bladder cancer, receives BCG, it fails; receives more BCG, it fails; and it becomes what they call unresponsive. And sadly, the only alternative -- there's no approved drug for CIS and papillary beyond that at the time we initiate the trial other than a total radical cystectomy. What does that mean the total radical cystectomy? That means that patients would lose their bladder and have an artificial bladder made. And so devastatingly lifechanging procedure, even associated mortality from the procedure itself and significant morbidity. So patients rightly so and doctors rightly so, urologists rightly so, do anything and everything they can to preserve the bladder. And more importantly, to preserve the opportunity from progressing from nonmuscle-invasive to muscle-invasive, because once the tumor progresses out of the mucosa from nonmuscle-invasive into the muscle, progression then takes a different course, and these patients have a high mortality because of metastasis. So let's give you the history of this approval. So this trial was started a decade ago. And in this pivotal QUILT-3.032 trial, there were 2 cohorts. Cohort A was patients who had CIS with or without papillary, and this is now FDA approved. This indication of CIS with or without papillary is approved with a complete response rate that we've now reported at 71% of the 100 patients that we've added, with the duration of response extending beyond 53 months as we reported at the AUA 2025 meeting in Las Vegas. And that leaves us in the same study with Cohort B. What is Cohort B? Recall, Cohort A is CIS with and without papillary disease. Cohort B is papillary disease in a sense without CIS. So it is, I suppose, the heads and tails of the same BCG-unresponsive nonmuscle-invasive bladder cancer in which CIS with or without papillary is already approved, the concept of papillary is already improved if you happen to have CIS. Cohort B was papillary alone without CIS and the result of that has been published in the Journal of Urology in 2026, in which the papillary cohort met its primary endpoint with a 12-month disease-free status of 58%, and more importantly, a 24-month disease-free status, which is retained basically at 52%. And importantly, the disease-specific survival, meaning patients did not die of bladder cancer, was 96% at 36 months, and the median has not been reached yet, meaning we haven't reached even 50% of patients dying at the time of this report, with roughly 82% of these patients maintaining their bladder at 36 months. So the fact that we've demonstrated over 80% bladder preservation at 3 years and avoiding total radical cystectomy. I think it's important to point out for this Cohort B, papillary alone in which patients have BCG-unresponsive nonmuscle-invasive bladder cancer, that there is no -- zero, no approved therapy to date, other than total radical cystectomy. We have announced that the FDA has requested us to submit additional data. After they refused to file in May 2025, we held a Type B meeting with the FDA in January 2026. And then the FDA asked us for more new data, which we've submitted and announced recently. What else are we doing in bladder cancer? Well, what we're doing in bladder cancer, there's been a BCG shortage for decades. Merck is the only supplier of BCG, and there has been a shortage -- a terrible shortage in the country, which results in many patients not being able to get enough BCG, but we have now a solution to that problem. Let me turn my attention then to our efforts in recombinant BCG. The FDA gave us expanded access to this recombinant BCG and the FDA authorized this expanded access program in February 19, 2025, to address the ongoing TICE BCG shortage in the United States. Our first U.S. dosing occurred in March 2025. And as of February 2026, 580 patients have now been enrolled across the country. And this recombinant BCG is administered intravesically, and we have requested a meeting with the FDA, which is scheduled for this month to discuss the future of this recombinant BCG to address this decade shortage of BCG in the country. So let me switch to lung cancer. So we just talked about bladder cancer. And remember, we're in this phase of ANKTIVA plus standard of care. So in the bladder cancer, the standard of care was BCG. So therefore, it was ANKTIVA plus BCG, and how ANKTIVA rescued BCG. But I think the next evolution of pure immunotherapy, while BCG, in fact, was an immunotherapy, it was one of the earliest immunotherapy, the next evolution of immunotherapy was checkpoint inhibitors. And what the checkpoint inhibitor does or checkpoint blockade does is to actually take the brakes off T cells so that T cells could recognize the tumor and be activated without any restriction. That's called a checkpoint inhibitor. And as you all may know, this is KEYTRUDA and nivo. I know we've spoken about this in terms of the plausible mechanism of action. But in order for T cell to work, a T cell inhibitor to work, it obviously requires a T cell to be able to recognize the tumor. And as I was telling you about the shapeshifting or -- the shapeshifting opportunity of cancers, the moment it actually has a T cell coming at it, one of the amazing things it does to tumor, it pulls in the MHC-I receptor. And now the T cells, even though the brakes are off, can't recognize it. So that is why you get what we call checkpoint failures. The other reason why the checkpoints fail is sometimes these patients already received radiation chemotherapy. And we do know that chemo radiation acts as a lymphopenic activity, meaning removing the T cells from the tumor microenvironment is so effective sadly in generating low lymphocyte count. So if you have no T cells, there's no brakes to take off. So these are the 2 issues that face now the American population because there were 40 approvals of KEYTRUDA by 2025, many of them single-arm trials across all tumor types. So the world has been flooded, rightly so, over the last decade with checkpoint inhibitors. But now the oncologists are flooded by a crisis, which then leaves us with the question is what if this checkpoint inhibitor that's failing could, in fact, be rescued by a natural killer cell. So imagine the state in which you have now failed checkpoint inhibitors in your second line, third line, fourth line lung cancer with a survival possibility anywhere between 6 months and 9 months even with docetaxel and suffering this terrible last 6 months of your life with this chemo. But, in fact, you could change the course of that by combining the molecule ranked #1 with the molecule ranked #2, that is ANKTIVA plus KEYTRUDA and exploring whether that would change the survival. Well, that is QUILT-3.055. That is the trial that we designed as a single-arm trial to prove that when you have this missing cell, the failure of the checkpoint at this point, for which there's no other treatment other than docetaxel that we just add ANKTIVA, no chemo, to the same checkpoint inhibitor on which the patient is progressing. I can't emphasize that more. The eligibility of this trial is you have to be progressing on this checkpoint inhibitor and then we add ANKTIVA. That's all we're giving., ANKTIVA plus a checkpoint inhibitor, and we look at the overall survival. When one looks at the literature of docetaxel in the second-line and even third-line patients with lung cancer, regardless of the literature, you will see 6 to 9 months is the median overall survival. So if we ask the question, if we took these very sick patients, second-line lung cancer patients, third-line lung cancer patients, fourth-line lung cancer patients, and if we could extend the survival of these patients, not by 7 months, but maybe even doubling it to 14 months, would that be a major impact even in these advanced cases? Well, the answer to that is we were able to accomplish that in QUILT-3.055. And on that basis, the Saudi FDA gave us the approval. So time doesn't permit me to go through all the trials and you could go to our press release where you could see the trials where ANKTIVA is combined with our NK cell therapy or m-ceNK therapy and ANKTIVA is also combined with our adenoviruses. And there are multiple trials in which this BioShield platform is being implemented through these single-arm and randomized trials. Let me talk about lymphopenia. What is lymphopenia? Well, lymphopenia is a lower level of NK and T cells in our body. It is measured by a simple test called the absolute lymphocyte count. The absolute lymphocyte count has been available as an ICD-10 code for reimbursement as a diagnostic measure of your immune status since 2015, but has largely been ignored. Why is that? The reason it's been ignored is because it's not been taught. The reason it's not been taught is because until today, there's never been a treatment that can reverse the lymphocyte count, change the ALC levels from what I call a lymphopenic level to a normal level. It's very much like anemia. If you had anemia, we can measure the hemoglobin, and we can change that either with the blood transfusion or EPOGEN. If you're lymphopenic, which means your ALC is within the dangerous range, for the first time, the opportunity to treat lymphopenia. Well, what's the consequence if you don't treat lymphopenia? I will refer you to a paper that was just published by JAMA that shows frighteningly that 1 in 5 Americans suffer from lymphopenia. I am sure that both the patients and the doctors are not aware of the fact that 1 in 5 Americans today, that is 52 million Americans, suffer from lymphopenia, meaning a count below 1,500, and severe lymphopenia, meaning a count below 1,000. What this paper frighteningly showed that if these patients with severe and/or mild lymphopenia are unattended, the hazard ratio, meaning the risk of mortality, and similarly, therefore, the risk of longevity or absence of longevity, increases by 80% if you have severe lymphopenia. So the opportunity to right this newly, I suppose, recognized, it's never been really diagnosed. We've always had the ability through a simple CBC to measure ALC. But this newly recognized danger that lurks and this newly recognized danger that actually may be the basis of aging and the treatment of aging through the treatment of lymphopenia is now possible with ANKTIVA. We have shown, as we showed you in our randomized clinical trials in lung cancer patients and as well in healthy volunteers, that ANKTIVA acts to increase ALC. In fact, the FDA has affirmed in the package insert that ANKTIVA increases the NK and T cell count. So we have several trials in motion to not only show that we can increase ALC, but also show the effect on the outcome. In sepsis, patients with sepsis routinely have a low ALC count. In radiation, patients who have radiation routinely have a low ALC count. And then even in treatment-induced infection, such as patients now in multiple myeloma receiving bispecific antibodies, routinely have a high risk of infection. We will be doing these trials to demonstrate that we can treat the lymphopenia as well as change the outcome in patients with community-acquired pneumonia, patients with radiation-induced lymphopenia and patients with treatment-induced infection over the course of the next year to 2. Finally, the manufacturing of the future. The NANT Leonardo, an AI-driven cellular manufacturing platform is the manufacturing of the future at scale and at low cost for patients requiring cell therapy, whether it be NK cell therapy or CAR T-cell therapy. Our Dunkirk, New York facility awaits this NANT Leonardo platform, and we're also in discussions with the United States officials on a national preparedness for this particular site. I would like to emphasize that this would be the most magnificent site in New York that could take biologics and via U.S. domestic manufacturing and the readiness that has already been invested in the scale of this site, to be ready on behalf of the American public. Thank you for your attention and I know it's been a long call and I appreciate you all listening to both the insights and the progress of the company. We're happy to take questions. And Richard Adcock and I are available here to take some questions. Operator? Operator: [Operator Instructions] Our first question comes from the line of Ted Tenthoff with Piper Sandler. Edward Tenthoff: Thank you for that extensive overview. It's been incredible to see the progress of the company. So that really explains a lot of what's going on at ImmunityBio. Dr. Soon-Shiong, thanks for taking time to speak with us today. Perhaps you can tell us a little bit more about this new pathway on plausible mechanism of action. Why would FDA consider accelerated approval of ANKTIVA plus CPI in lung cancer and other indications? Patrick Soon-Shiong: Well, thank you, Ted, for that question. Look, I think this is really one of the most exciting, sort of, I believe, a new policy that was advocated by the FDA Commissioner. And interesting, it was even brought up by Jay Bhattacharya the NIH Head on Friday. The best way for us to understand it is to go directly to the article in the New England Journal of Medicine that was published, and we'll put that out, in December 11th, 2025. So it's very recent. And so what I would like to do is maybe just read it directly from that article. There's obviously just a 2-page article, very short. And so if I may read specifically, he gave an example. He says, "For instance, a single disease with 150 different genetic mutations with the same functional implications may require 150 different therapies and the plausible mechanism pathway would be ideally suited to such therapies." So, obviously, with 150 different mutations, 150 different therapies, one wouldn't be expected to do 150 different trials. He goes on to say and this is important and this is in the article by Commissioner Makary, "An appropriately designed study with a small sample size can support licensure of a product for which pharmacological effect is aligned with biological plausibility." So the pharmacological effect of ANKTIVA is to, through IL-15, stimulate NK and T-cells without immunosuppressive regulatory cells and aligned with biological plausibility. Biological plausibility says that you need NK cells and T-cells to kill cancer. And it goes on to say, and congruent with observed clinical outcomes. So, Ted, if I could repeat that last sentence, an appropriately designed study with a small sample size can support licensure of a product for which pharmacological effect is aligned with biological plausibility and congruent with observed clinical outcomes. He goes on to emphasize this statement by saying, "That philosophy, in essence, embodies the plausible mechanism pathway." So it's been a long answer to the direct question, is ANKTIVA -- does ANKTIVA fall under the plausible mechanism pathway? Its biological effect is aligned with its clinical outcome. Hope that helps you. Operator: Our next question comes from the line of Andres Maldonado with H.C. Wainwright. Andres Maldonado: Congrats on all the amazing progress you guys have done. So maybe one for Dr. Shiong here. As we think about all the ANKTIVA combinations, maybe specifically with your other cellular platforms, could you provide additional color on the implementation of your AI-driven robotic cellular manufacturing capabilities for us today? Patrick Soon-Shiong: Thank you for that question as well. I mean, this is the advance that we're making and it'll be very, very, very quickly being implemented. There's 2 ways of looking at this. We have an NK cell therapy platform, a PD-L1 NK and a CD19 NK. They're called CAR-NKs. And then we have another platform called m-ceNK. Let's go to the m-ceNK platform first because I think that has such amazing scalable potential. In order for you to have an m-ceNK, we can take anybody, a healthy person, a patient with cancer, anybody, any human being and remove or extract these white cells from the patient, just like you're giving a donation at Red Cross. Now we can take these white cells and grow them into billions of activated NK cells and freeze them down. The ability to then freeze them down and make them as a product could then be given to anybody else on the planet. We started to conceive of that, that how would you make this scalable? How would you make this affordable? And with our skill sets internally of machine vision and AI, we started working with a company that was building physically the robots and actually then taught the robot of how to make, from the apheresis sample, these NK cells without a human being involved in that process. Number one, now this could work 24/7, number two, the safety without any human contact with contamination and number three, the auditory profile adds to such an advantage for scalability. So this would be the world's first -- literally the world's first automated system in which AI is used to actually drive the production of these natural killer cells, either in the form of a targeted natural killer cells, what I call CAR-NK, or supercharged natural killer cells, which we call m-ceNK. So we think we're leading not only the nation, we're leading the world now on using AI automation, machine vision and robotics to start a complete new era of automated manufacturing process. Operator: Our next question comes from the line of Jeet Mukherjee with BTIG. Jeet Mukherjee: Congrats on the progress. Just to follow the thread on the plausible mechanism pathway and as it relates to your QUILT-3.055 study. How many patients have you treated, and how does that perhaps compare to the number of patients treated in the single-arm studies run for pembrolizumab across tumor types? Patrick Soon-Shiong: Well, that's a great question as well. And so the question is, could drugs get approved for single-arm studies and there's clear evidence of that. The most, I suppose, appropriate comparator is with Merck's approval for microsatellite instability-high or what they call MSI, across all tumor types. While Merck got this approved, and if you go to the June 2018 label because that's the only place you could find the number of patients, they had single-arm trials and let me give you the numbers of patients. The total number of the 5 single-arm trials, independent single-arm trials, is 149. For patients with -- some patients with a gastric bladder cancer, triple-negative breast cancer, the number of patients in that trial was 6. The number of patients with biliary esophageal endometrial cancer -- the number of patients in that trial was 5. The number of the patients with what they call non-colorectal was 19, et cetera. So the total of these single-arm, what they called uncontrolled open-label trials represented 149 patients for which they were able to get full approval for using KEYTRUDA regardless of the tumor type, as long as they had this MSI high. In our 3.055, we had 147 patients, completely -- basically no different number, of which 86 patients were second, third, fourth and fifth line even non-small cell lung cancer. So the QUILT-3.055 in which we will be discussing with the FDA where we have either PD-L1 high or even PD-L1 low, where we have a much more prolonged survival, for which there is no other treatment available, and that's very important, other than more chemo, it falls directly into this concept of the single-arm trial. Just to emphasize the idea of single-arm trials, this KEYTRUDA, as you recall, I said it was ranked #2 by the NCI in 2007, received approval for a single-arm trial for microsatellite high. It received approval for a single-arm trial for head and neck cancer. It received approval for a single-arm trial for Hodgkin's lymphoma. It received approval of a single-arm trial for urothelial cancer, a single-arm trial for gastric adenocarcinoma, a single-arm trial for cervical cancer and so on. I think you begin to understand that it's with great precedence that the FDA has approved, at least a T-cell, immunotherapy with single-arm trial in which the brakes are taken off and therefore there should be really no -- there should be consistency when you actually grow with T-cell and NK cell as it relates to single-arm trials for which there's no other treatment available. I hope that answers your question. Operator: Our next question comes from the line of Clara Dong with Jefferies. Yuxi Dong: Congrats on all the progress. So you've made a lot of progress recently, both in the U.S. and outside of the U.S. So just curious how you're thinking about the global commercial growth of ANKTIVA and maybe also talk to us about what the market access looks like in different regions as well. Patrick Soon-Shiong: You will take that, Rich? Richard Adcock: Thank you. Thank you, Clara. As you know, we've already launched distribution agreements with Accord, Cigalah and Biopharma. And in each of those, there were very specific reasons that we picked them. Accord is going to collaborate with ImmunityBio for the United Kingdom and all of the European Union. And in the U.K. and EU, each one of those member states have their own reimbursement process you have to go through. So you have to do a country-by-country and that's one of the biggest reasons we selected Accord because they have deep resources that do this regularly through those. So if you look at that, as I indicated, the big 5 is where we'll start with those. Germany is likely to be first just by the nature of how progressed we are and the work that we've already done with that one. And so we're looking forward to that in 2026. Much of the work is really getting it to be accelerated. So we are prepared in ramping up in '26 heading into '27. But for the Middle East regions, we've already secured, as you know, 2 approvals from the Saudi FDA for both bladder and lung. But beyond that, we're already in direct conversations with multiple other health regulatory authorities about approvals in that region as well. And so each of those will represent new growth opportunities. Now, Saudi, as I indicated, we already have product that is literally ready to be delivered as soon as possible. Same way with Germany. So there's no holdup from any supply constraints. It's just us working through the process on those. So if you take a look at that, '26, we'll be working country by country through those and adding new regulatory approvals is what our focus will be. Operator: Our next question comes from the line of Jason Kolbert with D. Boral Capital. Jason Kolbert: Dr. Shiong, thank you so much for describing the paradigm shift. It's very clear to me that ImmunityBio is kind of turning the oncology -- what we know about cancer therapy or the oncology pyramid upside down. So I just want to keep pushing on what you're saying a little bit, which is, what's the mode of failure? How much do we know about the mode of failure around checkpoint inhibitors that suggests the reconstitution of NK cells, restores or allows the suppression or actually the death of the malignant cell? I mean, we're seeing the anecdotal clinical data that you're creating, but I'm just trying to understand how much science and literature is out there that kind of supports this mechanistically. And by the way, thank you so much for the work and the explanation. It's amazing and I understand that you -- this is new ground. You're changing everything. And in many ways, this has to be very exciting and a big threat to Big Pharma based on what you're doing. So we're all really watching and excited. Patrick Soon-Shiong: Thank you. Thank you so much, Jason. So let me step back in terms of while it may -- can be considered new science, excitingly to us, at least, because we've been at this for a decade, I would refer you to, if you go do a PubMed search, either my name, but Jeffrey Schlom, who is the Head of the immuno-oncology program at the National Cancer Institute, people like that, we've been working diligently to understand exactly your core question. What is the mode of failure? Why does checkpoint inhibitors fail? Well, it turns out that the checkpoint inhibitor requires a T cell because the checkpoint inhibitor takes the brakes off the T cell so that the T cell can work. The tumor becomes smart over time and withdraws the receptor for the T cell. So the tumor begins to hide that receptor so the T cell can't even recognize the tumor any longer. And that's the mode of failure, both for BCG as well as for checkpoints, as well as for chemo. There's yet even one more mode of failure. Again, as I said, the checkpoints require T cells. So when you give chemotherapy and when you give radiation, you knock out the T cells, you knock out the NK cells. So there's nothing to take the brakes off. So these fundamental insights has been gleaned now with multiple, multiple both preclinical and clinical studies showing quite conclusively that this is the biology of the system, meaning that the tumor morphs in association with the treatment you give it. You give it chemo, it morphs by making sure that the NK and T cells are gone. You give it radiation, the NK and T cells are gone. You give it T cell activators through checkpoints, it hides itself from the checkpoints. So how do we recover all that? How do we outsmart all of that? Well, it turns out these NK cells look for cells in the tumor that do not have the T cell receptor, what we call the MHC-1 receptor. It turns out as soon as the tumor tries to outsmart the T cell, the NK cell as a backstop is there, has been there for 450 million years to actually kill that particular cell. So imagine then the combination of the NK cell plus the T cell. That's what ANKTIVA does. ANKTIVA proliferates both the NK cell and the T cell and rescues the checkpoint inhibitor. And that's why the 3.055, which is the combination of ANKTIVA plus KEYTRUDA or combination of ANKTIVA plus any checkpoint inhibitor, has such an effective opportunity. That is why ANKTIVA plus BCG works better than just BCG alone. So I think -- thank you for your question, it is a complete paradigm change where we're treating the host rather than the cancer and we're outsmarting this cancer. Jason Kolbert: And Dr. Shiong, one... Patrick Soon-Shiong: Go ahead. Jason Kolbert: One quick follow-up, too, which is when I look at Big Pharma and I look at what Merck and Big Pharma has at stake with checkpoints, it would seem to me that they should be knocking at your door in order to try to lock up their checkpoint in combination with ANKTIVA. And I just wonder, what is the interest level strategically from a business point of view? Do you see Big Pharma coming at you kind of realizing that there's a paradigm shift ahead? Or are they behind the curve on this? Patrick Soon-Shiong: Well, I'm trying to be polite, right? I think -- is Big Pharma behind the curve? I think, look, without my being personal about any Big Pharma organization, the CEOs of Big Pharma really have to look just at what drives the biggest revenue. And as you know, for Merck, it was 50% of the market's sales is $30 billion a year. And there's a lot of -- bunch of me-too copycats and everybody has another checkpoint inhibitor. I don't think anybody has looked at the body as a system. I was very, not just surprised, but impressed by the conversation that Jim Allison and Carl June had, and I'll refer you to either my ex, where I actually cut those 2 conversations just last week that Carl June and Jim Allison had with Michael Milken at the Nixon Conference, where they discussed checkpoint inhibitors or CAR T cells, respectively. And they then brought up the idea that, well, you know what, we have a constellation of other cells surrounding the T cells, like the natural killer cells and the myeloid-derived suppressor cells and we need to think about that. Well, luckily, we've been thinking about that for the last decade. And this composition of all these cells is why ImmunityBio is different. We needed both the ANKTIVA to stimulate and grow the T cells, but you also need to target NK cells that you could infuse off the shelf, but you also need to educate the dendritic cell with our adenovirus and you also have to manufacture supercharged m-ceNK cells. The reason we've not gone with Big Pharma, as you know, I had 2 companies that are sold to Big Pharma because my concern was that if our mission is to cure cancer, you need the combination of all these actors, meaning the ANKTIVA to grow the cells, the dendritic cell, the m-ceNK cells, to all work together in concert in an orchestrated way. So, yes, we have resisted the Big Pharma because our mission is to cure cancer. If you cure cancer, the organic value of a company is very much no different than as you could see what's happening with NVIDIA and Tesla, et cetera. I think you grow an organic value based on change and this is what we plan to do. Just to give you an insight, we're very excited, as we said, about the BCG-naive trial, which we've done the interim analysis. That will change everything with regard to bladder cancer because not just giving BCG alone where you actually will have this failure mode we just discussed, but you give BCG with ANKTIVA, where you have this memory mode, which we now can bring in. And then I think I'll make my final comment as we close this session. I looked into the number of single-arm trials approved by the U.S. FDA from 2005 to 2025. I think many of you will be surprised that according to the AI platforms, 234 -- think about that, 234 single-arm trials have resulted in approvals by the U.S. FDA. So I am very excited by the work we've done in the last decade on our QUILT trials. And then we will be moving forward not only with that, but obviously, confirmatory randomized trials. So I hope, Jason, that answers this question of yours with regard to... Operator: And we have reached the end of the question-and-answer session and this also concludes today's conference call. And as a quick reminder, you can find the recording of the conference in its entirety available on the company's website. We do thank you for your participation and have a great day.
Operator: Ladies and gentlemen, good afternoon. At this time, I would like to welcome everybody to QuickLogic Corporation's Fourth Quarter and Fiscal 2025 Earnings Results Conference Call. As a reminder, today's call is being recorded. I would now like to turn the conference over to Ms. Alison Ziegler of Darrow Associates. Ms. Ziegler, please go ahead. Alison Ziegler: Thank you, operator, and thanks to all of you for joining us. Our speakers today are Brian Faith, President and Chief Executive Officer; and Elias Nader, Senior Vice President and Chief Financial Officer. As a reminder, some of the comments QuickLogic makes today are forward-looking statements that involve risks and uncertainties, including, but not limited to, statements regarding our future profitability and cash flows, expectations regarding our future business and expected revenue growth and statements regarding the timing, milestones and payments related to our government contracts. Actual results may differ due to a variety of factors, including delays in the market acceptance of company's new products, the ability to convert design opportunities into customer revenue, our ability to replace revenue from end-of-life products, the level and timing of customer design activity, the market acceptance of our customers' products, the risk that new orders may not result in future revenues, our ability to introduce and produce new products based on advanced wafer technology on a timely basis, our ability to adequately market the low power, competitive pricing and short time to market of our new products, intense competition by competitors, our ability to hire and retain qualified personnel, changes in product demand or supply, general economic conditions, political events, international trade disputes, natural disasters and other business interruptions that could disrupt supply or delivery of or demand for the company's products and changes in tax rates and exposure to additional tax liabilities. For more detailed discussions of the risks, uncertainties and assumptions that could result in those differences, please refer to the risk factors discussed in QuickLogic's most recently filed periodic reports with the SEC. QuickLogic assumes no obligation to update any forward-looking statements or information, which speak as of the respective dates of any new information or future events. In today's call, we will be reporting non-GAAP financial measures. You may refer to the earnings release we issued today for a detailed reconciliation of our GAAP to non-GAAP results and other financial statements. We have also posted an updated financial table on our IR web page that provides current and historical non-GAAP data. Please note, QuickLogic uses its website, the company blog, corporate X account, Facebook page and LinkedIn page as channels of distribution of information about its business. Such information may be deemed material information, and QuickLogic may use these channels to comply with its disclosure obligations under Regulation FD. A copy of the prepared remarks made on today's call will be posted on QuickLogic's IR web page shortly after the conclusion of today's earnings call. I would now like to turn the call over to Brian. Go ahead, Brian. Brian C. Faith: Thank you, Alison. Good afternoon, everyone, and thank you all for joining our fourth quarter 2025 conference call. While certain contract delays over the course of the year resulted in much lower-than-expected 2025 revenue, we accomplished numerous tangible milestones that set the stage well for 2026 and beyond. Underscoring this is our forecast for nearly 50% sequential revenue growth in Q1, large contracts for very high-density eFPGA Hard IP cores that are in late stages of negotiation and the acceleration of our storefront business model, which we believe will drive a meaningful revenue contribution beginning in 2026. I'll take a few minutes now to update you on these and other accomplishments. In our February 18 press release, we announced QuickLogic was awarded a $13 million tranche for our ongoing contract with the U.S. government that was initiated in 2022. We will begin recognizing revenue from this tranche in Q1. In line with my comments during our last earnings conference call, this tranche funds increased quarterly revenue recognition relative to 2025. In parallel with our U.S. government contract, QuickLogic internally funded the development of an SRH FPGA test chip. Last August, we delivered design files to GlobalFoundries to fabricate our SRH FPGA test chip using its 12LP process. This chip was designed to meet the specific requirements of certain large DIBs that have programs in development today that are good candidates for this device. This investment positions us very well as the only source available today for a U.S. fabricated FPGA that addresses the full spectrum of radiation hardness requirements. We received our SRH FPGA test chip samples earlier in Q1 and announced in a January 14 press release that we have received orders for our SRH FPGA dev kit that enables DIBs to evaluate the test chips. I view this as a strong demand signal and our first tangible step towards what I believe will be hundreds of millions of dollars in potential storefront business for our discrete SRH FPGA during the coming years. Beyond the discrete SRH FPGA market, we are leveraging this test chip to cast a much broader net. In addition to the applications that require strategic radiation hardness that are most likely to design using our storefront discrete SRH FPGA, there are many other applications with less rigorous radiation requirements that may prefer to integrate our SRH eFPGA Hard IP in ASICs. DIBs are already using GlobalFoundries' 12LP fabrication process for various levels of radiation hardness in ASIC designs. By demonstrating our SRH FPGA test chip that is also fabricated on 12LP, we are positioning QuickLogic to address both discrete SRH FPGA requirements as well as provide DIBs with the confidence they need to integrate our SRH eFPGA Hard IP in future ASIC designs. In some cases, these DIBs may also elect to utilize our storefront services for their ASIC designs. The short story here is by leveraging the milestones accomplished in 2025, we believe we are very well positioned to successfully address both discrete and embedded FPGA designs across the full spectrum of radiation hardness requirements. And with the architectural enhancements we implemented last year that are extensible to 12LP, we have significantly expanded our SAM in these markets to include the lucrative applications for very high-density discrete and embedded FPGA. During our last conference call, I stated that a mid-7-figure eFPGA Hard IP contract leveraging Intel 18A was pushed into 2026 due to a delay in government funding. Based on our conversations with this DIB, we remain highly confident we will be awarded this contract once it is funded. While the timing of funding remains uncertain, our discussions with this DIB have expanded to include the potential of QuickLogic providing storefront services for the customer-designed ASIC that will include our eFPGA Hard IP. We expect that we will learn more about the potential expansion to storefront and the timing for this award in the coming months. During this funding delay and the discussions about expanding the scope of our participation, we have worked closely with this DIB on a variety of projects. Through these efforts, we have been awarded 3 smaller Intel 18A contracts that total well over $1 million, and a fourth is pending that will bring the total to nearly $2 million. The first 2 contracts were for Intel 18A test chips. We delivered IP for both in 2025 and expect to receive an allotment of test chips for our internal evaluation next quarter. The third contract was for a 1 million LUT feasibility study that we completed in Q4. A fourth contract, which we anticipate being awarded yet this quarter, leverages the architectural enhancements developed during the 1 million LUT study. In support of this contract, we will deliver Hard IP for a very large Intel 18A eFPGA core, the customer plans to integrate into its ASIC that is targeted for tape-out during the second half of 2026. The architectural enhancements we developed in support of the 1 million LUT study can be leveraged across all advanced fabrication nodes, which we define as 12 nanometers and smaller. These enhancements reduce power consumption, increase performance and reduce the silicon area required for a given size block of our core FPGA technology. In industry terms, the enhancements materially improve our PPA. With these architectural enhancements in place, we can address the lucrative markets that require very high-density eFPGA cores in ASIC designs and very high-density discrete FPGAs. This significantly expands our SAM for eFPGA Hard IP and discrete devices, including our SRH FPGA, chiplets and other storefront opportunities. In addition to these DIB contracts, we are working closely with a large commercial customer on a new Intel 18A contract valued at several million dollars. We originally expected this contract would be awarded in late Q4. However, the customer decided to expand the size of the eFPGA core in their ASIC to provide greater programmable flexibility. While this is a beneficial trend for QuickLogic, it has delayed the contract award. We are currently forecasting this contract will be awarded during Q2. During our November 2025 conference call, I stated that we would soon announce the expansion of our involvement with a DIB that specializes in cybersecurity for strategic and tactical weapon systems. On December 8, we issued a press release announcing Idaho Scientific selected our eFPGA Hard IP for forward-leaning hardware-based cryptographic solutions designed to address mobile, IoT, infrastructure and defense systems. Idaho Scientific has a rich history in leveraging FPGA technology to deliver robust security systems that can adapt quickly to changing external threats without the vulnerabilities that are inherent in software-based solutions. By integrating our eFPGA Hard IP into its secure System on Chip processors, it can further enhance its cryptographic security and address new markets much more quickly and with lower risks and lower costs. Last April, we announced an eFPGA Hard IP contract with a new defense industrial-based customer valued at $1.1 million that will be fabricated on the GF 12LP process. This application utilizes a large block of our eFPGA Hard IP for critical functions, which is a trend we are seeing in designs targeting advanced fabrication nodes. With the cooperation of this DIB and its end customer, we are leveraging the large eFPGA core into a new 7-figure contract that we expect to announce this year. However, due to the fact this contract involves multiple parties, it is taking longer than we expected to finalize. Based on current forecast, we anticipate the contract award later this quarter. In the scope of this new contract, we will be provided with test chips that we will incorporate in an evaluation kit. The evaluation kit, which is currently scheduled for late 2026, will be compatible with common third-party development environments used by both DIBs and commercial customers. This enables these customers to accelerate system-level evaluations and designs that can use either a storefront version of the discrete FPGA or our eFPGA Hard IP in an ASIC. In parallel with these efforts, we're exploring the potential to leverage the FPGA as a chiplet that is co-packaged with one of our partners' microcontrollers. We are already seeing interest from some of our partners on this concept. We completed the initial phase of our digital proof-of-concept chiplet program in 2025 as a strategy to accelerate our storefront chiplet initiative. Internally, we refer to this as POC. With the support of our large strategic partners, we leveraged our existing eFPGA Hard IP and readily available third-party IP to move this program forward rapidly and with minimal investment. With ongoing debates regarding the communications and protocol layers of chiplet interfaces, this POC and our decades of experience in FPGA bridging positions us well as a potential solution to move chiplet designs forward to satisfy what appears to be significant pent-up demand. We were invited to present a paper on our POC at the recent Chiplet Summit and at the Intel Foundry's partners' presentation at the upcoming GOMAC together with Cadence and Trusted Semiconductor solutions. The net takeaway from our presentation at the Chiplet Summit supports our optimism that chiplets will build traction in 2026. The primary hurdles today are interoperability gaps, and we believe a storefront FPGA chiplet is the logical solution for a programmable bridge. Earlier this year, Epson gave us permission to share its case study that supports our claims that using FPGA technology to process algorithms lowers power consumption without sacrificing programmability relative to processing and software. We published the results in a blog post on January 13. Epson's SoC was originally architected to run workloads entirely in software. But as demand for more features and real-time responsiveness grew, power consumption became a limiting factor. Epson's engineering team recognized that moving compute-intensive functions into dedicated hardware could deliver significant efficiency gains, but the hardware solution would need to be capable of adapting to changes in algorithms. This meant the only practical solution would be an eFPGA core integrated inside the SoC. By using our proprietary Australis eFPGA IP Generator, we were able to quickly deliver a customized Hard IP core specifically designed to the SoC application that targeted TSMC's e12n fabrication technology. Adding to our challenge was the fact that this would be our first eFPGA Hard IP for e12n. From design handoff to silicon validation, the IP integrated cleanly into Epson's SoC without the need for re-spins or late-stage design changes. Epson was able to boot, configure and validate the eFPGA subsystem immediately, accelerating its schedule and reducing risk. After final testing, Epson confirmed the resulting design, reduced overall power consumption by 50%. This makes a huge difference for battery-powered systems. Given our success in this design, we believe we are very well positioned for future opportunities with Epson as well as other companies with similar requirements. As I'm sure you noticed in our 8-K, we took a large impairment charge on SensiML. This is due to the standard accounting practice to impair the value of an asset held for sale for a year or longer. During the last year, we have discussed the divestiture of SensiML with microcontroller companies. And in one case, those discussions advanced to due diligence, but were concluded without an agreement. We are in discussions today with a large company where SensiML software potentially presents high value for new AI and drone projects. We cannot provide assurance that this or other discussions will result in a transaction. With that, I will turn the call over to Elias for his presentation of financial data. Elias Nader: Thank you, Brian, and good afternoon, everyone. Total fourth quarter revenue was $3.7 million. This was down 35% from Q4 2024 and up 84% from Q3 2025. New product revenue in Q4 was $2.8 million and mature product revenue was $0.9 million. New product revenue was down 39% from Q4 2024 and up 199% compared to Q3 2025. Mature product revenue was down from $1 million in the fourth quarter of 2024 and $1.1 million in the third quarter of 2025. Non-GAAP gross margin in Q4 was 20.8%. The primary reasons the non-GAAP gross profit margin was below my outlook are $473,000 in inventory reserves and $135,000 in contracted professional services costs attributable to COGS that were not anticipated at the time of our last conference call. The balance is mostly attributable to a higher-than-expected contribution from professional services relative to IP and mature product revenue. Non-GAAP operating expenses in Q4 were approximately $3.5 million. This was $500,000 above the midpoint of our outlook due to the booking of certain executive incentives in Q4. This compares with non-GAAP operating expenses of $2.9 million in the fourth quarter of 2024 and $2.9 million in the third quarter of 2025. Non-GAAP net loss was $2.9 million or $0.17 per share. This compares to a non-GAAP net income of $0.6 million or $0.04 per diluted share in Q4 2024 and a non-GAAP net loss of $3.2 million or $0.19 per share in the third quarter of fiscal 2025. The difference between our GAAP and non-GAAP results is related to noncash stock-based compensation expenses and the noncash impairment charge for SensiML that Brian mentioned. Stock-based compensation for Q4 was $700,000 compared to $900,000 in Q4 2024 and $800,000 in Q3 2025. For the fourth quarter, 3 customers accounted for 10% or more of total revenue. At the close of Q4, total cash was $18.8 million, inclusive of $15 million from our credit facility. This compares with $17.3 million, inclusive of $15 million from our credit facility at the close of Q3 2025. This increase of $1.5 million in net cash is inclusive of $3.2 million raised with our ATM during Q4. Now moving to our guidance and outlook for our fiscal first quarter, which will end on March 29, 2026. Based on backlog and customer forecast, our total revenue guidance for Q1 is $5.5 million, plus or minus 10%. We expect total revenue to be comprised of $4.5 million in new product revenue and $1 million in mature product revenue. For the full year, we anticipate mature product revenue will be approximately $4 million. Based on the anticipated Q1 revenue mix, non-GAAP gross margin for the first quarter is expected to be approximately 45%, plus or minus 5%. For the full year 2026, we are modeling a 57% non-GAAP gross profit margin. However, there are several factors that we believe will weigh on our non-GAAP gross profit margin during the first half of 2026. We are modeling services revenue will be a high percentage of total revenue during the first half. In support of services, we will have costs for software tools that we lease, and we will utilize outside engineering services in addition to our internal resources. A large percentage of these costs are currently being modeled as COGS. We expect some percentage of these costs will be capitalized, but it is unclear at this point the exact percentage. Also during the first half, we will incur certain significant costs associated with large contracts that will be recognized late during the quarter and the offsetting revenue will not be recognized until the following quarter. We're modeling these factors as negatively impacting our non-GAAP gross profit margin during Q1 and Q2. Among the significant costs we are modeling for fiscal 2026 are 3 multi-project wafer or MPW tape-outs. All 3 tape-outs are for products that we intend to sell via our storefront program. The costs associated with 2 of these tape-outs will be fully covered by customer contracts. One of these contracts is already on the books and another is in the very late stages of negotiation. We believe the costs associated with the third tape-out will be covered at least in part by contracts. If contracts are secured in advance of this tape-out, it would be an upside to our full year model. Please note that given the nature of our industry, we may occasionally need to classify certain expenses to COGS versus OpEx or capitalize certain costs. These classifications are related to labor and tooling for IP products -- IP contracts, pardon me. This may cause variability in our quarterly gross margins and operating results that will usually balance out on the operating line. With that in mind, our Q1 non-GAAP operating expense is expected to be approximately $3.2 million, plus or minus 5%. We are expecting full year non-GAAP operating expenses to be approximately $13.5 million. This forecasted growth of 14% in non-GAAP OpEx over 2025 is to support our anticipated revenue growth in 2026. After interest and other income, we are forecasting a Q1 net loss of about $800,000 or a loss of approximately $0.04 per share. The main difference between our GAAP and non-GAAP results is related to noncash stock-based compensation expenses. In Q1, we expect this compensation will be approximately $800,000, which is similar to Q4 2025 and Q1 2025. As a reminder, there will be movements in our stock-based compensation during the year, and it may vary quarter-to-quarter based on the timing of grants. Prior to this conference call, we raised approximately $3.2 million during Q1 using our existing ATM. We anticipate Q1 cash use net of money raised with our ATM will be approximately $1.4 million. Our projected Q1 cash use is negatively impacted by the expected timing of payments attributable to our prime U.S. government contract. The timing of these payments during the year are expected to benefit cash flow during the second half. As a heads up, we are working to secure a new banking partner as we are focused on obtaining more favorable terms that will lower our costs and purposely reduce our line of credit from $20 million to $10 million. Thank you for your time. And with that, I will now turn the call over to Brian for his closing comments. Brian C. Faith: Thank you, Elias. Through hard work, dedication and long hours, the QuickLogic team accomplished numerous strategic milestones in 2025 that has enabled us to enter 2026 on extremely sound footing. Thank you all for what you have accomplished. Our continued performance on our prime U.S. government contract has led to its expansion to a potential $89 million. The addition of GlobalFoundries and its 12LP fabrication process, which is used today by numerous DIBs for a variety of radiation hardness requirements and most recently, the award of a $13 million tranche. Independent of this contract, QuickLogic funded its own strategic radiation hard or SRH discrete FPGA test chip. We now have test chips in hand as well as orders for our SRH FPGA dev kit that will enable DIBs to evaluate our test chip for the full spectrum radiation hardness requirements. This significantly accelerates our ability to win both discrete SRH FPGA designs we can storefront as well as designs that are better suited to embed our SRH eFPGA Hard IP in ASICs. To further accelerate our storefront business model in 2026, we are planning 3 multi-project wafer or MPW tape-outs this year. All 3 tape-outs are for chips that we intend to sell via our storefront program. The cost for 2 of these tape-outs will be fully covered by customer contracts. One of these contracts is already on the books and another is in the very late stages of negotiation. We believe the third tape-out will be covered at least in part by contracts. Through a revenue-generating contract with a customer, we developed architectural enhancements for our core eFPGA technology that enables us to address the lucrative markets for very high density in both discrete and embedded designs. These enhancements were initially developed for Intel 18A and are extensible to all advanced fabrication nodes. Given the sound foundation of the recently awarded U.S. government contract, our outlook for continuing mature business of approximately $4 million in 2026 and the number of pending contracts that are in the late stages of negotiation, we believe we are well positioned to deliver between 50% and 100% revenue growth in 2026. With that, I will turn the call over for questions. Operator: [Operator Instructions] Our first question is from Richard Shannon with Craig-Hallum Capital Group. Richard Shannon: Brian, you kind of saved the best for last year with the outlook for the year here. So I guess I'll start with that topic here and ask for a little bit of help in trying to think about the dollar growth here contributions as we go from '25 to '26 in that 50% to 100% here. I wonder if you could tray that by SFR contribution, defense versus commercial and any other ways you'd like to split that up, please? Brian C. Faith: Sure. So as I said, $4 million of that is going to be our base mature business, which we're very comfortable with at this point for the year. And then, of course, the $13 million tranche for the U.S. government contract, so that's $17 million. If you were to look at the range of 50% to 100%, obviously, we need to get well into the 20s to get to that. And we're expecting that there will be additional contracts that are defense related for either the one of those MPW test ships that I alluded to and/or IP that would be to defense contractors for use in their ASICs. As I mentioned, as we've gone and upgraded our architecture to support higher LUT counts, we're seeing a lot of interest in that type of architecture for some of these process technologies that are tried and true for U.S. defense companies like 18A and 12LP. And then if you go on top of that a little bit further, we see other commercial IP opportunities, one of which I mentioned during the call that we felt was pushed into 2026 from 2025 with that commercial customer specifically because they were looking at making the IP core larger to handle more capability. And so there was a lot of architectural discussions and trade-offs going on that sort of naturally pushed that IP contract into what we're now forecasting to be 2026. But that would be a nondefense customer for that particular IP license. Does that give color to the question, Richard? Richard Shannon: Yes, it does here. So maybe -- I probably should have asked this as a multiple-part question here, but maybe I just want to get a little sense of what are the differences between the high and low end of that range here. I think I heard part of it, but I'd love to hear you put that all together, please. Brian C. Faith: Sure. So the -- if you look at the low end of that range, that would definitely be the base $4 million business, the current tranche that we have for the government contract and I'd say a couple of IP licenses, one of which would be useful for one of these MPW tape-outs. And then the higher end or even exceeding the higher end of that would be as we layer additional IP licenses on top of that and perhaps even further funding on the government contract. Richard Shannon: Okay. That is helpful. Maybe a couple of other questions for me here. So big picture, when we look at strategic rad-hard, both -- I asked this question both as FPGAs as well as the opportunity to storefronts for ASICs to include your IP here. What do we think -- or how do we think about timing of wins with any of these DIBs for, I think, substantial programs that I think was the intention of this program all along here. Help us understand what you're expecting to happen this year versus in the following years. Brian C. Faith: So this year, we're expecting evaluations to take place using our test chips, either ours or the government-funded one and then getting to some sort of architecture understanding with these DIBs by the end of this year, this fiscal year, next year, starting actual development activity with those chips. So to be clear, this year is very much an evaluation year. All of these companies are very risk-averse from a technical perspective. And so they need the time to dig into the test chip and make sure that they understand it and are comfortable with the tools that go along with it, meaning our software tools and the device and the dev kits themselves. So meaning exiting this year with their positive feedback and sort of thumbs up that they want to move forward with architecture insertion next year. Richard Shannon: Okay. That is helpful perspective. Maybe jumping back quickly to the thought process for the year here. You mentioned a sales number and then Elias also gave us some other numbers. I wasn't able to put those together here to understand whether we're going to be net income positive or cash flow positive this year. Maybe you can help us understand your thought process either both at the low and the high end of your sales guidance range. Elias Nader: Well, I'll tell you if it's -- we're expecting cash flow positive on the second half of the year for sure, not the first half, Richard. Richard Shannon: Okay. And how about net income or EPS? What's that looking like on the bottom line? Elias Nader: Same. I think we'll be on the high end in the second half of the year and not the first half as well. But I expect to be both positive on net income in the second half of the year. Richard Shannon: Okay. That is helpful. And one last question for me, and I'll jump out of the line here. Brian, you mentioned targeting 3 MPWs this year. And I think I've lost a couple or some of the details you offered regarding that. But maybe you can help us understand the dynamics here? And is this something that's kind of follow-on to the ones you got on last year? Or are these blossoming opportunities that you expect to continue to do here? Like how should we think about these? And I can't remember also, did you mention the process node or even foundries that those would be on. Brian C. Faith: Yes. We did not mention process technology for these, and I'm not going to. But they are based on process technologies that we already support. So we don't have to do an actual physical port to a new process to execute on these. And I think we're trying to convey that 2 of these will be fully covered by customer contracts and one of them would be partially covered by the contract. The key here being that there's going to be end customers associated with all 3 of them. They are the driving force behind the definition of these. And in some cases, like we mentioned, either partial or fully funding the development of them during the year. Operator: Our next question is from Neil Young with Needham & Company. Neil Young: The first question, I wanted to ask about the high-performance data center win that you talked about in the press release. Maybe if you could dig a little bit deeper on that, share what the application is? Just any other color, I think, would be interesting. Brian C. Faith: Sure. So this is a 12-nanometer design, and it's for an eFPGA IP core. The eFPGA IP core for this particular one is a meaningful percent of the die size, meaning it's not just an insurance policy, it's actually delivering capability that they've architected in from day 1 to be very important for the functionality of this chip. Because it's not a 3- or 4-nanometer chip, obviously, it's not going to be a GPU class device. But there's a lot of peripheral components in these data center printed circuit boards that surround those types of devices. And this would be an example of one of those, let's call it, peripheral chips that are still important and critical for overall functionality, but not at the core of the compute. So we're continuing to execute on that, continuing our engagement with the customer and hopefully supporting their tape-out at some point later this year. The nice thing about it -- I'm glad you brought it up, Neil, because this is sort of the -- probably the largest IP contract we've had in recent times for a nondefense application. And a lot of people have asked us repeatedly, are you going to be beyond just defense? And we said, yes. And I think it's glad that we're able to talk about this particular example because it clearly is a nondefense application, and we believe hopefully the start of other nondefense applications as well. The other one I'll mention is Epson, right? We gave Epson more airtime today in the call based on that blog. That's also an example of a nondefense use. So it's been a while getting to more commercial customers, but I think we're starting to see a little bit more momentum and interest there now that we have these other process technologies supported. Neil Young: That makes sense. The other question I had, I'm just interested in the competitive dynamics. So you talked about the potential storefront business being pretty large for this discrete strategic rad-hard FPGA during the coming year and the year after that. I was curious if the competition differs at all from your traditional eFPGA IP that you've talked about. So just anything different on the competition front would be helpful, just understanding that. Brian C. Faith: Sure. So if we go up to 50,000 feet and we say, what's the programmable logic umbrella in total, there's eFPGA and there's FPGAs. And most people know the FPGA competitors, or I guess, the peers, if you will, some of them not really competitors, would be Xilinx and Altera and the FPGA division of Microchip and Lattice and Efinix and Achronix. Those are sort of the companies that do discrete FPGA devices. Now of those, if we think about what are the ones that are U.S.-based and have a defense focus and [ 2 ] devices that would fall into this category of some level of radiation hardness, you can kind of go and zoom in and say, okay, well, today, Microchip has devices from their Actel acquisition long ago that do this rad-tolerant, to some extent, rad-hard. Xilinx has some rad-tolerant, I think 1 rad-hard device. I think Altera has some, although I admit I haven't looked at their product portfolio recently. And I think Lattice would like to get into defense and doesn't really have anything today in that area. I don't think Achronix has. I think Efinix is mostly focused on Asia. So you already whittle down pretty closely to just a couple of people that do any level of serious radiation hardness or tolerance. But when you compare and you say, okay, well, let me move the bar and say, it has to be manufactured onshore and it's got to meet strategic levels. I would challenge anybody to go to the websites of those companies I just mentioned and point to a device that meets those requirements. I think it's an all set. So I think we're really well positioned in that sense as we continue to execute on this program. Now the other part of the programmable logic umbrella, as I mentioned, is eFPGA IP. And none of those companies that I just mentioned have a real eFPGA IP business. They want to sell new devices because they view IP as undermining device sales, I would imagine. From an IP perspective, there's really just a couple of companies that have done IP in the last few years besides QuickLogic. One is called Flex Logix that was acquired last year by Analog Devices and made captive, so they don't do licensing anymore. And now there is a French start-up company called Menta and they have licensable IP. And then there's a couple of really tiny academically oriented companies that I won't even give airtime to today. So if you compare us against one company, Menta, again, I go back to we're a more established company. We're doing business with all these big companies. We have the spectrum of IP2 devices. We're a U.S. company, products made in the U.S. So we have a lot of, I would say, differentiation at that level compared to Menta. But the more important one is when you dig into the technical details, Menta is a soft IP company. And so soft IP means that when you're licensing IP to a customer, they're not just getting soft IP, they're getting a big boatload of work to make it a hard IP before they put it into their ASIC. And with that boatload of work comes a lot of risk and time and cost. And when you're a hard IP supplier like we are, we take care of all that. They don't have to worry about designing anything. They just need to think about how do I architect and use this IP. And so there's a huge difference in the engagement model between us and Menta. And that's, I think, reflected in the wins that we're announcing, who is using us. It's also reflected in the average selling price of our IP, right? We're not doing soft IP that is a $20,000 IP that comes with it a lot of work. You're licensing something for quite a bit more money, but we're taking care of that work and risk for the customer. And that's the huge difference between us and Menta as far as the eFPGA IP goes. Hopefully, that helps as an update on the competitive [ metrics ]. Operator: Our next question is from Tyler Burmeister with Lake Street Capital Markets. Tyler Burmeister: So first, great to see the next tranche of the U.S. SRH development program, the $13 million you got as well as the announcement that the program had expanded with GlobalFoundries process. Maybe it's a little bit of a follow-on from an earlier question. I think you said potentially in the high end of expectations this year, you could see more funding. But to the extent you're able to, I'm just wondering, could you give any color on what next milestones we should be expecting or looking forward to from that program? Brian C. Faith: Sure. I'm asked this question a lot, Tyler. And unfortunately, I can't give programmatic details out on the program. But what I can say is I'll go back to something I was given permission to say when we first got this contract in 2022, which is that the scope of this whole contract contemplates 2 devices, a test chip and a final chip. And so we were able to say, I think it was in December press release when we announced the contract ceiling expansion to $89 million and adding GlobalFoundries that we had, in fact, taped out a test chip for that contract. So you can sort of check one off the list there of the 2. So you can imagine I think it's a natural extension that with more funding, especially the rate -- the increase in the funding from this year over last year and the fact we've already done 1 but not 2 chips that we're embarking on that second chip development now. And unfortunately, I'm not going to be able to give really specific details on what's in the chip and when we're taping it out and when it's going to come out, but it's all in line with our obligations to the government for this contract. Tyler Burmeister: Yes. That's perfect. I appreciate the extra color there. And then the full year guidance was great, and I appreciate the details around that. Just putting the pieces together, strong Q1 and a number of initiatives kind of coming together at the same time here. Would it be reasonable to potentially expect some lumpiness through the year, maybe Q2 sequentially down? Or do you think you could grow revenue sequentially kind of linearly through the year? Brian C. Faith: So we actually think that Q1 is going to be the low point for the year, right? We'll give that breadcrumb, that the other quarters will be over Q1. There may be some lumpiness. And the reason why I say maybe is that when you're dealing with contracts that are $2 million, $3 million each, especially if it's IP and it's recognized on delivery, then there's some natural lumpiness to when we get the contract and we make the delivery in a particular quarter, right? So there may be lumpiness from that perspective. But I think we're trying to give this outlook that Q1 is actually the low point for the year, that it's going to be up from here. Operator: Our next question is from Gus Richard with Northland Capital Markets. Auguste Richard: Just on Q3, you guys mentioned a $3 million commercial contract that you expected the revenue in Q4, didn't look like you did. Is that part of the guide for Q1? Brian C. Faith: No, it's not. In this call, we said that we're expecting or forecasting that to be contracted in Q2. And so that $3 million is not part of the Q1 guide. The other thing I'll add, Gus, is when we said initially Q3 and then in Q4, we said it may be in there or not, and it clearly got pushed. This is the one where we had said that now what they're looking at is a larger eFPGA core. And because they're looking at larger cores, they want to basically take more time on the technical feasibility side and diligence before we execute a contract. But it's not in the Q1 guide to be very clear. Auguste Richard: Okay. And that contract is upside if I heard you correctly. Brian C. Faith: I'm sorry, could you... Auguste Richard: The value of the contract was increased. Brian C. Faith: Yes. Well, we said the size of the core has increased. We didn't say the value of it has increased, but the amount of eFPGA logic that they want is definitely larger than what they had originally thought of. Auguste Richard: I understand. And then my next question is for the test chip that you guys taped out and have gotten samples back and you're getting orders for the test development boards. When do you expect those to start to ship? And how much revenue do you think you can generate and from how many customers? Brian C. Faith: Several questions in there. Let me unpack that. So -- and for clarity, we've talked about 2 test chip tape-outs now, right, publicly. We've talked about the government-funded one. We've talked about the self-funded one. So because I can't give updates on the government one by my obligations to the government, I can just talk about our self-funded one. So on the self-funded one, we did receive the chips in Q1. I'd say the fab was a little bit later than what we had planned on for that. Our engineering team is working on those chips right now and going through the validation process. And what I've said previously is that as soon as we have those validated, then we'll make sure that we can get those out to fulfill the test chip for the dev kit orders. And I think we've said previously, we'd love to get it out by the end of Q1. If it's into Q2, then that's fine, too, because we intentionally did this test chip tape-out. So we gave ourselves a lot of buffer in terms of time for us to get these into the hands of the DIB for them to do the evaluations that they need to do to get comfortable. And I think your last question, Gus, there was how many customers. So the nature of this type of device being rad-hard means that there aren't a lot of people that you're actually allowed to sell it to, clearly U.S.-based. And the nature of this is really for the strategic defense systems, and there's only a handful of those that actually design for any kind of subsystem in those devices or systems, I should say. So our target is less than 5 because those 5 really, really matter in terms of these major systems. Auguste Richard: Got it. And then my last one is on gross margins. How do we think about the trajectory of gross margins going through the year? Non-GAAP 45% for the first quarter, does that step up at all in the second quarter and -- or is it more of a linear ramp? How do we think about that? Elias Nader: Q1, we said 45%, give or take. Q2 would most likely be around the same flattish. And Q3 and Q4, I see an upside big time on gross margins. I have to say, over the time I've been here, this has been the most difficult piece of the puzzle to gauge and forecast, mainly because of the way we capitalize certain COGS and move certain things into OpEx and otherwise. So it's been a very tough exercise to do, but we're getting there. But overall, I see a decent 57% for the full year in terms of gross margin that I said in the script. Operator: Our next question is from Rick Neaton with Rivershore Investment Research. Richard Neaton: I just had one question about chiplets. And you're talking about your bridging technology that you've used in the past with programmable logic. How do you see these chiplet applications using programmable logic in what end uses are some of these being contemplated? And when you say -- the second part of the question is on bridging, are you talking about bridging on the chiplet or between chiplets? Brian C. Faith: Okay. So 2 questions there. One is really the use case, the end applications for chiplets? And then one is, I guess, how are they partitioned within these packages? Is it all resident in one chiplet? Or is it multiple chiplets to solve the problem, right? Richard Neaton: Right, right. Are you bridging between layers on a chiplet or are you bridging between multilayer chiplets? I'm just curious. Brian C. Faith: I think -- yes. No, I can elaborate on some of this. So on the -- let's start with the end markets and use cases for the chiplets. So I think we've talked about this before, but aerospace and defense is a really big market for chiplets because they don't want to have to do a bunch of custom ASICs if they can avoid it because their volumes are not terribly large, and it costs a lot of money to go off and do these custom ASICs. So to the extent they can make things heterogeneous inside the package, it's going to really help offset their program costs for development. So eFPGA in that case, you can almost look at where are FPGAs used today in those systems and that becoming a chiplet and connecting them with other devices that FPGAs interface with in those systems today. So in those systems today, you generally have some sort of big processor, could be a flight computer. The FPGA technology today is very useful for signals that are coming in from sensors, doing preprocessing on those signals and packetizing them in a way that the actual CPU or SoC can process on without having to redo a lot of that capability that the FPGA is doing. Because remember, FPGAs are very good at real-time, highly parallelized computation. So that's sort of the overall defense use case for these. And again, you can imagine that there's a lot of software that's already been written in the defense industry for certain processor architectures, there's already a lot of FPGAs used. Packaging those die or capabilities inside one package actually saves on the A and PPA, which is area, right? A lot of these systems are going for more miniaturization and they're looking at packaging these things in a single package to do that. So that's the big use case there. I'd say outside of defense, there's a lot of interest for security or things that are sort of protected from this post-quantum era of computing for really just protecting systems from a cyber perspective. And eFPGA or FPGA is good for that because in the event that anything is hacked in the future, if the hardware itself is programmable, then you can reprogram whatever algorithm that you have in those to adapt to that threat at the time. And so there's interest in that as far as making these systems more trusted. And I don't mean trusted from a defense perspective, I mean trusted in the sense that you can trust that it's running what it's supposed to be running and nothing more than that. So that's also an interesting use case that's coming up for eFPGA chiplets. Again, the same idea being they've got a lot of software and infrastructure already. How can they adapt that existing infrastructure by adding a little bit of programmability and not redesigning all the ASICs. So that's a good use for an eFPGA chiplet. Now as far as the bridging goes, you can see from these examples that we're not replacing the whole SoC with this eFPGA. It's basically taking the capability of a discrete FPGA and getting it inside the same package as what the SoC is or the ASIC is in their system architecture. And then as far as the actual bridging goes, chiplets is kind of like if you go back to when USB or PCI was first being broadly adopted in the PC or laptop era of growth, that sort of happened. That was successful because everybody was able to standardize on a common interface, right? PCI is PCI, USB is USB. You design a peripheral with that, you go to the plug fest, everything works, everybody is happy. In chiplets, it's a lot more complicated than that because you have these different flavors of UCIe as an example, and you have a bunch of wires, BOW, and they're incompatible. And so there isn't this notion of like universal compatibility. And then if you dig even further into the details, if you want to, there's a difference between the physical layer and the protocol layer, right? So you can imagine like a physical layer is me writing a note on a piece of paper and passing it to you, right? I pass the paper, you receive it, we're all good. But if I'm writing in a different language than what you understand, it's going to look like gibberish when you try to read that paper. And the same thing is happening with UCIe, where the physical layers may be compatible, right? UCIe cores on both sides, but the protocol that people are putting over UCIe are different. And that's exacerbated by people doing ASICs at different points in time. So one of the things with our eFPGA is we're thinking, well, that hardware is actually programmable. So as long as the physical layers are connecting and as long as you have enough gates in our FPGA, you can probably program them to add some level of compatibility or in my paper analogy like a translator. And so we're hopeful that some of those will actually come to fruition based on that value proposition. And we're starting to get some positive feedback on that idea based on what we heard at the Chiplet Summit last week, and I think what we're going to hear at GOMAC next week in Louisiana when we're there presenting. Does that help the use cases? Richard Neaton: Yes. No, I appreciate the color. Operator: Our final question is a follow-up from Richard Shannon with Craig-Hallum Capital Group. Richard Shannon: Just one last question for me. Brian, again, hitting on the topic of strategic rad-hard and actually probably want to extend this maybe to rad-hard given your comments on the call today here. But how many distinct programs are you bidding on here? I know you're not going to tell us an exact number, but I was hoping you could use language like a couple of few, several over a dozen, that sort of thing here. Just help us get a sense of the number of programs you're bidding on. Brian C. Faith: I would say the immediate ones that are the highest level of radiation hardness, there are less than 5 major programs, but there are several subsystems within each major program that we would like to be inserted into. So I guess you could -- what you hear about there is the total number of socket opportunities in that kind of part of land. And that would be I don't know, 10 to 20 total. And that's for the highest level of radiation, which has been our focus because that's the greatest area of differentiation. If you start relaxing the radiation hardness requirements, obviously, you can get into a lot of new applications around space. And there's going to be tens of applications in space. But the initial focus, especially for these first dev kit orders is going to be the ones that are the higher levels of radiation where we don't have a competition at this point. Richard Shannon: That's great perspective, Brian. Operator: There are no further questions. I would like to turn the conference back over to Brian Faith for closing remarks. Brian C. Faith: Thank you. And we will provide a technical presentation on our chiplet POC at the Intel Foundry's partners' presentation at the upcoming GOMAC, March 10, together with Cadence and Trusted Semiconductor Solutions. In April, we will exhibit at HEART, which is another government radiation effects-oriented conference and also exhibit and present at IP SoC Days in Silicon Valley, again, in April. Thank you for your support and for joining us today, and we'll talk with you next time. Thank you. Goodbye. Operator: Thank you. This will conclude today's conference. You may disconnect at this time, and thank you for your participation.
Pieter Engelbrecht: Good morning, ladies and gentlemen. It's an absolute pleasure for us that you take some of your valuable time to give us roughly an hour of your time that we can tell you a little bit about what has transpired in H1 of this financial year. I'm going to just do a very quick synopsis, and then I'm going to hand over to Anton, of course. He'll take you through the detail, which is very important for you. I know the detailed numbers. I know you've read the sense and understand all of that, but he'll color it in for you to make sure your models are in place. And then I'm just going to end off by saying a little bit about what we've been doing. Not everything is perfect. So we'll also tell you what is not great. So the sales growth was 7.2%. You have read that. Now almost ZAR 137 billion for the half year, adding ZAR 9.2 billion in sales for the 6 months. The trading profit grown by 5.9% to ZAR 7.7 billion. And probably the most telling number is the fact that the South African supermarkets achieved a trading margin of 6.2%. And for a value trader, I think that is an outstanding number. And I want to, if I may ask, to just think about that number a little bit that it sits with you that, that is the one that we consistently and Anton will talk about it, where we consistently try and achieve. And that is not something that happens because we increase prices and -- it happens because of the efficiencies and how efficient this business is run. And that's my emphasis on the 6.2% margin. The ROIC has increased again. I know a lot of you are interested in that. We can go back in history. We can talk a lot about what if African never happened and all the investments we made there, the ROIC would have been probably much higher. But that's not the point. I think what is important is the fact that we're continuously improving on that number. From last year 17% to now over 19%, I think needs acknowledgment to the team. Thank you very much for that. Headline earnings per share up over 7%. If one thinks about the last decade, how many challenges there have been, macro challenges, et cetera, that Shoprite never failed to pay a dividend to its shareholders. And we are very pleased again to be able to increase our dividend payment by 7.7% this year again. In terms of operationally, what's happening in our business, again, for the sixth year in a row, the Shoprite Group have managed to gain market share to the value of about ZAR 3 billion additional. We're still growing customers. We're still moving volume. And we're serving more than 100 million customers in a month. It's an enormous responsibility. I tend to say that there's probably 2 most difficult businesses to please is airlines and the retailers because you have such a large number of customers to please everyone is almost not possible, but not for a lack of trying. We certainly try to please every single one. That's why we think about things like the ZAR 1 items that I will cover a little bit later on also. The 6 months was really marked by low inflation. And in the month of December, actually, the festive period, we went into deflation. There were like over 14,000 items cheaper than the previous year. And I know there was a lot of reports in the media around a very slow or subdued Black Friday but we certainly didn't experience it. We had a record Black Friday. We had a record festive season, so much so that the Shoprite Group have outgrown the market 5.3x during that period. We remain South Africa's largest employer. Again, I cannot almost remember a year that Shoprite did not increase its employment or number of employees. So it's 1,711. That excludes all the contractors. You must always remember that. There's no security, no cleaning, no trolley collectors. And all the peripheral businesses that benefits as Shoprite grows. Where are we in terms of our strategy. I said this to you for the last 10 years, I think. We don't do knee-jerk. We have a strategy, and we deliver on it as best as we possibly can with the best execution that we can. That makes the difference. Yes, we make small adjustments. Of course, we have to. Market dynamic changes. The one thing you will not hear us saying is trying to make excuses in terms of we never do make excuse, good or bad. We don't praise and we don't complain. We live what we are dealt with, we deal with the markets, and we deliver as best as we possibly can. And that is what 170,000 people of Shoprite does every day. One of the things that I'm extremely proud of was the efficiencies on the supply chain. Now we currently are running an on-shelf availability of stock of over 98%. Obviously, we have to carry a lot of stock in our distribution centers to make good for service levels that are not supporting the kind of volume requirements that we have during promotions. So at store level, I mean, that percentage is closer to 6%, which I think in global context are comparing quite favorably. In the past 6 months, we had our fair share of challenges in our non-RSA business units, well written and publicized around what happened in Mozambique. There are also good things. There's a big improvement on the electricity side in Zambia, which is our largest contributor in that segment. But for the 6 months, we did experience a lower level of return from our non-RSA business. Although we also have continued to rationalize, which Anton will clarify on Malawi and Ghana, but they will come through in his numbers when he explains about continued and discontinued businesses. Then this is what we do. We really live by this that we are uplifting lives every day. And we say that not only because of our customers, yes, that is our primary, primary focus that, yes, we want to improve their lives. And that's why we are thinking every day how we can lower prices, how we can make something cheaper, we change the packaging, the transport, whatever it is to make their lives better, but also our own people. That's the Shoprite people, the people on this side of the line. So at this point, it would be very wrong for me not to thank each and every one of the 170,000 people at Shoprite for what they do every day, uplifting lives. It is an incredibly hard job to do. But the one thing is for sure is that we appreciate it. And I think in most cases, our customers also appreciate that. So thank you to you all. I'm going to hand you over now to Anton, who I'm sure will make the numbers very clear and understandable for your benefit. So thanks, Anton. Anton de Bruyn: Thank you, Pieter, for that introduction. In my section of the presentation, I will focus on the top line drivers, the gross margin and cost dynamics within the business before touching on capital allocation and our outlook for the second half. As part of our enhanced segmental reporting, we introduced additional disclosures for the first time during this year. And here, you can go and look in Note 3 of the financial statements, where we've spoken about the expanded information and notably more about gross margin per segment. It's important to revisit certain factors that forms part of the first half of the 2025 base, which impacted some of our measurements. And here, I'm specifically referring to the impact of the Pingo increase in our shareholding as well as the discontinuation of our furniture business and then the closure of our Ghana and Malawi operations, where we saw the restatement of our 2025 financial year results. Throughout my section of the presentation, I will be referring to the results from continued operations. The Pingo transaction was concluded during the first 3 months of the 2025 financial year. And post the effective date of the acquisition, the revenues earned from Sixty60 delivery fees as well as the subscription income, which we reported previously as part of alt revenue are now classified as part of Supermarkets RSA sales. The associated cost of delivery was shown previously as part of other expenses, but is now classified as part of cost of sales, and you'll see that impact as well coming through in terms of our gross margins. This was a reclassification and on a restatement for accounting treatment. Other significant transactions the group embarked on was the sale of the furniture business to Pepkor, which included the RSA as well as the non-RSA assets, but it didn't include the operations that we had within Angola and Mozambique. These operations were classified as discontinued operations during -- in terms of IFRS 5, and we have subsequently restated our income statement numbers for the comparative period. In terms of timing to conclude on these transactions, especially relating to the RSA assets, following the recent court proceedings and the intervention by a competitor, the transaction is now expected to be heard by the competition tribunal in the coming months. We do not foresee that we will be able to conclude this part of the transaction during the 2026 financial year. When we then look at the non-RSA operations relating to this transaction, that was concluded as part of our H1 results and the proceeds from that transaction equated to ZAR 568 million, which we did receive in January 2026. Regarding the Mozambique and Angola operations, we ceased our trading already within our furniture Mozambique business during the second half of the prior financial year. And the Angola business is we are in the final stages of actually transferring the assets to a new operator. Then referring to our Ghana and Malawi operations, both were classified as discontinued during the second half of the 2025 financial year and this resulted in the restatement in our comparative results. In terms of the sale of assets on our Ghana operations, that's now concluded with the proceeds already as part of our base year or part of first half reporting. In terms of the Malawi assets also concluded on, and I expect that to be the proceeds from that transaction we will receive during the third quarter of our financial year. For a full analysis on the impact of the discontinued operations and the results relating to the discontinued operations, we've done a full analysis in Note 2 and 6 to the financial statements. Now Pieter has spoken to quite a few of these numbers in his opening comments. I would just like to highlight 1 or 2 of these. It's important to note that we did manage to contain our cost growth to around 6.6% on prior year. And that really helped us to achieve and maintain our trading margin of 5.7% for the first half. Adjusted ROIC and return on equity have shown consistent growth over recent reporting periods. And I think we're very happy with the fact that we could exceed our weighted average cost of capital that reported at 12.3% by respectively, 7.2% and 15.5% from a return on equity point of view. Now this would not have been possible if it wasn't for our disciplined approach on -- and our continued investment across our expanding store footprint, which I will touch on a little bit later, as well as our continued investment within our supply chain. And then, of course, our digital platforms, which we see continue driving value for the operations and the business. Very proud to be able to again declare a dividend where we saw an increase of 7.7% to ZAR 3.07, and that is very much in line with our growth, our 7.9% growth within our diluted headline earnings per share from continued operations. If we then turn to sales, Pieter will talk a lot about the sales and what is currently driving especially the sales growth within the Supermarkets RSA basis. Maybe just from an overview and top line point of view, we saw growth of 7.2% on the back of opening of 273 new stores during the last 12 months. with like-for-like sales growth of 2.7%. Within the RSA Supermarkets business, we saw a 7.1% sales growth to ZAR 115 billion, and that was on the back of the opening of 262 new stores over the last 12 months. Within our core brands, we saw a growth of 5.1% in the Shoprite and Usave, including our liquor business. And then Checkers, we saw a very strong performance in terms of that 8.9% growth, including our Liquor business. Important to note is that as part of our Supermarkets RSA segment and especially our Checkers and Checkers Hyper banners, we include our Sixty60 sales growth, where we have reported again a growth of around 34.6% with the number now measuring around ZAR 11.9 billion in turnover. If I turn to the adjacent businesses, and I mean, we've given you the list of all the various brands that are included as a part of that adjacent businesses. We saw a growth of 70.9% to very close to ZAR 1 billion for the first 6 months of the financial year. I think notably, when we also look at the store number growth is the improvement and the growth that we saw, especially in our Petshop Science business. Supermarkets non-RSA, very strong growth in terms of rand cent growth of 12.1% to around ZAR 11.5 billion. It's on the back of a like-for-like growth of 10.4% and then also constant currency growth of 9.5%. Internal food inflation measured across the regions were 3.2%. We opened a net 15 new stores during the 12-month period. We then look at our other operating segments, which includes our franchise business as well as our Medirite and Transpharm business units. Franchise growth was muted at 1.7%. And here, I have to flag, obviously, the lower inflation environment as well as a net decrease of 9 stores during the last 12 months. Turning to our Medirite and Transpharm business. We saw some very positive numbers and growth within that part of our business where we saw a growth of 7.9%. And again, Pieter will unpack that in much more detail as part of his operational segment. Now in the past, we've given guidance around space growth of between 5% to 6%. Our space growth in the current period was reported at 7.3% and that was really driven by the 4 hypers and the increase that we saw within the Checkers Hyper business units, where we now have 42 hypers. If I have to look at our store opening program for the second half of the financial year, where we plan to open 123 stores, I think we will return again to that 5.5% to 6% space growth. We saw a nice growth within our Shoprite, Usave and Liquor business within those banners where we added 133 stores and then also Checkers, we saw some nice growth of 76 stores added to the portfolio now of 714 stores. Within the adjacent businesses, we added 53 stores, of which 45 of those 53 new stores related to our Petshop Science business. Store openings for the second half of the year at this stage is planned for around 123 stores. Turning then to our total income, where we saw growth of 6.5% to ZAR 34.8 billion. Our gross profit increased by 7.1%. And very pleasingly, we saw that increase was in line with our sales growth of 7.2%. As I mentioned in my opening statement, we are now giving our gross profit and gross margin percentages per segment, and I will deal with that on the next slide. If we look at old revenue, we saw a decline of 2.1%, but that was really impacted as a result of the Pingo reclassification in the prior year 3 months. And again, we do that, and I will share a lot more information in more detail in the next 2 slides. We also saw a decrease in our interest revenue of about 9.8% to ZAR 101 million. That decline is mainly attributable to the maturing of ZAR 345 million worth of Angolan government bonds and bills. The positive news is that we did manage to repatriate $12.4 million of these funds to our operations in Mauritius, and it now forms part of our cash and cash equivalents. Important to note that the impact of this interest revenue decline also impacted the trading profit within the non-RSA segment, which I will deal with when we get to the trading profit slide. The majority of the share of profits within our equity accounted investments derive from our Retail Logistics Fund, which is the owner of some of our key distribution centers. And here, I referred to where we add also the Wells Estate distribution center in the last financial year as well as the expansion within our Canelands and Riverfields DCs. As part of our efforts to enhance segmental disclosures, we are, for the first time, providing the market with gross profit information at this level of detail. Supermarkets RSA operations increased gross profit by 6.5% to ZAR 29.2 billion, resulting in a gross margin of 25.3%. Now Pieter spoke about the value retailer in his opening comments. And I think here, I would like to add in terms of if we look at our RSA supermarkets operation from a value retailer point of view, the achievement of a 25.3% gross margin in a low inflation environment is a fantastic result for the group. This outcome would, however, not be possible also without the investments in our digital pricing optimization tools and this additional capital that we supported, the supply chain expansion. Additional to the low inflation environment, the decrease of 20 basis points within the Supermarkets RSA segment was also impacted by the fact that the full delivery cost relating to our Sixty60 operations now form part of cost of sales, where in the previous period, we only had 3 months included as part of that cost. I do, however, expect to see a smaller impact as we progress through the financial year. Gross margins in Supermarkets non-RSA did come under pressure, mainly driven by our business interruptions in Mozambique as well as continued shortages within foreign currency across the region, which limited the availability of imported product ranges. We are, however, pleased with the improved margins that we saw within the pharma operations that forms part of our other operating segments, and this really supports the planned expansion that Pieter spoke about within the previous results presentation within our pharma offering. We then turn to alt revenue. Excluding the impact of the Pingo reclassification we spoke about earlier, growth would have been 4.9%. We look at some of the key items within alt revenue, commissions received from our various financial service business units increased by 9.2% to ZAR 676 million. Despite a growing competition within the financial services market, our money market kiosks in the Checkers and the Shoprite stores have seen an increase in activity within the continued launch of new product offerings and the growth that we saw within the payouts relating to government grants, which obviously benefits the group over that period in the month. Our marketing and media income line and revenue line increased by 15.6% on the back of growth within our Rainmaker Media business as well as our Rex Insight platform. Operating leases and income increased marginally by 1.7%. Over time, we've talked a lot about how we also consolidate our property portfolio, and this was as a result of our continued sale of owned income-generating properties during the period. Franchise fees received decreased by 2%, noting the impact of the subdued current inflation environment on the franchise division sales, which obviously impacted that performance. The sundry revenue decreased by 14%, and that was really on the back of lower dividends received from our insurance sale during the first half, but I do expect that to actually rectify in the second half as our claims history or our claims -- current claims for the year is looking very positive. If we then turn to total expenses, where we saw a growth of 6.6% to ZAR 27 billion. Some of the major lines impacting our expense growth is depreciation and amortization, which increased by 7.9% to ZAR 4.2 billion. The growth that we saw is a combination of the increase in new stores that we opened during the last 12 months, but also our store renewals that's impacted by our right-of-use asset in terms of IFRS 16. Our aim and our target is still to be at a depreciation and amortization rate to sales of around 3%. Our current period, we were sitting at 3.1%. With the lower capital spend expectation, which I will talk about later in the presentation for the full year, I do expect us actually to come in target on that 3% depreciation to sales ratio. Important to note is the PPE that we use in terms of our stores. We saw a growth of depreciation of 8.8% to ZAR 1.9 billion. And then if I look at the IFRS 16 portion of depreciation, we saw a 16.3% to ZAR 2.6 billion. What is positive for me at this stage around depreciation is that we did see a decrease if I compare to the prior year, where our growth was around 17% to 18% to the current 7.9%, which is already showing that some of that expansion within the supply chain that we had to carry last year is now getting into the base. From an employee benefits point of view, our growth was 8.6%, and there were really 3 reasons for that. The main reason is expansion within the business. And again, I'm pleased with the fact that we could slow the growth down from the prior year 10.8% to the current year 8.6%. The group also continued to invest in our staff, where we spent more than ZAR 500 million in training and again contributed more than ZAR 50 million to the government-supported youth employment scheme. ZAR 155 million was also expensed in the current period in favor of our employees that forms part of our Shoprite Employee Trust with equivalent awards also being paid out to our non-RSA beneficiaries. If we then look at other operating expenses, where we saw a growth of 4.5%. Some of the major lines that form part of that growth is water and electricity, where we saw an increase of 17.3%. I've mentioned quite a few times in the past that I would love us to get back to that 2% water and electricity ratio to sales. But currently, we're sitting at 2.2%, and that was on the back of the 12.7% increase in our national energy regulator that obviously now forms part of our cost base. The positive for us is that we did have a reduction in our diesel costs, where we saw a reduction from ZAR 158 million in the prior year to ZAR 139 million in the current year. Other major expenses, we saw advertising costs increasing by 6.6% to ZAR 2.4 billion. And then repairs and maintenance costs increasing at a slower pace this year at 2.4%. Our cost of security increased by 12.3%, again, a result of our store expansion program, but it's still around 1% of revenue, which is our target for that expense line. If we then turn to trading profit, despite a 10 basis point impact or a decrease on gross margin through containing our costs, we did manage to achieve our 5.7% trading margin. A reminder that our trading margins within the first half always trades lower than the full year as a result of the lower gross margin within the first half. If I look at RSA growth, we saw 7.1% and our margins remained intact at 6.2%, which is very pleasing. Non-RSA did come under pressure in terms of profitability. We've spoken about the impact of the gross margin that came under pressure. Also from a cost base and a profitability base, the performance of Mozambique did come under pressure in the first half. And then I did mention earlier the third reason for the non-RSA operations showing a decrease was that impact of the interest revenue decline as a result of the repatriation of the funds and the maturity within the Angolan bonds and bills. Other operating segments saw a decrease of 1.6%, which was mainly as a result of the pressure that we saw within the franchise operations. If we then turn to net finance cost in terms of IFRS 16, that's really driving this cost base, but we saw an increase of 13.4% in the first half. And again, one of the main drivers within the finance cost growth was the 17.2% growth within our IFRS 16 lease base, where we saw the lease liability increasing by 15.5%. We've now seen that growth over the last 3 years within our lease liability, and that is as a result of the program of new store openings, and this year was 282 stores. Also the lease renewals. Now I mean, because of our big store base, we also have a big store renewal program that we do every year, and that unfortunately forms part of this whole lease liability growth rate. And then the third reason for the growth within that has been the DC openings and the supply chain expansion that we've seen during the last 3 years. The positive, obviously, is the impact that we saw in terms of a gross margin and trading profit margin impact as a result of that supply chain investment. On the positive note, the finance costs relating to our borrowings, we saw a decrease of 10.7% and that was as a result of a decrease in the prime lending rates, but also as a result of the lesser demand that we have on our overdraft facilities, especially during month-end periods. And you will see from a cash flow point of view, our cash generation within the business was stronger this year, which basically led to that lesser demand on overdraft facilities. We then turn to our cash and capital allocation. Cash generation within the group remained very strong as in our previous periods as well, with cash generated from our core operations at ZAR 13.3 billion for the first 6 months. Then we settled some debt. Part of that is our IFRS 16 lease liability of ZAR 6.2 billion. And then our capital spend in terms of our expansion as well as our maintenance capital was ZAR 3.9 billion for the first 6 months. The detail behind that, I will unpack in the next slide. We then paid dividends. Our final dividend for the previous financial year equated to about ZAR 2.7 billion, and that was formed part of our shareholder returns. If I then turn to working capital, we did see a positive move in terms of the working capital gains where we had ZAR 5.4 billion of positive move. ZAR 4.3 billion of that was as a result of the cutoff where we made creditor payments post our H1 cutoff date. But secondly, we also had a very positive impact in terms of how we look at our inventory, where our inventory grew and increased at a slower pace than the growth within sales, which also then gave rise to part of the benefits that we realized through our working capital. I did mention the impact of the cutoffs in terms of our creditor and tax, which equated to ZAR 5.8 billion. If we then turn to CapEx and our spend, was 2.9% of our revenue, and we spent ZAR 3.9 billion for the first half. 82% of that spend was allocated on expanding the business, of which the majority of these initiatives was focused on expanding our store base as well as upgrading our existing stores. And I mean, Pieter will talk about his views on how we think about our Shoprite FreshX stores, together with then also our investments into our digital capabilities and supply chain infrastructure. So most of the capital spend remained within South Africa, and that is directed at initiatives supporting our ecosystem. That includes ongoing investment in our information technology infrastructure to keep pace with the growth that we're currently seeing within the business. Management has a clear understanding of the information technology future demand and the associated investment required. And capital allocation will be adjusted accordingly over the medium term if there is a bigger requirement for CapEx from an information technology point of view. And here, I'm referring to various system upgrades or replatforming that needs to be done. If we then turn to inventory, we saw an increase of 3.3% to ZAR 33.7 billion. Excluding the impact of the various restatements that I spoke about in my opening comments, inventory increased by 4.5%, lower than our increase within our sales. The majority of the increase was within our RSA Supermarkets operations, where we saw an increase of ZAR 1.1 billion. The reasons behind this increase was as a result of the 7.3% we saw in space growth or additional 262 new stores. The higher on-shelf availability that we needed to support our Sixty60 business, where we saw that 34.6% growth. And just a reminder, again, our model is that we pick from store, and that's why we have that requirement for that higher on-shelf availability. And then the third reason is around the supply chain investment and the additional stock to obviously have stock availability within our distribution centers. Pleasing to note is that we managed to maintain our inventory to sales within the store portfolio at below 9%. Non-RSA inventory levels remained stable and the increase that we saw within other operating segments was as a result of our pharma expansion. And there, I'm referring to the expansion within our distribution center that we opened in Gauteng earlier this year. In conclusion then, maybe just some considerations in terms of how we look at the second half and what is our expectations in terms of the second half. Supermarkets RSA selling price inflation for January measured 0.7%. If we compare that to prior year, it was at 3.1%. And I think we're all on the same page that we do expect to see lower inflation for a longer period of time. In terms of growth from new business, as mentioned, we plan to open 123 new stores during the second half of the financial year. If I look at the income statement in terms of our trading profit margin, medium term, still a 6% trading margin target. But if I look at the current environment and the low inflation environment, I think more realistically, a 5.7% to 5.9% trading margin would be a good outcome for us. If we then also follow those principles in terms of how we look at gross margin, seeing that the cost of delivery as part of our Sixty60 platform and Sixty60 operations now forms part of our cost of sales. I do expect to see a slight impact for the full year as a result of that. And we're estimating gross margin for the full year to be around 23.9% to 24.2%. From a cost growth point of view, the staff cost growth, and I did mention that we saw that slowdown from the prior year from the 10.8% to the 8.6%, we are currently in negotiations again with the unions around the increases for our store staff. So that we will also communicate and discuss when we have more clarity on that. Depreciation, the lower capital spend for the full year, I do expect to see that we can come back to that 3% as a percentage to sales ratio. And electricity and water, unfortunately, I think that cost is going to continue to increase. And if we can get back to a 2.1% ratio, that will also be a very good outcome for us. From a finance cost point of view, especially the IFRS 16 leases, the Wells Estate distribution center was already part of the second half of the prior financial year, and it didn't form part of the base, which means that we will see a slower growth within finance costs in the second half. So I do expect to see an improved result already on that 17% that we reported in the first half. And then lastly, maybe just around our effective tax rate. I do estimate our effective tax rate to be between 27% and 28%. From an inventory point of view, we saw that improved result already in the first half. And I do expect to see that continuing throughout the full financial year, especially now that we have all the distribution centers in our numbers. And then from a capital allocation point of view, a reminder that we do have a current dividend policy of 1.75x of the full year diluted headline earnings per share from continued operations, and I do not foresee any changes to that strategy. In terms of share buyback mandate, it's still in place by the Board and management will execute on that as we see fit. From a CapEx point of view, if I look at the spend in the first half and I also look at the store opening program for the second half, I do expect us to actually see a slowdown in our spend within CapEx. That is definitely something that management is currently driving, and we're looking at a ZAR 7.5 billion increase for the full year, which will be lower than the 3% target that we set ourselves as well as our previous year spend. Pieter, that then concludes my part of the presentation and looking forward to hear from you around the operations and strategy of the group. Thank you very much. Pieter Engelbrecht: So thank you very much to Anton. As usual, you have given us a very clear explanation to understand the financials of the Shoprite Group, both the balance sheet and also on the cost side as well as the changes that happened in the comparable numbers. And I hope that you all are very clear now in terms of your own models how to look at the Shoprite business this year going forward. So I know we've repeated numbers a couple of times and the 7.2% growth in the revenue amounts to an additional ZAR 9.2 billion that was added in the 6 months. Now for me, I don't know for you, but for me, that's an enormous amount of money. But fantastic performance again from Team Shoprite, gross profit up by 7.1%. And there's a telling number, the gross profit. There is something in here that was quite problematic is service levels from our brand owners that supplies us has a direct impact on gross profit margins also. And we do find it these days because of the size of these numbers, you talk ZAR 136 billion for 6 months in revenue. It's very hard to consistently supply the Shoprite Group to maintain our world standard of over 98% on shelf availability. So the confidential discounts, the rebates, all the things that adds up into gross profit margin, I think an excellent result to come in at a 23.8% gross profit margin for the 6 months. Trading profit up by 5.9% with a trading margin of 5.7%. But then as I said earlier, absolute world-class South African trading margin at 6.2%. I cannot help to think that, that is absolutely a world-class performance. And that is not done by increasing prices. We were talking about deflation and the inflation was only 0.7%. That comes out of running an efficient business from the supply chain right through to deliver the last-mile delivery to our customers. Obviously, we've grown the EBITDA. We know what the effect is of IFRS 16 and the lease payments and that so EBITDA is these days, I find it a little bit different in the old days when it was purely cash flow because if you look at our cash flow that Anton just explained now, the cash flow is very strong. And the EBITDA shows a 6.7% growth. So just something that we have to take note of that things have changed. The CapEx spend, we've been spending ZAR 8 billion basically for the last 3 years. We are very tight on that CapEx spend. A lot of that spend have really put a difference between us and our competitors. Amongst that, if I can give one example, it would be our price optimization tool. And I said 5 years ago, if retailers are not going to invest in that technology, coupled with artificial intelligence agents, you're going to somewhere start to fall guy. The maintenance of the gross profit, the additional contribution of promotional items participation in the basket is testimony of selecting the correct items, the items that people are looking for. So here's a good example of previous investments, earlier CapEx that was spent that is now really starting to pay back, which we're very pleased about. And I told you about over 98% in stock on inventory. So if we, from an operational point, have to mark our own homework, what stands out is more customers, higher volumes, continued market share gains, meaning you're running faster than your competitor. You're gaining customers faster than your competitor. And you're giving the volumes to your brand owners, I like to refer to them as brand owners, not suppliers. That helps them to reduce costs and get efficiencies. So you think about it, 572 million customer visits, up over 5%, 0.5 billion people, 1.2 million additional customers per week. We can work it down by the hours that we trade and how many that is. It's just astounding for me, selling over 4 billion items, and I told you before, gained ZAR 3 billion in market share now for 6 years, uninterrupted every single month. I know we've mentioned the number before, but the 7.1% sales growth was achieved despite a declining internal inflation, and I'm going to get to an explanation, the difference between our internal inflation and official CPI calculation. There is quite a difference in the methodology. We really have been able to maintain the sales momentum, our customers with the selection of products and really the data, I must always come back to the data. It's data-led decisions that make us make better decisions. It's not the gut feel decision. It's fact-based. It's data-based. Also, on top of that, I've mentioned the price optimization tool, the gross margin stayed intact despite the fact that people are buying more into the promotional items. Our promotional contribution to the overall basket have now increased to about 40%. And that is something we will have to watch. But over so many items, you need technology and systems to assist you to make the right decisions in there. Liquor stores have done very well. We will probably have over 1,000 stores by June in both the brands, Shoprite and Checkers Liquor. Sixty60 remains a remarkable story, growing 34% on a very high base. And some people think it's not profitable. It is. There are many reasons why. And over time, we will also explain to you why. This model works so differently in our environment to that of our competitor. Now if we look at the market share on this graph that I'm showing you, there are 2 graphs here. So if one looks at the formal retail market in totality and the base have been elaborated. It now also includes some other competitors. The growth was ZAR 14 billion. And if you think of it that basically Shoprite took more than ZAR 9.2 billion of that and the rest of the market had to share the difference. And you can see it clearly. Graph on the left shows you that for the 6 months, Shoprite have outgrown the market by 2.3x. And then on the right-hand side, you can see every single brand has gained market share. So it's not a one swallow story. Yes, the growth in Checkers is higher than in the rest of the other 2 brands. But it's just because Checkers is the fastest-growing retailer in the premium food segment in South Africa. So I have already mentioned that we had a very good festive period that have continued subsequently. We've outgrown the rest of market during the festive 5.3x and well publicized that the consensus was that it wasn't a fantastic festive or Black Friday for the rest of the market. But for Shoprite, we're not in the same boat. We're very happy with the performance. And I've just spoken earlier about maintaining margin. Our customers win because there's deflation. 14,000 items, I mentioned in December was cheaper than the previous year. Of course, if you look at it in a monetary value, even though we're growing volume, of course, the monetary value is not there. Even though customers continue to buy the same number of items because of the deflation, your rand cent value doesn't support your volume growth, plus the fact that as said we've grown customers by 5.6%. So I just want to, for a minute, explain the difference between official food inflation, which you would read for December was 4.7% versus ours for the 6 months at 0.7%. The difference is that the official food inflation is calculated on a static basket based on 2023 life conditions, which at that time included, of course, our extensive load shedding. So for example, in that basket would be candles. But it is, at the moment, not that relevant anymore. So the way we calculate our internal inflation is we have taken this specific period, 56,000 items bought by customers. And remember, customers buy different things. It's actually a complicated number to calculate because you've got promos, you've got combos, you've got multi-buys. But in theory, to make it simple is we take the 56,000 items that's being bought by customers this year, and we look what was the price last year because that's the true inflation, the customer experiences not what we think they are experiencing because people down buy, people change brands. There's a lot of nuances that go into that number. And I do believe that our number is probably the most accurate true reflection of food inflation for the South African consumer. Now we must remember, there are monetary policies being made on these numbers. And I'm just putting up my hand here to say, we must be careful that we base monetary policy on numbers that are not 100% correct. or, let's say, the most sophisticated that we can do it. So what do we do? We're in the long game. Pricing has always been for us, paramount first. That is why when the customer wakes up and they didn't see an advert or a promo, they don't have to think where they have to go. They know where they will get the best value. That is what we do. But if you look at what I've just put there for you on the screen is the inflation by brand. And you can clearly see, of course, the more affluent customers in the Checkers brand, 1.9% inflation. And then you go down to Usave that goes into a negative. And a lot of that is driven by the prices of commodity type items, basic items because we over-index in a lot of these categories. In other words, we have a higher market share in these specific categories, and I put there some examples for you than our overall market share. So there's in a lot of cases, been double-digit negative or deflation in categories like potatoes and rice and so forth. And even through all of this, and I already mentioned the 14,000 items that was cheaper, Shoprite Group still managed to maintain its gross margin in such a strong deflationary environment in categories where we over-index. I think very good result. As you all are very aware that basically, Shoprite Group runs multiple brands. And on the supermarket business, in particular, we have very deliberately separated the Shoprite brand and the Checkers brand. But there are also other sub-brands, Usave, Liquor, the wholesale or cash and carry as we have today, which was part of the Massmart transaction. What I can say is all of these brands are doing their job. They deliver. Shoprite as a brand have added 5.1% to sales growth, amounting now to over ZAR 62 billion, added an additional ZAR 3 billion in sales in the last 6 months, continue to gain market share. But most telling is probably the 4.8% growth in customers, amounting to 670,000 additional customer visits per week. And I'm deliberately saying it slowly just that we, for a moment, pause and what does that mean for the entire value chain from our brand managers, that's our suppliers right through the supply chain, the service levels we have to give at store to get it on the shelf, the movement of the stock, the cost of that extra movement of stock. So for me, incredible that Shoprite is still able after 6 years to grow its customer base and grow its market share. I'm very pleased about this result. And -- that is what Shoprite does. Price is what we do, value is what we give. So when in doubt, you wake up in the morning, you need to go shopping, you don't have to think. You go Shoprite, you get the best value. No questions asked. And then the cash and carry business, I mentioned earlier, if we can bank percentages, we would be very rich, but one doesn't bank percentages. We bank the ZAR 3 billion extra revenue, but the 24% growth in the cash and carry, that's just a percentage. We can't bank that. But super performance growing. It's a new world for us and a lot of good potential that we see in that business. If we look at the Checkers brand, I just mentioned, remember, we're running basically 2 retailers, absolutely industry-leading sales growth of 8.9%. Checkers is now doing ZAR 52.2 billion in revenue, I want to just add for 6 months, if we compare that to our peers and added ZAR 4.3 billion in revenue in the last 6 months. Also multi-brand, Checkers, Checkers Hyper, Liquor Shop and then, of course, Sixty60. Checkers remains the fastest-growing grocer in the premium market and continue to gain market share. The reason why we picked Jamie Oliver was he is globally known for standing for healthy eating, healthy cooking. And then I often get the question, so how many of what we call the FreshX stores we're still going to do. So we basically 50% through the real estate, 188 stores being done. It doesn't mean all of the stores eventually will be done, but all of the stores will be of acceptable standards. They might just not have orange floor. And then probably the global retailers' dream is that customers start to love your brand. They become your brand advocate. Now I've looked around, you can correct me, but I have not found another country where an FMCG food retailer has achieved the position of being the #1 brand in the country of all businesses. And it stays for us a proud moment, and we will cherish that and try and keep there as long as we can. Our non-RSA segment, I did make mention to the 272 stores now. Sales growth was a very healthy 12%, but the profitability did suffer mostly as a result of what happened in Mozambique, a bit of headwind in Angola, but also some positive turn lately in Zambia, where as the Kariba Dam is starting to fill up that we have less and less load shedding. If we look at the other operating segment, the OK Franchise division had a 1.7% sales growth. If we look at the 9 stores were closed, it basically comes down to a like-for-like sales number. They also had the same as the rest of market had to contend with deflation and so not unpleasing result. There are some changes in the market around personal care, health and beauty. And we can see that also in our Medirite sales, hence, why we have decided to start opening stand-alone pharmacies with front shop, and they are performing exceptionally well. And then Transpharm, although only a 5%-odd growth for the 6 months, accelerated towards the second part. Remember, we went into a new distribution center in July and really done exceptionally well since we moved in there, and it's a much more automated facility. We've added 873 new customers to the overall customer base, which I'm very pleased about. I think I've said it now more than once. We are truly a customer business. This is how we make decisions from the customer backwards. And then we find out how to do it cheaper, not the other way around. So probably my pride and joy would be the slide that I show you now, ZAR 9.7 billion in instant cash savings at till point in the last 6 months. ZAR 9.7 billion we've given back to the South African consumer at till point on the things that they need. It's an enormous number. For me, it's incredible that we can actually afford to do that and still have spoken about all the things that's still intact, like the trading margin, the gross margin, et cetera. There's no question that Shoprite is #1 when it comes to price and value. And then this thing and I think 2 years ago, I told you the story about my visit to a Usave 1 day and this kid that they couldn't buy a sweet. And today, here, I can stand and say, in the 6 months, we sold 9.5 million items at ZAR 1. That is USD 0.06. And can you think like I 9.5 million smiles on a kid's face that bought a little packet of chips or chocolate for ZAR 1. Incredible. Then we even take the next step. 55.6 million items sold at ZAR 5, helping people survive. How else do you survive if you live on a ZAR 370 grant a month. You can with Shoprite ZAR 5 meal solutions. We've got over 30 meal solutions under ZAR 5. That is what we think. That is what we live. That's why Shoprite is what I call not just a retailer, it's an institution. If I just very quickly give you an overview where we currently are in terms of our strategy, I think it's now almost 9 or 10 years that I've been showing you this trolley with its 9 levers. And basically, it's stayed the same. I just want to give you assurance that we have a plan, we stick to our plan. We all understand what it is, and then we execute with excellence. That's what I think sets Shoprite apart. I spoke about that, I think, easily 9 years or so ago. I used the phrase to say, we're going to create a smarter Shoprite with more data to allow us to make better decisions. And today, I can really say to you the amount of decisions that are made on real data and what customers' behavior shows us in terms of price optimization, in terms of healthy eating, in terms of what we advertise is really, really sophisticated. And it learns by the day. I don't have to give you a lesson around artificial intelligence and the use thereof. But I can just tell you that we are using it. As you know, we've said before, we do view ourselves as a high-growth company. At least we try and achieve that. And we look at our data and in our world, we see what is it that the curve that people are on, what are their lifestyles currently. And hence, we've opened some of these adjacent businesses based on the data that we have how people behave, what they buy, what's happening in their lives. And the Petshop Science is a very good example of that. It was a greenfield operation that started, now 173 stores, making a good contribution overall, both in revenue and in profit, where we have noticed that there is a difference in the new generation of how they view pets and kids, et cetera. And very proud about the business, and it's performing very well. Amongst other, we've got Little Me, we've got Outdoor. After COVID, there was this tendency of people to just go more camping and outdoor and spending more time together. So there was just a gap in the market for that. And what we are trying to achieve is to increase our part of people's discretionary spend. The digital commerce really, I mean, I did make mention of Sixty60 already. You know the numbers, 20% growth, 18,000 jobs being created since the inception. We've got 10,000 drivers. And if you look at that fantastic graph on your right-hand side, I mean, it drives you to tears to see that for so many years, consistently, this business have just kept on improving. And a staggering number for me is that over 900 software upgrades, releases, patches is done in a year, improving this product virtually by the day. So we're not standing still. We don't say, oh, we've done it. It's happening. We're working on it every day. And the beauty of it is, and you will remember, I think it's now 2 years ago that I've said, we've set ourselves this task when we had to rationalize the African operations. We set ourselves a task to become really truly omnichannel. And that's exactly what's happening at the moment. So very soon on this one platform, you'll be able to navigate through all the everyday categories like from your groceries into your health and beauty, to your pet, to baby, it's really limited to your imagination. And all of this will be amplified and made very easy with the use of an AI agent just for additional convenience, making shopping really seamless. This graph will be my last. So apologies to my own people for some of the brands that are not on this picture. It's not that we've forgotten about them. It just gets busy. The idea is that you get this picture where this is what we've been doing for the last 10 years. We first laid the foundation with the core systems. We improved our distribution and supply chain. We then added adjacencies and the data. Then we added the extra savings to really embed our decision-making on our customer-driven data and then finally, to deliver all of that in a single omnichannel platform for not only ease of use, but just the convenience, the fact that if we can do all of that together, also the fact that we can bring it to you at a cheaper price, better value, that's what we stand for. That's what we deliver. So just having taken you through the steps, I want to say this is not impossible to replicate or to do. It's just very hard and it costs money. But this is sort of the story why the Shoprite Group can continue to deliver a certain level of customer experience and a value proposition to its consumers and the people that we serve. I really want to thank you for the time that you offered us and that you still feel it valuable to spend an hour to just listen what it is that we do and that we're still of interest to you. So thank you very much. We're going to give you some time now to quickly get your questions. And then Anton and I will take questions and answers. [indiscernible] in the last 6 months. So just very quickly while you're getting your questions and we're getting ready to answer you and you're free to ask whatever you want, is that the momentum from December continued. I think a 7.5% sales growth into January was excellent. If we -- and that's why I made that explanation of the inflation. If the true inflation was 4.8% or 4.7% it was published for December, then Shoprite would have grown 12%, double digit. But it is not the true inflation. We went into deflation in December. So that's why I made that point in the explanation between the difference of the calculations. So just to give you a context. To be able to -- if we theoretically have to say then the Shoprite Group grew double digits in the last 6 months, it is incredible. So once again, thank you to team Shoprite. So we continue to gain the market shares. I did mention, and I'm going to repeat it because I think it was just astounding that in the December and the festive month that the Shoprite Group managed to outgrow rest of market 5.3x. And that continued into January, outgrowing the rest of market 4x. But yes, I have to tell you, the other side is the deflationary or lack of inflation, let me call it that. So we ended up 0.7%, as you've seen on the numbers for the 6 months. Actually, the real inflation in February came down to 0.5% from 0.7% in January. So we don't see in the short term a change in the food inflation basket. And then immediately, I want to emphasize the ability through all of this to maintain the gross profit margins with all the things that I've explained. I'm not going to repeat myself again. So I mean, in the end, we can debate a lot of things about pricing, moving pricing. But we, first and foremost, are for the consumer. So we first look what is the consumer's world, and that determines our pricing, not the other way around. So Anton, I think that's my summary to say that, that drives everything we do. And there's going to be some green shoots there. So I'm very positive, I think, but now yesterday, the weekend, we've got this war going on in Iran and all that stuff. So the oil price quickly went up, and we were banking on a reduced fuel price. I mean, that would have given us a good saving on the cost line and the supply chain, which I'm very proud of. I think Shoprite probably runs the best FMCG supply chain in the world if we look at our service levels. So things are changing, but -- and I also -- I know hope is not a strategy. But if all the money that government have secured for development, et cetera, and if that goes into infrastructure, like ports and roads and water and electricity, all these things, that creates jobs and creates economy. And if that starts to happen, Shoprite usually is the first one to benefit. Small people, I'm a welder. So I get a little job to weld and then I can't do it all and I need a handler and before we know, I need a driver. And before we know we've got 10 people employed having a job. So I'm still positive that these things are going to come through. It does look like that there is an inclination from also government's point of view in terms of really that we have to get this economy going. Okay. So that's our summary, Anton, we can take some questions. Anton de Bruyn: Unfortunately, I'm not going to let you off the hook on GP, gross margin. There's quite a few questions. I'm not going to call out the names. There's quite a few questions around gross margin. So I think, Pieter, the main question, if I summarize all these questions is how do you think about gross margin? How do you think about promotional participation? So if you maybe can just give us color on that for the second half and how you see that play out? Pieter Engelbrecht: If I have to assume what people are thinking in that question is there's so much pressure in the retail market currently Everybody is under pressure. And specifically on margin, of course, you say must the competitors start moving their prices and does it give us opportunity to move prices? I go back. Consumer first. So yes, there may be, but not necessarily. That's the first part. The second part is, yes, we've seen an increase again in the promotional participation of items to the basket. And there is a level where it gets too high and it's not sustainable. You can't just give everything away. But if we go back to the CapEx that you said, we spent over the last 3 years, ZAR 8 billion a year, that's the tools that we've, amongst other, have invested to help us to make more scientific decisions around pricing kind of items, width of promotion. It's a science by itself not to take any credit away from the fantastic buying team that we've got and the people leading that. But the point is if you don't have the tools and you're not investing in AI and you're not using it, then the gap is probably going to widen. And the consumer will decide, you need to be the most relevant. That's why I made that comment. That's how I think. I don't say everybody thinks that way. I'm on the inside. But if I wake up on a Saturday morning, I say, where must I go to get the best deal. I'm going to go to Shoprite or Checker. Usave is actually by far the best deal if I'm on the budget. So that is -- that's my answer to the margin. If you wanted me to say, do we think we can increase the margin even further? I'm going to go back to what I always say is I think we can maintain our margin, but be very careful to increase your margin. I mean, for Shoprite Group to run the highest gross profit margin of all retailers in South Africa and still be the cheapest, that is what we need to protect, first and foremost, not just to drive margin. Anton de Bruyn: So I think, I mean, maybe just to add to what you're saying and that there's also a question around trading margin and the guidance and the medium term, we spoke about that 6%. So I mean, if we really look currently at the trading profit and trading margin per segment, we can see that we've maintained our RSA Supermarket trading margin at 6.2%. So the outlook still for us is how we look at the RSA trading margin, and we're currently maintaining that trading margin. There is some pressure within the non-RSA segment. And then we do expect a better performance in terms of the other segments for the second half. So that's really driving also our medium-term targets around how we think about trading margin. Pieter Engelbrecht: And the non-RSA, I mean Namibia is basically in the same position as Africa around the deflationary environment. The [indiscernible] was thrown under the bus. Malawi -- not Malawi, Mozambique, we all know what's going on. South has got the floods. North has got ISIS. And then as I said, a bit of a headwind in Angola. But I mean, it will come right. Anton de Bruyn: So you did say in your gross margin discussion, you talked about AI. So I mean, Ya'eesh, you had a question around how the group utilizes AI. And so maybe just share some of your thoughts in terms of what we do or are you seeing the impact of AI in the business? Pieter Engelbrecht: Okay. No, I like that one. I'm very excited about AI. We started this year, in particular, actually 4 years ago, we already started to get the right people in place data scientists, people that understand the layers of data because remember, you've got agentic that you compete against, and there will be a consumer agent and there will be a retail agent in our world. And if your data sets are not set up correctly, you may just miss a question. You may not be in the answer. It's very different to -- if you do a Google search today versus speaking to agent. And we have really embraced it. I think it's what we said a couple of years ago. It's not what did I say? It's not a race for space, it's a race for reach. And this is almost the same that I feel about AI. And so we have started this year. So we have -- yesterday, actually, I looked at the first version of the dashboard. We can see exactly who's using it, who's not using it. We have used a couple of agents, Copilot, Gemini. Google looks a little bit strong at this moment. So we are actively embracing AI across the entire business. We're measuring who's using it. I actually, at some point, said, I must be careful because it can become addictive that you keep on asking questions and you need to deliver on something. You can't ask questions all the time. And we might have to limit people's time that they spend on it. But for now, I can tell you that it's definitely something that we take very seriously and will embrace into our business. And yes, it's not that like the Cisco CEO said, AI is not going to take people's jobs, but people that uses and knows how to use AI will take your job. Anton de Bruyn: Strong point to end. If we maybe just come back to inventory. We had quite a strong numbers in terms of inventory, also a better impact in terms of our working capital. Do you see that actually going into the second half as well? Do you see a better performance in terms of our stockholding? Pieter Engelbrecht: You asked me the question yesterday, I would have said yes immediately without thinking. Now today, I have to say 162 containers are stuck in the Suez Canal currently. So I don't know exactly what the impact of that would be. But remember, these are businesses. They make plans. Maersk has already decided to come around Cape Town not going through the Suez because it's closed and they offload. And so I don't think it's a concern. I think the number -- if people think -- but how did we maintain a 98.5% on shelf availability and reduce the inventory basically? It's because of the decisions -- well, the new DCs and the decision to also serve inland from our distribution centers and rather incur the additional fuel cost than compromising the on-shelf availability. And we're seeing a benefit of it. Anton de Bruyn: We see it in our GP as well. Maybe we've quite a few questions on IFRS 16 and what I mean by normalization. So we've already seen an improved growth rate in terms of that IFRS 16 lease liability and costs. The main move for us last year and why we saw such a big growth was as a result of now 2 to 3 years of continued increases in our DC space. So obviously, as soon as a DC comes in, that's got a massive impact in terms of our leasability. Our DC leases are 20-year leases. So you have to acknowledge a 20-year lease, and that's why you see that movement in that lease liability. I think what will bring our total finance costs line down, and we have already seen it in the first half is also the decline in our borrowing costs. I mean our strong cash flows that we generate has made us less dependent on overdraft during month-end period. So we're already seeing that benefit coming through. Like I said, I think we will see a much better -- also a stronger result in the second half in terms of our borrowing cost. So yes, I mean, I hope that answers the question around IFRS 16. Pieter Engelbrecht: You maybe just think of something is that we're even in such a privileged position that we can provide what I call our brand managers, suppliers, sometimes with bridging finance especially over month ends in high promotional periods when cash flow is tight. I mean that's a fantastic position to be in for the retailer. Anton de Bruyn: Pieter, I mean, I think we've answered most of the questions. The one that I'm going to maybe ask you to close out with is there's questions around you've spoken about the profitability within Sixty60. I know you always talk about that omnichannel customer. Maybe you just want to talk about we could see the trading profit and trading margins remain strong. Maybe just talk about that in terms of how you think about the Checkers and the Shoprite banners. Pieter Engelbrecht: Yes. I think the answer goes back to what I said around the omnichannel. I mean we really truly want to be a full omnichannel retailer, which means I think somebody asked a question somewhere around can we provide our Sixty60 service to third parties and other retailers. And so yes, we could, but it's not on our plan currently. We've got too much to do. I mean all the businesses that we have in the group, you know that we are a multi-brand retailer. We still have to add all of those functionalities onto the omnichannel. That process is running flat out. So that's what we have to deliver first. And I made the comment in my part to say that we're trying to increase our part or share of the discretionary income or spend of customers. Now that's exactly what Sixty60 does. And -- I mean, we've added now pet and the rest of the businesses units still has to be added until we've got a full omnichannel. And we're going to -- we said -- we decided rightly or wrongly that we will give you more color at year-end presentation around the adjacent businesses, what we do in financial services, what we do in pharma care. There's a lot of things happening at the moment. But in terms of the omnichannel, the first target, obviously, is to get as quick as we can the entire business unit of the Shoprite Group onto that platform. And there's agentic that needs to be implemented to make it easier, faster. And that's why I mentioned the over 900 software releases. It's an enormous amount of work that goes in there. It's a lot of stuff that I don't even understand, but I know it works. That's more important. So yes, that's the story, Anton. Anton de Bruyn: You can close. Pieter Engelbrecht: Well, then if that is that, all good. Thank you again, everybody, for your time. It is not taken for granted. I know you've got many businesses to look at. You've got many choices of making investments. We hope that we have given you the best clarity of what's happening in these walls every day. And I certainly am very pleased with the result, given the whole market. You know we never make excuses. So I hope that we gave you some clarity. And thanks a lot. Have a fantastic day. We'll make some money.
Jason Paul Quinn: Good afternoon, and welcome, everyone, to the Nedbank Group 2025 Annual Results Presentation. Our presentation today will start with an overview of the Group's performance for the year, a reflection on the operating environment and an update on some key strategic developments. I'm then going to hand over to Mfundo, our COO who will provide an update on the progress we're making on our strategic execution. And Mike, our CFO, will follow with an analysis of the Group's financial performance for the period. I'll then return to close the presentation with an update on the economic outlook, our guidance for 2026 and our prospects for the medium to long term. 2025 was a transformative year from a strategic perspective at Nedbank. The external environment remained volatile and uncertain, as evidenced by continued global geopolitical conflict with concerning recent developments in the Middle East. Despite this, we have seen cautious optimism emerge as markets began pricing in a more supportive macroeconomic environment and the progress South Africa has made on multiple fronts. And I'll unpack some of these shortly. Banking conditions were particularly challenging in the first half, but I'm encouraged by the early green shoots evident in both corporate and consumer activity. From a strategy perspective, we've made a number of bold and swift strategic decisions, including the Group's strategic reorganization, effective July 1, acquiring iKhokha and concluding the sale of our 21% shareholding in ETI. In January this year, we also announced our intention to acquire a controlling interest in a leading East African bank NCBA Group. In addition, we concluded a confidential ZAR 600 million settlement with Transnet, avoiding a costly and protracted legal process, which would have been an ongoing management distraction for years to come. Putting this long-standing matter behind us, we'll clear the path towards our substantial support of South Africa's broader logistics infrastructure investment requirements, which are currently estimated at over ZAR 100 billion. And the settlement represents a full and final closure of the matter with neither party admitting fault. Pleasingly, we see momentum building as evidenced in underlying growth across almost all our businesses and clusters, mostly in the second half. From a financial performance perspective, while our results for the year were slightly ahead of guidance, a 3% growth in diluted HEPS is not a satisfactory outcome for us. Similarly, our return on equity of 15.4% was above the cost of equity of 14.6%, but declined from the 15.8% in the prior year. On the positive side, we maintained a strong balance sheet declared the final dividend of ZAR 11.4 a share, completed a ZAR 2.4 billion share buyback program at attractive share price levels of around ZAR 229 per share, and we ended the year with a CET1 ratio of 12.9%. Reflecting a bit more on the operating environment, financial markets are buoyed with optimism. And we expect GDP growth to have increased by 1.4% from the 0.5% in 2024. Unlike this time last year, we believe that this optimism is not unfounded and is supported by evidence of an improving working relationship with the GNU, solid progress on structural reforms, stabilization of energy, supply and transport networks, enhanced collaboration on public-private partnership initiatives, and continued fiscal discipline as reflected in the recent South African budget. In addition, South Africa's removal from the FATF Greylist and S&P's sovereign upgrade with a positive outlook, which is the first since 2009, also contributed to an improved investor sentiment. The outcomes are evident in the graphs on the left. South Africa's government long bond yields improved to their lowest levels in more than a decade. And CDS spreads narrowed back to investment-grade levels reflecting reduced sovereign risk perceptions. So the combination of all of these items translated into tangible foreign market flows and a stronger rand. Improved operating conditions were also evident in private sector loans and advances growth of 7.8%. On the consumer front, we have seen how higher levels of real disposable income, low and steady inflation at around the newly clarified 3% target range, combined with 150 basis points lower interest rates started to stimulate household credit demands towards the end of the year. On the corporate side, we have seen how the economic recovery, slightly higher levels of business confidence, higher fixed investment and a low 2024 base resulted in corporate credit growth improving to above 10%. Reflecting on infrastructure opportunities, our economic unit's latest capital expenditure project listing, saw a sharp rise in investment plans announced in 2025, particularly in the private sector for the first time in a while, which increased by over 230% when compared to 2024. We are very well positioned to participate in this upside. Turning now to the bold strategic decisions we made and executed on during the year. We successfully restructured our Retail and Business Banking and Nedbank Wealth Clusters into a more focused client-centered organizational design. We created Personal and Private Banking, a cluster solely focused on individual clients, headed up by Ciko Thomas and Business and Commercial banking a juristic-focused cluster, which covers the spectrum of mid-corporate, commercial and SME clients headed up by Andiswa Bata, who joined us in August. This strategic reorganization was aimed at being a catalyst to enhance our focus on clients, drive faster revenue growth and unlock efficiency and productivity enhancements. The reorganization was substantial and impacted more than 16,000 colleagues that was swiftly implemented and it was in place by the July 1. This resulted in various strategic initiatives across our cluster. I'll now highlight a few proof points, which are all evidenced by improving H2 momentum. In CIB, we increased our appetite to deepen participation in larger, high-quality deals. And while drawdowns were slow, client activity was robust and pipelines remain very strong. In BCB, we swiftly filled key leadership positions, including the Managing Executive of a cluster. We accelerated advances growth in the second half of the year, and we made good progress in launching new value propositions. In Personal and Private Bank, where our focus is on addressing scale challenges in certain products and segments. We're pleased with solid progress. We saw improving deposit and loan growth and improving quality ahead of industry. Insurance cross-sell is starting to increase strongly. Transactional revenue growth improved and the cluster continued to unlock efficiencies and productivity gains with further progress expected in '26 and beyond. In NAR, we recorded strong loan growth and client gains, while we look to participate in exciting growth opportunities in Namibia and Mozambique. We also made some bold strategic decisions to strengthen our competitive positioning in fleet management and in the SME payment space, both now part of BCB. In June '24, we acquired Eqstra, and I'm pleased to report that in its first full financial year as part of the group, we've achieved full operational integration. We've realized efficiencies across funding and technology and achieved some early client gains and upsell successes. In December, we completed the acquisition of 100% of iKhokha. This is a strategically important transaction for us as it strengthens and fast tracks our payments and merchant acquiring capabilities, particularly in the fast-growing SME and informal merchant segments where our presence has been low. Annually, iKhokha processes more than ZAR 20 billion in digital payments. And to date, has distributed more than ZAR 3 billion in working capital into the SME sector through its more than 54,000 point-of-sale devices. Looking forward, we seek to grow the SME client base and cross-sell lending, banking and payments as well as business solutions. As noted before, the sale of ETI followed a strategic review, that included an evaluation of the performance against our initial investment case, which did not materialize as expected, with a significant negative impact on our NAV, which Mike will unpack for the last time later in the presentation. Unfortunately, a minority stake limited our ability to drive strategic progress and the quality of the associated accounted earnings stream was low and was not backed up by dividend flows from ETI, increasing risks of continuing to hold on to the investment due to regulatory uncertainty and the probability of increasing capital requirements in certain jurisdictions would have resulted in a scenario where we would have had to inject additional capital to prevent shareholder dilution. I'm best pleased to report that we finalized the disposal of our 21% shareholding in ETI for a purchase consideration of $100 million or ZAR 1.6 billion. Importantly, we've received unencumbered cash proceeds and all regulatory approvals. In January, we announced our intention to make an offer to acquire approximately 66% of the issued share capital of NCBA Group, one of East Africa's leading financial services groups. The offer consists of the issuance of new Nedbank ordinary shares, which contributes 80% and 20% in cash, valuing the transaction at approximately ZAR 13.9 billion based on the Nedbank share price of ZAR 250. In a recent positive development on the February 19, we announced that we received exemption from the Kenyan Capital Markets Authority to make a mandatory offer to acquire 100% of NCBA shares. Upon successful completion, NCBA will become a subsidiary of Nedbank, while the remaining shareholding will continue to trade on the Nairobi Stock Exchange. The transaction remains subject to regulatory approvals and is expected to be concluded by the third quarter of 2026. Many of you will recall that on the back of our strategic refresh last year, we indicated that having disposed of the ETI investment we would focus on Southern and Eastern Africa. We noted that, in particular, our home base of South Africa still presents significant opportunities to improve growth and returns and that we saw further opportunities in Namibia and Mozambique. We also highlighted that we intended to enter East Africa, either through acquisition or on a greenfield approach, playing primarily to our strength in CIB, particularly in structured finance, fixed income, currency trade and trade finance, and in sectors like energy and resources. I also indicated that quality entry points into the Kenyan banking sector were rare and hard to execute and may take time. And we were thus very pleased to be able to execute a unique and compelling opportunity to acquire a leading bank with a great track record and an outstanding Board and Management team. The deal structure is also compelling as it keeps the majority of NCBA investors exposed to the combined Nedbank and NCBA business. Following the lessons learned from the disappointing ETI experience, we've ensured that all of those learnings have been applied to the NCBA acquisition. The strategic rationale for the deal is set out on this slide. At a high level, we see East Africa as a region of significant strategic importance to Nedbank, underpinned by strong macroeconomic fundamentals, a robust and predictable regulatory environment and attractive growth potential. Secondly, NCBA is a top Tier 1 bank, which has an attractive ROE, low-cost income ratio and is well capitalized with a strong track record of regular and consistent dividend distributions in cash. It's got a strong and well-established brand, extensive regional presence, more than 60 million clients and expertise in areas such as digital banking. And lastly, the transaction will bring together 2 highly complementary organizations where Nedbank can benefit from NCBA's modern technology and digital platforms, positioning us to grow and diversify earnings. And NCBA will benefit from Nedbank's CIB expertise and our Group's strong balance sheet. NCBA will retain its brand, local leadership team, independent governance and listing on the Nairobi Stock Exchange. This proposed transaction represents a significant strategic reset for Nedbank's presence on the African continent with a renewed focus on the SADC and East Africa regions, driven through businesses under Nedbank Group's direct ownership and control with high correlation between earnings and dividend accretion. And lastly, before I hand over to Mfundo, a quick assessment of the progress we've made on our strategic value drivers. Starting on the left, in the wholesale space, banking advances growth was modest. Despite the shift in our appetite, improving client activity and encouraging pipelines, drawdowns were slow given ongoing delays in deal closures. We are very well positioned to benefit as infrastructure investment gains momentum, and we have thus far seen a strong start to '26, although it is still early days. On the more positive side, we've recorded good growth in retail advances and gained market share in home loans, vehicle asset finance, overdrafts and retail deposits. We experienced pressure on margins, primarily from lower interest rates. But pleasingly, the decrease in NIM seems to have slowed in the second half of the year, and we continue to build out our hedging program in a commercially appropriate manner. We also saw an increase in client numbers across all segments and strong growth in digital transactions, value-added services and payment volumes. From a productivity perspective, while expenses were well managed, our cost-income ratio was under pressure, mostly on the back of slow revenue growth. I'm pleased to update you that we've identified new productivity initiatives, exceeding ZAR 1.5 billion, which I expect to be realized over the next few years. On the far right, key risk and capital management metrics reflect our strong balance sheet, with our CET1 ratio at 12.9%, above our revised board target range of 11% to 12.5%. Liquidity metrics all significantly exceeded the minimum regulatory requirement of 100%. And I was pleased that we were able to optimize capital management further through the execution of ZAR 2.4 billion of well-timed buybacks at attractive levels of around ZAR 229 per share. From a risk management perspective, we are pleased to have reported a further improvement in impairment outcomes, leading to our credit loss ratio at 68 basis points moving to the bottom half of our target range, supporting capacity to increase our lending appetite. The progress on loan loss rates delivers firmly on our commitment 18 months ago to move back into our target range. With that, let me hand over to Mfundo to reflect on the progress we've made on our strategic value unlock. Mfundo Nkuhlu: Thank you, Jason, and good afternoon, everyone. Starting with digital experience is our first key focus area. In 2025, digital activity and usage grew by double digits as evident in the increases in app transaction volumes and values and active users. By the end of the year, 73% of all sales in PPB were on digital channels. Our juristic businesses also noted steady progress as the adoption rate of the Nedbank Business Hub have increased to 76% in BCB, and 50% in CIB, respectively, both driven by higher levels of self-service and the delivery of enhanced digital features. Digital FX transactions increased to 75% with net FX expected to further enhance our digital capabilities. Our current focus is to leverage AI, machine learning and robotics across the value chain, including credit decisioning, fraud analytics, digital marketing and cross-sell with our dedicated data and analytics capabilities as a key enabler of digital growth and innovation. We also look to unlock productivity benefits linked to the similar use of people and machines in the delivery of our services. To this end, we look forward to the launch of our new app that will deliver a highly personalized and contextual experiences tailored to users' needs, and we expect average app logins per client per month currently at 24.5 to increase further. From the perspective of client experience, we reported good outcomes across key metrics, but acknowledged that there is more to be done, particularly in enhancing digital experiences. In our Consumer business, our Net Promoter Score improved to 77 and ranked #2 among the large South African retail banks. In the Small Business Services segment, we recorded the second half level of NPS in 9 years. And in mid-corporate, the KPI research study noted that Nedbank achieved a client satisfaction score of 87 placing this new business division, first in the SA peer group. In CIB, we achieved a client satisfaction outcome of 80%, in line with the global benchmark. In the Nedbank Africa regions, we achieved good outcomes in Mozambique and Zimbabwe. A key highlight of the period was the value of the Nedbank brand that increased by 24% to ZAR 20 billion and now ranks top 8 among all South African companies. As part of strategy execution, and the strategic portfolio tilt. We are making good progress in building stronger client franchises and enhancing client primacy, which is central to growing revenues. Total Group clients were up 7% and reached 8 million for the first time in the Group's history. This was supported by 9% growth in both PPB to 7.5 million clients and NAR to over 430,000 clients. Main-banked clients in PPB showed a reasonable growth and cross-sell penetration improved to 2.02 products per clients. Importantly, our Greenbacks Loyalty and Rewards program increased its client base by 19% to 2.1 million on the back of a more competitive loyalty and rewards scheme. And for the Amex card users, an additional 100,000 merchants now accept our cards on their devices. Lastly, as shown on the far right, our market share in Commercial Banking segment improved to 24%. From a BA900 perspective, we made good progress in key product lines. In the retail lending, we increased market share across home loans, finance and overdrafts, as highlighted by the green arrows, but still fell short of our desired portfolio mix ambition. Of the historic market share losses in personal loans and credit cards, it was pleasing to see declines halted in the second half of 2025 and with appropriate risk management we expect our performance to continue to improve over time. In our Wholesale businesses, we are disappointed with market share losses in term loans as competition for scarce and good quality assets remained fierce. The closure of large transactions, particularly in energy and infrastructure was delayed into 2026 and planned repayments resulted in slower growth. In Commercial Mortgages, where we have a leading market position, we supported our clients and the market share remains strong around 35%. Looking forward, CIB is well positioned for growth with strong pipelines that are weighted to low risk, including power, renewables and infrastructure. While in BCB, advances are growing off a low base driven by our sector-led expertise and new client value propositions. Retail deposits were up slightly, while commercial deposits decreased marginally. Going forward, we aim to gain further deposit market share with a heightened focus on transactional deposits. As part of our 2024 results, we outlined a number of transformational growth initiatives, designed to leverage our strong foundation and core capabilities to unlock new revenue streams and drive cost optimization. Today, I will not cover all of them, but focus on the progress we have made on payments and insurance. With regard to payments modernization, as shown on the left-hand side, we recognize the enormous potential of digitizing small, fast payments instead of using cash, which has become very expensive to manage. In 2025, we recorded 183% growth in PayShap revenues and very strong growth across contactless payments, value-added services, e-commerce and money app payments when compared to a 6% decline in cash withdrawals. With regard to insurance, as shown on the right-hand side, the opportunity to grow and cross-sell traditional bancassurance and new solutions, such as MyCover suite into the Nedbank line base is accelerating, enabled by the organizational restructure. Insurance offerings are being integrated into client journeys at points of need and provide claims with data-driven personalized offers through enhanced digital experiences. This approach aims to increase client penetration from 19% in 2025 to more than 30% in the medium term and grow gross and premiums by more than 50%. Early signs are evident in the strong growth in end premiums across the MyCover Funeral personal lines and life product lines, and the increases in credit product penetration in card and overdrafts with home loans and vehicle finance enhancements planned for 2026. Lastly, and our fifth strategic value unlock, I will reflect on a few highlights. We continue to provide loans and finance to clients that are aligned to the UN Sustainable Development Goals. At the end of 2025, sustainable development finance exposures amounted to ZAR 207 billion, which represented around 21% of the Group's gross loans and advances. And as a result, achieve our 2025 ambitions of 20%, which we set back in 2021. From a transformation perspective, we maintained our Level 1 Broad-Based Black Economic Empowerment status for the eighth year in a row, supported by ongoing improvements in African colored and Indian employee representation and a 3% increase in African talent representation at both senior and middle management levels. We also provided first-time job opportunities to more than 3,800 U.S. employment service participants, bringing the cumulative opportunities to more than 17,000 since inception. In a year in which we had large-scale changes arising from the organizational restructure, we are pleased to have been announced the #2 ranked SA company on the Forbes World's Best Employers list and top 50 globally. I now hand over to Mike to take us through a review of the Group's financial performance. Michael Davis: Thank you, Mfundo, and good afternoon. Our financial performance for the 2025 year was muted, although slightly ahead of guidance we provided at our pre-close meeting in December and market consensus of an expected decline. Headline earnings increased by 2%, DHEPS by a slightly faster 3% due to buybacks and our ROE was softer at 15.4%, although ahead of cost of equity of 14.6%, excluding the once-off ZAR 600 million Transnet settlement, headline earnings increased by 4%, DHEPS up by 5% and ROE at 15.8% was similar to 2024. Basic earnings per share, however, decreased by 53% as we accounted for the impact of disposing of our ETR shareholding. From a balance sheet perspective, gross banking advances growth was modest at 6%, while deposit balances grew strongly at 11%. Net asset value per share at around ZAR 250 increased by 4% year-on-year, and other balance sheet metrics remain strong, evident in our capital and liquidity ratios. The total dividend for the year was ZAR 21.32 per share, representing an attractive dividend yield of around 7%. Unpacking the numbers, the 2% increase in headline earnings was underpinned by revenue growth of between 3% and 4%. Associate income that declined by 8% as ETI did not contribute to the second half of the year. The impairment charge improved by 18% and expenses increased by 7%. Reflecting on balance sheet growth, advances grew by 6% year-on-year, driven by 6% and 9% growth in home loans and vehicle finance, respectively, on the back of strong front book growth sales as we leverage our existing MFC partnerships and new mortgage originator joint ventures, including with the BetterHome Group, Uber and MultiNet. Modest growth in personal loans of 2% was the outcome of deliberate historic actions taken to derisk the book together with the impact of a change in the write-off policy implemented during 2024. New sales levels have lifted strongly in 2025 and there were no further market share losses in the second half of the year, enabled by specific initiatives focused on originating better quality business. Card and overdrafts increased by 7% off a low base. Term loans reflecting largely the growth in our wholesale businesses, grew by 3%, impacted by delayed deal closures despite improved client activity and robust pipelines. Commercial property finance grew by a modest 2% due to resilient domestic client demand that was offset by a contraction in the African portfolio due to heightened competition, client prepayments and adverse foreign exchange movements. Deposit growth of 11%, as shown on the far right, was underpinned by a 10% increase in franchise call and term deposits, a 23% increase in other deposits as clients extended tenure in response to Nedbank's competitive offerings and NCDs that increased off a low base. Looking at the income statement in a bit more detail. Net interest income increased by 3% as growth in average interest-earning banking assets of 9% was offset by margin compression. The 9% growth was driven by a 6% growth in average banking advances and high levels of high-quality liquid assets. The 24 basis point decline in margin to 381 basis points was primarily driven by a 12 basis point negative endowment mix impact due to capital and transactional deposit balances growing slower than average interest-earning banking assets, and an 11 basis point negative endowment impact from lower rates. The impact of asset mix changes as well as asset and liability pricing pressures reduced margin further by 8 basis points. Pleasingly, the rate of the decline in margin slowed in the second half of the year when compared to the first half. From an interest rate sensitivity perspective, a 1% change in interest rates impacts NII by approximately ZAR 1.5 billion. To date, we have implemented approximately 38% of our endowment hedge as progress depends on interest rate levels. This has reduced our sensitivity from around 18 basis points in 2021 to around 13 basis points when expressed on average interest-earning banking assets. Noninterest revenue growth was 4%, in line with the guidance we provided during the Group's pre-close update of below mid-single digits. Commission and fees increased by 6%, supported by Eqstra that was in for a full 12 months in 2025. Within PPB, we were pleased with transactional NII growth of 8% as our consumer banking business, reflecting good progress in strengthening the franchise and strong growth in value-added services of 36%. Growth in CIB was restrained by delayed deal flow moving to 2026 and a high prior year base. Trading and fair value income decreased by a combined 6%, including a 1% increase in markets. Trading income increased by 10%, driven by strong growth in ForEx and debt securities, offset by slower equity trading income, while fair value income declined. Insurance income increased by 5% due to an improved non-life claims experience and strong growth in premiums and policies within the MyCover suite, as Mfundo highlighted earlier. This was partially offset by a sizable positive actuarial basis changes in the prior period. And when excluding the base effect, insurance income increased by 11%. Turning to impairments. The Group's impairment charge decreased by 18%, and the credit loss ratio improved to 68 basis points, which was better than we had expected. The improvement was primarily the outcome of decisive risk management actions and an improved macroeconomic environment. At a cluster level, CIB reported a recovery of ZAR 718 million and a credit loss ratio at negative 17 basis points, primarily the result of successful workouts and derisking strategies that resulted in provision releases given the decline in Stage 2 and Stage 3 exposures. The BCB credit loss ratio decreased to 21 basis points to well below its through-the-cycle target range of 50 to 70 basis points. The decline was driven by an outstanding performance in recoveries and collections. PPB's credit loss ratio decreased to 163 basis points from 176 basis points in the prior year within its through-the-cycle target range of 130 to 190 basis points as a result of ongoing credit risk and collections initiatives and better quality front book origination. Home loans and vehicle finance, reported improvements, while credit card impairments increased off a low prior year base, and the personal loan credit loss ratio remains elevated, although improving from the first half of the year through better front book origination. Nedbank Africa regions reported a credit loss ratio of 89 basis points, back to within its through-the-cycle target range of 85 to 120 basis points, driven largely by lower impairments due to improved recoveries and stronger asset growth. Within gross loans and advances, Stage 1 loans increased by 10%, while Stage 2 and Stage 3 loans reduced by 5% and 2%, respectively. As a result, the Group's total ECL coverage at 2.96% decreased from 3.32%, mainly driven by the decline in Stage 2 and Stage 3 loans. Shifting our focus to costs. Underlying expense growth was 5%. An 8% increase in salaries, wages and other employee costs reflect the impacts of average annual salary increases of 6% and the additional Eqstra staff costs not fully in the base. Incentives decreased by 2%, aligned with profitability metrics and vesting probabilities relating to corporate performance targets. Computer processing costs increased by 5%, driven by ongoing investments in digital data and cloud solutions as well as higher digital volumes, partially offset by negative growth in the amortization of intangible assets. Fees, insurance, accommodation and marketing were all well managed, increasing by a combined 3%, while the large increase in other operating expenses was due to the inclusion of the Transnet settlement. Turning now to the disposal of our historic ETI associate investment. The graph unpacks the ETI lifetime outcome from the date of the original investment to the date of sale. We show on this slide the on-sale accounting treatment where ZAR 8.6 billion is crystallized through the income statement as a non-headline earnings item. The ZAR 8.6 billion is made up of our share of historic foreign currency translation and other comprehensive income losses to the value of ZAR 7.4 billion and an IFRS 5 adjustment of ZAR 1.2 billion on sale. The sale proceeds of ZAR 1.6 billion represent the $100 million sales price, less transaction costs converted at the December 17 rand-U.S. dollar exchange rate. Moving to capital. The movement in our CET1 ratio this year reflects solid capital generation, the payment of dividends in the calendar year, a 3% increase in RWA and the combined impacts of share buybacks, which was beneficial to ROE, the acquisition of iKhokha, the sale of ETI and the final Basel III reforms. The increase in RWA was mainly due to an increase in credit and operational risk, partially offset by a marked improvement in equity risk, following the adoption of the final reforms. At 12.9%, our CET1 ratio remains above the top end of our revised target range of 11% to 12.5%. Positioning for growth, the execution of the NCBA acquisition and to sustain dividend payments within our target range. I will close with the financial performance of our clusters in their new construct. CIB produced headline earnings growth of 2% and delivered an ROE of 21.4%. Earnings growth and returns were supported by lower impairments and disciplined capital management. NII decreased by 2%, reflecting actual advances growth of 5% and a decline in margin on the back of lower interest rates, competitive pricing and a lower risk loan book mix. NIR decreased by 2% due to negative fair value adjustments and lower commission and fees, given a high 2024 base and deals delayed into 2026 despite solid underlying activity. Trading income and equity investment income, on the other hand, were up strongly, and underlying operating expenses were well managed. The cluster is well placed for future growth given its skills, expertise and strong pipelines. Headline earnings in our new cluster business and commercial banking decreased by 7%, delivering an ROE of 20.8%. NII decreased by 1%, given a slight decline in advances and lower margin on the back of rate cuts. NIR increased by 13%, including the full year impact of Eqstra and underlying NIR growth was driven by higher card acceptance and commercial issuing volumes as well as growth in value-added services. Expenses increased by 12%, but by only 8% when adjusting for Eqstra. BCB is now fully resourced and positioned for growth. Headline earnings in our Personal and Private Banking cluster pleasingly increased by 9%, delivering a higher ROE of 15.6%. Growth was driven by a 7% increase in NIR as a result of strong growth in value-added services and insurance income. NII increased by 1% on the back of 6% growth in advances, diluted by a decrease in margin, mainly due to lower endowment and the advances mix impact. Expenses were very well managed and increased by only 4%. The momentum we are starting to see in PPB is pleasing as it takes to increase its ROE towards 18%. Lastly, in the Nedbank Africa regions, headline earnings decreased by 1%, delivering an ROE of 20.5%. The earnings decline was mainly due to the sale of ETI that resulted in no associate income reported in the second half. Headline earnings in our SADC operations increased by 15%, but its ROE remains low at 9%, which remains a focus. Thank you. I'll now hand back to Jason. Jason Paul Quinn: Great. Thanks, Mike, and Mfundo. Let's start this section by looking at our latest macroeconomic forecast. We expect banking conditions to improve further in the coming years as South Africa's GDP for 2026 to 2028 is around 1.5% to 1.8%. Inflation should remain around the Reserve Bank's target of 3% due to a stable rand, low global oil prices, low inflation expectations and fewer supply side challenges. It's actually too early to call out any changes in this guidance based on recent events in the Middle East. After a cumulative 150 basis points cut in interest rates, including the 25 basis points in November, interest rates are currently forecast to reduce by a further 50 basis points. To my mind, though, this is becoming increasingly unlikely with a plausible scenario of rates flat from here for the foreseeable future. Credit extension is forecast to remain relatively robust around 7% to 8%, supported by the anticipated recovery in the domestic economy and lower interest rates. Although, difficult to forecast due to geopolitics, the rand is expected to average slightly above ZAR 16 to the dollar in the coming years. Turning now to our guidance for 2026. We expect NII growth to increase to around mid-single digits. This is likely to be driven by stronger advances growth across all our clusters. Our NIM is expected to contract slightly given the growing impact of lower interest rates. Our credit loss ratio is expected to be around the mid-70 basis points, which is below the midpoint of our through-the-cycle target range as impairments in CIB and BCB normalize off a very low 2025 base, and PPB will continue to see an improvement in its credit loss ratio. NIR growth is expected to grow at upper single digits, driven by the execution of various growth initiatives across all our clusters. Associate income from ETI will not recur in '26 or beyond. Expenses are expected to be below mid-single digits as our focus on cost management continues. On capital, we expect to operate within our revised board-approved target range of 11% to 12.5% by the end of this year. Dividend subject to Board approval will be declared within our target range of 1.75 to 2.25x cover. So I'm even more excited today about the Group's growth prospects in the medium term than I was a year ago. And this has given our strategic focus and execution that we saw in 2025, which won't necessarily offset the discontinuance of the contribution from ETI in 2026, but will do so from 2027. Tailwinds in 2026 will come from an improving macroeconomic environment, strong underlying business momentum, as we highlighted in our presentation today, the benefits from the organizational restructure and the one-off Transnet settlement that is now in the base. We do, however, face some headwinds. These include endowment pressure from lower interest rates, wholesale impairments normalizing off a low base and no further earnings contribution from ETI. These impacts will be more material in our interim results, given that we had a final ZAR 927 million contribution from ETI in the first half of 2025. Notwithstanding all of this, the focus for 2026 remains on delivering an ROE above 15%, heading towards 2025 levels and improving our cost income ratio. In the medium term, we firstly see benefits from a more constructive macroeconomic environment, including us being well positioned to capitalize on large energy and infrastructure finance opportunities, stronger retail credit growth and a low, but more stable interest rate backdrop with low inflation, particularly from an endowment perspective. Our Transform initiatives are starting to scale, and we should see more meaningful contributions from insurance, payments and other vectors as well as ongoing market share gains in lending and deposits. I'm particularly encouraged by our various productivity initiatives, which I mentioned earlier, including AI projects, which in combination will improve our cost income ratio. We also expect to unlock synergies from our Eqstra and iKhokha acquisitions, while NCBA is expected to contribute once the transaction is finalized. From a capital perspective, we remain committed to be flexible in the management of capital and being good stewards of capital as we demonstrated in 2025. Overall, these initiatives, along with underlying momentum underpin our confidence in progressing to our medium-term targets of an ROE of 17% and a cost to income ratio of 54%. Thanks very much for listening, and we'll now proceed to your questions and answers. Jason Paul Quinn: All right. Sorry, we just had a bit of a glitch there. All right, everybody. I'm going to play a point here and coordinate our responses to your various questions. It probably makes sense for us to firstly take any questions on the telephone. So operator, if you could advise those on the telephone to put the questions to us now. Operator: [Operator Instructions] Jason Paul Quinn: Thank you. We do have a number of questions on the web, so we can go to those if there aren't any questions on the telephone. Let's give it a second just to give anyone the last opportunity. Operator: There are no questions on the conference, sir. Jason Paul Quinn: All right, folks. So if we move to the questions coming through the web. I'll read them out in verbatim, and then we'll deal with answering them together, myself, Mike and Mfundo. First question is from Baron Nkomo from JPMorgan. There's a two-part question here. First one is how our recent developments in the Middle East, impacting the Group's short-term outlook. Baron, I think it's premature for us to revise anything at this point, to be honest, even our short-term outlook. And that's really because it's just totally uncertain as to whether the conflict in the Middle East is short as the previous one was. And if they go back to the negotiating table, potentially the Strait of Hormuz are opened up again. We just don't know. What we know for sure, though, is that over the sort of more medium-term impact on oil price would be something we would observe carefully. I do think that the world has stockpiled a lot of oil over the last while. This is a risk that was well flagged for some time, in fact. I also understand that the UAE came out and said that they've got much more capacity in oil pipelines that could avoid these transformers in the short term. But the truth is, given the uncertainties around this, it's premature for us to change anything at all and we stand by our outlook based on what we know today. The second one would be also from Baron, what are your loan growth expectations for each of the key divisions, Retail, Business Banking, Corporate Banking in the second half of 2026. Just checking with Mike, Baron, I would say that we've given good guidance for the year, we can update that when we're together in August, depending how the first half goes. But we've got pretty strong conviction, as you've heard, around momentum in many of our lending businesses, particularly the annuity ones that are more kind of inflow like mortgages, autos. I think those are kind of in good shape, and we should see the similar or improving growth. BCB similarly, I think we've got good conviction there. CIB, we've said we didn't execute our full pipeline in 2025 and that, that pipeline should be executed into 2026, and we've got conviction on that statement as we stand here today. So I'd say we'll be pretty linear through '26 and with some lumpy trades in CIB that will emerge from a pipeline execution perspective. Tyron Green from Granate Asset Management. Are you able to provide more details on the competitive environment in the corporate credit market, the reason for the lower market share in corporate credits and delays in CIB pipeline impacting NIR? Thanks very much, Tyron. I think we covered some of that in the presentation, but let's just double click on it. Our CIB business can only operate as quickly as our clients, to be honest. We put great capabilities in place. We have great structures in place. We've got appetite, as you've heard, and we've even gone so far as to really express our appetite in a different way in that for our best customers now, we will take full exposure to them. In other words, we're standing by our clients' growth opportunities. We know for sure that the last round of renewables that were awarded weren't executed. We think those do get executed in '26. And we've got pretty good conviction around it, as you've heard, but not necessarily always in our hands, and that's the only reason for the delay as we see it at this point. Ross Krige from Investec. A couple of questions here, which we'll probably share around a bit. First one is on the additional cost optimization plans brackets, I think ZAR 1.5 billion was mentioned. What is driving this and in what time frame? Let me cover that one quickly, and Mike and Mfundo might come in on it. Ross, you'll recall that the company ran a very effective TOM program. I think that took ZAR 6 billion, ZAR 7 billion of cost out of the organization. What we talk about now is a project that deals with productivity. So in other words, ensuring that we have the most efficient organizational designed to serve clients, minimizing any duplications between our enablement functions and our businesses. And ensuring that our technology enablement delivers in the technology enablement part, we're looking at -- we've got a lot of use cases, Mfundo covered some of those in AI to enhance colleagues productivity. So in other words, a loan officer and the number of loan applications they can deal with in any particular time period should be accelerated through AI. That's where that quantification comes from. That is a medium-term aspiration. So we'll deliver that over 3 years. Second question on the delayed deals in CIB, what are the main reasons for the delay? And what is the risk those deals don't happen at all. Ross to be fair, I think we've covered that. I just want to see it Mike or Mfundo want to add anything. I think we've covered it. Third question, on home loan origination proportion going through owned channels reduced to 35%. Could you be more -- could you share more details around the strategy and the trade-offs at play? Ross, I think 18 months ago or thereabouts, we were very clear as part of our strategic refresh that we intended to widen our scope of origination and bring in originators, and we've done that very successfully. And I think that's seen the largest part of the growth in flow coming from the mortgage business. So that's clearly been strategic. And I think we're executing it well. Next one is Harry Botha from Bank of America. How should we think about CLR in the medium-term targets? Can wholesale remain lower supporting CLR below 80. So let me start on that, Mike, you probably come in. So yes, we've got a range, as you know, Harry, which is 60 to 100 basis points. We're probably at the lower end now of where I think we may end up, and we've guided very explicitly for FY '26 to be somewhere in the mid-70s, so from 68 up to 70 mid. And that's on the back, of course, of a non recurrence of the very low or credit kind of write-back in CIB this year and an increase in BCB, which was also pretty low. Mortgage is also pretty low at the moment and might go up a little bit. So that should give you a bit more color, Harry, on where we are with respect to guidance. With respect to medium term, like more further out, we want to be more or less in the middle of the range or thereabouts with good loan growth on the top of that. You never want your loan losses to be so low that you're not taking enough risk in the market, and I think that's something to watch. Michael Davis: Maybe, Jason, just to add to that. So in terms of -- we've given guidance this year, in terms of credit loss ratio in the mid-70s. So you can model that 75, 76 somewhere in that sort of range. And as Jason has indicated, we would see an unwind of the recovery seen in CIB towards the bottom of the target range. And you know that, that plus there's a range of 15 to 45. We've indicated that BCB had a very good credit outcome. And obviously, our focused on growth. I would suggest the 21 basis points, that's going to move up. Jason referred to home loans at 8 basis points at very, very attractive levels. So I would suggest that's going to move up. But then we've got scope and capacity and unsecured lending, both in personal loans and card and VAF, we think will continue to come in. You put all those bits and pieces together, that's where we get the guidance for the group at somewhere in the mid-70s. Jason Paul Quinn: Thanks, Mike. Thanks for that color. Harry, you've got 2 more parts. Can you expand on your strategies to accelerate growth in BCB over the next couple of years? Absolutely, Harry. So firstly, it's been great to see the formation of BCB as a cluster. It's been great to see the leadership team form under Andiswa Bata's leadership. We already saw quick wins in that second half last year and more momentum in our client franchise. So a combination of, I would say, a good hustle, in other words, bankers chasing transactions, service and products. We also need to see collaboration, which is already building out nicely between BCB with PPB on some products and CRB on others, like FX and trade and commercial properties. So really excited about the opportunity strategically in BCB and we can unpack that a bit more when we're together later in the week. All right. Harry's got one more there. What underpins the 18% ROE target in PPB? Is it predicated on high single-digit revenue growth. Harry, of course, it's a revenue-led strategy in PPB, but also, we need to make sure that credit loss ratio covers is well covered, and we get efficiency out of that. I'd also just say that the productivity gains that we expect would probably benefit PPB the most. I think that will be a fair comment, although there will also be benefits in BCB given it's relatively high cost-income ratio. Okay. Harry, thank you. All right. Chris, Chris Steward from Ninety One. Please, could you unpack the NIR growth guidance? How much do you see as organic versus how much from recent acquisitions such as iKhokha? That's a great question, Chris. Of course, iKhokha only landed in December. So it's only had one month of revenues in it. You'll see that in our booklet. In fact, it's around about ZAR 60 million from memory, Mark, or thereabouts on the revenue line. I think we'll unpack that a little bit more later, but I certainly would see that a large portion of our NIR revenue growth would come from organic. And you've seen where that's -- where those lines are, those key lines that we think we should make progress on, including in CIB, especially those deal closures come with fairly large upfront fees attached to them, which I think would make a big difference to our NIR trajectory. Chris, I'm also really pleased if you go through the businesses with PPB, some pretty good momentum there on the fees and commissions lines in the high single digit, which we think we should be able to maintain. Mike, I don't know if we want to say much more about an individual acquisitions contribution in '26 other than what we earned in December. And I don't think that was -- look, seasonally, that would be a relatively high month given transactional volumes in December. So maybe not a run rate of 60 a month, but a little bit less than that, and then you can figure out annualizing that what the -- because that's the only one run that will have a major contribution. The other one will be NCBA, which is much later in the year, and we'll probably guide more explicitly on that when we get closer to executing that transaction. Okay. Charles Russell from SBG. First one, do you anticipate further buybacks given your comments about DHEPS growth greater than HC growth in FY '26. Mike, do you want to take that one? Michael Davis: Yes. So I think when you think about DHEPS and when you think about our capital management and our approach towards capital management, we indicated, certainly during 2025 that we saw significant value in doing buybacks at levels at which the stock price was trading at, at a time when we were short of growth and at a time when effectively, we had no major acquisitions in the pipeline. So we saw an opportunity to certainly execute buybacks at valuable levels to shareholders. If you reflect on where the stock price is trading today, if you reflect on the fact that we've announced to the market, we're looking to close out a 66% acquisition of NCBA. And if you reflect on Jason's comments around front book growth, which certainly in CIB, BCB are going to be much better than 2025 or expect it to be much better than 2025. It's likely that capital is going to be utilized to support growth and to continue to service inside the range. So that would be... Jason Paul Quinn: I think that's right, Mike. Thanks, Charles. Your NII guidance for FY '26 seems to imply continued lower than market loan growth. I guess we'll see Charles how the other banks guide over the coming weeks. Can you unpack the mechanics of shrinking CET1 ratio into FY '26? I think we've covered a bit of that. So we certainly would see loan growth as a first key driver. We certainly have to fund at least part of the NCBA acquisition. And then after all that, if there's opportunity, we would look at buybacks at -- within guardrails of a share price. But those will be the drivers of bringing our CET1 ratio up to the top end of that new target range. Michael Davis: Maybe just one other is that D2 comes into effect, January 1, 2026, and that itself takes about 27 basis points of the CET1 ratio. So you've got -- to Jason's point, you've got NCBA coming in. You've got D2 coming in. You've got an expectation of stronger growth. And hence, our guidance or expectations around CET1. Jason Paul Quinn: But once again, Charles, our commitment to shareholders would be to be good stewards of capital, and we would use those levers appropriately. Okay. Now we've got a question from a colleague at Nedbank, Heathcliff. Are there any plans around internal structure to deal with inefficiencies such as market offsetting in different CIB area to markets? I'd suggest Heath we'll take that up with you internally. I wouldn't suggest that that's a question I can answer here today. Simon Nellis from Citibank. Do you intend to execute further buybacks this year? Simon, I think we've covered that extensively now. So I'm going to assume that one's answered. We went to James Starke from Morgan Stanley. Regarding your home loans distribution strategy, with only 35% origination coming through own channels down from 42%. Please, can you give some color on a few things. How the economics and asset quality characteristics compare between your own channel and mortgage originator channel and how do you secure a position of the MO channel relative to other banks? Well, I'll start off with that one. James, in my experience, a diversified portfolio that originates both from owned channels and mortgage originators takes you well through cycles. I think what mortgage originators price the most is consistency of appetite. So in other words, it gets very difficult for them to do their business if banks are in and out of appetite with them. So I think consistency of appetite is very important, and they will see that from us. I think it's also important that as we build out these partnerships, they are kind of long-term partnerships with sharing of economics right down to the bottom line, including sharing of good credits and not so good credits. In other words, that loan loss is important to both parties. I think that will be the main part of the answer, Mike, I don't know if you want to add anything to it? Michael Davis: You heard me in my slide referred to the partnerships and JVs with the BetterHome Group, Uber and MultiNet. I mean, obviously, the adverse implications of that is obviously, it costs us something to be in those JVs. But certainly, when looking at the quality of the front book and the residual economics in the deal they are favorable joint ventures to the organization. Jason Paul Quinn: Yes, I agree, Mike. And James, the last point I'd make around the mortgage originators is simply that we really have a long-term view of how to work with them. And those relationships are being built out carefully. Simon Nellis from Citibank. What, if any, earnings accretion do you expect from the NCBA transaction? What is the magnitude of any synergies from the transaction you expect? And last, what is the capital impact of the transaction? So Simon, I think with respect to how the transaction is progressing firstly, we announced a week ago that we obtained Capital Markets Authority exemption. So -- and we're busy now with processes of applications to the Central Bank of Kenya, for instance, and the SARB. So we only expect to execute the transaction in the third quarter. As we get closer to that, the economics, I think, will firm up a bit more. And at that point, we'll be able to say a lot more around quantifying some of these magnitudes that you're looking for. But certainly, strategically, we're very excited about the opportunity of bringing these 2 companies together. We certainly think that there are things that Nedbank can add to NCBA and there's things that NCBA can add to Nedbank. So we do see synergies as part of the game plan. Mike, do you want to cover the capital impact? Michael Davis: Yes. So Simon, the best estimate at the moment is based on assumptions that the deal will take 40 basis points out of the CET1 ratio. And obviously, there are a few moving parts in that, but you could model 30 to 40 basis points. Jason Paul Quinn: Thanks, Mike. James, is coming back in. And James, there was one other point I just wanted to make to you on the mortgage originators which really deals with turnaround times. I covered the part around consistency of appetite. But one thing we had to invest in significantly in Nedbank was our turnaround times of approving applications and you need to get to the good credit quickly and first. And I think that's another reason why that channel has grown quite nicely for us. With respect to your final question, James, does the FY '26 guidance include NCBA from Q3? Not at the moment, James. We haven't put that in our thinking for what we guided today. We will update you as we get closer to Q3 on that. I'm just going to refresh, one last time before we move to close. So if anyone has a final question, please put it in now. Otherwise, I think we can move to closing this session. We look forward to seeing most of you in the coming days as we engage in-person on today's presentation. Thank you very much.
Jacques Sanche: So very good. We're still 1 minute early. So as a good Swiss company, we'll still wait for a minute, maybe less. There we are. It is 2:00. Thank you very much for joining us here in the room, first of all, and for those of you who are at the screen, thank you very much for joining us at least online. I know the weather outside is very, very tempting, but I hope we have some good news that will be interesting for you as well. It is a hybrid presentation. So in other words, we have people watching us, and it is being recorded, and it will be available on our website later. If you have questions, I will first address the questions that are here in the room. And then afterwards, I will address the questions which are online. You will have to raise your electronic hand so that we can see who has a question but that we do during the Q&A session. Today, with me are -- let me see if I can work out the electronics here. There we are. So as usual, Manuela is going to join the presentation later and explain some financials. And then it's Matthias job as the future CEO, the CEO as of the General Assembly in April to give an outlook. If I try to summarize last year's results, what we can see is that the markets where we are active have stabilized overall. There is some recovery visible, especially in Europe. We see more demand also in the agricultural sector, which is good. We have 2 divisions that managed to grow their order intake, which is basically Kuhn Group and Bucher Hydraulics. Then the sales still fell if we compare it to 2024 based on the lower volume or lower order book that we had at the beginning of the year. And it was only Bucher Municipal as a division that managed to increase their sales year-over-year. The EBIT margin reflected the lower activity that we had in our facilities, the reduced volume, and we profited from the sale of a property here in Switzerland. So that compensated somewhat the situation, which is what is a very nice highlight is the strong cash flow that we generated last year, and that will then result into nice requests to the general assembly. And also a good result is the fact that we managed to reduce the CO2 emissions once again. So we look for the long term, then we can see that we have a very solid financial position. We are holding about CHF 500 million in net cash positions, and we have a high equity ratio of 66%. And we are proposing also for that reason, the continued dividend of CHF 11 at the general assembly despite the share buyback, which is almost accomplished now. And then finally, the last point, which is important, we have established a new management team, a new management team with Matthias being my successor, but also within the divisions with Bucher Municipal and Bucher Emhart Glass, we have 2 good, very capable successors. If I come to the numbers, then you can see that, that order intake I spoke before was a stronger focus on the European market that increased by about 7% year-over-year. And if I show you these numbers now, they're always corrected for exchange rate and for acquisitions. So these are really like-for-like numbers. So 7% on the order intake that went up. It was mainly Kuhn Group and Bucher Hydraulics that increased there, whereas the glass forming machinery business suffered most, but in aggregate, 7% up. The sales, however, still based on the lower order intake at the beginning of the year, declined by about 6% last year. It was only Bucher Municipal that managed to increase their sales. The good news, though, is that especially with the fourth quarter of last year, finally, we reached a stage where we were showing positive sales for the whole group again. If we look at profitability, then you can see the group's EBIT margin reached 9.7%. That is a bit higher than the 9% we had in 2024, but we did benefit from the sales of a property that we had here in Switzerland. We cleared that property and now we got it into the market, and that netted in a profit of CHF 43 million. Profitability otherwise was, of course, impacted by the lower volume that we had. And if we look at the cost elements, then we see that our personnel costs in percentage of sales had a tendency to go up despite measures that we took to reorganize or adjust capacities, especially in the United States. FTEs declined by about 4% year-over-year. In some areas, we had to reduce them, but there are other factories where we are already building our employee base again so that we can prepare to produce a higher output. Then we continue with some key elements, and that is, of course, the R&D cost. The R&D cost did not go down. We basically maintained almost CHF 140 million, not quite CHF 134 million in percentage of sales. It's where it should be, in my opinion, somewhere between 4% and 5%. The 4.6%, I think, is a good value. And we did continue to also invest into buildings, IT and of course, modern machinery. As you can see here, the CapEx did get reduced from about CHF 150 million, which was a high level, down to about not quite CHF 120 million. I can show you some examples. For the R&D side, what I'd like to show you is in the middle picture, the new tine cultivator that we introduced, especially for the European market. The tine cultivator is a tool that you use after the harvest. It really has the job of putting the residue or mixing the residue with the soil so that the decay can start happening. It's a natural way of kind of reducing the residue and getting back some fertilizer or some nutritions actually into the ground. We were very successful with that. That's one element. And we have a lot of other products that we, of course, introduced into the market. And what you can see is, of course, that tine cultivator, it's called the Highlander that is towed by a green tractor, the John Deere tractor. We -- it's a bit in the dark, but you would see otherwise hydraulic components and these components are from Bucher Hydraulics usually. And that is one of the reasons why we expanded our buildings in Frutigen, and that is the picture on the right side, where we are going to be delivering into a new generation of John Deere tractors, and we have created that capacity to do so. Another achievement that we made is we reduced our CO2 footprint by another 13% year-over-year. So we're down to 60,000 tonnes or 61,000 tonnes. When I started, it was 93,000 tonnes in 2021. So I think we are on a nice path to continuously bring it down. We invested into renewable energy that we brought. So the energy mix was better, but we also invested in solar cells. And then, of course, lower activity does help also to reduce the CO2. But all in all, in the last 4 years, we reduced 35%. I think that's a very good achievement. Every year, when you look at the annual report, we have kind of a topic. This year, our topic of the annual report was where do we create value for the society. And we just brought some examples that I would like to explain to you. I mean the first question would be, could you imagine a life without milk? Maybe the milk, yes, but can you imagine a life without cheese? The pizza without cheese? I mean, at Swiss, of course, we cannot imagine at all or the chocolate without milk or milk powder or a toast without butter? That is, of course, one of the elements where you suddenly notice how important milk is to our society, at least to the diet that we know. And that is this part of the story. And producing milk is very labor-intensive. So you need to take care of your cows on a regular basis every day. If you don't do that, of course, milk production goes down and eventually, they'll start complaining. So finding the labor that wants to work in the stable is the next challenge that the farmer has, especially in the milk industry or dairy industry. And we have developed this robot that goes out to fetch the silage, puts some other ingredients into the food stuff, then it mixes it. There's a mixer inside that robot and then it has a belt that feeds that food mix basically to the cows. And then on top of it, it has a brush because the cows start sweeping out the food mix too far away, they can reach it. The robot will then sweep it back right in front of the cow. And that machine does it all day long, just drives back and forth and keeps feeding the cows very, very regularly, like this the milk production is just optimum. And that is a machine that is pretty successful. It's getting installed in more and more places into dairy farms. We take another example that is probably very prominent today. As you can see, I mean, obviously, first of all, our sweepers have the job of cleaning the streets again when there's gravel on the road, maybe from the winter time or so old leaves. That is one job that has to do with safety. But of course, a clean city is something where people like to be. It attracts a good society. And then I think sweeping goes right beyond just having a clean road, but also providing comfort to the inhabitants of a city, such a sweeper can do about 25,000 square meters per hour. So it has to be high performing continuously. What we see more and more through these cities, we have electric buses. I think it makes a lot of sense. There's a lot less noise for electric buses. It's easy to kind of run them, and we had invested into a company about 5 years ago that produces these inverters. So with an electric bus basically have the battery available, now you have all kind of systems that need to be powered by electricity. That can be the steering that needs power steering, that can be the compressors that drive the dampening or the tilting of the bus for the -- when the passengers are entering. It can be something simple like air conditioning or the USB power plug that is available in the buses today. And we have these inverters that go into these buses. It is a successful business as such. So whenever you sit in electric bus, enjoy the quietness somewhere in the background, there are our inverters working. There is no doubt for us -- and it's also, I think, well depicted on the right side that glass is one of the best containers for liquids and for drinks. It is just the purest form about PET, a lot has been written, even aluminum cans, they have a plastic liner inside. It's not really aluminum that touches and it is just not quite as healthy as what glass can offer. So there, we are proud of producing almost -- or more than every second bottle in this world is produced on one of our machines, and that's really globally. So a lot of people sitting together enjoying the bottle of beer or eventually wine, they will be profiting from our glass machine. And then finally, apple juice is another beverage that people like very, very much. We have invested into a facility in Poland. About 3 years ago, they produced the containers where all this apple juice or the concentrate can be stored. We have the filters that go right in front of it, and we have the presses that is our origin that we sell to go with it. So basically, we have the full chain for apple juice production. And again, we see people enjoying it. Just some examples how Bucher is creating comfort and a better life for people in this world. I would like to continue now with some details on the divisions, and I'll start off with Kuhn Group. And of course, we have another nice product, which I cannot refrain from praising because we did get a medal for that at the Agritechnica show in Germany last year, and that is the GMD 15030 that's a disc mower and it has a reach of 14.5 meters. So it's driving along with some 20 kilometers an hour. It's cutting at 14.5 meters. It's highly efficient. But the specialty about it, of course, because you have such wings, you have to have them flexible because they have to adapt basically to the terrain. Otherwise, you would not be cutting the grass nicely. And then the other part that is interesting because at the end, he has to drive home. So we have to fold this together from 14.5 down to 3 meters in width and 4 meters in height. That's the allowable size that is available in European regulations, and it does so very, very well. If we look at farming last year, it's kind of a mixed picture. The picture that was a bit more pessimistic is on the left side, where you can see the grain prices. Down below it is more corn and wheat. And if you compare it year-over-year, you can see we were at a very low level for the farmers, particularly in the United States, and they were suffering. Income for farming was bad last year. You can also see the green line, that's the upper one on the left chart. And you can also see that dip, which is most likely the dip that happened when China decided not to buy any soybeans anymore from United States. That happened right around midyear because of the tariffs and then after a while, Trump renegotiated and then they started buying again. And these are all these elements that happened. But there's no doubt, crop production last year was a very difficult task and hardly profitable for the farmers and they're suffering. The milk price was better, dairy was actually a good business last year. In the United States, it started coming down. It continues, but it's still at a fair level in Europe, milk price is still at a good level. And one element that we don't depict here is meat price, livestock. That was at a very, very high level, and it remains there. And so these farmers are doing well, but the crop producers have problems. Here, you can see the farm income as it is projected by the USDA. And you can see 2025 wasn't really an improvement over 2024 and 2026 is expected to remain about the same. And these levels here are just not sustainable for farmers. Now the United States government has noticed it, and obviously, farmers are Trump fans. So they expect more subsidies to happen in 2026 or more to come, and they were more promised. Now 2025, there were some promise as well, but the problem is at the moment they had promised it, they had the government shutdown, so they didn't pay. So that delayed as well. So a challenging year for these crop producers overall, a bit less challenging in Europe. If we remember a year ago, we said that one of the biggest challenges that we had was that the dealers were overstocked. They had too much in their inventory. They were not selling quick enough, and it took a while for them to reduce that inventory to the level where they would start ordering again. And we have reached the level now. The dealers in Europe are at normal levels. They are ordering again the material that they need. The ones in the U.S. are getting there. They were -- that happened a bit slower over there. So that was one element why we see more revival in Europe happening. If I take some other areas, I mentioned the United States being challenging, Brazil, there, what we see is the subsidized credits that farmers can get from the Brazilian government are at interest rates that are not attractive for the farmers. So it is available the money, but they don't really want to use it because the interest rates are high. And at that moment, they're holding back with investments. That is basically the part. So all in all, Kuhn Group's order intake rose by impressive 20%, albeit from a rather low level. The order book reached 6 months of sales, which I think is a fair level. And sales, of course, still reflected the low order book of the beginning of the year and it fell by 7% year-over-year. So the lower utilization of our factories and sites led to an EBIT margin, which was on the low side for Kuhn at 7.1%. They were also having to pay tariffs. They were most impacted by the tariffs overall from our divisions. And then we had capacity adjustments also in the United States that needed to be done so that we can face the lower level of demand, at least over there. If I change over to Bucher Municipal, this is our latest baby in the line of compact sweepers. It's the smallest one, too, the VR17e is fully electric, 4-wheel steering, very, very maneuverable, is ideal, of course, for more pedestrian areas. What is interesting, it has actually a full drive-by-wire setting or electronics. And that is what we need. We want to do autonomous sweeping. So we need to have the controls and they will have to have a digital control or digital access to all these elements of the sweeper. And a matter of fact, it's in Duisburg, where we are testing the sweeper fully autonomous, no driver in it for now testing purposes, obviously, but with the intention eventually to come out with a product that can fulfill this requirement. Then if we look at Bucher Municipal, which I think is a very nice story. So the order intake, we had mentioned it came down a bit. Compact sweepers like the one before went pretty, pretty well. There was also momentum for the sewage cleaning side. Then the truck-mounted sweepers had a bit more trouble selling. Likewise, the winter equipment or refuse collections, they were a bit more under pressure. All in all, the order intake declined somewhat by 3.4% year-over-year, but at a solid level. The reach of our order book is 5 months, so that's still good. The sales remained high at about 3.4% above previous year, mainly driven by United States and Europe and less by Australia and Asia. So as a result of very solid sales, but also as a result of the restructuring and the continuous organization, the EBIT margin almost finally reached 9.4%, I think a very good value. I would continue to the next division, which is Bucher Hydraulics. This is a system integrator that we bought in Finland. There's quite some machinery being built in Finland. Forestry is one good example and then also defense or offshore marine. And this company was a good system integrator for all these applications. We're very happy that we could buy this team that produces solutions for these applications as mentioned, and it is doing actually pretty well. So I mentioned that we saw a little bit of a revival was hydraulics. It's a good sign. There were different applications, different regions that helped to do so, construction and started picking up again, agricultural machinery, also our tractor manufacturers are starting to come back to life, but there was also industrial hydraulics that was going upwards. There was mainly one application that was on its way down still, and that was material handling. That is the facility that we have over in the United States that was suffering. Then we look at the order book altogether, it decreased by 4%. And the sales, of course, were still an effect of that lower order book that we had at the beginning of the year, and that also decreased by about 4% altogether. So the lower capacity utilization did challenge us here and there. Then we also had some acquisition costs for -- also the new system integrator that I mentioned before. And we had to also open up a new facility in Mexico or in Malaysia, just to be closer to customers. And for that reason, our EBIT margin kind of sank by about not quite 1 percentage point to 10.1%. I will continue to the next division, which is Emhart Glass. There, we acquired a company that is active in the engineering of glass manufacturing plants, a complete specialist, but it is the first company that a glass customer would address when he has a new project in his mind, and that is one of the reasons why we like to have them. So they do all the engineering and the specification for the machinery that is required in the glass manufacturing plant. And of course, they will then also specify our machines in the future. It's good, but it also gives us an opportunity to sell more of the infrastructure that is needed to run our machines. So we will eventually expand that business beyond just glass forming. And then another side effect, which was very pleasant with the acquisition of this company, we also found a new member of our management team, and the successor for Matthias Kummerle. If we look at the overall results, then it is clear that our customers were suffering substantially last year. Glass consumption was still lower. Energy prices was a challenge for them. They were adjusting their capacities, closing older plants. And what we also see is alcoholic beverages, which is a driver for glass is coming down. The consumption of alcoholic beverages is coming down. So overall, there was less demand from our customers. Order intake went down as well for forming machines, but as well also for inspection machinery and altogether by 15.4%. The one element that stayed stable was, of course, service and spare parts that continues. There we continued with solid success. Sales were significantly lower also based on the order intake by 18%. The operating profit margin despite that reduction remained at very respectable 12.6%. We did adjust our production planning to that lower demand, and we did some activities as well. One of them is to shift the production from -- of inspection machinery from the United States over to Germany. That is Bucher Emhart Glass coming to Bucher Specials. There you can see presses. These presses are normally used to press apples and then produce apple juice. But there is a side application that we have been serving only halfway successful in the past that is pressing of sludge and the sludge, which comes basically from water purification plants. And we received a big order at the end of the year from Hong Kong. Hong Kong is reshuffling their sewage system, and they want to have these presses so that they can dry the sludge better than with current technologies. And we're going to be building them this year and then delivering them in 2017. They will be installed in caverns for Hong Kong sewage system. So maybe a breakthrough of a new technology. But Bucher Specials overall was challenged last year, especially the wine production was a very difficult topic. We see clearly that wine consumption is going down. That is one element. And then the markets where we are very strong in France suffered particularly because there were tariffs on their French wine. So there was less consumption in the United States. And almost everywhere in the world, they're reducing the vineyards, the surface of vineyards. European Union is actually paying money if you start reducing your vineyards. So that is going on, and that was very challenging for one of the units, which is called Bucher Vaslin. The other unit that does mainly juice production, which is Bucher Unipektin, apple juice, orange juice and also beer filtration, that was doing very well last year. And then we have the trading business for tractors here in Switzerland, Bucher Landtechnik that remained at the low prior year level but was solid. And then finally, the last unit of this Bucher Specials, which is the automation side, which has a high degree of internal customers, Emhart Glass being one of them and then Bucher Hydraulics being the other. That unit was also challenged just by lower demand and had to go through some restructuring. All in all, the order intake was stable, as you can see, but the sales did fall 9%. The profit margin improved somewhat from 2.3% to up to 3%, but still at a low level. That, in short, is the explanations to our divisions, and I'll hand over to Manuela to explain the very positive financial data. Manuela Suter: Thank you, Jacques, and good afternoon from my side. We talked a lot about the operating results. So now let's come to the net profit of the year. And in between, we have the net financial result and the income taxes. Net financial result, in our case, a positive number. The net financial result was driven by interest income and the result of short-term investments, mainly in Brazil. As a reminder, we have a substantial high net financial liquidity, and we are almost debt-free. The effective tax rate was slightly below 20%, slightly lower than expected, mainly due to special effects, the property gain was with a lower tax rate, and then we also benefited from R&D impact or R&D credits. So midterm, we still expect the tax rate to be in the range of 21%, 23%. The net working capital, it was a highlight. We could reduce net working capital significantly by CHF 180 million, mainly due to a reduction of inventory and higher customer prepayments at Kuhn Group from Europe or in Europe. Net working capital in percentage of net sales of 18.5% compared to 22.8% last year. This is a meaningful improvement year-on-year and shows our focus on the cash conversion. There is still some way to go. Over the last couple of years, our average was between 17% and 18%, and that's a number that we also would like to achieve over the next 2, 3 years. The reduction in average net operating assets is mainly attributable to the net working capital reduction. As we continue to invest in our production facilities, modernization, digitalization is a key topic and also ensures our long-term organic growth. The return as a result with 16.2% is still above our cost of capital of around 8%, but below our target over a cycle of 20% and includes the effect from the property gain is roughly 2.5 percentage points. Here on this graph, I would like to start right in the middle with our operating free cash flow, and it was clearly a highlight of 2025. The operating free cash flow of CHF 365 million exceeded the already high prior year, mainly due to the substantial reduction of net working capital here on this chart with CHF 130 million. And even without this impact, it's the highest operating free cash flow over the last 20 years of Bucher Industries. As a result, on the bottom, the free cash flow slightly above CHF 100 million. And in between, Jacques mentioned the acquisition that we did over the years. And then we have the dividend and treasury shares or the share buyback program with CHF 234 million. The impact is roughly half-half. So dividend payment around CHF 112 million and the rest is applied to the share buyback program. As a result of this strong free cash flow, we achieved a net cash position close to CHF 500 million in the middle. And we still have a comfortable equity ratio of 66%. And this solid financial position ensures our flexibility, but also our stability for the whole group and creates optimal conditions for our -- for the future growth. And when it comes to our capital allocation priorities, first, it's organic growth, investing in CapEx, innovation. So R&D is key also in the future. Second, is scan the market for acquisition opportunities to complement our businesses to generate future growth. And last, with such a strong balance sheet, it also allow us to continue to pursue a consistent dividend policy. And another nice chart over the years, over the last 10 years, we were able to increase our dividend per share. And the Board for the year 2025, the Board of Directors will propose a dividend of CHF 11 per share. This takes into account our results of 2025, including the property gain, the outlook 2026, future investments and also further the dividend policy or consistent dividend policy. Overall, we are also in the final stage of our share buyback program. Yesterday evening, we achieved close to 4%. We paid around CHF 150 million over the last year. It's a bit earlier than expected. So our Board will propose at the next AGM, the capital reduction this year. And before I hand over to Matthias, some nonfinancial numbers. The heart of our company is the people, and it's right in the middle, the employees. We still have around 14,000 employees of headcount around 400 trainees worldwide, 100 in Switzerland. So it's also key to further invest in skillful employees and in our training. So the average hours of training per regular employee also increased by 14%, has mainly to do with also the introduction of ERP programs and additional trainings. And other key target is to reduce the number of occupational accidents on the bottom. Here, we were able to reduce it by 13%. And within the group and the group management, we have a commitment to further reduce this number with a new target that we also introduced during 2025 to reduce our lost workday rate. So to summarize, for a sustainable value creation, it's important to work on both sides. On one hand, on the profitability. Our focus is to remain on actively managing the cost within business units with still lower capacity utilization. And at the same time, we are also well positioned to capitalize on those where we are seeing signs of market recovery. So profitability, managing costs. And on the other hand, our invested capital, it's our aim to return the net working capital as a percentage of sales to the long-term average, this 17%, 18%. And at the same time, we remain committed to investing thoughtfully in future growth, guided by our capital allocation priorities, as I just mentioned before. And with that, I would like to hand over to Matthias with an outlook. Matthias Kummerle: Thank you, Manuela. Good afternoon also from my side. It's a pleasure to be here, and thank you very much for coming this afternoon and for joining us. I haven't had the pleasure yet to speak with all of you. So please allow me to briefly introduce myself before we go into the outlook. So my name is Matthias Kummerle. The name comes from Germany, born in Germany, grown up in Switzerland. I have a technical background, studied at ETH Zurich mechanical engineering, then ended up in Lausanne at EPFL for a PhD, finally complemented my studies a few years later with an MBA, had a number of years with Hilti in Liechtenstein first and then a couple of years in China, a country which I'm still following with a great interest. And since 15 years now, I've been with Bucher Industries. I have headed the R&D effort at Emhart Glass for 10 years. And the last 5 years, I had the pleasure of heading the division. And now from April on, as it has been mentioned before, I have the pleasure to take over from Jacques as CEO at the next general assembly. And I'm looking forward a lot, of course, to continue building on what Jacques and the team have built in the last years and to working with the management team. As you know, Bucher Industries has a very long history of entrepreneurship of decentralized responsibilities and management and I think also a very disciplined capital allocation process, as Manuela has mentioned. And I want to continue that culture and basically continue driving with the teams along those lines. Now coming to the outlook. I have to admit looking into the future has already been easier in the past with all the uncertainties that we have going on at the moment. The whole planning cycle is challenging. The most recent events in the Middle East are not really making it easier. Nevertheless, I will walk you through the assumptions that we are applying at the moment and what that means for the expectations for this year. So overall, we expect that the recovery in demand that we have seen in the second half of last year will continue. This will be most pronounced with the Kuhn Group and also with Bucher Hydraulics. But again, the uncertainties are still quite large and elevated, and we have to also live with the possibility of headwinds, which might have an adverse impact on the investment mood of our customers and also on the cost side. Walking through the divisions -- this one here. And starting with the Kuhn Group, we can say that based on the higher order book with Kuhn Group, we expect an increase in sales. And when I speak about sales, I always mean comparable basis compared to last year. And in addition, also the operating margin is expected to be higher than the prior year. The improvement in volumes and also the high discipline that we enjoy with Kuhn Group on the operational side will support the profitability as the demand continues to normalize. With Bucher Municipal, we expect a slight decrease in sales on a comparable basis once again and also a slight decrease in the operating margin compared to '25. Overall, the demand should stay intact. We are not worried about the demand. And we also expect the continuation of the benefit from efficiency measures that have been going on. However, the order book going into the new year is substantially lower than what we had a year ago, and this limits a bit the near-term visibility and also weighs on the year-on-year comparison. Bucher Hydraulics. There, we anticipate a slight increase in sales. And correspondingly, we also expect a slightly higher operating margin. As mentioned, the order intake has improved, especially in Europe. And while we remain cautious about the overall situation, the trend is clearly more supportive than in the prior years. Bucher Emhart Glass, obviously, I know that division the best at this moment. There we expect on a comparable basis a significantly lower sales and also a significantly lower operating profit margin. And that has to be put in light with a strong increase in sales that we saw in the last year -- towards end of the last year, which supported in the previous year, the profit margin and the sales. And because of that, we really start the year now with a lower order book, and that will weigh on the Emhart. But we are hopeful that we'll see during the course of this year a trend to the positive again. But the visibility is not the best yet. Finally, Bucher Specials. There, we anticipate a slight sales growth and also the operating profit margin is expected to improve again. And that is supported by the higher capacity utilization that we expect. And also some ongoing efficiency measures. If we put all that together, we can say that Kuhn Group and Bucher Hydraulics and to some extent Bucher Specials they have to compensate in '26 for the shortcomings of Bucher Emhart Glass. And overall, we expect a comparable sales compared to '25 and also a similar operating profit and that is excluding the property gain that we had in the last year. We believe that this picture contains a quite balanced view of the risks that still are there and of the upside potential. So the risks, as I have mentioned before, there are still uncertainties with the trade situation with tariffs and so on. The cost side is difficult to anticipate. On the other hand, on the upside, it could be that agriculture in Europe or also in the U.S. might pick up a little bit faster than we believe at the moment. So overall, the picture, we believe, is quite balanced. And with that, we approach '26, I would say, with a cautious optimism. Before we go into the Q&A, I would like to mention a couple of words about the management team. I'm in a very fortunate situation that I can start working with an extremely experienced management team, which has also -- which is fully aligned also with the culture and the values of Bucher Industries. There is Manuela Suter, responsible for finance as our CFO, whom you know very well. We have Thierry Krier responsible for the Kuhn Group. We have Frank Muhlon driving Bucher Hydraulics. And we have Stefan During responsible for corporate development and for Bucher Specials. I have known these colleagues since a very long time from my term on the management team, and I'm super happy to be working together with them in the future and to have their experience on board. And then as Jacques has briefly mentioned, we have for Bucher Municipal, Martin Starkey, an internal successor who took over from Aurelio Lemos beginning of this year. Martin has been heading the truck-mounted sweeper divisions during the last years, has an automotive background and is a huge asset on our management team. And last but not least, Daniel Schippan, who took over from me at the beginning of the year running now Bucher Emhart Glass. I have known Daniel since many years from the glass industry. He has a very strong entrepreneurial spirit, is strategically quite visionary and I'm convinced that he is the right person to take Emhart Glass through these still difficult times and also bring it back to a growth path. Last but not least, an announcement that you saw as part of the communication packages this morning. We have a change on our Board. It is Urs [indiscernible] our Chairman of the Board, who for personal reasons, has decided not to stand for reelection at the next general assembly. Urs has been on our Board since '23. He has been Chairman of the Board since 2024. And again, for personal reasons, he's not available anymore. And it is Stefan Scheiber, who is being proposed by the Board to be elected as our Chairman. Urs, you know him most likely from Buhler, has had a career there as CEO served for a very long time, a very seasoned international manager. And Stefan has been on the Bucher Board since '22. He knows our company very well. He is in line with the culture. So we are happy that also here, we have a very good solution that will guarantee a seamless continuation. And with that, I would like to hand to Jacques, who will open the Q&A. Jacques Sanche: We'll, of course, do that as a team. I'll try to answer more 2025 questions together with Manuela and then outlook will be a bit more the topic of Matthias. So who's going to break the ice here in the room? Any questions concerning the past year? [indiscernible] please? Unknown Analyst: Yes, I have one question. It's all about capital allocation because you -- the dividend remains unchanged, CHF 11. And you said number 1 is organic growth; number 2 is acquisition. Number 3 is giving back. As you don't give back more money to investor despite the 20 years record operating cash flow, I'm wondering whether you are growing much more organically? Or are you investing much more into M&A? Or did you treat the shareholders badly? Jacques Sanche: The money is still there. It won't be lost. So I don't know if it's -- we're not trying to -- I think one element is if we start growing, then we will need more cash. That is known. So one part will eventually go back into that element. I know we're still conservative, but eventually, we will need it over time. Unknown Analyst: But you guided flat sales growth, so you don't need more money. Jacques Sanche: Let's see what happens. Manuela Suter: In a downturn, we were always able to manage or to reduce the net working capital. I would say we are now quite on a high level of net cash. For next year, we expect an operating free cash flow between CHF 100 million and CHF 150 million. So again, a positive number, but clearly below this year. But yes, you're right. But there are future growth. So we have R&D CapEx, we expect around CHF 150 million next year, also slightly higher than this year. And last acquisition was always on our agenda for the last 10 years. Matthias Kummerle: I can just build on that. It is very clear that with the situation, acquisitions will play a role as we go forward. So we will be obviously continuing to look out for acquisitions that make sense. So that is going to be part of the strategy also in the future. Jacques Sanche: Next question, please. Unknown Analyst: How do you see net working capital, for example, as a percentage of change developing for the next 2 years? Manuela Suter: Right now, we are around 18.5% of sales. Over the last years, it was more 17%, 18%. So I think that's a number that we would like to go again, means for next year or for 2026, we will see a slight reduction, obviously, not to the extent that we had during 2025. I would say, around 0 depends a bit on the movement to CHF 30 million, something like that, but it's hard to say. It depends also a bit on the growth that we will see during 2026 or how it develops depending on the businesses. Unknown Analyst: I have also another question. Can you remind me of your CapEx plans for the next 2 years? Manuela Suter: The CapEx plans. As mentioned before, for 2026, we expect around CHF 150 million, but overall and a good number is always around 4%, 4.5% of sales when it comes to capital expenditure. Unknown Analyst: I have one, maybe to continue on M&A. It sounded, Mr. Kummerle, that you might want to be doing more acquisition in terms of numbers and maybe also in terms of size? And if yes, can you give an indication what would be your ambitions in which areas and geographies? Matthias Kummerle: I mean I can make a couple of general comments, maybe not as specific as you might expect. But in general, I see -- well, the strategy overall is not going to change. So we continue investing in organic growth, and that will be complemented with M&A. And I think it's clear if M&A shall be a growth driver also in the future of our business, the size of the acquisitions needs to be on a certain level. So obviously, we will be building a pipeline and working on a funnel to also have objects which would serve a growth target. And we are in the fortunate situation that with the current balance sheet, we are able to propose those type of propositions to our Board. I would say the type of acquisitions, I mean, that is an ongoing discussion. I personally believe that in areas where we already have a relevant position in fragmented markets, we have a very good chance to further strengthen our position. That is going to be a high priority, but we will be also considering pushing a bit more into geographies where we may not have such a strong position yet or in businesses with a very strong position already to also consider adjacent activities. So I would say that's in a nutshell, what we expect, but it's a bit too early here to go into more details. Unknown Analyst: Okay. Can I ask a question on Kuhn maybe. When I look at the charts that you have presented, Jacques, it seems that the rebound in farmer income or -- farmer income is really driven by the subsidies. So is that coming, first of all? And can you give a bit of an indication about the geographies, if they are coming or not? And then maybe related to that, how is the mood because in the U.S. has been very volatile in the last months. Once up, once down, once up, one down, you never -- you don't know where they are standing. Maybe they don't know themselves either, actually. Jacques Sanche: Well, I think, I mean, the main drivers for farm income are, first of all, of course, weather and yield. The second element then is price of whatever they sell, the commodity that they sell. Then you have the costs for input and finally, subsidies. So there are multiple elements, not just subsidies as such. It's true in the United States where crop production is not very profitable at the moment. The biggest impact on a better income would be subsidies at this time. That's for sure. Now the mood in farming in the United States is no good, at least I'm talking about crop production. Dairy livestock is not a problem, but the mood in farming in crop production is not good at the moment. And I don't really see that it has been up and down. It basically has been down for a while. So that's the part. But that's talking about the United States. And then there are other areas where you might see either maybe a relaxed agricultural policy or less regulations that helps a bit for the self-confidence of the farmer and then the investment attitudes. That's one element, and that is different from country to country. European Unions, although they have been protesting, they're a bit worried about regulations as well. But overall, it is improving the situation, and they're seeming to buy more. Unknown Analyst: Can I ask you a last one maybe here on -- always on agriculture. I don't know if it's relevant. But in Switzerland, we have seen the farmers throwing away milk. Is this something that happens also outside Switzerland? And if yes, how can the milk prices stay high? This is something I don't understand. Jacques Sanche: I would not at all overrate that media coverage that is one action that is not relevant. Unknown Analyst: Yes. But it was not only the throwing away the milk. It was also a lot of additional cheese production because there was just too much milk available. Jacques Sanche: Yes. But that's Switzerland and I mean we're looking at the global scale here. I mean... Unknown Analyst: It's only Switzerland. Jacques Sanche: Yes sometimes. The dairy farmer overall has been doing pretty well. And of course, the milk prices are getting a bit more under pressure now, but it had not very much to do with the milk. Mr. Bamert, you were in action -- somewhere else. Walter Bamert: Walter Bamert from Zurcher Kantonalbank. I have a question regarding the component for John Deere that you mentioned. John Deere has an ambitious growth program for excavators in the U.S. There are 2 questions I have. One is, can you benefit from those new factories and the new offering there? And the second one is when I see what John Deere is doing with closing the gaps, I ask myself, is it also a risk that they would get into implement. I don't know what John Deere already produces in terms of implements and if that would be an attractive business for them to produce on their own. Jacques Sanche: I'll maybe answer the first question, and you can take the implement question at that moment. So the first question is we are -- the John Deere business that we have is agriculture. It's not the building construction side. There might be some small applications, but it's -- the main part is tractors that we're supplying to. So the excavator is not a very important topic for us at this moment. Are they competing with us in implements? That's yes. Matthias Kummerle: I mean the answer is yes and no. I mean they already have implements. So it's not that they're only focusing on tractors, even though that is the biggest part of their business. And on the implement, it's typically more the big, big and few flagship products, which are also the brand shapers. And the big gorillas like John Deere are typically not the ones who have the breadth of the offering like Kuhn, also going into the midsize and the smaller ones. And that's, I think, where companies like Kuhn can really make the difference and can bring a very strong position with the dealers. and the big companies like John Deere, they are struggling to have the complete offering. So it's a yes and no answer. Unknown Analyst: I have a question regarding Emhart Glass. I'm wondering how long are these investment cycles, if I may say. I mean you were mentioning that there's a lot of investments being done, maybe overcapacities around consumption going down, efficiency going up. So it looks like a kind of a textile machinery business almost. Just give us a feeling what's the fair assumption to say, well, at a certain point, all these fillers or glass... Matthias Kummerle: Yes. So in the past, I would say a typical cycle was 3 to 4 years, 3 years, a typical one for a longer one. This one here is a bit longer and a bit deeper to what we have seen. And we believe that it's still to a large part due to an extreme amount of overinvestment that happened after COVID. And so we are still seeing -- we are still in that downswing and it's going to come back up. There is no doubt about that. The only thing that is on top of that is that in the last 2 years, there has been a little bit a shift from glass into aluminum cans. So that adds a bit of an additional element, which we have not seen in the past. But looking globally, we have no concern that we will be back on a typical growth trajectory that we have seen in the past, which is typically 1% to 2% or 2% more in the long run. And with the global footprint that Emhart has being also present in China, in India and emerging markets, we are not concerned. So it's a question of -- it's a question of... Unknown Analyst: You don't think that you're not as good positioned as in the past. Matthias Kummerle: We don't believe that it will shoot back to the post-COVID level anytime soon, but it will be back on a stable trajectory. That's the assumption. Unknown Analyst: And the product extension you did or the acquisition you did, I can't remember the sales. So is that something that helps at least to dampen the cycle? Or is that not -- in that case, because the investment is the same, it's plant. It's like the equipment you put into these plants. So does it accelerate the cycle going forward? Matthias Kummerle: The additional sales from that acquisition is relatively small. was around CHF 7 million to CHF 8 million, the sales on top. The bigger impact that we expect is that we can offer a more complete product to the industry. And there, we expect an amplification of the effect that we get a bigger scope in the different projects and that we get a bigger share of the cake inside the glass plant. Unknown Analyst: Okay. Maybe last question coming back to Kuhn. You had good order intake in Europe, if I may say. So I'm wondering whether we kind of are a little bit on top of the investment cycle in Europe? Or what's the risk that we will see next 12, 18 months? Lower order intake or lower demand from Europe? Matthias Kummerle: I mean the indications that we have at the moment with the level of the dealer stocks, which are on a normal level at the moment, but not on the other side of the curve yet. We don't see an immediate risk yet that we're already overshooting. So we are working with the assumptions that we have mentioned before. Jacques Sanche: Maybe if you look into the past, the downturn of agriculture started mid of 2023. And since then, we had a quarter-over-quarter reduction of demand until basically Q3 of last year. And it's pretty clear, I think it looks like now it's stabilizing. And if anything, I would more assume it's a pent-up demand that will eventually drive the business. But of course, for me, it's easier to say than for Matthias. Any other question? Mr. [indiscernible], once more and then I'll start looking at the online numbers here or the... Unknown Analyst: How do you see the demand backdrop in hydraulics over the next few quarters? Are there any observations in the key end markets that support this view? Matthias Kummerle: I mean we play in different segments. So what has been -- or what is supporting the statements that we made is developments in agriculture, in construction and in general industry, there also in Europe, we have seen a positive momentum again. What is not working yet is on the -- in the U.S., particularly on the transportation side. So those are leveling docks in logistics centers and so on. That segment has been still relatively weak. So that's, I would say, if you go into the applications and the segments, the picture that we have. Manuela Suter: The Material Handling segment is more exposed to U.S. I think that has also a reason why it's still lagging and then we have agriculture and construction. And we are still coming from a very, very low base. I think that's also need to take into account. However, over the last couple of months, it was really a steady improvement also in order intake that we could see in particularly in construction and agricultural segment. Matthias Kummerle: But again, the signs are not super strong, as I said. So it's -- I also cautious optimism that it continues like that. Jacques Sanche: If there are no more questions here, then I would address [indiscernible]. Unknown Analyst: So my question is about Emhart Glasses. Could you give us more details on the competitive landscape in this division? And do you have a different strategy versus your competitor? And do you think you might have a stronger recovery than your competitor? Jacques Sanche: I didn't quite get which... Matthias Kummerle: Yes, okay, glass. I'm happy to take that. So the -- I would say the industry within this glass business is relatively consolidated. So suppliers of those forming machines, there you have 4 players, which are relevant, of which Emhart is the largest one. And then you have the other big segment, which is inspection machines. There Emhart Glass is #2 and our competitor is leading the pack, even though the size of that segment is substantially smaller. And I would say the competitive advantage that Emhart has had is that we have a lot of credibility with our history, with the R&D, with the technology. And also I can say with Bucher Industries behind. It's a very long-term oriented business. It's very much relationship driven, and that's what has helped Emhart Glass in the last, I would say, 15 years to continuously build the market share and to be perceived as the clear #1. And typically, if somebody does not work with Emhart Glass it's because of pure price. So what Jacques said, I think is true. It is on a global scale, every other bottle that we drink of will have been produced at an Emhart Glass machine. Now will the recovery come faster for Emhart Glass? I think what we will see is that the service and the parts side that's typically reacting earlier, that will pick up again. So we hope to see these signals during this year. And then I think with this combined business of this acquisition that we had, we have our foot in those projects probably earlier than anyone else. I think we have a very good chance to benefit of an upswing also when they start investing in CapEx again. Jacques Sanche: I think we can say over the last 10 years and the cycles that we have been living through Emhart Glass has always emerged even stronger than before. Market shares over time have been rising. That story could continue. Thank you, Mr. [indiscernible]. And any other questions from the online participants? I don't see any hand raised. And at that moment, it was my 19th presentation, half of them more or less for BELIMO and then the other half for Bucher. And a lot of the faces I see here have been continuously showing up. I appreciate that very, very much. I had an incredible amount of time. And I'm also very proud that I can hand over a very, very solid company with a lot of potential to the team that deserves it. So thank you very much for showing up. And of course, we'll still be around sharing a glass of wine with you. And at that moment, we will close the session and also turn off the online recording. Thank you very much also for those who joined us online. Thank you very much. Manuela Suter: Thank you.
Russell Loubser: Afternoon, everyone. I really feel that I'm privileged to welcome you to -- it sounds like I've got a little bit of an echo here. okay? Thank you. Well, it's really a great afternoon in the sense that I believe we have a management team that's going to present some sterling results on the one hand. On the other hand, it's really a sad day, which is why I'm standing here because it's Leila, our well versed CEO, forthcoming and last set of results. Leila has obviously had a number of stints at the JSE in different capacities with the final one being as the CEO over a period of almost 7 years. It feels like you came in yesterday, but it's been almost 7 years. And during that period, I have had the privilege and the honor to work with Leila. And I think it would be an understatement to say it's been a period full of cross-pollination, incredible amounts of energy and passion. And as a result, so much was achieved. I will have the opportunity to say more this afternoon, so I don't want to make this a long speech. But suffice to say that on this very last swansong, on your results, Leila has made an incredible contribution to the JSE. Whatever matrices you may want to look at, and I don't want to bore you with a lot of data, we have achieved a lot, firstly, in her leading the modernization of the stock exchange, leading to increased diversification of revenues and operating income in the company, not to mention a whole range of initiatives where she took center stage, some of them really in partnership with government, looking at financing SOEs, Project Phumelela, which really had a very significant role in really looking at the financial architecture and ease of the financial services in this country playing a very, very optimum role. It's a long list. But it's really just to say, Leila will discuss this a little bit more this afternoon. On behalf of the Board, -- and I have no doubt, I'm also speaking on behalf of 600 staff at JSE and the other subsidiaries. You're going to leave an enormous void. And that void is not merely one of strength of leadership, intellect and so on, but also the human aspect of it. which I think is absolutely fundamental. And in fact, without it, we would not have achieved most of what we've achieved. So as I said, it's not to make a long speech. It's just to say it is your final results. You may even have a forthcoming, so we don't want to be too clairvoyant about the future. But thank you very much. Thank you very much. We'll say more later on this afternoon. I think it's the opportunity now with Fawzia to really have your place in the sun quite rightfully given what you're just about to present. So thank you very much. And maybe I should also say a minute to say, Valdene, welcome. And you seem like you're sitting in the hot seat, but I'm sure you do justice. So thank you very much. Leila Fourie: Thank you very much, Chair, for your very generous and kind words, and welcome, everybody, both online and in the room. In fact, we've had a fantastic turnout. I think I should be bowing out more often. It's absolutely wonderful to have my predecessor and a stalwart in the industry, Russell Loubser joining us in person today and Erica, who's been the backbone of the broker community for many years, even Selvan, who is the backbone of BDA and worked alongside me for many, many years. I'm going to -- I see my notes okay. So welcome to the JSE's Full Year 2025 Financial Results Presentation. The JSE enters 2026 with improved performance and sustained strategic momentum. This reflects both an improved operating environment and the cumulative impact of disciplined execution over the recent years. Today, I'm going to begin with an overview of the group's performance and the key drivers behind our results. Our CFO, Fawzia Suliman, will then provide a detailed breakdown of our financial results, and I will conclude by reflecting on the strategic progress made since 2029, what it means for the positioning of the exchange today and how it shapes priorities going forward. We'll then open the floor for questions. The JSE delivered record results for the year. Operating income increased 14.2% year-on-year, driven by growth across all of our core segments and sustained equity market activity. Importantly, 35% of our operating income is now coming from nontrading sources. This structural shift improves the stability and the predictability of our revenue base, allowing the exchange to perform more consistently through market cycles. NPAT was up 16.7%, and it crossed the ZAR 1 billion mark for the first time, reaching an all-time high, while we continued with cost discipline and operational efficiency, and our efforts have resulted in an operating leverage, which we're very pleased with the end of the year of 5.9%. Headline earnings per share for the period were ZAR 13.29, up 17.7% year-on-year, while our ROE increased to 22% from 20.2% the year prior. Reflecting our improved profitability and cash generation, we increased the total dividend to ZAR 10.61 per share, up 28.1% compared to 2024. Operational resilience remains a core asset of the exchange with market availability of 99.96% and only 3 priority 1 incidents during a year of elevated trading volumes. In fact, we haven't had an outage in the equity market, and I'm sure Russell will remember our outages in 3 years, which is quite a record. Overall, the group has delivered a robust financial outcome characterized not only by growth, but by continued improvement in the quality, durability and diversity of our earnings, alongside sustained progress against our long-term strategic agenda. Turning to the macroeconomic and market context of this year's performance. South Africa's capital markets experienced a meaningful re-rating through 2025 and into early 2026. This reflects a combination of improved domestic reform momentum, renewed institutional credibility, supportive commodity dynamics and heightened global capital rotation towards emerging markets. These developments have contributed to the reassessment of South Africa's risk premium and supported renewed international appetite for South African assets. This re-rating was reinforced by several milestones during the period, including South Africa's exit from the FATF grey list, a sovereign rating upgrade, continued fiscal consolidation and progress across key economic reform programs. South Africa's equity markets responded accordingly, delivering outperformance relative to global peers on the back of increased prices for precious metals, a weaker U.S. dollar and as markets reassessed South Africa's risk premium. Between the 1st of January 2025 and the 31st of December 2025, the All Share has grown by 57% in dollar terms, outperforming almost all of global market equity indices, supported, of course, by a combination of strong overall market performance, commodity-led gains in major sectors, improved macroeconomic sentiment and structural enhancements to the market infrastructure and listings that support investor interest. As you can see in the graph next to that, this trend continues this year. Market activity increased materially with average daily value traded growth of 41% and 30% in quarter 3 and quarter 4, so a much stronger second half than first half, ending on 32% for the full year. This momentum was supported by robust performance across key large cap and resource counters, reflecting improved earnings expectations and renewed investor confidence. Notable gains were recorded across several of the heavyweight constituents, including from mining Sibanye, which was up 304%; AngloGold Ashanti, which was up 240%; MTN Group up 84% and Prosus, which was up 37%. Market participation was particularly active during peak trading periods between April and September. While our nontrading -- our nonresident participation increased materially with foreign investors now accounting for 32% of our holdings, up from 29.3% in the prior year, reflecting, of course, international investor confidence in South African equities. Consistent outperformance in 2025 has supported South Africa's increasing prominence within our global emerging market allocations with pleasingly, the country's weighting in the FTSE Emerging Market Index rising to 4.29% from 3.16% at the end of December 2024. As of early 2026, the JSE is the 18th largest market by market capitalization in the world, and that's up from 20th in 2029. Taken together, these developments reflect a broader structural reengagement with South African capital markets. Turning now to Slide 6. We've seen a high correlation between index valuation and value traded. This is an interesting long-run graph, which indicates that market activity has surged since early 2024 with strong growth in indices, market cap and value traded. And this echoes time when Russell was at the helm in the mid-2000s during the commodity-driven boom. Although recent gains signal improved sentiment, it is too early to determine whether these gains are cyclical, structural or a combination of both. Given the risk of a reduction in trading activity or an external shock as we're experiencing as we speak, we assess the downside scenarios and stress test impact of lower value traded. This will guide our cost management responses and also our diversification efforts. ADV growth in -- between 2025 and 2026 marks the strongest momentum since the 2006, 2007 period, following which we had periods of stagnation. While history indicates a precedent for this multiyear growth trajectory, the JSE remains vulnerable to potential global and domestic shocks that could rapidly affect volumes and confidence. Strengthening resilience, preparing for potential reversals in sentiment and accelerating diversification into nontrading revenues remains a key strategic focus in improving the quality and durability of earnings. Turning now to Slide 7. The market momentum created a supportive environment for the exchange, which entered a period of higher quality earnings in terms of our model. Over the last 6 years, we've deliberately diversified revenues, and we've increased our nontrading base. Non-trading income has grown materially over the period. You can see 92% nominal growth. And the model now carries a larger annuity style component alongside our trading activity. Elevated market participation supported a 14% increase in operating performance, while nontrading income grew by 5%. In the first half of the year, we had a more subdued growth mainly due to the higher base in JIS in the prior period and also the lower interest rates in that period. Nontrading income, which includes market data fees, margin income, colocation and listing activity remains an important part of our business, and it ensures that the JSE continues to perform systematically across all market cycles. Now moving to Slide 8. You'll see that the activity across the JSE accelerated across all areas, reflecting the exchange's role as a systemic anchor in increasingly complex macro and geopolitical environments. Stronger participation across asset classes highlights a deepening investor base and the resilience of South Africa's capital markets. Equities saw the strongest uplift with value traded up 28% year-on-year. Higher billable equity volumes were supported by a global commodity resurgence, a more stable domestic backdrop and a recovery in investor sentiment. This performance underscores the continued relevance of South African corporates to global capital flows. Derivatives markets delivered a resilient outcome, benefiting from elevated volatility and a persistent demand for hedging strategies. Equity derivatives grew 14% as value traded increased 15.4% with index futures dominating activity. Similarly, financial derivatives advanced 15%, supported by solid appetite for bond-related instruments as rate uncertainty remained a key global theme. Bond market activity was buoyant with nominal value traded in repos and standard trades rising 9.7% Net foreign flows reached ZAR 122 billion net inflow, up sharply from the ZAR 82 billion in the prior year, driven largely by attractive SA yields amid global rate volatility and a higher for longer inflation narrative. Despite ongoing geopolitics and domestic macro risks, demand for South African bonds remained stable, supported by foreign and local investors. Currency derivative volumes rose 32%, heightened by the ZAR volatility, which was driven by U.S. tariff developments and uncertainty in the GNU and this increased the need for tactical hedging, as you can imagine. Interest rate derivatives saw modest growth with contracts and value traded up 1.2% and 7.2%, respectively. Commodity derivatives experienced a bit of a divergence. Physical activities increased by 26%, yet contracts traded declined by 7%, reflecting weaker maize export demand, firmer local currency and softer global prices. And you'll see a bit of a recovery from the first half year performance in that asset class. The primary market delivered steady growth with revenue up 4%. The upcoming pipeline includes several significant names across our sectors. Moving now to Slide 9, and I think this is where Selvan wakes up. The broad-based growth in trading activity and asset classes that we've just discussed places increasing demands on the JSE's infrastructure. Ensuring that this infrastructure can support higher volumes, greater product complexity and deeper participation is central to sustaining market resilience and future growth. A key component of this investment is the modernization of our broker-dealer accounting system, or BDA platform, which is a foundational program that underpins the next generation of post-trade infrastructure at the exchange. In 2025, we successfully completed the pilot phase ahead of schedule, validating the quality and stability of the migrated code, and we commenced full-scale modernization. The bulk of the transformation and testing activities will continue through 2026 with implementation targeted for 2027. To date, approximately 2.2 million lines of code have been modernized with no critical defects identified, which is really an encouraging indication of robustness and quality of the transformation. Delivery of the remaining modernized components is scheduled for the end of the first quarter of 2026. This will be followed by extensive integration, verification and mass testing across all functional areas alongside ongoing engagement with market participants to ensure operational readiness ahead of our implementation. Subject to the successful completion of these testing and readiness phases, the modernized Java-based BDA platform for the equity market is targeted to move into production in 2027. Strategically, this transition enables the JSE to support higher trading volumes at lower cost, introduce new functionality more rapidly and enhance reporting and analytics capabilities, enhance operational resilience across the post-trade environment. And with that, I will hand over to Fawzia for the financial review. Thank you, Fawzia. Fawzia Suliman: Thank you, Leila, and good afternoon to everyone. Looking at our financial performance, operating income increased 14.2% year-on-year, reflecting higher market activity and solid performance across core segments, including information services. OpEx increased 8.3% year-on-year. And excluding costs linked to higher trading activity, underlying OpEx growth was within guidance, and the group delivered a positive operating leverage of 5.9% as we continue to adopt a balanced approach between strategic investment and operational efficiency. EBITDA margin improved by 1.2 percentage points with the EBITDA margin improving to 38.7%. Net finance income decreased as expected to around ZAR 197 million as a result of lower interest rates. And overall, our NPAT increased 16.7% and our HEPS increased by 17.7%, reflecting both operational delivery and disciplined cost management. Moving on to cash and capital allocation. The JSE is and has always been a highly cash-generative business. For the period, net cash generated was ZAR 1.23 billion, an increase of 12.3% versus last year. Capital expenditure was ZAR 141 million for the year, below the prior period, reflecting phasing and timing of delivery. Our financial position remains strong with our cash balance increasing year-on-year by 12.7% to ZAR 3.16 billion. This grants us flexibility to continue to fund growth without compromising shareholder returns. And on this, our total dividend per share increased by 28.1% year-on-year to ZAR 10.61. Our cash conversion remains strong at 1.64%, reinforcing the quality of our earnings and the capital-light nature of the model. Our ROE increased to 22%, up 1.8 percentage points from the prior year. This slide reflects higher operating income, disciplined cost growth and stronger profitability. This year, we delivered robust revenue growth while maintaining a disciplined approach to cost management, translating into positive operating leverage of 5.9%. Our 2 biggest operating expenses remain personnel and technology, and we continue to proactively manage these costs in a balanced way, being cognizant of the fact that they are critical to our delivery and transformation. Other income decreased by 80%, and this was primarily due to ForEx losses in 2025 compared to a gain in 2024. The decrease also reflects the fact that prior year included higher issuer regulation fines as well as VAT recovery income. As I mentioned previously, our revenue performance this year was robust. Capital markets performance was strong with revenues up 18% as equity market trading activity remained high. And as such, we also saw significant growth in post-trade services due to higher billable value traded and an increase in the number of trades. JSE Investor Services revenue was down 7%, mainly because of the high base effect and the unfavorable interest rate environment. JSE Tier revenues increased by 10% on the back of higher fees driven by the equity, currency and commodity derivatives markets growth. And finally, Information Services revenue increased by 10%, reflecting growth in index revenue, terminal subscriptions and equity derivatives data. On the next few slides, I will unpack the underlying drivers for each revenue segment, starting with Capital Markets and JIS. Capital Markets performance over the period reflects solid revenue growth across all asset classes. Primary Markets revenue was up 4%, driven by higher listing fees and ETFs. Trading revenue was up 28% as billable equity value traded up 32%, driven by global commodity strength, improved macro stability and reinvigorated investor confidence. Colocation revenue was up 15%, while the colo activity to value traded remained flat, we saw an increase in the number of racks to 58 from 56 in the prior year. Equity derivatives revenue grew by 14% year-on-year, driven by strong hedging appetite. Bonds and financial derivatives revenue increased by 15%. Bond nominal value traded was up 8%, while contracts traded for currency derivatives were up 32% as we saw increased volatility in the rand on the back of the news about the U.S. tariffs and concerns over GNU stability. Commodity Derivatives revenue was up 6%, with physical deliveries up 26% and contracts traded down 7% as we experienced subdued market volatility following the above-average local and regional maize production. JIS revenue was down 7% and mainly because of lower interest rates, high base impact and slow corporate actions activity. These were partially offset by an increase in asset reunification revenue as well as the number of customers. Moving on to post-trade services. Revenue increased by 18% compared to last year. Clearing and settlement revenue was up by 34% due to the increase in billable equity value traded. BDA fees were up 4% year-on-year as the 7% increase in equity transactions was partly offset by a slight reduction in the fee from ZAR 0.73 to ZAR 0.69 per transaction. In 2025, we developed a new BDA fee model. However, implementation was deferred because the market consensus was clear. The operating model and the fee structure must evolve together. As a result, the new fee model remains on hold until we finalize the non-mandated BDA operating model. And in light of this, we introduced a mid-2025 fee reduction. The BDA fee per transaction was lowered from ZAR 0.73 to ZAR 0.69. And this adjustment brought the average fee for 2025 down to ZAR 0.71. For 2026, we have maintained the BDA fee at the 2025 average of ZAR 0.71, ensuring stability and predictability for market participants. Funds under management revenue was up 7%, and this was due to the higher JSE Trustees cash balances. And then finally, JSE Clear revenue was up 10% on the back of higher clearing fees and increased activity in equity, commodity and currency derivatives. Information Services revenue was up 10% -- more specifically, U.S. dollar-denominated revenues accounted for 68% of total information services revenue and translated at an average exchange rate of ZAR 17.95 for the year compared with ZAR 18.39 in 2024. Growth in core market data was driven by indices, terminal subscriptions and equity derivatives data with a mix of once-offs and recurring annuity sales. The core market data franchise continues to be strongly cash generative and delivers healthy margins, although organic growth opportunities are relatively modest. Our modern data platform has now completed its foundational technology build and is moving into a more commercial and product-led phase, currently contributing approximately 1% to the portfolio. We continue to see good underlying performance of our growth strategy, where revenue was up 50%, albeit off a modest base. The JSE delivered positive operating leverage while still investing in strategic priorities. Operating expenses increased by 8.3% year-on-year, 6.5% excluding higher trading activity costs. This means that our OpEx growth is in line with the guidance that we provided at year-end of a 5% to 7% increase. Key cost drivers include personnel costs, which were up 12.5%, but excluding performance-related costs of high LTIP vesting and discretionary bonuses, personnel costs increased 6.5% year-on-year. More specifically, permanent headcount remained flat overall, while salaries increased by an average of 5% year-on-year. Technology costs were up 13% due to the implementation of our growth strategy, the reclassification from CapEx to OpEx of cloud-related spend and inflationary and foreign currency impact on license costs. General operating expenses have remained relatively flat, owing to our continued commitment to disciplined cost management. Our focus remains on driving operational efficiency with a continued emphasis on financial discipline while still directing capital toward our key strategic priorities and investments. On CapEx, spend was focused primarily on maintaining and protecting the business, including modernization programs and regulatory enhancements with a smaller portion allocated to growth initiatives such as information services and the bond CCP development. We came in slightly below the guidance range of ZAR 150 million to ZAR 170 million due to savings in infrastructure spend owing to negotiations and the BDA phasing. For 2026, CapEx guidance increases to reflect delivery phasing on the BDA modernization and the work program across our core initiatives. We expect CapEx to be in the range of ZAR 190 million to ZAR 230 million. Let's now look at our cash position as at the end of December. Over the period, cash generated from operations amounted to ZAR 1.2 billion, and the cash and bonds balance as of 31 December 2025 amounted to ZAR 3.2 billion. This reflects a strong liquidity position, meaning that we do not need additional credit lines or external financing, and it speaks to the quality and reliability of our earnings while supporting consistent shareholder returns. Our healthy cash and bond balance highlights the resilience of the balance sheet and the fact that we have maintained a disciplined capital allocation through targeted investment in technology and infrastructure. This is the breakdown of our cash and bonds balance as at the end of December. Our ZAR 3.2 billion in cash and bonds comprises ZAR 1.25 billion allocated to investor protection and regulatory capital, about ZAR 500 million for CapEx and other expenses and ZAR 920 million for shareholder returns. We aim to keep around ZAR 480 million as a strategic reserve, which includes potential M&A and a share repurchase program in 2026. Let me briefly reemphasize how we are thinking about M&A. Our approach is deliberately strategic and centered on bolt-on opportunities that complement what we already do well. We prioritize transactions that strengthen our core franchise and extend our value proposition with a clear aim to broaden revenue sources, maximize synergies and capture growth in adjacent markets and services. When we assess potential deals, we apply a disciplined framework. We look closely at the expected return relative to our hurdle rates, the stand-alone growth prospects of the target and the degree of alignment with our long-term strategy. Delivering tangible synergies is a key requirement to ensure any transaction has real financial value. Moving on to dividends. In 2025, we announced an ordinary dividend of ZAR 9.61 per share, up 16% year-on-year and a special dividend of ZAR 1.00 per share, which brings the total dividend to ZAR 10.61 in financial year 2025, reflecting an increase of 28.1% year-on-year. This has been an exceptional year given the market conditions and the JSE has benefited from the resulting impact on ADV and revenue. Accordingly, the Board has declared a special dividend given the excess cash on hand. This translates into an ordinary payout ratio of 78% and a total payout ratio of 86% -- we maintain our commitment to our dividend policy of a payout ratio between 67% to 100%. And this policy enables us to have a flexible approach to balancing the cash between the shareholder returns and the investments in the business. The group is considering a share repurchase program when market conditions permit and factoring in strategic investments and capital allocation priorities. The final size, terms and timing of any such program will be contingent upon Board approval. Any share repurchases will be disclosed as required. Now let's move to the guidance for full year 2026. From an operating expense perspective, we continue to guide to cost growth in the 5% to 7% range. This will be dependent on trade-related cost, but the underlying cost mix is expected to remain broadly consistent with investment directed toward our people, technology and key growth initiatives. On CapEx, we expect it to be in the range of ZAR 190 million to ZAR 230 million, reflecting a continued prioritization and disciplined spend. And lastly, our approach to shareholders remains unchanged. We are maintaining our dividend policy, targeting a payout ratio of between 67% and 100%. So overall, our guidance reflects a balance between cost discipline, targeted investment for growth and consistent returns to shareholders. Looking ahead, we are on track to achieve our strategic priorities as we continue to protect the core and to grow. In capital markets, the focus is on broadening our product suite and enhancing the trading experience for clients. This includes further ETP functionality and enhancements to block trading services, all of which are progressing well. We are also working on preparations for the launch of a crypto ETF. Within JSE Investor Services, we are working to scale our client base and to deepen our service offering. In JSE Clear and Post Trade Services, progress continues on the bond CCP and the BDA modernization program, both tracking in line with plan. In Information Services, priorities include building scale on the data marketplace, increasing client uptake of new data products and services, rolling out the SENS replacement for issuers and transitioning GIBA to Zeronia. And from an infrastructure and technology perspective, our attention remains on modernizing core platforms, advancing our AI transformation agenda and progressing key initiatives such as the JSE Network Alliance, AWS Outpost and local zones. Taken together, these initiatives position us well to support future growth while continuing to strengthen the core of the business. And with that, I'll hand back over to Leila for the concluding remarks. Thank you. Leila Fourie: Thank you, Fawzia. To fully understand the position of our 2025 performance, it's important to place it in the context of our multiyear transformation under Vision 2026. When I joined the JSE in 2019, we launched Vision 2026 with clear objectives: protect the core franchise, improve quality and resilience of earnings and modernize the business so that the JSE stays relevant and competitive in an increasingly complex and globalized market environment. The delivery of Vision 2026 has unfolded in 3 connected phases. The first phase focused on fortifying foundations of the exchange. We reset the strategy and operating model around clear pillars of delivery and discipline. we strengthened the operational resilience because trust in the market infrastructure is nonnegotiable for an exchange. And we took deliberate steps to rebalance our earnings base, including the JIS acquisition and to increase -- this was really to increase the annuity style components of the model. The second phase centered on capability expansion. We advanced our data and digital agenda. We expanded connectivity and infrastructure services, and we continue to evolve the product set across markets, including sustainability-related initiatives and reforms that support capital formation. For the third and recent phase, focus has been on converting transformation into measurable operational and financial outcomes. That includes continuing to raise the bar on resilience and service delivery while progressing large-scale infrastructure programs such as the BDA modernization, which is the foundation for the next generation of post-trade capability in South Africa. Taken together, Vision 2026 has fundamentally strengthened the JSE as a franchise and an institution. The exchange is today more resilient operationally more robust and strategically clearer about where it can create long-term value within South Africa's capital markets ecosystem. Shifting now to Slide 28. The financial performance of the JSE since 2019 reflects the deliberate execution of Vision 2026 and the transformation of the exchanges operating model. Operating income has increased to ZAR 3.5 billion in 2025, up 56% versus 2029, reflecting more diversified and resilient earnings model. The quality and durability of earnings have improved nontrading income increased from around 29% to around 35% of operating income, reducing reliance on pure trading volumes. The group's operating profile also improved, moving from negative operating leverage in 2019 to positive operating leverage of 5.9% in 2025. Profitability has increased accordingly with NPAT now just over ZAR 1.07 billion and ROE at 22%, and shareholders have participated in that progress with HEPS up from ZAR 8.14 to around ZAR 13.29 and the total dividend increasing from ZAR 730 million to around ZAR 916 million. Together, these financial results reflect the successful transition of the JSE to a more diversified, more resilient and higher quality earnings model that really positions the exchange effectively for future growth. And then on my final slide, Slide 29, I just want to share a little bit about the JSE entering 2026 from a position of genuine strength and strategic clarity. Today, the exchange operates within a diversified and resilient earnings model, world-class operational reliability and modernizing market infrastructure, which is designed to support the next phase of growth in South Africa's capital markets. Market participation is deepening. Client engagement is entrenching and the investments made under Vision 2026 are now translating into sustained operational and financial performance. The JSE remains well positioned to support capital formation and long-term economic growth. This is my final set of financial results as a CEO. And I would just like to say it's been an immense privilege to lead this organization through one of the most tumultuous and transformative periods in history. Since 2019, we've worked to reinforce the JSE's foundations, modernize its infrastructure and expand its capabilities and improve the quality and resilience of earnings. Importantly, this transition of leadership takes place at a position and a moment of momentum and continuity. I've got great confidence in Valdene Reddy as she assumes the role of Group CEO. Valdene, as many of you know, brings deep market experience and institutional knowledge, and she too has been central to the transformation that we've delivered under Vision 2026. The JSE has long reflected South Africa's economic journey. Today, it stands stronger in its ability not only to mirror the confidence of the economy, but to convert that confidence into capital investment and growth. Thank you very much for your time. We will now open for questions. Thanks. Should we start Romy, with anyone in the room? And we've got a couple of roving mics. Anything from anyone in the room? I know we've got a couple of questions online, I think, queuing up. We've got 2 questions, I believe. Romy, can we hand the mic to you? Romy Foltan: Sure. We've got a question from Catherine Bloesch. She said, what are the proactive cost management measures you mentioned in the introduction? And what initiatives are in place to drive efficiencies in the business? And her second question is, can you tell us a bit more about the AI transformation agenda you mentioned? Leila Fourie: Great. Do you want to take the costs? I'll take AI. Fawzia Suliman: Sure. So from a cost perspective and a cost discipline perspective, we've done a lot of work in terms of embedding this culture of cost discipline in the organization. And that includes improving the transparency of the cost throughout the organization. We also have a lot more proactive monitoring of cost, challenging of cost, and that includes controllable cost as well as new headcounts and really any additional costs that we bring into the business. We've also implemented zero-based budget, and I think that has also improved our thinking and the level of scrutiny that we put on cost. And then lastly, what we're also doing is we're managing our book of work and our CapEx spend with a lens of what the impact is going to be on depreciation in the business. And as we implement new projects depending on the delivery methodology, that sometimes has an impact on our technology costs. So there's a real level of transparency, I think, an acknowledgment throughout the business of the need to manage the cost, and we start to see that bear fruit. Romy Foltan: Leila, we have a second AI question along the similar veins from Mark Horrist, which you can probably answer with the initial question. The second one is where exactly do you plan to start embedding AI in 2026, operations, risk management or products? And what early wins are you targeting? Leila Fourie: Okay. Wonderful. Thank you, Catherine, and thank you, Mark. AI is a very important component in our current strategy and into the future. And we have commenced a number of targeted investments in AI capabilities to enhance operational efficiency and support long-term digital competitiveness. Now the first and most obvious area is the use of AI in the transformation of the BDA initiative. Russell will remember in the early 2000s the tremendous amount of work that went into the transformation of the BDA project. The ASX has been through a very difficult period over the last 3 to 5 years where they had to impair a project similar to the BDA project. And what we are doing in the AI project is to -- in the BDA transformation project is to use artificial intelligence to rewrite the code from COBOL into a more modernized language, which is Java. That project has -- I would estimate having worked deeply in the post-trade area in my history, that project would normally take 5 to 6 years to deliver and probably approximately twice what it is costing us now. We are about to deliver the final batch of code, which is, as I said earlier, 5 million lines of code, and that's been done within just over a year. In addition to the actual writing of the code, we are also using artificial intelligence to test our code with our vendor called Trianz. And that mass modernization testing will begin at the end of February. Many of the large institutions with big mainframe systems are looking with interest at the project. It's worked out very well so far. We have -- we delivered the pilot ahead of schedule, and we are on track on all of our other milestones. And looking forward, the JSE's infrastructure and the services that we provide are very infrastructure and technology heavy to the extent that we're able to continue leveraging AI in our other areas of transformation it will most definitely reduce -- have the potential to reduce costing relating to the number of coders that we have and also the number of testers. We are taking a very comprehensive approach, and I have no doubt that Valdene in her Vision 2031 will give you a lot more detail because we're at the beginning of this journey now. We've got detailed policy frameworks, and we've created an AI center of excellence, which is really focusing on the acceleration of the adoption of AI. We've also established an organization-wide productivity pilot, and that's under the leadership of Alicia, who's sitting in the front here to identify impactful use cases where we can build organizational expertise. And then the question from Mark was really around where are we going to use products, et cetera. there is a wide potential. At this point in time, we have initiated a proof of concept to automate listings requirements, processes where we are leveraging AI tools to automate the end-to-end process for issuer regulation, including the automated compliance analysis of listed company annual reports against compliance of listings requirements, which is a very exciting world. I have no doubt that there is possibility for this to expand into market regulation, insurance area and into a number of the other areas. I think we're also running a productivity pilot with Amazon Q Developer and GitHub Copilot. And that's supporting the accelerated software development and testing workflows. So as you can imagine, the largest or some of the largest costs in our projects that we execute on. And as far back as I can remember, the JSE has always been busy with a large-scale multiyear project. And these tools introduce the opportunity to rightsize and reduce and make those projects much more efficient, and it's really through agent AI capability. Of course, looking further ahead, there is potential to build AI into new products such as in Mark's area, the market data space, contextual AI, which market participants could use with JSE as the golden source. So we are very excited about the possibilities that AI holds, but it's a very nascent and early part of the journey, although less so with the BDA project. Romy Foltan: Leila I have 2 more questions on the chat if no one has in the audience. Leila Fourie: Anyone in the audience? Romy Foltan: Okay. We have a question from Adam. Leila Fourie: We'll take one in the front. Sorry about that -- if we can just ask you to state your name and where you're from and then your question. Mike Brown: Mike Brown from ETFSA. Just looking at the vision for the JSE, have you got any comments on gradually moving the JSE or graduating one way or another to a dollar-based -- U.S. dollar-based market. Significant amount of the trading that's taking place by local asset managers into global assets, being able to do that on the JSE would help as well as, of course, attracting international investors. If you got any comments on that? Leila Fourie: Yes, Mike, and thank you for asking that question. It was a topic that I didn't really cover. As some market participants may be aware, I chair and we convened an SA competitiveness committee with some of the top CEOs in the country. We've got Jannie Durand and Johann Holtzhausen, Michael Katz, Daniel Mminele, a number of very important influential participants on that group, and it's called Project Phumelela. And we, as a private sector have been working with -- under National Treasury's leadership to encourage and open up opportunities to bring dollar-based listing, collateral and various other initiatives into our country. We are very delighted and we strongly endorse and support the announcements made in the budget speech by Enoch Godongwana, where he is -- the National Treasury will be introducing the enabling regulatory. I'm going to call it infrastructure. It's called a synthetic financial center. Now what this does is it enables -- it's an enabling -- it will be an enabling policy or legislation that will enable the capital formation, trading, settling, collateral posting in hard currency. The first step is to set up this infrastructure. And the second -- the immediate first step after that infrastructure or alongside that infrastructure establishment is the enabling of our buy side, which we're very excited about for them to manage dollar-based or hard currency-based funds onshore. Currently, legislation prohibits that. Any dollar-based funds have to have a domicile outside of South Africa, which really compromises some of our buy-side participants. And so Project Phumelela and Valdene will no doubt take over from me as I step down. We have been lobbying and working very hard with the policymakers to try and encourage this -- we are hopeful that in the future, in the not-too-distant future, and I am engaging constantly at the most senior levels and all the way down into the more technical components of National Treasury to encourage this. Just to give you a sense of the scale, I think, and Russell will remember, we introduced the ability of the buy side to invest in dual currency or dual listed counters, which didn't count towards their foreign allowance. That completely transformed the market. That I think Russell was around -- I worked on that project with Srivan around 2004. It was a transformational policy. This will probably be the most transformational policy of the last 20 years. Just to give you a sense of the numbers, we -- research estimates that around ZAR 10 trillion worth of assets held by South Africans are invested offshore. Now if we, at this point in time, can start to attract those assets back into South Africa, it's job creating, buy side, sell side, clearing agents, custodians, all of those participants in the value chain will be able to participate in that flow. We are very excited and we are hopeful that the -- what is initially positioned by the National Treasury and the Minister of Finance as the synthetic financial center will very definitely take us forward. We were dropped from the position # 92 to 94 on the world competitiveness rating. That is behind Kigali, behind Mauritius and we need to do more as a country to attract and repatriate funds back into the country and also to repatriate other investors investing in South Africa. The National Treasury right now, if they issue dollar-based bonds, they go to Luxembourg and list on that exchange. We are very excited about the potential into the future of them listing those dollar bonds on the JSE and enabling flow through our local environment. So we welcome what National Treasury is doing, and it's an open-minded and important step in growing and internationalizing our economy. Romy Foltan: We have 2 questions from Admire Mulvani. He said, can you comment on the competition tribunal -- and is the group going to provision for a potential fine? And then the last question he has here is what is the listings pipeline looking like in 2026? Leila Fourie: Great. Who said that? Was it Admire? Romy Foltan: Admire, both questions. Fawzia Suliman: Thanks for those questions. So I'll take the question just on the Competition Commission and also whether or not we're provisioning for it. So the JSE confirms that it has filed its answering affidavit with the Competition Tribunal in response to the Comp Com's complaint referral arising from A2X's complaint against the JSE. The JSE categorically denies the commission's allegations that it has contravened Section 8C of the Previous Competition Act and Section 8(1)(c) of the Current Competition Act. So the JSE believes that the merits of the case is poor, and this is obviously on the advice of our legal counsel as well. In terms of whether or not we're provisioning, the requirements to raise the contingent liability is dependent on 2 things. And the first is the probability of the outcome of this referral. And then the second is the ability to quantify. Now you've asked the question in terms of which revenue lines we would apply this to. That is completely unclear. So the maximum is 10% and what we've seen from what's been levied before that hasn't happened. There's no clarity in terms of which line items it would be applied to. So it's impossible to quantify it at this stage. And given the low probability, our view in terms of the low probability of success, there is no requirement for us to raise a contingent liability. We've obviously discussed this both at Board level as well as our external auditors, and we haven't raised any provision. We don't believe there's a requirement. Leila Fourie: Thanks, Fawzia. Now coming to the question, Admire on listings. Last year, we saw a couple of notable listings, particularly Boxer and Optasia, both of which were signaling points that market conditions have changed. Listings are very much a function of market confidence and timing. And Optasia was the first fintech which was the largest in the EMEA region over, I think it was the last 5 years, and they chose to list on the JSE rather than on the LSE or the NYSE. And that is a very powerful vote of confidence. Boxer was equally well subscribed and very financially successful in their listing and in the re-rating of Pick n Pay. This year and looking forward to the year ahead of this year, we're very excited about Coca-Cola Hellenic Bottling, which will be the largest bottling company in the world looking to list here. Fidelity Security AME, which is a secondary inward listing. And then, of course, in the more medium term, companies like African Bank, TymeBank and Virgin Active are possibilities. And then, of course, Canal+, which we all know closed in their takeout towards the end of last year, and that would be a second listing. Graham, is this our time is up signal? I think the market is overheating. Romy, anything else? Romy Foltan: We have one final question. It's from Chris Logan. He said well done on the results and particularly to Leila for going out on a high. Lots of welcome talk about competitiveness. Any initiatives to get MST scrapped which penalizes smaller and sophisticated investors and not payable in the likes of NASDAQ? Leila Fourie: We are working with market participants and regulators on a number of initiatives like this. But at this stage, I don't think we've got anything -- any meaningful updates. And thank you, Chris, for your comments. We've thoroughly enjoyed working with you and appreciate your sentiment. Russell? Russell Loubser: Outstanding presentation. Well done, guys. Really -- fantastic to see. referred to a forthcoming. Can you shed any light on that? While I agree with that, your position on the provisioning with the Competition Tribunal, that's nonsense. Leila Fourie: Forthcoming in terms of what's forthcoming with me? Russell Loubser: For you. Leila Fourie: Oh, with me. Sorry, that sounded. Well, I -- firstly, perhaps -- and I think there are no -- are there any more questions? If there are none, I'll close with this. Perhaps if I can just say an incredibly warm thanks and sense of appreciation to all market participants, our shareholders, our regulators, our policymakers and importantly, our traders and back office teams. Without you, we have no market. It's been an immense, immense privilege for me, and I've thoroughly enjoyed every minute. So Russell is asking now what next. I am not -- although I'm stepping down, I won't be completely stepping away. I still intend to sit on a couple of boards, and I will contribute to academia. I have a role at the Global Henley Board, and I will continue in more academic pursuits. And some of you may know that I spend my weekends rock climbing, and I'm probably going to swap solids for liquids, looking to spend a lot more time sailing on the water, but also still very much connected to the country of my birth and then, of course, a couple of global roles. I will be supporting Valdene and Fawzia from the sidelines and watching with great joy as they build on this foundation and continue to take the JSE to even greater heights. So thank you. Thank you, Russell. Thank you very much, and please help yourselves to refreshments outside.
Jason Paul Quinn: Good afternoon, and welcome, everyone, to the Nedbank Group 2025 Annual Results Presentation. Our presentation today will start with an overview of the Group's performance for the year, a reflection on the operating environment and an update on some key strategic developments. I'm then going to hand over to Mfundo, our COO who will provide an update on the progress we're making on our strategic execution. And Mike, our CFO, will follow with an analysis of the Group's financial performance for the period. I'll then return to close the presentation with an update on the economic outlook, our guidance for 2026 and our prospects for the medium to long term. 2025 was a transformative year from a strategic perspective at Nedbank. The external environment remained volatile and uncertain, as evidenced by continued global geopolitical conflict with concerning recent developments in the Middle East. Despite this, we have seen cautious optimism emerge as markets began pricing in a more supportive macroeconomic environment and the progress South Africa has made on multiple fronts. And I'll unpack some of these shortly. Banking conditions were particularly challenging in the first half, but I'm encouraged by the early green shoots evident in both corporate and consumer activity. From a strategy perspective, we've made a number of bold and swift strategic decisions, including the Group's strategic reorganization, effective July 1, acquiring iKhokha and concluding the sale of our 21% shareholding in ETI. In January this year, we also announced our intention to acquire a controlling interest in a leading East African bank NCBA Group. In addition, we concluded a confidential ZAR 600 million settlement with Transnet, avoiding a costly and protracted legal process, which would have been an ongoing management distraction for years to come. Putting this long-standing matter behind us, we'll clear the path towards our substantial support of South Africa's broader logistics infrastructure investment requirements, which are currently estimated at over ZAR 100 billion. And the settlement represents a full and final closure of the matter with neither party admitting fault. Pleasingly, we see momentum building as evidenced in underlying growth across almost all our businesses and clusters, mostly in the second half. From a financial performance perspective, while our results for the year were slightly ahead of guidance, a 3% growth in diluted HEPS is not a satisfactory outcome for us. Similarly, our return on equity of 15.4% was above the cost of equity of 14.6%, but declined from the 15.8% in the prior year. On the positive side, we maintained a strong balance sheet declared the final dividend of ZAR 11.4 a share, completed a ZAR 2.4 billion share buyback program at attractive share price levels of around ZAR 229 per share, and we ended the year with a CET1 ratio of 12.9%. Reflecting a bit more on the operating environment, financial markets are buoyed with optimism. And we expect GDP growth to have increased by 1.4% from the 0.5% in 2024. Unlike this time last year, we believe that this optimism is not unfounded and is supported by evidence of an improving working relationship with the GNU, solid progress on structural reforms, stabilization of energy, supply and transport networks, enhanced collaboration on public-private partnership initiatives, and continued fiscal discipline as reflected in the recent South African budget. In addition, South Africa's removal from the FATF Greylist and S&P's sovereign upgrade with a positive outlook, which is the first since 2009, also contributed to an improved investor sentiment. The outcomes are evident in the graphs on the left. South Africa's government long bond yields improved to their lowest levels in more than a decade. And CDS spreads narrowed back to investment-grade levels reflecting reduced sovereign risk perceptions. So the combination of all of these items translated into tangible foreign market flows and a stronger rand. Improved operating conditions were also evident in private sector loans and advances growth of 7.8%. On the consumer front, we have seen how higher levels of real disposable income, low and steady inflation at around the newly clarified 3% target range, combined with 150 basis points lower interest rates started to stimulate household credit demands towards the end of the year. On the corporate side, we have seen how the economic recovery, slightly higher levels of business confidence, higher fixed investment and a low 2024 base resulted in corporate credit growth improving to above 10%. Reflecting on infrastructure opportunities, our economic unit's latest capital expenditure project listing, saw a sharp rise in investment plans announced in 2025, particularly in the private sector for the first time in a while, which increased by over 230% when compared to 2024. We are very well positioned to participate in this upside. Turning now to the bold strategic decisions we made and executed on during the year. We successfully restructured our Retail and Business Banking and Nedbank Wealth Clusters into a more focused client-centered organizational design. We created Personal and Private Banking, a cluster solely focused on individual clients, headed up by Ciko Thomas and Business and Commercial banking a juristic-focused cluster, which covers the spectrum of mid-corporate, commercial and SME clients headed up by Andiswa Bata, who joined us in August. This strategic reorganization was aimed at being a catalyst to enhance our focus on clients, drive faster revenue growth and unlock efficiency and productivity enhancements. The reorganization was substantial and impacted more than 16,000 colleagues that was swiftly implemented and it was in place by the July 1. This resulted in various strategic initiatives across our cluster. I'll now highlight a few proof points, which are all evidenced by improving H2 momentum. In CIB, we increased our appetite to deepen participation in larger, high-quality deals. And while drawdowns were slow, client activity was robust and pipelines remain very strong. In BCB, we swiftly filled key leadership positions, including the Managing Executive of a cluster. We accelerated advances growth in the second half of the year, and we made good progress in launching new value propositions. In Personal and Private Bank, where our focus is on addressing scale challenges in certain products and segments. We're pleased with solid progress. We saw improving deposit and loan growth and improving quality ahead of industry. Insurance cross-sell is starting to increase strongly. Transactional revenue growth improved and the cluster continued to unlock efficiencies and productivity gains with further progress expected in '26 and beyond. In NAR, we recorded strong loan growth and client gains, while we look to participate in exciting growth opportunities in Namibia and Mozambique. We also made some bold strategic decisions to strengthen our competitive positioning in fleet management and in the SME payment space, both now part of BCB. In June '24, we acquired Eqstra, and I'm pleased to report that in its first full financial year as part of the group, we've achieved full operational integration. We've realized efficiencies across funding and technology and achieved some early client gains and upsell successes. In December, we completed the acquisition of 100% of iKhokha. This is a strategically important transaction for us as it strengthens and fast tracks our payments and merchant acquiring capabilities, particularly in the fast-growing SME and informal merchant segments where our presence has been low. Annually, iKhokha processes more than ZAR 20 billion in digital payments. And to date, has distributed more than ZAR 3 billion in working capital into the SME sector through its more than 54,000 point-of-sale devices. Looking forward, we seek to grow the SME client base and cross-sell lending, banking and payments as well as business solutions. As noted before, the sale of ETI followed a strategic review, that included an evaluation of the performance against our initial investment case, which did not materialize as expected, with a significant negative impact on our NAV, which Mike will unpack for the last time later in the presentation. Unfortunately, a minority stake limited our ability to drive strategic progress and the quality of the associated accounted earnings stream was low and was not backed up by dividend flows from ETI, increasing risks of continuing to hold on to the investment due to regulatory uncertainty and the probability of increasing capital requirements in certain jurisdictions would have resulted in a scenario where we would have had to inject additional capital to prevent shareholder dilution. I'm best pleased to report that we finalized the disposal of our 21% shareholding in ETI for a purchase consideration of $100 million or ZAR 1.6 billion. Importantly, we've received unencumbered cash proceeds and all regulatory approvals. In January, we announced our intention to make an offer to acquire approximately 66% of the issued share capital of NCBA Group, one of East Africa's leading financial services groups. The offer consists of the issuance of new Nedbank ordinary shares, which contributes 80% and 20% in cash, valuing the transaction at approximately ZAR 13.9 billion based on the Nedbank share price of ZAR 250. In a recent positive development on the February 19, we announced that we received exemption from the Kenyan Capital Markets Authority to make a mandatory offer to acquire 100% of NCBA shares. Upon successful completion, NCBA will become a subsidiary of Nedbank, while the remaining shareholding will continue to trade on the Nairobi Stock Exchange. The transaction remains subject to regulatory approvals and is expected to be concluded by the third quarter of 2026. Many of you will recall that on the back of our strategic refresh last year, we indicated that having disposed of the ETI investment we would focus on Southern and Eastern Africa. We noted that, in particular, our home base of South Africa still presents significant opportunities to improve growth and returns and that we saw further opportunities in Namibia and Mozambique. We also highlighted that we intended to enter East Africa, either through acquisition or on a greenfield approach, playing primarily to our strength in CIB, particularly in structured finance, fixed income, currency trade and trade finance, and in sectors like energy and resources. I also indicated that quality entry points into the Kenyan banking sector were rare and hard to execute and may take time. And we were thus very pleased to be able to execute a unique and compelling opportunity to acquire a leading bank with a great track record and an outstanding Board and Management team. The deal structure is also compelling as it keeps the majority of NCBA investors exposed to the combined Nedbank and NCBA business. Following the lessons learned from the disappointing ETI experience, we've ensured that all of those learnings have been applied to the NCBA acquisition. The strategic rationale for the deal is set out on this slide. At a high level, we see East Africa as a region of significant strategic importance to Nedbank, underpinned by strong macroeconomic fundamentals, a robust and predictable regulatory environment and attractive growth potential. Secondly, NCBA is a top Tier 1 bank, which has an attractive ROE, low-cost income ratio and is well capitalized with a strong track record of regular and consistent dividend distributions in cash. It's got a strong and well-established brand, extensive regional presence, more than 60 million clients and expertise in areas such as digital banking. And lastly, the transaction will bring together 2 highly complementary organizations where Nedbank can benefit from NCBA's modern technology and digital platforms, positioning us to grow and diversify earnings. And NCBA will benefit from Nedbank's CIB expertise and our Group's strong balance sheet. NCBA will retain its brand, local leadership team, independent governance and listing on the Nairobi Stock Exchange. This proposed transaction represents a significant strategic reset for Nedbank's presence on the African continent with a renewed focus on the SADC and East Africa regions, driven through businesses under Nedbank Group's direct ownership and control with high correlation between earnings and dividend accretion. And lastly, before I hand over to Mfundo, a quick assessment of the progress we've made on our strategic value drivers. Starting on the left, in the wholesale space, banking advances growth was modest. Despite the shift in our appetite, improving client activity and encouraging pipelines, drawdowns were slow given ongoing delays in deal closures. We are very well positioned to benefit as infrastructure investment gains momentum, and we have thus far seen a strong start to '26, although it is still early days. On the more positive side, we've recorded good growth in retail advances and gained market share in home loans, vehicle asset finance, overdrafts and retail deposits. We experienced pressure on margins, primarily from lower interest rates. But pleasingly, the decrease in NIM seems to have slowed in the second half of the year, and we continue to build out our hedging program in a commercially appropriate manner. We also saw an increase in client numbers across all segments and strong growth in digital transactions, value-added services and payment volumes. From a productivity perspective, while expenses were well managed, our cost-income ratio was under pressure, mostly on the back of slow revenue growth. I'm pleased to update you that we've identified new productivity initiatives, exceeding ZAR 1.5 billion, which I expect to be realized over the next few years. On the far right, key risk and capital management metrics reflect our strong balance sheet, with our CET1 ratio at 12.9%, above our revised board target range of 11% to 12.5%. Liquidity metrics all significantly exceeded the minimum regulatory requirement of 100%. And I was pleased that we were able to optimize capital management further through the execution of ZAR 2.4 billion of well-timed buybacks at attractive levels of around ZAR 229 per share. From a risk management perspective, we are pleased to have reported a further improvement in impairment outcomes, leading to our credit loss ratio at 68 basis points moving to the bottom half of our target range, supporting capacity to increase our lending appetite. The progress on loan loss rates delivers firmly on our commitment 18 months ago to move back into our target range. With that, let me hand over to Mfundo to reflect on the progress we've made on our strategic value unlock. Mfundo Nkuhlu: Thank you, Jason, and good afternoon, everyone. Starting with digital experience is our first key focus area. In 2025, digital activity and usage grew by double digits as evident in the increases in app transaction volumes and values and active users. By the end of the year, 73% of all sales in PPB were on digital channels. Our juristic businesses also noted steady progress as the adoption rate of the Nedbank Business Hub have increased to 76% in BCB, and 50% in CIB, respectively, both driven by higher levels of self-service and the delivery of enhanced digital features. Digital FX transactions increased to 75% with net FX expected to further enhance our digital capabilities. Our current focus is to leverage AI, machine learning and robotics across the value chain, including credit decisioning, fraud analytics, digital marketing and cross-sell with our dedicated data and analytics capabilities as a key enabler of digital growth and innovation. We also look to unlock productivity benefits linked to the similar use of people and machines in the delivery of our services. To this end, we look forward to the launch of our new app that will deliver a highly personalized and contextual experiences tailored to users' needs, and we expect average app logins per client per month currently at 24.5 to increase further. From the perspective of client experience, we reported good outcomes across key metrics, but acknowledged that there is more to be done, particularly in enhancing digital experiences. In our Consumer business, our Net Promoter Score improved to 77 and ranked #2 among the large South African retail banks. In the Small Business Services segment, we recorded the second half level of NPS in 9 years. And in mid-corporate, the KPI research study noted that Nedbank achieved a client satisfaction score of 87 placing this new business division, first in the SA peer group. In CIB, we achieved a client satisfaction outcome of 80%, in line with the global benchmark. In the Nedbank Africa regions, we achieved good outcomes in Mozambique and Zimbabwe. A key highlight of the period was the value of the Nedbank brand that increased by 24% to ZAR 20 billion and now ranks top 8 among all South African companies. As part of strategy execution, and the strategic portfolio tilt. We are making good progress in building stronger client franchises and enhancing client primacy, which is central to growing revenues. Total Group clients were up 7% and reached 8 million for the first time in the Group's history. This was supported by 9% growth in both PPB to 7.5 million clients and NAR to over 430,000 clients. Main-banked clients in PPB showed a reasonable growth and cross-sell penetration improved to 2.02 products per clients. Importantly, our Greenbacks Loyalty and Rewards program increased its client base by 19% to 2.1 million on the back of a more competitive loyalty and rewards scheme. And for the Amex card users, an additional 100,000 merchants now accept our cards on their devices. Lastly, as shown on the far right, our market share in Commercial Banking segment improved to 24%. From a BA900 perspective, we made good progress in key product lines. In the retail lending, we increased market share across home loans, finance and overdrafts, as highlighted by the green arrows, but still fell short of our desired portfolio mix ambition. Of the historic market share losses in personal loans and credit cards, it was pleasing to see declines halted in the second half of 2025 and with appropriate risk management we expect our performance to continue to improve over time. In our Wholesale businesses, we are disappointed with market share losses in term loans as competition for scarce and good quality assets remained fierce. The closure of large transactions, particularly in energy and infrastructure was delayed into 2026 and planned repayments resulted in slower growth. In Commercial Mortgages, where we have a leading market position, we supported our clients and the market share remains strong around 35%. Looking forward, CIB is well positioned for growth with strong pipelines that are weighted to low risk, including power, renewables and infrastructure. While in BCB, advances are growing off a low base driven by our sector-led expertise and new client value propositions. Retail deposits were up slightly, while commercial deposits decreased marginally. Going forward, we aim to gain further deposit market share with a heightened focus on transactional deposits. As part of our 2024 results, we outlined a number of transformational growth initiatives, designed to leverage our strong foundation and core capabilities to unlock new revenue streams and drive cost optimization. Today, I will not cover all of them, but focus on the progress we have made on payments and insurance. With regard to payments modernization, as shown on the left-hand side, we recognize the enormous potential of digitizing small, fast payments instead of using cash, which has become very expensive to manage. In 2025, we recorded 183% growth in PayShap revenues and very strong growth across contactless payments, value-added services, e-commerce and money app payments when compared to a 6% decline in cash withdrawals. With regard to insurance, as shown on the right-hand side, the opportunity to grow and cross-sell traditional bancassurance and new solutions, such as MyCover suite into the Nedbank line base is accelerating, enabled by the organizational restructure. Insurance offerings are being integrated into client journeys at points of need and provide claims with data-driven personalized offers through enhanced digital experiences. This approach aims to increase client penetration from 19% in 2025 to more than 30% in the medium term and grow gross and premiums by more than 50%. Early signs are evident in the strong growth in end premiums across the MyCover Funeral personal lines and life product lines, and the increases in credit product penetration in card and overdrafts with home loans and vehicle finance enhancements planned for 2026. Lastly, and our fifth strategic value unlock, I will reflect on a few highlights. We continue to provide loans and finance to clients that are aligned to the UN Sustainable Development Goals. At the end of 2025, sustainable development finance exposures amounted to ZAR 207 billion, which represented around 21% of the Group's gross loans and advances. And as a result, achieve our 2025 ambitions of 20%, which we set back in 2021. From a transformation perspective, we maintained our Level 1 Broad-Based Black Economic Empowerment status for the eighth year in a row, supported by ongoing improvements in African colored and Indian employee representation and a 3% increase in African talent representation at both senior and middle management levels. We also provided first-time job opportunities to more than 3,800 U.S. employment service participants, bringing the cumulative opportunities to more than 17,000 since inception. In a year in which we had large-scale changes arising from the organizational restructure, we are pleased to have been announced the #2 ranked SA company on the Forbes World's Best Employers list and top 50 globally. I now hand over to Mike to take us through a review of the Group's financial performance. Michael Davis: Thank you, Mfundo, and good afternoon. Our financial performance for the 2025 year was muted, although slightly ahead of guidance we provided at our pre-close meeting in December and market consensus of an expected decline. Headline earnings increased by 2%, DHEPS by a slightly faster 3% due to buybacks and our ROE was softer at 15.4%, although ahead of cost of equity of 14.6%, excluding the once-off ZAR 600 million Transnet settlement, headline earnings increased by 4%, DHEPS up by 5% and ROE at 15.8% was similar to 2024. Basic earnings per share, however, decreased by 53% as we accounted for the impact of disposing of our ETR shareholding. From a balance sheet perspective, gross banking advances growth was modest at 6%, while deposit balances grew strongly at 11%. Net asset value per share at around ZAR 250 increased by 4% year-on-year, and other balance sheet metrics remain strong, evident in our capital and liquidity ratios. The total dividend for the year was ZAR 21.32 per share, representing an attractive dividend yield of around 7%. Unpacking the numbers, the 2% increase in headline earnings was underpinned by revenue growth of between 3% and 4%. Associate income that declined by 8% as ETI did not contribute to the second half of the year. The impairment charge improved by 18% and expenses increased by 7%. Reflecting on balance sheet growth, advances grew by 6% year-on-year, driven by 6% and 9% growth in home loans and vehicle finance, respectively, on the back of strong front book growth sales as we leverage our existing MFC partnerships and new mortgage originator joint ventures, including with the BetterHome Group, Uber and MultiNet. Modest growth in personal loans of 2% was the outcome of deliberate historic actions taken to derisk the book together with the impact of a change in the write-off policy implemented during 2024. New sales levels have lifted strongly in 2025 and there were no further market share losses in the second half of the year, enabled by specific initiatives focused on originating better quality business. Card and overdrafts increased by 7% off a low base. Term loans reflecting largely the growth in our wholesale businesses, grew by 3%, impacted by delayed deal closures despite improved client activity and robust pipelines. Commercial property finance grew by a modest 2% due to resilient domestic client demand that was offset by a contraction in the African portfolio due to heightened competition, client prepayments and adverse foreign exchange movements. Deposit growth of 11%, as shown on the far right, was underpinned by a 10% increase in franchise call and term deposits, a 23% increase in other deposits as clients extended tenure in response to Nedbank's competitive offerings and NCDs that increased off a low base. Looking at the income statement in a bit more detail. Net interest income increased by 3% as growth in average interest-earning banking assets of 9% was offset by margin compression. The 9% growth was driven by a 6% growth in average banking advances and high levels of high-quality liquid assets. The 24 basis point decline in margin to 381 basis points was primarily driven by a 12 basis point negative endowment mix impact due to capital and transactional deposit balances growing slower than average interest-earning banking assets, and an 11 basis point negative endowment impact from lower rates. The impact of asset mix changes as well as asset and liability pricing pressures reduced margin further by 8 basis points. Pleasingly, the rate of the decline in margin slowed in the second half of the year when compared to the first half. From an interest rate sensitivity perspective, a 1% change in interest rates impacts NII by approximately ZAR 1.5 billion. To date, we have implemented approximately 38% of our endowment hedge as progress depends on interest rate levels. This has reduced our sensitivity from around 18 basis points in 2021 to around 13 basis points when expressed on average interest-earning banking assets. Noninterest revenue growth was 4%, in line with the guidance we provided during the Group's pre-close update of below mid-single digits. Commission and fees increased by 6%, supported by Eqstra that was in for a full 12 months in 2025. Within PPB, we were pleased with transactional NII growth of 8% as our consumer banking business, reflecting good progress in strengthening the franchise and strong growth in value-added services of 36%. Growth in CIB was restrained by delayed deal flow moving to 2026 and a high prior year base. Trading and fair value income decreased by a combined 6%, including a 1% increase in markets. Trading income increased by 10%, driven by strong growth in ForEx and debt securities, offset by slower equity trading income, while fair value income declined. Insurance income increased by 5% due to an improved non-life claims experience and strong growth in premiums and policies within the MyCover suite, as Mfundo highlighted earlier. This was partially offset by a sizable positive actuarial basis changes in the prior period. And when excluding the base effect, insurance income increased by 11%. Turning to impairments. The Group's impairment charge decreased by 18%, and the credit loss ratio improved to 68 basis points, which was better than we had expected. The improvement was primarily the outcome of decisive risk management actions and an improved macroeconomic environment. At a cluster level, CIB reported a recovery of ZAR 718 million and a credit loss ratio at negative 17 basis points, primarily the result of successful workouts and derisking strategies that resulted in provision releases given the decline in Stage 2 and Stage 3 exposures. The BCB credit loss ratio decreased to 21 basis points to well below its through-the-cycle target range of 50 to 70 basis points. The decline was driven by an outstanding performance in recoveries and collections. PPB's credit loss ratio decreased to 163 basis points from 176 basis points in the prior year within its through-the-cycle target range of 130 to 190 basis points as a result of ongoing credit risk and collections initiatives and better quality front book origination. Home loans and vehicle finance, reported improvements, while credit card impairments increased off a low prior year base, and the personal loan credit loss ratio remains elevated, although improving from the first half of the year through better front book origination. Nedbank Africa regions reported a credit loss ratio of 89 basis points, back to within its through-the-cycle target range of 85 to 120 basis points, driven largely by lower impairments due to improved recoveries and stronger asset growth. Within gross loans and advances, Stage 1 loans increased by 10%, while Stage 2 and Stage 3 loans reduced by 5% and 2%, respectively. As a result, the Group's total ECL coverage at 2.96% decreased from 3.32%, mainly driven by the decline in Stage 2 and Stage 3 loans. Shifting our focus to costs. Underlying expense growth was 5%. An 8% increase in salaries, wages and other employee costs reflect the impacts of average annual salary increases of 6% and the additional Eqstra staff costs not fully in the base. Incentives decreased by 2%, aligned with profitability metrics and vesting probabilities relating to corporate performance targets. Computer processing costs increased by 5%, driven by ongoing investments in digital data and cloud solutions as well as higher digital volumes, partially offset by negative growth in the amortization of intangible assets. Fees, insurance, accommodation and marketing were all well managed, increasing by a combined 3%, while the large increase in other operating expenses was due to the inclusion of the Transnet settlement. Turning now to the disposal of our historic ETI associate investment. The graph unpacks the ETI lifetime outcome from the date of the original investment to the date of sale. We show on this slide the on-sale accounting treatment where ZAR 8.6 billion is crystallized through the income statement as a non-headline earnings item. The ZAR 8.6 billion is made up of our share of historic foreign currency translation and other comprehensive income losses to the value of ZAR 7.4 billion and an IFRS 5 adjustment of ZAR 1.2 billion on sale. The sale proceeds of ZAR 1.6 billion represent the $100 million sales price, less transaction costs converted at the December 17 rand-U.S. dollar exchange rate. Moving to capital. The movement in our CET1 ratio this year reflects solid capital generation, the payment of dividends in the calendar year, a 3% increase in RWA and the combined impacts of share buybacks, which was beneficial to ROE, the acquisition of iKhokha, the sale of ETI and the final Basel III reforms. The increase in RWA was mainly due to an increase in credit and operational risk, partially offset by a marked improvement in equity risk, following the adoption of the final reforms. At 12.9%, our CET1 ratio remains above the top end of our revised target range of 11% to 12.5%. Positioning for growth, the execution of the NCBA acquisition and to sustain dividend payments within our target range. I will close with the financial performance of our clusters in their new construct. CIB produced headline earnings growth of 2% and delivered an ROE of 21.4%. Earnings growth and returns were supported by lower impairments and disciplined capital management. NII decreased by 2%, reflecting actual advances growth of 5% and a decline in margin on the back of lower interest rates, competitive pricing and a lower risk loan book mix. NIR decreased by 2% due to negative fair value adjustments and lower commission and fees, given a high 2024 base and deals delayed into 2026 despite solid underlying activity. Trading income and equity investment income, on the other hand, were up strongly, and underlying operating expenses were well managed. The cluster is well placed for future growth given its skills, expertise and strong pipelines. Headline earnings in our new cluster business and commercial banking decreased by 7%, delivering an ROE of 20.8%. NII decreased by 1%, given a slight decline in advances and lower margin on the back of rate cuts. NIR increased by 13%, including the full year impact of Eqstra and underlying NIR growth was driven by higher card acceptance and commercial issuing volumes as well as growth in value-added services. Expenses increased by 12%, but by only 8% when adjusting for Eqstra. BCB is now fully resourced and positioned for growth. Headline earnings in our Personal and Private Banking cluster pleasingly increased by 9%, delivering a higher ROE of 15.6%. Growth was driven by a 7% increase in NIR as a result of strong growth in value-added services and insurance income. NII increased by 1% on the back of 6% growth in advances, diluted by a decrease in margin, mainly due to lower endowment and the advances mix impact. Expenses were very well managed and increased by only 4%. The momentum we are starting to see in PPB is pleasing as it takes to increase its ROE towards 18%. Lastly, in the Nedbank Africa regions, headline earnings decreased by 1%, delivering an ROE of 20.5%. The earnings decline was mainly due to the sale of ETI that resulted in no associate income reported in the second half. Headline earnings in our SADC operations increased by 15%, but its ROE remains low at 9%, which remains a focus. Thank you. I'll now hand back to Jason. Jason Paul Quinn: Great. Thanks, Mike, and Mfundo. Let's start this section by looking at our latest macroeconomic forecast. We expect banking conditions to improve further in the coming years as South Africa's GDP for 2026 to 2028 is around 1.5% to 1.8%. Inflation should remain around the Reserve Bank's target of 3% due to a stable rand, low global oil prices, low inflation expectations and fewer supply side challenges. It's actually too early to call out any changes in this guidance based on recent events in the Middle East. After a cumulative 150 basis points cut in interest rates, including the 25 basis points in November, interest rates are currently forecast to reduce by a further 50 basis points. To my mind, though, this is becoming increasingly unlikely with a plausible scenario of rates flat from here for the foreseeable future. Credit extension is forecast to remain relatively robust around 7% to 8%, supported by the anticipated recovery in the domestic economy and lower interest rates. Although, difficult to forecast due to geopolitics, the rand is expected to average slightly above ZAR 16 to the dollar in the coming years. Turning now to our guidance for 2026. We expect NII growth to increase to around mid-single digits. This is likely to be driven by stronger advances growth across all our clusters. Our NIM is expected to contract slightly given the growing impact of lower interest rates. Our credit loss ratio is expected to be around the mid-70 basis points, which is below the midpoint of our through-the-cycle target range as impairments in CIB and BCB normalize off a very low 2025 base, and PPB will continue to see an improvement in its credit loss ratio. NIR growth is expected to grow at upper single digits, driven by the execution of various growth initiatives across all our clusters. Associate income from ETI will not recur in '26 or beyond. Expenses are expected to be below mid-single digits as our focus on cost management continues. On capital, we expect to operate within our revised board-approved target range of 11% to 12.5% by the end of this year. Dividend subject to Board approval will be declared within our target range of 1.75 to 2.25x cover. So I'm even more excited today about the Group's growth prospects in the medium term than I was a year ago. And this has given our strategic focus and execution that we saw in 2025, which won't necessarily offset the discontinuance of the contribution from ETI in 2026, but will do so from 2027. Tailwinds in 2026 will come from an improving macroeconomic environment, strong underlying business momentum, as we highlighted in our presentation today, the benefits from the organizational restructure and the one-off Transnet settlement that is now in the base. We do, however, face some headwinds. These include endowment pressure from lower interest rates, wholesale impairments normalizing off a low base and no further earnings contribution from ETI. These impacts will be more material in our interim results, given that we had a final ZAR 927 million contribution from ETI in the first half of 2025. Notwithstanding all of this, the focus for 2026 remains on delivering an ROE above 15%, heading towards 2025 levels and improving our cost income ratio. In the medium term, we firstly see benefits from a more constructive macroeconomic environment, including us being well positioned to capitalize on large energy and infrastructure finance opportunities, stronger retail credit growth and a low, but more stable interest rate backdrop with low inflation, particularly from an endowment perspective. Our Transform initiatives are starting to scale, and we should see more meaningful contributions from insurance, payments and other vectors as well as ongoing market share gains in lending and deposits. I'm particularly encouraged by our various productivity initiatives, which I mentioned earlier, including AI projects, which in combination will improve our cost income ratio. We also expect to unlock synergies from our Eqstra and iKhokha acquisitions, while NCBA is expected to contribute once the transaction is finalized. From a capital perspective, we remain committed to be flexible in the management of capital and being good stewards of capital as we demonstrated in 2025. Overall, these initiatives, along with underlying momentum underpin our confidence in progressing to our medium-term targets of an ROE of 17% and a cost to income ratio of 54%. Thanks very much for listening, and we'll now proceed to your questions and answers. Jason Paul Quinn: All right. Sorry, we just had a bit of a glitch there. All right, everybody. I'm going to play a point here and coordinate our responses to your various questions. It probably makes sense for us to firstly take any questions on the telephone. So operator, if you could advise those on the telephone to put the questions to us now. Operator: [Operator Instructions] Jason Paul Quinn: Thank you. We do have a number of questions on the web, so we can go to those if there aren't any questions on the telephone. Let's give it a second just to give anyone the last opportunity. Operator: There are no questions on the conference, sir. Jason Paul Quinn: All right, folks. So if we move to the questions coming through the web. I'll read them out in verbatim, and then we'll deal with answering them together, myself, Mike and Mfundo. First question is from Baron Nkomo from JPMorgan. There's a two-part question here. First one is how our recent developments in the Middle East, impacting the Group's short-term outlook. Baron, I think it's premature for us to revise anything at this point, to be honest, even our short-term outlook. And that's really because it's just totally uncertain as to whether the conflict in the Middle East is short as the previous one was. And if they go back to the negotiating table, potentially the Strait of Hormuz are opened up again. We just don't know. What we know for sure, though, is that over the sort of more medium-term impact on oil price would be something we would observe carefully. I do think that the world has stockpiled a lot of oil over the last while. This is a risk that was well flagged for some time, in fact. I also understand that the UAE came out and said that they've got much more capacity in oil pipelines that could avoid these transformers in the short term. But the truth is, given the uncertainties around this, it's premature for us to change anything at all and we stand by our outlook based on what we know today. The second one would be also from Baron, what are your loan growth expectations for each of the key divisions, Retail, Business Banking, Corporate Banking in the second half of 2026. Just checking with Mike, Baron, I would say that we've given good guidance for the year, we can update that when we're together in August, depending how the first half goes. But we've got pretty strong conviction, as you've heard, around momentum in many of our lending businesses, particularly the annuity ones that are more kind of inflow like mortgages, autos. I think those are kind of in good shape, and we should see the similar or improving growth. BCB similarly, I think we've got good conviction there. CIB, we've said we didn't execute our full pipeline in 2025 and that, that pipeline should be executed into 2026, and we've got conviction on that statement as we stand here today. So I'd say we'll be pretty linear through '26 and with some lumpy trades in CIB that will emerge from a pipeline execution perspective. Tyron Green from Granate Asset Management. Are you able to provide more details on the competitive environment in the corporate credit market, the reason for the lower market share in corporate credits and delays in CIB pipeline impacting NIR? Thanks very much, Tyron. I think we covered some of that in the presentation, but let's just double click on it. Our CIB business can only operate as quickly as our clients, to be honest. We put great capabilities in place. We have great structures in place. We've got appetite, as you've heard, and we've even gone so far as to really express our appetite in a different way in that for our best customers now, we will take full exposure to them. In other words, we're standing by our clients' growth opportunities. We know for sure that the last round of renewables that were awarded weren't executed. We think those do get executed in '26. And we've got pretty good conviction around it, as you've heard, but not necessarily always in our hands, and that's the only reason for the delay as we see it at this point. Ross Krige from Investec. A couple of questions here, which we'll probably share around a bit. First one is on the additional cost optimization plans brackets, I think ZAR 1.5 billion was mentioned. What is driving this and in what time frame? Let me cover that one quickly, and Mike and Mfundo might come in on it. Ross, you'll recall that the company ran a very effective TOM program. I think that took ZAR 6 billion, ZAR 7 billion of cost out of the organization. What we talk about now is a project that deals with productivity. So in other words, ensuring that we have the most efficient organizational designed to serve clients, minimizing any duplications between our enablement functions and our businesses. And ensuring that our technology enablement delivers in the technology enablement part, we're looking at -- we've got a lot of use cases, Mfundo covered some of those in AI to enhance colleagues productivity. So in other words, a loan officer and the number of loan applications they can deal with in any particular time period should be accelerated through AI. That's where that quantification comes from. That is a medium-term aspiration. So we'll deliver that over 3 years. Second question on the delayed deals in CIB, what are the main reasons for the delay? And what is the risk those deals don't happen at all. Ross to be fair, I think we've covered that. I just want to see it Mike or Mfundo want to add anything. I think we've covered it. Third question, on home loan origination proportion going through owned channels reduced to 35%. Could you be more -- could you share more details around the strategy and the trade-offs at play? Ross, I think 18 months ago or thereabouts, we were very clear as part of our strategic refresh that we intended to widen our scope of origination and bring in originators, and we've done that very successfully. And I think that's seen the largest part of the growth in flow coming from the mortgage business. So that's clearly been strategic. And I think we're executing it well. Next one is Harry Botha from Bank of America. How should we think about CLR in the medium-term targets? Can wholesale remain lower supporting CLR below 80. So let me start on that, Mike, you probably come in. So yes, we've got a range, as you know, Harry, which is 60 to 100 basis points. We're probably at the lower end now of where I think we may end up, and we've guided very explicitly for FY '26 to be somewhere in the mid-70s, so from 68 up to 70 mid. And that's on the back, of course, of a non recurrence of the very low or credit kind of write-back in CIB this year and an increase in BCB, which was also pretty low. Mortgage is also pretty low at the moment and might go up a little bit. So that should give you a bit more color, Harry, on where we are with respect to guidance. With respect to medium term, like more further out, we want to be more or less in the middle of the range or thereabouts with good loan growth on the top of that. You never want your loan losses to be so low that you're not taking enough risk in the market, and I think that's something to watch. Michael Davis: Maybe, Jason, just to add to that. So in terms of -- we've given guidance this year, in terms of credit loss ratio in the mid-70s. So you can model that 75, 76 somewhere in that sort of range. And as Jason has indicated, we would see an unwind of the recovery seen in CIB towards the bottom of the target range. And you know that, that plus there's a range of 15 to 45. We've indicated that BCB had a very good credit outcome. And obviously, our focused on growth. I would suggest the 21 basis points, that's going to move up. Jason referred to home loans at 8 basis points at very, very attractive levels. So I would suggest that's going to move up. But then we've got scope and capacity and unsecured lending, both in personal loans and card and VAF, we think will continue to come in. You put all those bits and pieces together, that's where we get the guidance for the group at somewhere in the mid-70s. Jason Paul Quinn: Thanks, Mike. Thanks for that color. Harry, you've got 2 more parts. Can you expand on your strategies to accelerate growth in BCB over the next couple of years? Absolutely, Harry. So firstly, it's been great to see the formation of BCB as a cluster. It's been great to see the leadership team form under Andiswa Bata's leadership. We already saw quick wins in that second half last year and more momentum in our client franchise. So a combination of, I would say, a good hustle, in other words, bankers chasing transactions, service and products. We also need to see collaboration, which is already building out nicely between BCB with PPB on some products and CRB on others, like FX and trade and commercial properties. So really excited about the opportunity strategically in BCB and we can unpack that a bit more when we're together later in the week. All right. Harry's got one more there. What underpins the 18% ROE target in PPB? Is it predicated on high single-digit revenue growth. Harry, of course, it's a revenue-led strategy in PPB, but also, we need to make sure that credit loss ratio covers is well covered, and we get efficiency out of that. I'd also just say that the productivity gains that we expect would probably benefit PPB the most. I think that will be a fair comment, although there will also be benefits in BCB given it's relatively high cost-income ratio. Okay. Harry, thank you. All right. Chris, Chris Steward from Ninety One. Please, could you unpack the NIR growth guidance? How much do you see as organic versus how much from recent acquisitions such as iKhokha? That's a great question, Chris. Of course, iKhokha only landed in December. So it's only had one month of revenues in it. You'll see that in our booklet. In fact, it's around about ZAR 60 million from memory, Mark, or thereabouts on the revenue line. I think we'll unpack that a little bit more later, but I certainly would see that a large portion of our NIR revenue growth would come from organic. And you've seen where that's -- where those lines are, those key lines that we think we should make progress on, including in CIB, especially those deal closures come with fairly large upfront fees attached to them, which I think would make a big difference to our NIR trajectory. Chris, I'm also really pleased if you go through the businesses with PPB, some pretty good momentum there on the fees and commissions lines in the high single digit, which we think we should be able to maintain. Mike, I don't know if we want to say much more about an individual acquisitions contribution in '26 other than what we earned in December. And I don't think that was -- look, seasonally, that would be a relatively high month given transactional volumes in December. So maybe not a run rate of 60 a month, but a little bit less than that, and then you can figure out annualizing that what the -- because that's the only one run that will have a major contribution. The other one will be NCBA, which is much later in the year, and we'll probably guide more explicitly on that when we get closer to executing that transaction. Okay. Charles Russell from SBG. First one, do you anticipate further buybacks given your comments about DHEPS growth greater than HC growth in FY '26. Mike, do you want to take that one? Michael Davis: Yes. So I think when you think about DHEPS and when you think about our capital management and our approach towards capital management, we indicated, certainly during 2025 that we saw significant value in doing buybacks at levels at which the stock price was trading at, at a time when we were short of growth and at a time when effectively, we had no major acquisitions in the pipeline. So we saw an opportunity to certainly execute buybacks at valuable levels to shareholders. If you reflect on where the stock price is trading today, if you reflect on the fact that we've announced to the market, we're looking to close out a 66% acquisition of NCBA. And if you reflect on Jason's comments around front book growth, which certainly in CIB, BCB are going to be much better than 2025 or expect it to be much better than 2025. It's likely that capital is going to be utilized to support growth and to continue to service inside the range. So that would be... Jason Paul Quinn: I think that's right, Mike. Thanks, Charles. Your NII guidance for FY '26 seems to imply continued lower than market loan growth. I guess we'll see Charles how the other banks guide over the coming weeks. Can you unpack the mechanics of shrinking CET1 ratio into FY '26? I think we've covered a bit of that. So we certainly would see loan growth as a first key driver. We certainly have to fund at least part of the NCBA acquisition. And then after all that, if there's opportunity, we would look at buybacks at -- within guardrails of a share price. But those will be the drivers of bringing our CET1 ratio up to the top end of that new target range. Michael Davis: Maybe just one other is that D2 comes into effect, January 1, 2026, and that itself takes about 27 basis points of the CET1 ratio. So you've got -- to Jason's point, you've got NCBA coming in. You've got D2 coming in. You've got an expectation of stronger growth. And hence, our guidance or expectations around CET1. Jason Paul Quinn: But once again, Charles, our commitment to shareholders would be to be good stewards of capital, and we would use those levers appropriately. Okay. Now we've got a question from a colleague at Nedbank, Heathcliff. Are there any plans around internal structure to deal with inefficiencies such as market offsetting in different CIB area to markets? I'd suggest Heath we'll take that up with you internally. I wouldn't suggest that that's a question I can answer here today. Simon Nellis from Citibank. Do you intend to execute further buybacks this year? Simon, I think we've covered that extensively now. So I'm going to assume that one's answered. We went to James Starke from Morgan Stanley. Regarding your home loans distribution strategy, with only 35% origination coming through own channels down from 42%. Please, can you give some color on a few things. How the economics and asset quality characteristics compare between your own channel and mortgage originator channel and how do you secure a position of the MO channel relative to other banks? Well, I'll start off with that one. James, in my experience, a diversified portfolio that originates both from owned channels and mortgage originators takes you well through cycles. I think what mortgage originators price the most is consistency of appetite. So in other words, it gets very difficult for them to do their business if banks are in and out of appetite with them. So I think consistency of appetite is very important, and they will see that from us. I think it's also important that as we build out these partnerships, they are kind of long-term partnerships with sharing of economics right down to the bottom line, including sharing of good credits and not so good credits. In other words, that loan loss is important to both parties. I think that will be the main part of the answer, Mike, I don't know if you want to add anything to it? Michael Davis: You heard me in my slide referred to the partnerships and JVs with the BetterHome Group, Uber and MultiNet. I mean, obviously, the adverse implications of that is obviously, it costs us something to be in those JVs. But certainly, when looking at the quality of the front book and the residual economics in the deal they are favorable joint ventures to the organization. Jason Paul Quinn: Yes, I agree, Mike. And James, the last point I'd make around the mortgage originators is simply that we really have a long-term view of how to work with them. And those relationships are being built out carefully. Simon Nellis from Citibank. What, if any, earnings accretion do you expect from the NCBA transaction? What is the magnitude of any synergies from the transaction you expect? And last, what is the capital impact of the transaction? So Simon, I think with respect to how the transaction is progressing firstly, we announced a week ago that we obtained Capital Markets Authority exemption. So -- and we're busy now with processes of applications to the Central Bank of Kenya, for instance, and the SARB. So we only expect to execute the transaction in the third quarter. As we get closer to that, the economics, I think, will firm up a bit more. And at that point, we'll be able to say a lot more around quantifying some of these magnitudes that you're looking for. But certainly, strategically, we're very excited about the opportunity of bringing these 2 companies together. We certainly think that there are things that Nedbank can add to NCBA and there's things that NCBA can add to Nedbank. So we do see synergies as part of the game plan. Mike, do you want to cover the capital impact? Michael Davis: Yes. So Simon, the best estimate at the moment is based on assumptions that the deal will take 40 basis points out of the CET1 ratio. And obviously, there are a few moving parts in that, but you could model 30 to 40 basis points. Jason Paul Quinn: Thanks, Mike. James, is coming back in. And James, there was one other point I just wanted to make to you on the mortgage originators which really deals with turnaround times. I covered the part around consistency of appetite. But one thing we had to invest in significantly in Nedbank was our turnaround times of approving applications and you need to get to the good credit quickly and first. And I think that's another reason why that channel has grown quite nicely for us. With respect to your final question, James, does the FY '26 guidance include NCBA from Q3? Not at the moment, James. We haven't put that in our thinking for what we guided today. We will update you as we get closer to Q3 on that. I'm just going to refresh, one last time before we move to close. So if anyone has a final question, please put it in now. Otherwise, I think we can move to closing this session. We look forward to seeing most of you in the coming days as we engage in-person on today's presentation. Thank you very much.
Operator: Thank you for attending Wajax Corporation's 2025 Fourth Quarter and Year-end Financial Results Webcast. On today's webcast will be Mr. Iggy Domagalski, President and Chief Executive Officer; Ms. Tania Casadinho, Chief Financial Officer. Please be advised that this webcast is being recorded. Please note that this webcast contains forward-looking statements. Actual future results may differ from expected results. I will now turn the call over to Tania Casadinho. Tania Casadinho: Thank you, operator. Good afternoon, and thank you for participating in our fourth quarter results call. This afternoon, we will be following a webcast, which includes a summary presentation of Wajax's Q4 2025 financial results. Presentation can be found on our website under Investor Relations, Events and Presentations. To begin, I would like to draw your attention to our cautionary statement regarding forward-looking information on Slide 2 and non-GAAP and other financial measures on Slide 3. Please turn to Slide 4. And at this point, I'll turn the call over to Iggy. Ignacy Domagalski: Thank you, Tania. To start, I will provide highlights on our fourth quarter before turning it back to Tania to comment on inventory, backlog and the balance sheet. Slide provides an overview of Wajax. The corporation has more than 167 years of Canadian operating history and operates across 105 branches with a team of approximately 2,900 employees. During the quarter, our heavy equipment categories and revenue sources made up approximately 61% of our total revenue, while industrial parts and ERS generated approximately 39%. Turning to Slide 5. This slide provides an overview of our purpose and values. Wajax's purpose statement is empowering people to build a better tomorrow, which we strive to achieve by living our values and delivering an exceptional experience to our shareholders, customers, suppliers, our people and the communities we serve. Our purpose and values guide our decision-making and allow us to execute on our strategic priorities. Turning to Slide 6. This slide provides an overview of our strategic priorities, which were refined for 2026. Management is focused on executing against these priorities as well as optimizing inventory, managing costs and improving margins. Between our purpose and values and these priorities, management believes this will enable Wajax to generate sustainable long-term value and capitalize on future opportunities. Turning to Slide 7. Wajax delivered steady performance in the fourth quarter of 2025, including gross profit margin growth, higher earnings and improved leverage due to management's focus on inventory optimization and cost discipline to drive free cash flow and strengthen the balance sheet. Revenue of $560 million decreased $5.9 million or 1% in the quarter. The decrease resulted primarily from lower product support sales in Western and Eastern Canada, lower industrial parts sales in Central Canada and lower equipment sales in all regions. These decreases were offset partially by higher ERS revenue in all regions, particularly in Eastern Canada. Gross profit margin of 18% increased 100 basis points compared to the same period of 2024, reflecting improved execution. The increase was driven primarily by higher margins realized on industrial parts, product support and equipment revenue, reflecting management's focus on margin improvement initiatives in these areas of the business. The increase in margin was also driven by a higher proportion of ERS sales from a sales mix perspective. We remain focused on these margin improvement initiatives to strengthen our margin profile, mitigate ongoing market pressures and drive continued earnings performance. Excluding the adjustments noted on the slide, selling and administrative expenses as a percentage of revenue decreased to 13.3% in the fourth quarter of 2025 compared to 13.4% in the same period of 2024, primarily due to higher incentive accruals driven by improved financial results compared to the prior year. Adjusted EBITDA of $44 million increased $8.9 million or 25.2% from the fourth quarter of 2024, noting the adjustments recorded on this chart. The increase in adjusted EBITDA resulted primarily from higher gross profit margin and lower finance costs. Adjusted EBITDA margin of 7.9% in the fourth quarter of 2025 improved from 6.2% compared to the same period of 2024 and declined from 9.3% in the third quarter of 2025. Adjusted net earnings of $0.71 per share increased 104.1% or $0.36 per share from the fourth quarter of 2024, noting the adjustments recorded on this chart. At the end of Q4, the TRIF rate was 0.93, a decrease of 1% from the fourth quarter of 2024. Safety continues to be Wajax's #1 priority, and management is committed to continuously improving our safety program to improve on this result. We thank everyone on our team for their ongoing dedication to workplace safety. Turning to Slide 8. Revenue decrease of 1% in the fourth quarter resulted from lower revenue in Western and Central regions, offset partially by higher revenue in Eastern Canada. Western Canada sales of $261 million decreased 4.9% in the quarter due primarily to lower equipment and forestry sales, partially offset by higher equipment sales in the mining category and higher ERS sales. Central Canada sales of $95 million (sic) [ $95.3 million ] decreased 4.4% in the quarter due primarily to lower equipment sales in the material handling category and lower industrial parts sales. These decreases were partially offset by higher equipment sales in the construction and forestry category and higher ERS. Eastern Canada sales of $203 million (sic) [ $203.3 million ] increased 6.2% in the quarter due primarily to higher ERS sales and higher equipment sales in the power systems and construction and forestry categories. These increases were partially offset by lower equipment sales in the material handling category. Please turn to Slide 9. An update on equipment and product support sales and year-over-year variances are shown on this page. Equipment sales of $206 million decreased $2.6 million or 1.2% compared to last year due primarily to lower material handling sales in Central and Eastern Canada and lower construction and forestry sales in Western Canada. These decreases were offset partially by higher power systems sales in Eastern Canada, higher construction and forestry sales in Central and Eastern Canada and higher mining sales in Western Canada. Product support sales of $124 million decreased $8.5 million or 6.4% compared to last year, due primarily to lower Power Systems revenue in Western and Eastern Canada and lower construction and forestry revenue in Western Canada. Please turn to Slide 10. An update on industrial parts and ERS sales and year-over-year variances are shown on this page. Industrial parts sales of approximately $131 million decreased $3 million or 2.3% compared to last year due primarily to lower sales in Central Canada. ERS sales of approximately $88 million increased $9 million or 11% due to higher revenue in all regions, particularly in Eastern Canada, due largely to timing of larger projects. Turning to Slide 11. This slide summarizes sales at a category level for our company's overall groupings of heavy equipments and industrial parts and ERS. In the fourth quarter, the heavy equipment categories decreased $11.8 million or 3.3% due to lower sales in construction and forestry and material handling, offset partially by higher mining sales in Western Canada and higher power systems sales in Canada. The industrial parts and ERS categories increased $5.7 million or 2.7%, driven by higher ERS sales in all regions, offset partially by lower industrial parts sales in Central Canada. I will now turn the call over to Tania for commentary on backlog, inventory and the balance sheet. Tania Casadinho: Thank you, Iggy. Please turn to Slide 12 for my comments on backlog and inventory. Our Q4 backlog of $516.6 million decreased $10.1 million compared to backlog of $506.5 million at Q3. And decreased $47.8 million on a year-over-year basis. The sequential increase was due to an increase in Power Systems backlog driven by the River Class Destroyers (RCD) subcontract entered into with Irving Shipbuilding Inc. During the fourth quarter of 2025, this increase was partially offset by lower backlog in all other categories, most notably in mining, driven largely by the sale of 2 large mining shovels in the quarter, which were in backlog at September 30th, 2025. The year-over-year decrease was due primarily to lower mining backlog driven largely by the sale of 6 large mining shovels since December 31st, 2024, and lower material handling backlog. These decreases were partially offset by an increase in Power Systems backlog, driven by the long-term RCD contracts signed with ISI during the quarter -- during the fourth quarter of 2025 and higher ERS orders. Backlog at December 31st, 2025, included 2 large mining shovels. Inventory decreased $58.2 million compared to Q3 of 2025. Ongoing inventory optimization initiatives have decreased inventory by over $200 million from peak levels at March 31st, 2024. Inventory decreased $126.4 million compared to Q4 of 2024. The year-over-year decline is mainly attributed to lower inventory in all categories, driven largely by management's focus on optimizing inventory levels. Management continues to focus on optimizing inventory levels and mix while matching these with business volumes and maintaining fill rates at appropriate levels. Please turn to Slide 13, where I will provide an update on cash flow, leverage and working capital. Cash flows generated from operating activities in the current quarter of $81.5 million compared to cash generated of $81.4 million in the same quarter of the prior year. Cash flows generated from operating activities for the full year 2025 amounted to $194 million compared to cash generated of $75.1 million in 2024. The increase in cash generated of $118.8 million was mainly attributable to a decrease in inventory and lower rental equipment additions, offset partially by a decrease in accounts payable and accrued liabilities. Our Q4 leverage ratio improved to 1.62x from 2.28x in Q3 due primarily to the lower debt level driven by cash generated from operating activities during the quarter. The corporation's leverage ratio is currently within our target range of 1.5 to 2x at the end of Q4. Also in the quarter, on October 24th, 2025, the corporation amended its bank credit facility, extending the maturity date from October 1st, 2027 to October 24th, 2029. There is no change to the credit limit of the facility. The maturity date extension strengthens the corporation's liquidity profile, providing enhanced financial flexibility and greater certainty of funding for planned strategic initiatives. Our available credit capacity at the end of Q4 was $266.9 million, which is sufficient to meet short-term normal course working capital and maintenance capital requirements and fund our planned strategic initiatives. We continue to focus on working capital efficiency, which is a key component in managing our overall leverage targets. The Q4 working capital efficiency was 25.1%, an improvement in efficiency of 30 basis points from 25.4% at September 30th, 2025, due to the lower trailing 4-quarter average working capital, largely resulting from lower average inventory levels. Inventory turns have improved from Q3 of 2025 and improved to 2.5x from 2.0x in Q4 of 2024 due primarily to lower average inventory levels and our focus on inventory optimization throughout the year. The optimization of inventory, improvement in cash flows from operating activities and meaningful reduction in leverage reflect management's disciplined execution and a more resilient balance sheet as we enter 2026. Finally, the Board has approved our first quarter 2026 dividend of $0.35 per share payable on April 2nd, 2026, to shareholders of record on March 16th, 2026. Please turn to Slide 14. And at this point, I will turn it back to Iggy. Ignacy Domagalski: Thank you, Tania. Our outlook is summarized on Slide 14. During the year, management focused on cost control, inventory optimization and margin improvement to reduce leverage, enhance profitability and increase cash flow from operations. In 2025, Wajax delivered revenue of $2.145 billion compared to $2.097 billion in 2024, adjusted basic earnings per share of $2.90 versus $2.44 in 2024 and cash flow from operating activities of $194 million compared to $75.1 million in 2024. In percentage terms, revenue was up 2.3%, adjusted EPS was up nearly 20% and cash flow was up [ 158 ]. Inventory was reduced by $126.4 million to $547.6 million and leverage improved to 1.62x, returning to management's target leverage range of 1.5 to 2x. These actions represent initial steps in a broader ongoing program of operational improvement. In 2026, management will continue to focus on disciplined cost control, inventory optimization and margin improvement, supported by prudent capital allocation and effective execution to enhance efficiency, strengthen cash flow and support sustainable performance. Looking ahead, Wajax continues to see strong customer demand in the mining and energy sectors with mining demand reflected in a backlog of 2 large mining shovels for delivery over the next 5 quarters. Market conditions in other sectors remain mixed across regions with continued macroeconomic softness and uncertainty related to Canada, U.S. tariffs and trade dynamics. Wajax enters 2026 with a strengthened balance sheet, a solid backlog and improved operating performance. Inventory levels are within a normal operating range. Margin and cost control remains a focus and leverage is within the corporation's target range. While demand visibility varies across end markets, the corporation's diversified exposure and approach to capital allocation and execution supports its ability to manage current conditions. Management believes that continued execution of its priorities underpinned by prudent capital allocation and balance sheet strength will support sustainable long-term value creation. Personally, as I reflect on 17 years with this organization, I'm encouraged by what our teams have accomplished. We have expanded and diversified the business through a mix of acquisitions and organic growth, built a culture that helps our people succeed personally and professionally and established a more resilient foundation to drive long-term value creation. In October, the Board of Directors and I jointly agreed to initiate a CEO succession process. And with that process now complete, I'm excited to welcome George McClean as Wajax's new President and Chief Executive Officer, effective later today, and he will also join the corporation's Board of Directors. George is an experienced, thoughtful, driven and people-focused leader, and I believe he is exceptionally well suited to lead Wajax into its next chapter. We look forward to introducing George to the investor and analyst community in the weeks ahead. Today is my last official day as CEO of Wajax, and I will remain with the company until March 20th to facilitate a smooth and seamless transition. And after that, I will be cheering on the team from the sidelines as a shareholder and wishing them continued success. In closing, I would like to recognize the hard work, resilience and trust of our employees. Your commitment to safety and success of our customers and each other is onspiring. To our leadership team, you are amongst the most talented and hardest working people I've ever met. It has been an honor to work alongside you. To our customers who are critical to our success, thank you for your continued business and trust. We strive every day to exceed your expectations. To our manufacturing partners who continue to innovate, evolve and support solutions that help our customers succeed, we appreciate the opportunity to represent your world-class products in key markets worldwide. I also want to thank our Board for their trust and wise counsel over the years. Their deep experience and strong oversight will remain instrumental in shaping and supporting our broader strategy for years to come. And last but certainly not least, I want to recognize our shareholders, banking partners and analysts for their continued support and recognition of our vision to create and drive long-term value. I firmly believe Wajax is well positioned to thrive in the months and years ahead, and I look forward to cheering the team on as it continues to build momentum. I will now turn it over to the operator to open the line for questions. Operator: [Operator Instructions] First question comes from Patrick Sullivan with TD Cowen. Patrick Sullivan: It's nice to know you over the years. So congratulations on everything. My first question, I guess, is basically on the guidance range for SG&A as a percentage of revenue. In the past, it's been 14.5% to 15.5%, but you guys have been investing that number for some time now. So I guess all the changes you made, are these new levels, lower levels, I guess, the new normal? Do you have an updated range? Tania Casadinho: Patrick, thanks for the question. Yes, we are extremely happy with what we've done so far with SG&A and our cost management strategies. And our full year run rate is at an adjusted of 14%. In terms of forward-looking, I guess, guidance and range, we do aim to operate within that lower end of the range. So the lower end is now 14%, I would say. And we feel that within that lower end of the range, we should be able to continue to operate within that on a full year basis. Now on a quarter-over-quarter basis, that's obviously relative to volume of revenue. Patrick Sullivan: Okay. Great. Yes, I totally understand that. I guess sort of sticking with the margins. Gross margins were up year-over-year, but they did take a bit of a step back sequentially. I know in the commentary of the filings, it said you saw meaningful improvement in product support margins versus the full year 2024 and improved IP and ERS margins in the latter half of 2025. I guess can you just talk us through the margin dynamics at play to end the year? And then how you're feeling about the progression going forward? Tania Casadinho: Sure. Thank you for the question. We continue to be very focused on our margin profile and margin expansion, as we mentioned. We did see a bit of a fall in Q4 relative to a couple of things, including mix. Our expectation, how we're seeing this going forward is we feel relatively good about the full year GP percentage for 2025 and aim to continue to see some of the improvements that we started to see in the latter half of 2025. Operator: The next question comes from Devin Dodge with BMO Capital Markets. Devin Dodge: Iggy, just before I get started with the question, I just wanted to wish you best of luck in your next steps. And if George is in the background there, just good luck in the new role, and congrats on joining Wajax. Ignacy Domagalski: Thanks so much, Devin. Much appreciated. Devin Dodge: I wanted to start with that shipbuilding contract, which I thought was interesting or it looks like an interesting opportunity. Just wondering if you could provide a bit more color on that contract, when those deliveries should start and if there are opportunities for this contract to grow over time. Ignacy Domagalski: Yes. Good question. So it's a big deal for us. We've been chasing this contract for 7 years. And so we're really pleased to land it just recently. There's -- we do think there's quite a bit more runway with the customer. Obviously, it's we still have to bid and win the work, but we think there's a significant more amount that's potentially on the table. And for this specific contract, we expect the majority of the revenue to be recognized between now and 2029. Devin Dodge: Okay. And just wanted to confirm, is the full value of the contract in backlog? Or is it -- did you just embed what's likely to be turned into revenue in the next 2 or 3 years? Ignacy Domagalski: All of it's in backlog. Devin Dodge: Okay. Got it. Okay. Second question, it's probably for Tania but working capital efficiency has meaningfully improved the last couple of years. I know it's been a big focus internally. So congrats on that. Just going forward, is there much more room to reduce inventory further? Or is improvement in efficiency more likely to be driven by increasing turnover? Tania Casadinho: Great question. Thank you. We are quite happy with the range it's at now from a turns perspective. We did increase inventory up to 2.5 turns from 2 at the end of last year. And we generally feel good about that range. We are continuing to look for ways to optimize certain areas of inventory, but the biggest push has probably already been done. I will say that this will fluctuate based on business demand, obviously, in terms of just when we need to stock for proper business expected demands and when we expect to have larger mining shovels in inventory. So it might fluctuate quarter-over-quarter. But overall, we feel good with -- from a turns perspective, where inventory is, and that's really the biggest driver of our working capital. Operator: The next question comes from Jonathan Goldman with Scotiabank. Jonathan Goldman: Maybe we could just talk about product support, another quarter kind of softness there. I was wondering if you can talk about sort of what end market dynamics you're seeing there in terms of demand? And how do we square kind of the lower revenues with the improvement in margins? Is there some sort of strategy or trade-off there that's happening? Ignacy Domagalski: Yes. I'm happy to provide some commentary on -- just on our markets. I think construction, we're seeing some optimism in Quebec and Atlantic, but conditions are definitely more cautious in Ontario and Western Canada. And mining is fairly strong across the country. We had a lot of RFQs in 2025. So we expect hopefully a few more decisions on those RFQs in 2026. And whether it's gold, copper, iron ore, metallurgical coal or nickel, they all remain generally healthy and oil sands is pretty healthy, too. And then oil and gas is decent as well. Forestry is definitely weaker nationally. And as a result, pulp and paper is down as well. Metals continue to be a struggle with tariffs and government utilities are -- those are pretty strong for us right now across the country. There's lots of infrastructure spend. And then industrial and commercial markets, definitely softer, especially in Quebec and Ontario. So I mean, just in terms of all activity, I would say we're continuing to see cautious activity in Q1 and current event overseas are injecting a little bit more uncertainty into things. So that's at least in the very short term, that will be a challenge. So that's just kind of the high-level market commentary. In terms of product support, it was just kind of a regular quarter, nothing to really report one way or the other. But I would say that the improved margins, that's all of our internal margin enhancement activities that we've been working on pretty hard. So we're pleased to see some improvements in those margins and really put in a lot of effort there. Jonathan Goldman: Okay. That's helpful. And it's good to hear. And I guess related, Iggy, recently, I guess, in the past few quarters, you talked about industrial products and ERS kind of customers deferring capital projects, putting a pause on those and really spending only on MRO. Has that dynamic shifted at all? I guess I'm also asking specifically because it looks like a really nice quarter in ERS, the growth year-on-year. Ignacy Domagalski: Yes. I think that's more just timing of some projects. But we're still seeing -- we're definitely seeing caution with industrial and commercial markets, as I mentioned, especially in Quebec and Ontario, which are pretty big. The West is, I would say, moderate, and there's a little bit of strength in Atlantic, but it's a pretty small market for us. But for sure, customers continue to push out capital projects and even still pushing out some maintenance. So I mean that's -- we've talked about it a bit, eventually, that has to stop, but we haven't seen a stop yet. Jonathan Goldman: Okay. And I guess one more nice work on the inventory destocking, the free cash flow generation and leverage back within your target range. How are you thinking about capital allocation priorities coming into the year, understanding kind of this transition period now, but you're kind of in a better position right now to start thinking about some levers to surface value. Ignacy Domagalski: Yes. We're -- I mean, we're very happy to be back in our target range. Just -- we obviously want to maintain flexibility. So operating at the lower end of the range is great, but we have kind of plans to stay within the range. It fluctuates quarter-to-quarter. Of note, the spring is our busy equipment selling season. So we usually have to increase our inventory a little bit there. So that's given us a nice buffer to be able to do that. Normally, on an annual basis, we spend about $15 million on just on maintenance of our facilities. No immediate plans to change any of that. And then we also put about $15 million into our material handling rental fleet. So that happens on an annual basis. And in the past, we had put money into acquisitions. And our Board has publicly said that in their press releases, related to the CEO transition that that's something that they're still very interested. I would say that we are going to be opportunistic on that front. We've got some decent capability inside the company to do acquisitions from the acquisitions that we've done in the past. We still continue to integrate some of those, and we think there's still a little bit more room to squeeze some value out of the companies that we have already acquired. And then we've got a great new CEO in George McLean. And if you've looked at his background, you'll see that he's got a pretty deep M&A experience. So I'll leave it to him to talk about that at the next call and how he's seeing the world, but that certainly is something that I know he will be thinking about for sure. Operator: We have no further questions. I will turn the call back over to Iggy Domagalski for closing comments. Ignacy Domagalski: Wonderful. Thank you for joining us today, and we appreciate your continued interest in Wajax. Have a great day. Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and we ask that you please disconnect your lines.
Pieter Engelbrecht: Good morning, ladies and gentlemen. It's an absolute pleasure for us that you take some of your valuable time to give us roughly an hour of your time that we can tell you a little bit about what has transpired in H1 of this financial year. I'm going to just do a very quick synopsis, and then I'm going to hand over to Anton, of course. He'll take you through the detail, which is very important for you. I know the detailed numbers. I know you've read the sense and understand all of that, but he'll color it in for you to make sure your models are in place. And then I'm just going to end off by saying a little bit about what we've been doing. Not everything is perfect. So we'll also tell you what is not great. So the sales growth was 7.2%. You have read that. Now almost ZAR 137 billion for the half year, adding ZAR 9.2 billion in sales for the 6 months. The trading profit grown by 5.9% to ZAR 7.7 billion. And probably the most telling number is the fact that the South African supermarkets achieved a trading margin of 6.2%. And for a value trader, I think that is an outstanding number. And I want to, if I may ask, to just think about that number a little bit that it sits with you that, that is the one that we consistently and Anton will talk about it, where we consistently try and achieve. And that is not something that happens because we increase prices and -- it happens because of the efficiencies and how efficient this business is run. And that's my emphasis on the 6.2% margin. The ROIC has increased again. I know a lot of you are interested in that. We can go back in history. We can talk a lot about what if African never happened and all the investments we made there, the ROIC would have been probably much higher. But that's not the point. I think what is important is the fact that we're continuously improving on that number. From last year 17% to now over 19%, I think needs acknowledgment to the team. Thank you very much for that. Headline earnings per share up over 7%. If one thinks about the last decade, how many challenges there have been, macro challenges, et cetera, that Shoprite never failed to pay a dividend to its shareholders. And we are very pleased again to be able to increase our dividend payment by 7.7% this year again. In terms of operationally, what's happening in our business, again, for the sixth year in a row, the Shoprite Group have managed to gain market share to the value of about ZAR 3 billion additional. We're still growing customers. We're still moving volume. And we're serving more than 100 million customers in a month. It's an enormous responsibility. I tend to say that there's probably 2 most difficult businesses to please is airlines and the retailers because you have such a large number of customers to please everyone is almost not possible, but not for a lack of trying. We certainly try to please every single one. That's why we think about things like the ZAR 1 items that I will cover a little bit later on also. The 6 months was really marked by low inflation. And in the month of December, actually, the festive period, we went into deflation. There were like over 14,000 items cheaper than the previous year. And I know there was a lot of reports in the media around a very slow or subdued Black Friday but we certainly didn't experience it. We had a record Black Friday. We had a record festive season, so much so that the Shoprite Group have outgrown the market 5.3x during that period. We remain South Africa's largest employer. Again, I cannot almost remember a year that Shoprite did not increase its employment or number of employees. So it's 1,711. That excludes all the contractors. You must always remember that. There's no security, no cleaning, no trolley collectors. And all the peripheral businesses that benefits as Shoprite grows. Where are we in terms of our strategy. I said this to you for the last 10 years, I think. We don't do knee-jerk. We have a strategy, and we deliver on it as best as we possibly can with the best execution that we can. That makes the difference. Yes, we make small adjustments. Of course, we have to. Market dynamic changes. The one thing you will not hear us saying is trying to make excuses in terms of we never do make excuse, good or bad. We don't praise and we don't complain. We live what we are dealt with, we deal with the markets, and we deliver as best as we possibly can. And that is what 170,000 people of Shoprite does every day. One of the things that I'm extremely proud of was the efficiencies on the supply chain. Now we currently are running an on-shelf availability of stock of over 98%. Obviously, we have to carry a lot of stock in our distribution centers to make good for service levels that are not supporting the kind of volume requirements that we have during promotions. So at store level, I mean, that percentage is closer to 6%, which I think in global context are comparing quite favorably. In the past 6 months, we had our fair share of challenges in our non-RSA business units, well written and publicized around what happened in Mozambique. There are also good things. There's a big improvement on the electricity side in Zambia, which is our largest contributor in that segment. But for the 6 months, we did experience a lower level of return from our non-RSA business. Although we also have continued to rationalize, which Anton will clarify on Malawi and Ghana, but they will come through in his numbers when he explains about continued and discontinued businesses. Then this is what we do. We really live by this that we are uplifting lives every day. And we say that not only because of our customers, yes, that is our primary, primary focus that, yes, we want to improve their lives. And that's why we are thinking every day how we can lower prices, how we can make something cheaper, we change the packaging, the transport, whatever it is to make their lives better, but also our own people. That's the Shoprite people, the people on this side of the line. So at this point, it would be very wrong for me not to thank each and every one of the 170,000 people at Shoprite for what they do every day, uplifting lives. It is an incredibly hard job to do. But the one thing is for sure is that we appreciate it. And I think in most cases, our customers also appreciate that. So thank you to you all. I'm going to hand you over now to Anton, who I'm sure will make the numbers very clear and understandable for your benefit. So thanks, Anton. Anton de Bruyn: Thank you, Pieter, for that introduction. In my section of the presentation, I will focus on the top line drivers, the gross margin and cost dynamics within the business before touching on capital allocation and our outlook for the second half. As part of our enhanced segmental reporting, we introduced additional disclosures for the first time during this year. And here, you can go and look in Note 3 of the financial statements, where we've spoken about the expanded information and notably more about gross margin per segment. It's important to revisit certain factors that forms part of the first half of the 2025 base, which impacted some of our measurements. And here, I'm specifically referring to the impact of the Pingo increase in our shareholding as well as the discontinuation of our furniture business and then the closure of our Ghana and Malawi operations, where we saw the restatement of our 2025 financial year results. Throughout my section of the presentation, I will be referring to the results from continued operations. The Pingo transaction was concluded during the first 3 months of the 2025 financial year. And post the effective date of the acquisition, the revenues earned from Sixty60 delivery fees as well as the subscription income, which we reported previously as part of alt revenue are now classified as part of Supermarkets RSA sales. The associated cost of delivery was shown previously as part of other expenses, but is now classified as part of cost of sales, and you'll see that impact as well coming through in terms of our gross margins. This was a reclassification and on a restatement for accounting treatment. Other significant transactions the group embarked on was the sale of the furniture business to Pepkor, which included the RSA as well as the non-RSA assets, but it didn't include the operations that we had within Angola and Mozambique. These operations were classified as discontinued operations during -- in terms of IFRS 5, and we have subsequently restated our income statement numbers for the comparative period. In terms of timing to conclude on these transactions, especially relating to the RSA assets, following the recent court proceedings and the intervention by a competitor, the transaction is now expected to be heard by the competition tribunal in the coming months. We do not foresee that we will be able to conclude this part of the transaction during the 2026 financial year. When we then look at the non-RSA operations relating to this transaction, that was concluded as part of our H1 results and the proceeds from that transaction equated to ZAR 568 million, which we did receive in January 2026. Regarding the Mozambique and Angola operations, we ceased our trading already within our furniture Mozambique business during the second half of the prior financial year. And the Angola business is we are in the final stages of actually transferring the assets to a new operator. Then referring to our Ghana and Malawi operations, both were classified as discontinued during the second half of the 2025 financial year and this resulted in the restatement in our comparative results. In terms of the sale of assets on our Ghana operations, that's now concluded with the proceeds already as part of our base year or part of first half reporting. In terms of the Malawi assets also concluded on, and I expect that to be the proceeds from that transaction we will receive during the third quarter of our financial year. For a full analysis on the impact of the discontinued operations and the results relating to the discontinued operations, we've done a full analysis in Note 2 and 6 to the financial statements. Now Pieter has spoken to quite a few of these numbers in his opening comments. I would just like to highlight 1 or 2 of these. It's important to note that we did manage to contain our cost growth to around 6.6% on prior year. And that really helped us to achieve and maintain our trading margin of 5.7% for the first half. Adjusted ROIC and return on equity have shown consistent growth over recent reporting periods. And I think we're very happy with the fact that we could exceed our weighted average cost of capital that reported at 12.3% by respectively, 7.2% and 15.5% from a return on equity point of view. Now this would not have been possible if it wasn't for our disciplined approach on -- and our continued investment across our expanding store footprint, which I will touch on a little bit later, as well as our continued investment within our supply chain. And then, of course, our digital platforms, which we see continue driving value for the operations and the business. Very proud to be able to again declare a dividend where we saw an increase of 7.7% to ZAR 3.07, and that is very much in line with our growth, our 7.9% growth within our diluted headline earnings per share from continued operations. If we then turn to sales, Pieter will talk a lot about the sales and what is currently driving especially the sales growth within the Supermarkets RSA basis. Maybe just from an overview and top line point of view, we saw growth of 7.2% on the back of opening of 273 new stores during the last 12 months. with like-for-like sales growth of 2.7%. Within the RSA Supermarkets business, we saw a 7.1% sales growth to ZAR 115 billion, and that was on the back of the opening of 262 new stores over the last 12 months. Within our core brands, we saw a growth of 5.1% in the Shoprite and Usave, including our liquor business. And then Checkers, we saw a very strong performance in terms of that 8.9% growth, including our Liquor business. Important to note is that as part of our Supermarkets RSA segment and especially our Checkers and Checkers Hyper banners, we include our Sixty60 sales growth, where we have reported again a growth of around 34.6% with the number now measuring around ZAR 11.9 billion in turnover. If I turn to the adjacent businesses, and I mean, we've given you the list of all the various brands that are included as a part of that adjacent businesses. We saw a growth of 70.9% to very close to ZAR 1 billion for the first 6 months of the financial year. I think notably, when we also look at the store number growth is the improvement and the growth that we saw, especially in our Petshop Science business. Supermarkets non-RSA, very strong growth in terms of rand cent growth of 12.1% to around ZAR 11.5 billion. It's on the back of a like-for-like growth of 10.4% and then also constant currency growth of 9.5%. Internal food inflation measured across the regions were 3.2%. We opened a net 15 new stores during the 12-month period. We then look at our other operating segments, which includes our franchise business as well as our Medirite and Transpharm business units. Franchise growth was muted at 1.7%. And here, I have to flag, obviously, the lower inflation environment as well as a net decrease of 9 stores during the last 12 months. Turning to our Medirite and Transpharm business. We saw some very positive numbers and growth within that part of our business where we saw a growth of 7.9%. And again, Pieter will unpack that in much more detail as part of his operational segment. Now in the past, we've given guidance around space growth of between 5% to 6%. Our space growth in the current period was reported at 7.3% and that was really driven by the 4 hypers and the increase that we saw within the Checkers Hyper business units, where we now have 42 hypers. If I have to look at our store opening program for the second half of the financial year, where we plan to open 123 stores, I think we will return again to that 5.5% to 6% space growth. We saw a nice growth within our Shoprite, Usave and Liquor business within those banners where we added 133 stores and then also Checkers, we saw some nice growth of 76 stores added to the portfolio now of 714 stores. Within the adjacent businesses, we added 53 stores, of which 45 of those 53 new stores related to our Petshop Science business. Store openings for the second half of the year at this stage is planned for around 123 stores. Turning then to our total income, where we saw growth of 6.5% to ZAR 34.8 billion. Our gross profit increased by 7.1%. And very pleasingly, we saw that increase was in line with our sales growth of 7.2%. As I mentioned in my opening statement, we are now giving our gross profit and gross margin percentages per segment, and I will deal with that on the next slide. If we look at old revenue, we saw a decline of 2.1%, but that was really impacted as a result of the Pingo reclassification in the prior year 3 months. And again, we do that, and I will share a lot more information in more detail in the next 2 slides. We also saw a decrease in our interest revenue of about 9.8% to ZAR 101 million. That decline is mainly attributable to the maturing of ZAR 345 million worth of Angolan government bonds and bills. The positive news is that we did manage to repatriate $12.4 million of these funds to our operations in Mauritius, and it now forms part of our cash and cash equivalents. Important to note that the impact of this interest revenue decline also impacted the trading profit within the non-RSA segment, which I will deal with when we get to the trading profit slide. The majority of the share of profits within our equity accounted investments derive from our Retail Logistics Fund, which is the owner of some of our key distribution centers. And here, I referred to where we add also the Wells Estate distribution center in the last financial year as well as the expansion within our Canelands and Riverfields DCs. As part of our efforts to enhance segmental disclosures, we are, for the first time, providing the market with gross profit information at this level of detail. Supermarkets RSA operations increased gross profit by 6.5% to ZAR 29.2 billion, resulting in a gross margin of 25.3%. Now Pieter spoke about the value retailer in his opening comments. And I think here, I would like to add in terms of if we look at our RSA supermarkets operation from a value retailer point of view, the achievement of a 25.3% gross margin in a low inflation environment is a fantastic result for the group. This outcome would, however, not be possible also without the investments in our digital pricing optimization tools and this additional capital that we supported, the supply chain expansion. Additional to the low inflation environment, the decrease of 20 basis points within the Supermarkets RSA segment was also impacted by the fact that the full delivery cost relating to our Sixty60 operations now form part of cost of sales, where in the previous period, we only had 3 months included as part of that cost. I do, however, expect to see a smaller impact as we progress through the financial year. Gross margins in Supermarkets non-RSA did come under pressure, mainly driven by our business interruptions in Mozambique as well as continued shortages within foreign currency across the region, which limited the availability of imported product ranges. We are, however, pleased with the improved margins that we saw within the pharma operations that forms part of our other operating segments, and this really supports the planned expansion that Pieter spoke about within the previous results presentation within our pharma offering. We then turn to alt revenue. Excluding the impact of the Pingo reclassification we spoke about earlier, growth would have been 4.9%. We look at some of the key items within alt revenue, commissions received from our various financial service business units increased by 9.2% to ZAR 676 million. Despite a growing competition within the financial services market, our money market kiosks in the Checkers and the Shoprite stores have seen an increase in activity within the continued launch of new product offerings and the growth that we saw within the payouts relating to government grants, which obviously benefits the group over that period in the month. Our marketing and media income line and revenue line increased by 15.6% on the back of growth within our Rainmaker Media business as well as our Rex Insight platform. Operating leases and income increased marginally by 1.7%. Over time, we've talked a lot about how we also consolidate our property portfolio, and this was as a result of our continued sale of owned income-generating properties during the period. Franchise fees received decreased by 2%, noting the impact of the subdued current inflation environment on the franchise division sales, which obviously impacted that performance. The sundry revenue decreased by 14%, and that was really on the back of lower dividends received from our insurance sale during the first half, but I do expect that to actually rectify in the second half as our claims history or our claims -- current claims for the year is looking very positive. If we then turn to total expenses, where we saw a growth of 6.6% to ZAR 27 billion. Some of the major lines impacting our expense growth is depreciation and amortization, which increased by 7.9% to ZAR 4.2 billion. The growth that we saw is a combination of the increase in new stores that we opened during the last 12 months, but also our store renewals that's impacted by our right-of-use asset in terms of IFRS 16. Our aim and our target is still to be at a depreciation and amortization rate to sales of around 3%. Our current period, we were sitting at 3.1%. With the lower capital spend expectation, which I will talk about later in the presentation for the full year, I do expect us actually to come in target on that 3% depreciation to sales ratio. Important to note is the PPE that we use in terms of our stores. We saw a growth of depreciation of 8.8% to ZAR 1.9 billion. And then if I look at the IFRS 16 portion of depreciation, we saw a 16.3% to ZAR 2.6 billion. What is positive for me at this stage around depreciation is that we did see a decrease if I compare to the prior year, where our growth was around 17% to 18% to the current 7.9%, which is already showing that some of that expansion within the supply chain that we had to carry last year is now getting into the base. From an employee benefits point of view, our growth was 8.6%, and there were really 3 reasons for that. The main reason is expansion within the business. And again, I'm pleased with the fact that we could slow the growth down from the prior year 10.8% to the current year 8.6%. The group also continued to invest in our staff, where we spent more than ZAR 500 million in training and again contributed more than ZAR 50 million to the government-supported youth employment scheme. ZAR 155 million was also expensed in the current period in favor of our employees that forms part of our Shoprite Employee Trust with equivalent awards also being paid out to our non-RSA beneficiaries. If we then look at other operating expenses, where we saw a growth of 4.5%. Some of the major lines that form part of that growth is water and electricity, where we saw an increase of 17.3%. I've mentioned quite a few times in the past that I would love us to get back to that 2% water and electricity ratio to sales. But currently, we're sitting at 2.2%, and that was on the back of the 12.7% increase in our national energy regulator that obviously now forms part of our cost base. The positive for us is that we did have a reduction in our diesel costs, where we saw a reduction from ZAR 158 million in the prior year to ZAR 139 million in the current year. Other major expenses, we saw advertising costs increasing by 6.6% to ZAR 2.4 billion. And then repairs and maintenance costs increasing at a slower pace this year at 2.4%. Our cost of security increased by 12.3%, again, a result of our store expansion program, but it's still around 1% of revenue, which is our target for that expense line. If we then turn to trading profit, despite a 10 basis point impact or a decrease on gross margin through containing our costs, we did manage to achieve our 5.7% trading margin. A reminder that our trading margins within the first half always trades lower than the full year as a result of the lower gross margin within the first half. If I look at RSA growth, we saw 7.1% and our margins remained intact at 6.2%, which is very pleasing. Non-RSA did come under pressure in terms of profitability. We've spoken about the impact of the gross margin that came under pressure. Also from a cost base and a profitability base, the performance of Mozambique did come under pressure in the first half. And then I did mention earlier the third reason for the non-RSA operations showing a decrease was that impact of the interest revenue decline as a result of the repatriation of the funds and the maturity within the Angolan bonds and bills. Other operating segments saw a decrease of 1.6%, which was mainly as a result of the pressure that we saw within the franchise operations. If we then turn to net finance cost in terms of IFRS 16, that's really driving this cost base, but we saw an increase of 13.4% in the first half. And again, one of the main drivers within the finance cost growth was the 17.2% growth within our IFRS 16 lease base, where we saw the lease liability increasing by 15.5%. We've now seen that growth over the last 3 years within our lease liability, and that is as a result of the program of new store openings, and this year was 282 stores. Also the lease renewals. Now I mean, because of our big store base, we also have a big store renewal program that we do every year, and that unfortunately forms part of this whole lease liability growth rate. And then the third reason for the growth within that has been the DC openings and the supply chain expansion that we've seen during the last 3 years. The positive, obviously, is the impact that we saw in terms of a gross margin and trading profit margin impact as a result of that supply chain investment. On the positive note, the finance costs relating to our borrowings, we saw a decrease of 10.7% and that was as a result of a decrease in the prime lending rates, but also as a result of the lesser demand that we have on our overdraft facilities, especially during month-end periods. And you will see from a cash flow point of view, our cash generation within the business was stronger this year, which basically led to that lesser demand on overdraft facilities. We then turn to our cash and capital allocation. Cash generation within the group remained very strong as in our previous periods as well, with cash generated from our core operations at ZAR 13.3 billion for the first 6 months. Then we settled some debt. Part of that is our IFRS 16 lease liability of ZAR 6.2 billion. And then our capital spend in terms of our expansion as well as our maintenance capital was ZAR 3.9 billion for the first 6 months. The detail behind that, I will unpack in the next slide. We then paid dividends. Our final dividend for the previous financial year equated to about ZAR 2.7 billion, and that was formed part of our shareholder returns. If I then turn to working capital, we did see a positive move in terms of the working capital gains where we had ZAR 5.4 billion of positive move. ZAR 4.3 billion of that was as a result of the cutoff where we made creditor payments post our H1 cutoff date. But secondly, we also had a very positive impact in terms of how we look at our inventory, where our inventory grew and increased at a slower pace than the growth within sales, which also then gave rise to part of the benefits that we realized through our working capital. I did mention the impact of the cutoffs in terms of our creditor and tax, which equated to ZAR 5.8 billion. If we then turn to CapEx and our spend, was 2.9% of our revenue, and we spent ZAR 3.9 billion for the first half. 82% of that spend was allocated on expanding the business, of which the majority of these initiatives was focused on expanding our store base as well as upgrading our existing stores. And I mean, Pieter will talk about his views on how we think about our Shoprite FreshX stores, together with then also our investments into our digital capabilities and supply chain infrastructure. So most of the capital spend remained within South Africa, and that is directed at initiatives supporting our ecosystem. That includes ongoing investment in our information technology infrastructure to keep pace with the growth that we're currently seeing within the business. Management has a clear understanding of the information technology future demand and the associated investment required. And capital allocation will be adjusted accordingly over the medium term if there is a bigger requirement for CapEx from an information technology point of view. And here, I'm referring to various system upgrades or replatforming that needs to be done. If we then turn to inventory, we saw an increase of 3.3% to ZAR 33.7 billion. Excluding the impact of the various restatements that I spoke about in my opening comments, inventory increased by 4.5%, lower than our increase within our sales. The majority of the increase was within our RSA Supermarkets operations, where we saw an increase of ZAR 1.1 billion. The reasons behind this increase was as a result of the 7.3% we saw in space growth or additional 262 new stores. The higher on-shelf availability that we needed to support our Sixty60 business, where we saw that 34.6% growth. And just a reminder, again, our model is that we pick from store, and that's why we have that requirement for that higher on-shelf availability. And then the third reason is around the supply chain investment and the additional stock to obviously have stock availability within our distribution centers. Pleasing to note is that we managed to maintain our inventory to sales within the store portfolio at below 9%. Non-RSA inventory levels remained stable and the increase that we saw within other operating segments was as a result of our pharma expansion. And there, I'm referring to the expansion within our distribution center that we opened in Gauteng earlier this year. In conclusion then, maybe just some considerations in terms of how we look at the second half and what is our expectations in terms of the second half. Supermarkets RSA selling price inflation for January measured 0.7%. If we compare that to prior year, it was at 3.1%. And I think we're all on the same page that we do expect to see lower inflation for a longer period of time. In terms of growth from new business, as mentioned, we plan to open 123 new stores during the second half of the financial year. If I look at the income statement in terms of our trading profit margin, medium term, still a 6% trading margin target. But if I look at the current environment and the low inflation environment, I think more realistically, a 5.7% to 5.9% trading margin would be a good outcome for us. If we then also follow those principles in terms of how we look at gross margin, seeing that the cost of delivery as part of our Sixty60 platform and Sixty60 operations now forms part of our cost of sales. I do expect to see a slight impact for the full year as a result of that. And we're estimating gross margin for the full year to be around 23.9% to 24.2%. From a cost growth point of view, the staff cost growth, and I did mention that we saw that slowdown from the prior year from the 10.8% to the 8.6%, we are currently in negotiations again with the unions around the increases for our store staff. So that we will also communicate and discuss when we have more clarity on that. Depreciation, the lower capital spend for the full year, I do expect to see that we can come back to that 3% as a percentage to sales ratio. And electricity and water, unfortunately, I think that cost is going to continue to increase. And if we can get back to a 2.1% ratio, that will also be a very good outcome for us. From a finance cost point of view, especially the IFRS 16 leases, the Wells Estate distribution center was already part of the second half of the prior financial year, and it didn't form part of the base, which means that we will see a slower growth within finance costs in the second half. So I do expect to see an improved result already on that 17% that we reported in the first half. And then lastly, maybe just around our effective tax rate. I do estimate our effective tax rate to be between 27% and 28%. From an inventory point of view, we saw that improved result already in the first half. And I do expect to see that continuing throughout the full financial year, especially now that we have all the distribution centers in our numbers. And then from a capital allocation point of view, a reminder that we do have a current dividend policy of 1.75x of the full year diluted headline earnings per share from continued operations, and I do not foresee any changes to that strategy. In terms of share buyback mandate, it's still in place by the Board and management will execute on that as we see fit. From a CapEx point of view, if I look at the spend in the first half and I also look at the store opening program for the second half, I do expect us to actually see a slowdown in our spend within CapEx. That is definitely something that management is currently driving, and we're looking at a ZAR 7.5 billion increase for the full year, which will be lower than the 3% target that we set ourselves as well as our previous year spend. Pieter, that then concludes my part of the presentation and looking forward to hear from you around the operations and strategy of the group. Thank you very much. Pieter Engelbrecht: So thank you very much to Anton. As usual, you have given us a very clear explanation to understand the financials of the Shoprite Group, both the balance sheet and also on the cost side as well as the changes that happened in the comparable numbers. And I hope that you all are very clear now in terms of your own models how to look at the Shoprite business this year going forward. So I know we've repeated numbers a couple of times and the 7.2% growth in the revenue amounts to an additional ZAR 9.2 billion that was added in the 6 months. Now for me, I don't know for you, but for me, that's an enormous amount of money. But fantastic performance again from Team Shoprite, gross profit up by 7.1%. And there's a telling number, the gross profit. There is something in here that was quite problematic is service levels from our brand owners that supplies us has a direct impact on gross profit margins also. And we do find it these days because of the size of these numbers, you talk ZAR 136 billion for 6 months in revenue. It's very hard to consistently supply the Shoprite Group to maintain our world standard of over 98% on shelf availability. So the confidential discounts, the rebates, all the things that adds up into gross profit margin, I think an excellent result to come in at a 23.8% gross profit margin for the 6 months. Trading profit up by 5.9% with a trading margin of 5.7%. But then as I said earlier, absolute world-class South African trading margin at 6.2%. I cannot help to think that, that is absolutely a world-class performance. And that is not done by increasing prices. We were talking about deflation and the inflation was only 0.7%. That comes out of running an efficient business from the supply chain right through to deliver the last-mile delivery to our customers. Obviously, we've grown the EBITDA. We know what the effect is of IFRS 16 and the lease payments and that so EBITDA is these days, I find it a little bit different in the old days when it was purely cash flow because if you look at our cash flow that Anton just explained now, the cash flow is very strong. And the EBITDA shows a 6.7% growth. So just something that we have to take note of that things have changed. The CapEx spend, we've been spending ZAR 8 billion basically for the last 3 years. We are very tight on that CapEx spend. A lot of that spend have really put a difference between us and our competitors. Amongst that, if I can give one example, it would be our price optimization tool. And I said 5 years ago, if retailers are not going to invest in that technology, coupled with artificial intelligence agents, you're going to somewhere start to fall guy. The maintenance of the gross profit, the additional contribution of promotional items participation in the basket is testimony of selecting the correct items, the items that people are looking for. So here's a good example of previous investments, earlier CapEx that was spent that is now really starting to pay back, which we're very pleased about. And I told you about over 98% in stock on inventory. So if we, from an operational point, have to mark our own homework, what stands out is more customers, higher volumes, continued market share gains, meaning you're running faster than your competitor. You're gaining customers faster than your competitor. And you're giving the volumes to your brand owners, I like to refer to them as brand owners, not suppliers. That helps them to reduce costs and get efficiencies. So you think about it, 572 million customer visits, up over 5%, 0.5 billion people, 1.2 million additional customers per week. We can work it down by the hours that we trade and how many that is. It's just astounding for me, selling over 4 billion items, and I told you before, gained ZAR 3 billion in market share now for 6 years, uninterrupted every single month. I know we've mentioned the number before, but the 7.1% sales growth was achieved despite a declining internal inflation, and I'm going to get to an explanation, the difference between our internal inflation and official CPI calculation. There is quite a difference in the methodology. We really have been able to maintain the sales momentum, our customers with the selection of products and really the data, I must always come back to the data. It's data-led decisions that make us make better decisions. It's not the gut feel decision. It's fact-based. It's data-based. Also, on top of that, I've mentioned the price optimization tool, the gross margin stayed intact despite the fact that people are buying more into the promotional items. Our promotional contribution to the overall basket have now increased to about 40%. And that is something we will have to watch. But over so many items, you need technology and systems to assist you to make the right decisions in there. Liquor stores have done very well. We will probably have over 1,000 stores by June in both the brands, Shoprite and Checkers Liquor. Sixty60 remains a remarkable story, growing 34% on a very high base. And some people think it's not profitable. It is. There are many reasons why. And over time, we will also explain to you why. This model works so differently in our environment to that of our competitor. Now if we look at the market share on this graph that I'm showing you, there are 2 graphs here. So if one looks at the formal retail market in totality and the base have been elaborated. It now also includes some other competitors. The growth was ZAR 14 billion. And if you think of it that basically Shoprite took more than ZAR 9.2 billion of that and the rest of the market had to share the difference. And you can see it clearly. Graph on the left shows you that for the 6 months, Shoprite have outgrown the market by 2.3x. And then on the right-hand side, you can see every single brand has gained market share. So it's not a one swallow story. Yes, the growth in Checkers is higher than in the rest of the other 2 brands. But it's just because Checkers is the fastest-growing retailer in the premium food segment in South Africa. So I have already mentioned that we had a very good festive period that have continued subsequently. We've outgrown the rest of market during the festive 5.3x and well publicized that the consensus was that it wasn't a fantastic festive or Black Friday for the rest of the market. But for Shoprite, we're not in the same boat. We're very happy with the performance. And I've just spoken earlier about maintaining margin. Our customers win because there's deflation. 14,000 items, I mentioned in December was cheaper than the previous year. Of course, if you look at it in a monetary value, even though we're growing volume, of course, the monetary value is not there. Even though customers continue to buy the same number of items because of the deflation, your rand cent value doesn't support your volume growth, plus the fact that as said we've grown customers by 5.6%. So I just want to, for a minute, explain the difference between official food inflation, which you would read for December was 4.7% versus ours for the 6 months at 0.7%. The difference is that the official food inflation is calculated on a static basket based on 2023 life conditions, which at that time included, of course, our extensive load shedding. So for example, in that basket would be candles. But it is, at the moment, not that relevant anymore. So the way we calculate our internal inflation is we have taken this specific period, 56,000 items bought by customers. And remember, customers buy different things. It's actually a complicated number to calculate because you've got promos, you've got combos, you've got multi-buys. But in theory, to make it simple is we take the 56,000 items that's being bought by customers this year, and we look what was the price last year because that's the true inflation, the customer experiences not what we think they are experiencing because people down buy, people change brands. There's a lot of nuances that go into that number. And I do believe that our number is probably the most accurate true reflection of food inflation for the South African consumer. Now we must remember, there are monetary policies being made on these numbers. And I'm just putting up my hand here to say, we must be careful that we base monetary policy on numbers that are not 100% correct. or, let's say, the most sophisticated that we can do it. So what do we do? We're in the long game. Pricing has always been for us, paramount first. That is why when the customer wakes up and they didn't see an advert or a promo, they don't have to think where they have to go. They know where they will get the best value. That is what we do. But if you look at what I've just put there for you on the screen is the inflation by brand. And you can clearly see, of course, the more affluent customers in the Checkers brand, 1.9% inflation. And then you go down to Usave that goes into a negative. And a lot of that is driven by the prices of commodity type items, basic items because we over-index in a lot of these categories. In other words, we have a higher market share in these specific categories, and I put there some examples for you than our overall market share. So there's in a lot of cases, been double-digit negative or deflation in categories like potatoes and rice and so forth. And even through all of this, and I already mentioned the 14,000 items that was cheaper, Shoprite Group still managed to maintain its gross margin in such a strong deflationary environment in categories where we over-index. I think very good result. As you all are very aware that basically, Shoprite Group runs multiple brands. And on the supermarket business, in particular, we have very deliberately separated the Shoprite brand and the Checkers brand. But there are also other sub-brands, Usave, Liquor, the wholesale or cash and carry as we have today, which was part of the Massmart transaction. What I can say is all of these brands are doing their job. They deliver. Shoprite as a brand have added 5.1% to sales growth, amounting now to over ZAR 62 billion, added an additional ZAR 3 billion in sales in the last 6 months, continue to gain market share. But most telling is probably the 4.8% growth in customers, amounting to 670,000 additional customer visits per week. And I'm deliberately saying it slowly just that we, for a moment, pause and what does that mean for the entire value chain from our brand managers, that's our suppliers right through the supply chain, the service levels we have to give at store to get it on the shelf, the movement of the stock, the cost of that extra movement of stock. So for me, incredible that Shoprite is still able after 6 years to grow its customer base and grow its market share. I'm very pleased about this result. And -- that is what Shoprite does. Price is what we do, value is what we give. So when in doubt, you wake up in the morning, you need to go shopping, you don't have to think. You go Shoprite, you get the best value. No questions asked. And then the cash and carry business, I mentioned earlier, if we can bank percentages, we would be very rich, but one doesn't bank percentages. We bank the ZAR 3 billion extra revenue, but the 24% growth in the cash and carry, that's just a percentage. We can't bank that. But super performance growing. It's a new world for us and a lot of good potential that we see in that business. If we look at the Checkers brand, I just mentioned, remember, we're running basically 2 retailers, absolutely industry-leading sales growth of 8.9%. Checkers is now doing ZAR 52.2 billion in revenue, I want to just add for 6 months, if we compare that to our peers and added ZAR 4.3 billion in revenue in the last 6 months. Also multi-brand, Checkers, Checkers Hyper, Liquor Shop and then, of course, Sixty60. Checkers remains the fastest-growing grocer in the premium market and continue to gain market share. The reason why we picked Jamie Oliver was he is globally known for standing for healthy eating, healthy cooking. And then I often get the question, so how many of what we call the FreshX stores we're still going to do. So we basically 50% through the real estate, 188 stores being done. It doesn't mean all of the stores eventually will be done, but all of the stores will be of acceptable standards. They might just not have orange floor. And then probably the global retailers' dream is that customers start to love your brand. They become your brand advocate. Now I've looked around, you can correct me, but I have not found another country where an FMCG food retailer has achieved the position of being the #1 brand in the country of all businesses. And it stays for us a proud moment, and we will cherish that and try and keep there as long as we can. Our non-RSA segment, I did make mention to the 272 stores now. Sales growth was a very healthy 12%, but the profitability did suffer mostly as a result of what happened in Mozambique, a bit of headwind in Angola, but also some positive turn lately in Zambia, where as the Kariba Dam is starting to fill up that we have less and less load shedding. If we look at the other operating segment, the OK Franchise division had a 1.7% sales growth. If we look at the 9 stores were closed, it basically comes down to a like-for-like sales number. They also had the same as the rest of market had to contend with deflation and so not unpleasing result. There are some changes in the market around personal care, health and beauty. And we can see that also in our Medirite sales, hence, why we have decided to start opening stand-alone pharmacies with front shop, and they are performing exceptionally well. And then Transpharm, although only a 5%-odd growth for the 6 months, accelerated towards the second part. Remember, we went into a new distribution center in July and really done exceptionally well since we moved in there, and it's a much more automated facility. We've added 873 new customers to the overall customer base, which I'm very pleased about. I think I've said it now more than once. We are truly a customer business. This is how we make decisions from the customer backwards. And then we find out how to do it cheaper, not the other way around. So probably my pride and joy would be the slide that I show you now, ZAR 9.7 billion in instant cash savings at till point in the last 6 months. ZAR 9.7 billion we've given back to the South African consumer at till point on the things that they need. It's an enormous number. For me, it's incredible that we can actually afford to do that and still have spoken about all the things that's still intact, like the trading margin, the gross margin, et cetera. There's no question that Shoprite is #1 when it comes to price and value. And then this thing and I think 2 years ago, I told you the story about my visit to a Usave 1 day and this kid that they couldn't buy a sweet. And today, here, I can stand and say, in the 6 months, we sold 9.5 million items at ZAR 1. That is USD 0.06. And can you think like I 9.5 million smiles on a kid's face that bought a little packet of chips or chocolate for ZAR 1. Incredible. Then we even take the next step. 55.6 million items sold at ZAR 5, helping people survive. How else do you survive if you live on a ZAR 370 grant a month. You can with Shoprite ZAR 5 meal solutions. We've got over 30 meal solutions under ZAR 5. That is what we think. That is what we live. That's why Shoprite is what I call not just a retailer, it's an institution. If I just very quickly give you an overview where we currently are in terms of our strategy, I think it's now almost 9 or 10 years that I've been showing you this trolley with its 9 levers. And basically, it's stayed the same. I just want to give you assurance that we have a plan, we stick to our plan. We all understand what it is, and then we execute with excellence. That's what I think sets Shoprite apart. I spoke about that, I think, easily 9 years or so ago. I used the phrase to say, we're going to create a smarter Shoprite with more data to allow us to make better decisions. And today, I can really say to you the amount of decisions that are made on real data and what customers' behavior shows us in terms of price optimization, in terms of healthy eating, in terms of what we advertise is really, really sophisticated. And it learns by the day. I don't have to give you a lesson around artificial intelligence and the use thereof. But I can just tell you that we are using it. As you know, we've said before, we do view ourselves as a high-growth company. At least we try and achieve that. And we look at our data and in our world, we see what is it that the curve that people are on, what are their lifestyles currently. And hence, we've opened some of these adjacent businesses based on the data that we have how people behave, what they buy, what's happening in their lives. And the Petshop Science is a very good example of that. It was a greenfield operation that started, now 173 stores, making a good contribution overall, both in revenue and in profit, where we have noticed that there is a difference in the new generation of how they view pets and kids, et cetera. And very proud about the business, and it's performing very well. Amongst other, we've got Little Me, we've got Outdoor. After COVID, there was this tendency of people to just go more camping and outdoor and spending more time together. So there was just a gap in the market for that. And what we are trying to achieve is to increase our part of people's discretionary spend. The digital commerce really, I mean, I did make mention of Sixty60 already. You know the numbers, 20% growth, 18,000 jobs being created since the inception. We've got 10,000 drivers. And if you look at that fantastic graph on your right-hand side, I mean, it drives you to tears to see that for so many years, consistently, this business have just kept on improving. And a staggering number for me is that over 900 software upgrades, releases, patches is done in a year, improving this product virtually by the day. So we're not standing still. We don't say, oh, we've done it. It's happening. We're working on it every day. And the beauty of it is, and you will remember, I think it's now 2 years ago that I've said, we've set ourselves this task when we had to rationalize the African operations. We set ourselves a task to become really truly omnichannel. And that's exactly what's happening at the moment. So very soon on this one platform, you'll be able to navigate through all the everyday categories like from your groceries into your health and beauty, to your pet, to baby, it's really limited to your imagination. And all of this will be amplified and made very easy with the use of an AI agent just for additional convenience, making shopping really seamless. This graph will be my last. So apologies to my own people for some of the brands that are not on this picture. It's not that we've forgotten about them. It just gets busy. The idea is that you get this picture where this is what we've been doing for the last 10 years. We first laid the foundation with the core systems. We improved our distribution and supply chain. We then added adjacencies and the data. Then we added the extra savings to really embed our decision-making on our customer-driven data and then finally, to deliver all of that in a single omnichannel platform for not only ease of use, but just the convenience, the fact that if we can do all of that together, also the fact that we can bring it to you at a cheaper price, better value, that's what we stand for. That's what we deliver. So just having taken you through the steps, I want to say this is not impossible to replicate or to do. It's just very hard and it costs money. But this is sort of the story why the Shoprite Group can continue to deliver a certain level of customer experience and a value proposition to its consumers and the people that we serve. I really want to thank you for the time that you offered us and that you still feel it valuable to spend an hour to just listen what it is that we do and that we're still of interest to you. So thank you very much. We're going to give you some time now to quickly get your questions. And then Anton and I will take questions and answers. [indiscernible] in the last 6 months. So just very quickly while you're getting your questions and we're getting ready to answer you and you're free to ask whatever you want, is that the momentum from December continued. I think a 7.5% sales growth into January was excellent. If we -- and that's why I made that explanation of the inflation. If the true inflation was 4.8% or 4.7% it was published for December, then Shoprite would have grown 12%, double digit. But it is not the true inflation. We went into deflation in December. So that's why I made that point in the explanation between the difference of the calculations. So just to give you a context. To be able to -- if we theoretically have to say then the Shoprite Group grew double digits in the last 6 months, it is incredible. So once again, thank you to team Shoprite. So we continue to gain the market shares. I did mention, and I'm going to repeat it because I think it was just astounding that in the December and the festive month that the Shoprite Group managed to outgrow rest of market 5.3x. And that continued into January, outgrowing the rest of market 4x. But yes, I have to tell you, the other side is the deflationary or lack of inflation, let me call it that. So we ended up 0.7%, as you've seen on the numbers for the 6 months. Actually, the real inflation in February came down to 0.5% from 0.7% in January. So we don't see in the short term a change in the food inflation basket. And then immediately, I want to emphasize the ability through all of this to maintain the gross profit margins with all the things that I've explained. I'm not going to repeat myself again. So I mean, in the end, we can debate a lot of things about pricing, moving pricing. But we, first and foremost, are for the consumer. So we first look what is the consumer's world, and that determines our pricing, not the other way around. So Anton, I think that's my summary to say that, that drives everything we do. And there's going to be some green shoots there. So I'm very positive, I think, but now yesterday, the weekend, we've got this war going on in Iran and all that stuff. So the oil price quickly went up, and we were banking on a reduced fuel price. I mean, that would have given us a good saving on the cost line and the supply chain, which I'm very proud of. I think Shoprite probably runs the best FMCG supply chain in the world if we look at our service levels. So things are changing, but -- and I also -- I know hope is not a strategy. But if all the money that government have secured for development, et cetera, and if that goes into infrastructure, like ports and roads and water and electricity, all these things, that creates jobs and creates economy. And if that starts to happen, Shoprite usually is the first one to benefit. Small people, I'm a welder. So I get a little job to weld and then I can't do it all and I need a handler and before we know, I need a driver. And before we know we've got 10 people employed having a job. So I'm still positive that these things are going to come through. It does look like that there is an inclination from also government's point of view in terms of really that we have to get this economy going. Okay. So that's our summary, Anton, we can take some questions. Anton de Bruyn: Unfortunately, I'm not going to let you off the hook on GP, gross margin. There's quite a few questions. I'm not going to call out the names. There's quite a few questions around gross margin. So I think, Pieter, the main question, if I summarize all these questions is how do you think about gross margin? How do you think about promotional participation? So if you maybe can just give us color on that for the second half and how you see that play out? Pieter Engelbrecht: If I have to assume what people are thinking in that question is there's so much pressure in the retail market currently Everybody is under pressure. And specifically on margin, of course, you say must the competitors start moving their prices and does it give us opportunity to move prices? I go back. Consumer first. So yes, there may be, but not necessarily. That's the first part. The second part is, yes, we've seen an increase again in the promotional participation of items to the basket. And there is a level where it gets too high and it's not sustainable. You can't just give everything away. But if we go back to the CapEx that you said, we spent over the last 3 years, ZAR 8 billion a year, that's the tools that we've, amongst other, have invested to help us to make more scientific decisions around pricing kind of items, width of promotion. It's a science by itself not to take any credit away from the fantastic buying team that we've got and the people leading that. But the point is if you don't have the tools and you're not investing in AI and you're not using it, then the gap is probably going to widen. And the consumer will decide, you need to be the most relevant. That's why I made that comment. That's how I think. I don't say everybody thinks that way. I'm on the inside. But if I wake up on a Saturday morning, I say, where must I go to get the best deal. I'm going to go to Shoprite or Checker. Usave is actually by far the best deal if I'm on the budget. So that is -- that's my answer to the margin. If you wanted me to say, do we think we can increase the margin even further? I'm going to go back to what I always say is I think we can maintain our margin, but be very careful to increase your margin. I mean, for Shoprite Group to run the highest gross profit margin of all retailers in South Africa and still be the cheapest, that is what we need to protect, first and foremost, not just to drive margin. Anton de Bruyn: So I think, I mean, maybe just to add to what you're saying and that there's also a question around trading margin and the guidance and the medium term, we spoke about that 6%. So I mean, if we really look currently at the trading profit and trading margin per segment, we can see that we've maintained our RSA Supermarket trading margin at 6.2%. So the outlook still for us is how we look at the RSA trading margin, and we're currently maintaining that trading margin. There is some pressure within the non-RSA segment. And then we do expect a better performance in terms of the other segments for the second half. So that's really driving also our medium-term targets around how we think about trading margin. Pieter Engelbrecht: And the non-RSA, I mean Namibia is basically in the same position as Africa around the deflationary environment. The [indiscernible] was thrown under the bus. Malawi -- not Malawi, Mozambique, we all know what's going on. South has got the floods. North has got ISIS. And then as I said, a bit of a headwind in Angola. But I mean, it will come right. Anton de Bruyn: So you did say in your gross margin discussion, you talked about AI. So I mean, Ya'eesh, you had a question around how the group utilizes AI. And so maybe just share some of your thoughts in terms of what we do or are you seeing the impact of AI in the business? Pieter Engelbrecht: Okay. No, I like that one. I'm very excited about AI. We started this year, in particular, actually 4 years ago, we already started to get the right people in place data scientists, people that understand the layers of data because remember, you've got agentic that you compete against, and there will be a consumer agent and there will be a retail agent in our world. And if your data sets are not set up correctly, you may just miss a question. You may not be in the answer. It's very different to -- if you do a Google search today versus speaking to agent. And we have really embraced it. I think it's what we said a couple of years ago. It's not what did I say? It's not a race for space, it's a race for reach. And this is almost the same that I feel about AI. And so we have started this year. So we have -- yesterday, actually, I looked at the first version of the dashboard. We can see exactly who's using it, who's not using it. We have used a couple of agents, Copilot, Gemini. Google looks a little bit strong at this moment. So we are actively embracing AI across the entire business. We're measuring who's using it. I actually, at some point, said, I must be careful because it can become addictive that you keep on asking questions and you need to deliver on something. You can't ask questions all the time. And we might have to limit people's time that they spend on it. But for now, I can tell you that it's definitely something that we take very seriously and will embrace into our business. And yes, it's not that like the Cisco CEO said, AI is not going to take people's jobs, but people that uses and knows how to use AI will take your job. Anton de Bruyn: Strong point to end. If we maybe just come back to inventory. We had quite a strong numbers in terms of inventory, also a better impact in terms of our working capital. Do you see that actually going into the second half as well? Do you see a better performance in terms of our stockholding? Pieter Engelbrecht: You asked me the question yesterday, I would have said yes immediately without thinking. Now today, I have to say 162 containers are stuck in the Suez Canal currently. So I don't know exactly what the impact of that would be. But remember, these are businesses. They make plans. Maersk has already decided to come around Cape Town not going through the Suez because it's closed and they offload. And so I don't think it's a concern. I think the number -- if people think -- but how did we maintain a 98.5% on shelf availability and reduce the inventory basically? It's because of the decisions -- well, the new DCs and the decision to also serve inland from our distribution centers and rather incur the additional fuel cost than compromising the on-shelf availability. And we're seeing a benefit of it. Anton de Bruyn: We see it in our GP as well. Maybe we've quite a few questions on IFRS 16 and what I mean by normalization. So we've already seen an improved growth rate in terms of that IFRS 16 lease liability and costs. The main move for us last year and why we saw such a big growth was as a result of now 2 to 3 years of continued increases in our DC space. So obviously, as soon as a DC comes in, that's got a massive impact in terms of our leasability. Our DC leases are 20-year leases. So you have to acknowledge a 20-year lease, and that's why you see that movement in that lease liability. I think what will bring our total finance costs line down, and we have already seen it in the first half is also the decline in our borrowing costs. I mean our strong cash flows that we generate has made us less dependent on overdraft during month-end period. So we're already seeing that benefit coming through. Like I said, I think we will see a much better -- also a stronger result in the second half in terms of our borrowing cost. So yes, I mean, I hope that answers the question around IFRS 16. Pieter Engelbrecht: You maybe just think of something is that we're even in such a privileged position that we can provide what I call our brand managers, suppliers, sometimes with bridging finance especially over month ends in high promotional periods when cash flow is tight. I mean that's a fantastic position to be in for the retailer. Anton de Bruyn: Pieter, I mean, I think we've answered most of the questions. The one that I'm going to maybe ask you to close out with is there's questions around you've spoken about the profitability within Sixty60. I know you always talk about that omnichannel customer. Maybe you just want to talk about we could see the trading profit and trading margins remain strong. Maybe just talk about that in terms of how you think about the Checkers and the Shoprite banners. Pieter Engelbrecht: Yes. I think the answer goes back to what I said around the omnichannel. I mean we really truly want to be a full omnichannel retailer, which means I think somebody asked a question somewhere around can we provide our Sixty60 service to third parties and other retailers. And so yes, we could, but it's not on our plan currently. We've got too much to do. I mean all the businesses that we have in the group, you know that we are a multi-brand retailer. We still have to add all of those functionalities onto the omnichannel. That process is running flat out. So that's what we have to deliver first. And I made the comment in my part to say that we're trying to increase our part or share of the discretionary income or spend of customers. Now that's exactly what Sixty60 does. And -- I mean, we've added now pet and the rest of the businesses units still has to be added until we've got a full omnichannel. And we're going to -- we said -- we decided rightly or wrongly that we will give you more color at year-end presentation around the adjacent businesses, what we do in financial services, what we do in pharma care. There's a lot of things happening at the moment. But in terms of the omnichannel, the first target, obviously, is to get as quick as we can the entire business unit of the Shoprite Group onto that platform. And there's agentic that needs to be implemented to make it easier, faster. And that's why I mentioned the over 900 software releases. It's an enormous amount of work that goes in there. It's a lot of stuff that I don't even understand, but I know it works. That's more important. So yes, that's the story, Anton. Anton de Bruyn: You can close. Pieter Engelbrecht: Well, then if that is that, all good. Thank you again, everybody, for your time. It is not taken for granted. I know you've got many businesses to look at. You've got many choices of making investments. We hope that we have given you the best clarity of what's happening in these walls every day. And I certainly am very pleased with the result, given the whole market. You know we never make excuses. So I hope that we gave you some clarity. And thanks a lot. Have a fantastic day. We'll make some money.
Jacques Sanche: So very good. We're still 1 minute early. So as a good Swiss company, we'll still wait for a minute, maybe less. There we are. It is 2:00. Thank you very much for joining us here in the room, first of all, and for those of you who are at the screen, thank you very much for joining us at least online. I know the weather outside is very, very tempting, but I hope we have some good news that will be interesting for you as well. It is a hybrid presentation. So in other words, we have people watching us, and it is being recorded, and it will be available on our website later. If you have questions, I will first address the questions that are here in the room. And then afterwards, I will address the questions which are online. You will have to raise your electronic hand so that we can see who has a question but that we do during the Q&A session. Today, with me are -- let me see if I can work out the electronics here. There we are. So as usual, Manuela is going to join the presentation later and explain some financials. And then it's Matthias job as the future CEO, the CEO as of the General Assembly in April to give an outlook. If I try to summarize last year's results, what we can see is that the markets where we are active have stabilized overall. There is some recovery visible, especially in Europe. We see more demand also in the agricultural sector, which is good. We have 2 divisions that managed to grow their order intake, which is basically Kuhn Group and Bucher Hydraulics. Then the sales still fell if we compare it to 2024 based on the lower volume or lower order book that we had at the beginning of the year. And it was only Bucher Municipal as a division that managed to increase their sales year-over-year. The EBIT margin reflected the lower activity that we had in our facilities, the reduced volume, and we profited from the sale of a property here in Switzerland. So that compensated somewhat the situation, which is what is a very nice highlight is the strong cash flow that we generated last year, and that will then result into nice requests to the general assembly. And also a good result is the fact that we managed to reduce the CO2 emissions once again. So we look for the long term, then we can see that we have a very solid financial position. We are holding about CHF 500 million in net cash positions, and we have a high equity ratio of 66%. And we are proposing also for that reason, the continued dividend of CHF 11 at the general assembly despite the share buyback, which is almost accomplished now. And then finally, the last point, which is important, we have established a new management team, a new management team with Matthias being my successor, but also within the divisions with Bucher Municipal and Bucher Emhart Glass, we have 2 good, very capable successors. If I come to the numbers, then you can see that, that order intake I spoke before was a stronger focus on the European market that increased by about 7% year-over-year. And if I show you these numbers now, they're always corrected for exchange rate and for acquisitions. So these are really like-for-like numbers. So 7% on the order intake that went up. It was mainly Kuhn Group and Bucher Hydraulics that increased there, whereas the glass forming machinery business suffered most, but in aggregate, 7% up. The sales, however, still based on the lower order intake at the beginning of the year, declined by about 6% last year. It was only Bucher Municipal that managed to increase their sales. The good news, though, is that especially with the fourth quarter of last year, finally, we reached a stage where we were showing positive sales for the whole group again. If we look at profitability, then you can see the group's EBIT margin reached 9.7%. That is a bit higher than the 9% we had in 2024, but we did benefit from the sales of a property that we had here in Switzerland. We cleared that property and now we got it into the market, and that netted in a profit of CHF 43 million. Profitability otherwise was, of course, impacted by the lower volume that we had. And if we look at the cost elements, then we see that our personnel costs in percentage of sales had a tendency to go up despite measures that we took to reorganize or adjust capacities, especially in the United States. FTEs declined by about 4% year-over-year. In some areas, we had to reduce them, but there are other factories where we are already building our employee base again so that we can prepare to produce a higher output. Then we continue with some key elements, and that is, of course, the R&D cost. The R&D cost did not go down. We basically maintained almost CHF 140 million, not quite CHF 134 million in percentage of sales. It's where it should be, in my opinion, somewhere between 4% and 5%. The 4.6%, I think, is a good value. And we did continue to also invest into buildings, IT and of course, modern machinery. As you can see here, the CapEx did get reduced from about CHF 150 million, which was a high level, down to about not quite CHF 120 million. I can show you some examples. For the R&D side, what I'd like to show you is in the middle picture, the new tine cultivator that we introduced, especially for the European market. The tine cultivator is a tool that you use after the harvest. It really has the job of putting the residue or mixing the residue with the soil so that the decay can start happening. It's a natural way of kind of reducing the residue and getting back some fertilizer or some nutritions actually into the ground. We were very successful with that. That's one element. And we have a lot of other products that we, of course, introduced into the market. And what you can see is, of course, that tine cultivator, it's called the Highlander that is towed by a green tractor, the John Deere tractor. We -- it's a bit in the dark, but you would see otherwise hydraulic components and these components are from Bucher Hydraulics usually. And that is one of the reasons why we expanded our buildings in Frutigen, and that is the picture on the right side, where we are going to be delivering into a new generation of John Deere tractors, and we have created that capacity to do so. Another achievement that we made is we reduced our CO2 footprint by another 13% year-over-year. So we're down to 60,000 tonnes or 61,000 tonnes. When I started, it was 93,000 tonnes in 2021. So I think we are on a nice path to continuously bring it down. We invested into renewable energy that we brought. So the energy mix was better, but we also invested in solar cells. And then, of course, lower activity does help also to reduce the CO2. But all in all, in the last 4 years, we reduced 35%. I think that's a very good achievement. Every year, when you look at the annual report, we have kind of a topic. This year, our topic of the annual report was where do we create value for the society. And we just brought some examples that I would like to explain to you. I mean the first question would be, could you imagine a life without milk? Maybe the milk, yes, but can you imagine a life without cheese? The pizza without cheese? I mean, at Swiss, of course, we cannot imagine at all or the chocolate without milk or milk powder or a toast without butter? That is, of course, one of the elements where you suddenly notice how important milk is to our society, at least to the diet that we know. And that is this part of the story. And producing milk is very labor-intensive. So you need to take care of your cows on a regular basis every day. If you don't do that, of course, milk production goes down and eventually, they'll start complaining. So finding the labor that wants to work in the stable is the next challenge that the farmer has, especially in the milk industry or dairy industry. And we have developed this robot that goes out to fetch the silage, puts some other ingredients into the food stuff, then it mixes it. There's a mixer inside that robot and then it has a belt that feeds that food mix basically to the cows. And then on top of it, it has a brush because the cows start sweeping out the food mix too far away, they can reach it. The robot will then sweep it back right in front of the cow. And that machine does it all day long, just drives back and forth and keeps feeding the cows very, very regularly, like this the milk production is just optimum. And that is a machine that is pretty successful. It's getting installed in more and more places into dairy farms. We take another example that is probably very prominent today. As you can see, I mean, obviously, first of all, our sweepers have the job of cleaning the streets again when there's gravel on the road, maybe from the winter time or so old leaves. That is one job that has to do with safety. But of course, a clean city is something where people like to be. It attracts a good society. And then I think sweeping goes right beyond just having a clean road, but also providing comfort to the inhabitants of a city, such a sweeper can do about 25,000 square meters per hour. So it has to be high performing continuously. What we see more and more through these cities, we have electric buses. I think it makes a lot of sense. There's a lot less noise for electric buses. It's easy to kind of run them, and we had invested into a company about 5 years ago that produces these inverters. So with an electric bus basically have the battery available, now you have all kind of systems that need to be powered by electricity. That can be the steering that needs power steering, that can be the compressors that drive the dampening or the tilting of the bus for the -- when the passengers are entering. It can be something simple like air conditioning or the USB power plug that is available in the buses today. And we have these inverters that go into these buses. It is a successful business as such. So whenever you sit in electric bus, enjoy the quietness somewhere in the background, there are our inverters working. There is no doubt for us -- and it's also, I think, well depicted on the right side that glass is one of the best containers for liquids and for drinks. It is just the purest form about PET, a lot has been written, even aluminum cans, they have a plastic liner inside. It's not really aluminum that touches and it is just not quite as healthy as what glass can offer. So there, we are proud of producing almost -- or more than every second bottle in this world is produced on one of our machines, and that's really globally. So a lot of people sitting together enjoying the bottle of beer or eventually wine, they will be profiting from our glass machine. And then finally, apple juice is another beverage that people like very, very much. We have invested into a facility in Poland. About 3 years ago, they produced the containers where all this apple juice or the concentrate can be stored. We have the filters that go right in front of it, and we have the presses that is our origin that we sell to go with it. So basically, we have the full chain for apple juice production. And again, we see people enjoying it. Just some examples how Bucher is creating comfort and a better life for people in this world. I would like to continue now with some details on the divisions, and I'll start off with Kuhn Group. And of course, we have another nice product, which I cannot refrain from praising because we did get a medal for that at the Agritechnica show in Germany last year, and that is the GMD 15030 that's a disc mower and it has a reach of 14.5 meters. So it's driving along with some 20 kilometers an hour. It's cutting at 14.5 meters. It's highly efficient. But the specialty about it, of course, because you have such wings, you have to have them flexible because they have to adapt basically to the terrain. Otherwise, you would not be cutting the grass nicely. And then the other part that is interesting because at the end, he has to drive home. So we have to fold this together from 14.5 down to 3 meters in width and 4 meters in height. That's the allowable size that is available in European regulations, and it does so very, very well. If we look at farming last year, it's kind of a mixed picture. The picture that was a bit more pessimistic is on the left side, where you can see the grain prices. Down below it is more corn and wheat. And if you compare it year-over-year, you can see we were at a very low level for the farmers, particularly in the United States, and they were suffering. Income for farming was bad last year. You can also see the green line, that's the upper one on the left chart. And you can also see that dip, which is most likely the dip that happened when China decided not to buy any soybeans anymore from United States. That happened right around midyear because of the tariffs and then after a while, Trump renegotiated and then they started buying again. And these are all these elements that happened. But there's no doubt, crop production last year was a very difficult task and hardly profitable for the farmers and they're suffering. The milk price was better, dairy was actually a good business last year. In the United States, it started coming down. It continues, but it's still at a fair level in Europe, milk price is still at a good level. And one element that we don't depict here is meat price, livestock. That was at a very, very high level, and it remains there. And so these farmers are doing well, but the crop producers have problems. Here, you can see the farm income as it is projected by the USDA. And you can see 2025 wasn't really an improvement over 2024 and 2026 is expected to remain about the same. And these levels here are just not sustainable for farmers. Now the United States government has noticed it, and obviously, farmers are Trump fans. So they expect more subsidies to happen in 2026 or more to come, and they were more promised. Now 2025, there were some promise as well, but the problem is at the moment they had promised it, they had the government shutdown, so they didn't pay. So that delayed as well. So a challenging year for these crop producers overall, a bit less challenging in Europe. If we remember a year ago, we said that one of the biggest challenges that we had was that the dealers were overstocked. They had too much in their inventory. They were not selling quick enough, and it took a while for them to reduce that inventory to the level where they would start ordering again. And we have reached the level now. The dealers in Europe are at normal levels. They are ordering again the material that they need. The ones in the U.S. are getting there. They were -- that happened a bit slower over there. So that was one element why we see more revival in Europe happening. If I take some other areas, I mentioned the United States being challenging, Brazil, there, what we see is the subsidized credits that farmers can get from the Brazilian government are at interest rates that are not attractive for the farmers. So it is available the money, but they don't really want to use it because the interest rates are high. And at that moment, they're holding back with investments. That is basically the part. So all in all, Kuhn Group's order intake rose by impressive 20%, albeit from a rather low level. The order book reached 6 months of sales, which I think is a fair level. And sales, of course, still reflected the low order book of the beginning of the year and it fell by 7% year-over-year. So the lower utilization of our factories and sites led to an EBIT margin, which was on the low side for Kuhn at 7.1%. They were also having to pay tariffs. They were most impacted by the tariffs overall from our divisions. And then we had capacity adjustments also in the United States that needed to be done so that we can face the lower level of demand, at least over there. If I change over to Bucher Municipal, this is our latest baby in the line of compact sweepers. It's the smallest one, too, the VR17e is fully electric, 4-wheel steering, very, very maneuverable, is ideal, of course, for more pedestrian areas. What is interesting, it has actually a full drive-by-wire setting or electronics. And that is what we need. We want to do autonomous sweeping. So we need to have the controls and they will have to have a digital control or digital access to all these elements of the sweeper. And a matter of fact, it's in Duisburg, where we are testing the sweeper fully autonomous, no driver in it for now testing purposes, obviously, but with the intention eventually to come out with a product that can fulfill this requirement. Then if we look at Bucher Municipal, which I think is a very nice story. So the order intake, we had mentioned it came down a bit. Compact sweepers like the one before went pretty, pretty well. There was also momentum for the sewage cleaning side. Then the truck-mounted sweepers had a bit more trouble selling. Likewise, the winter equipment or refuse collections, they were a bit more under pressure. All in all, the order intake declined somewhat by 3.4% year-over-year, but at a solid level. The reach of our order book is 5 months, so that's still good. The sales remained high at about 3.4% above previous year, mainly driven by United States and Europe and less by Australia and Asia. So as a result of very solid sales, but also as a result of the restructuring and the continuous organization, the EBIT margin almost finally reached 9.4%, I think a very good value. I would continue to the next division, which is Bucher Hydraulics. This is a system integrator that we bought in Finland. There's quite some machinery being built in Finland. Forestry is one good example and then also defense or offshore marine. And this company was a good system integrator for all these applications. We're very happy that we could buy this team that produces solutions for these applications as mentioned, and it is doing actually pretty well. So I mentioned that we saw a little bit of a revival was hydraulics. It's a good sign. There were different applications, different regions that helped to do so, construction and started picking up again, agricultural machinery, also our tractor manufacturers are starting to come back to life, but there was also industrial hydraulics that was going upwards. There was mainly one application that was on its way down still, and that was material handling. That is the facility that we have over in the United States that was suffering. Then we look at the order book altogether, it decreased by 4%. And the sales, of course, were still an effect of that lower order book that we had at the beginning of the year, and that also decreased by about 4% altogether. So the lower capacity utilization did challenge us here and there. Then we also had some acquisition costs for -- also the new system integrator that I mentioned before. And we had to also open up a new facility in Mexico or in Malaysia, just to be closer to customers. And for that reason, our EBIT margin kind of sank by about not quite 1 percentage point to 10.1%. I will continue to the next division, which is Emhart Glass. There, we acquired a company that is active in the engineering of glass manufacturing plants, a complete specialist, but it is the first company that a glass customer would address when he has a new project in his mind, and that is one of the reasons why we like to have them. So they do all the engineering and the specification for the machinery that is required in the glass manufacturing plant. And of course, they will then also specify our machines in the future. It's good, but it also gives us an opportunity to sell more of the infrastructure that is needed to run our machines. So we will eventually expand that business beyond just glass forming. And then another side effect, which was very pleasant with the acquisition of this company, we also found a new member of our management team, and the successor for Matthias Kummerle. If we look at the overall results, then it is clear that our customers were suffering substantially last year. Glass consumption was still lower. Energy prices was a challenge for them. They were adjusting their capacities, closing older plants. And what we also see is alcoholic beverages, which is a driver for glass is coming down. The consumption of alcoholic beverages is coming down. So overall, there was less demand from our customers. Order intake went down as well for forming machines, but as well also for inspection machinery and altogether by 15.4%. The one element that stayed stable was, of course, service and spare parts that continues. There we continued with solid success. Sales were significantly lower also based on the order intake by 18%. The operating profit margin despite that reduction remained at very respectable 12.6%. We did adjust our production planning to that lower demand, and we did some activities as well. One of them is to shift the production from -- of inspection machinery from the United States over to Germany. That is Bucher Emhart Glass coming to Bucher Specials. There you can see presses. These presses are normally used to press apples and then produce apple juice. But there is a side application that we have been serving only halfway successful in the past that is pressing of sludge and the sludge, which comes basically from water purification plants. And we received a big order at the end of the year from Hong Kong. Hong Kong is reshuffling their sewage system, and they want to have these presses so that they can dry the sludge better than with current technologies. And we're going to be building them this year and then delivering them in 2017. They will be installed in caverns for Hong Kong sewage system. So maybe a breakthrough of a new technology. But Bucher Specials overall was challenged last year, especially the wine production was a very difficult topic. We see clearly that wine consumption is going down. That is one element. And then the markets where we are very strong in France suffered particularly because there were tariffs on their French wine. So there was less consumption in the United States. And almost everywhere in the world, they're reducing the vineyards, the surface of vineyards. European Union is actually paying money if you start reducing your vineyards. So that is going on, and that was very challenging for one of the units, which is called Bucher Vaslin. The other unit that does mainly juice production, which is Bucher Unipektin, apple juice, orange juice and also beer filtration, that was doing very well last year. And then we have the trading business for tractors here in Switzerland, Bucher Landtechnik that remained at the low prior year level but was solid. And then finally, the last unit of this Bucher Specials, which is the automation side, which has a high degree of internal customers, Emhart Glass being one of them and then Bucher Hydraulics being the other. That unit was also challenged just by lower demand and had to go through some restructuring. All in all, the order intake was stable, as you can see, but the sales did fall 9%. The profit margin improved somewhat from 2.3% to up to 3%, but still at a low level. That, in short, is the explanations to our divisions, and I'll hand over to Manuela to explain the very positive financial data. Manuela Suter: Thank you, Jacques, and good afternoon from my side. We talked a lot about the operating results. So now let's come to the net profit of the year. And in between, we have the net financial result and the income taxes. Net financial result, in our case, a positive number. The net financial result was driven by interest income and the result of short-term investments, mainly in Brazil. As a reminder, we have a substantial high net financial liquidity, and we are almost debt-free. The effective tax rate was slightly below 20%, slightly lower than expected, mainly due to special effects, the property gain was with a lower tax rate, and then we also benefited from R&D impact or R&D credits. So midterm, we still expect the tax rate to be in the range of 21%, 23%. The net working capital, it was a highlight. We could reduce net working capital significantly by CHF 180 million, mainly due to a reduction of inventory and higher customer prepayments at Kuhn Group from Europe or in Europe. Net working capital in percentage of net sales of 18.5% compared to 22.8% last year. This is a meaningful improvement year-on-year and shows our focus on the cash conversion. There is still some way to go. Over the last couple of years, our average was between 17% and 18%, and that's a number that we also would like to achieve over the next 2, 3 years. The reduction in average net operating assets is mainly attributable to the net working capital reduction. As we continue to invest in our production facilities, modernization, digitalization is a key topic and also ensures our long-term organic growth. The return as a result with 16.2% is still above our cost of capital of around 8%, but below our target over a cycle of 20% and includes the effect from the property gain is roughly 2.5 percentage points. Here on this graph, I would like to start right in the middle with our operating free cash flow, and it was clearly a highlight of 2025. The operating free cash flow of CHF 365 million exceeded the already high prior year, mainly due to the substantial reduction of net working capital here on this chart with CHF 130 million. And even without this impact, it's the highest operating free cash flow over the last 20 years of Bucher Industries. As a result, on the bottom, the free cash flow slightly above CHF 100 million. And in between, Jacques mentioned the acquisition that we did over the years. And then we have the dividend and treasury shares or the share buyback program with CHF 234 million. The impact is roughly half-half. So dividend payment around CHF 112 million and the rest is applied to the share buyback program. As a result of this strong free cash flow, we achieved a net cash position close to CHF 500 million in the middle. And we still have a comfortable equity ratio of 66%. And this solid financial position ensures our flexibility, but also our stability for the whole group and creates optimal conditions for our -- for the future growth. And when it comes to our capital allocation priorities, first, it's organic growth, investing in CapEx, innovation. So R&D is key also in the future. Second, is scan the market for acquisition opportunities to complement our businesses to generate future growth. And last, with such a strong balance sheet, it also allow us to continue to pursue a consistent dividend policy. And another nice chart over the years, over the last 10 years, we were able to increase our dividend per share. And the Board for the year 2025, the Board of Directors will propose a dividend of CHF 11 per share. This takes into account our results of 2025, including the property gain, the outlook 2026, future investments and also further the dividend policy or consistent dividend policy. Overall, we are also in the final stage of our share buyback program. Yesterday evening, we achieved close to 4%. We paid around CHF 150 million over the last year. It's a bit earlier than expected. So our Board will propose at the next AGM, the capital reduction this year. And before I hand over to Matthias, some nonfinancial numbers. The heart of our company is the people, and it's right in the middle, the employees. We still have around 14,000 employees of headcount around 400 trainees worldwide, 100 in Switzerland. So it's also key to further invest in skillful employees and in our training. So the average hours of training per regular employee also increased by 14%, has mainly to do with also the introduction of ERP programs and additional trainings. And other key target is to reduce the number of occupational accidents on the bottom. Here, we were able to reduce it by 13%. And within the group and the group management, we have a commitment to further reduce this number with a new target that we also introduced during 2025 to reduce our lost workday rate. So to summarize, for a sustainable value creation, it's important to work on both sides. On one hand, on the profitability. Our focus is to remain on actively managing the cost within business units with still lower capacity utilization. And at the same time, we are also well positioned to capitalize on those where we are seeing signs of market recovery. So profitability, managing costs. And on the other hand, our invested capital, it's our aim to return the net working capital as a percentage of sales to the long-term average, this 17%, 18%. And at the same time, we remain committed to investing thoughtfully in future growth, guided by our capital allocation priorities, as I just mentioned before. And with that, I would like to hand over to Matthias with an outlook. Matthias Kummerle: Thank you, Manuela. Good afternoon also from my side. It's a pleasure to be here, and thank you very much for coming this afternoon and for joining us. I haven't had the pleasure yet to speak with all of you. So please allow me to briefly introduce myself before we go into the outlook. So my name is Matthias Kummerle. The name comes from Germany, born in Germany, grown up in Switzerland. I have a technical background, studied at ETH Zurich mechanical engineering, then ended up in Lausanne at EPFL for a PhD, finally complemented my studies a few years later with an MBA, had a number of years with Hilti in Liechtenstein first and then a couple of years in China, a country which I'm still following with a great interest. And since 15 years now, I've been with Bucher Industries. I have headed the R&D effort at Emhart Glass for 10 years. And the last 5 years, I had the pleasure of heading the division. And now from April on, as it has been mentioned before, I have the pleasure to take over from Jacques as CEO at the next general assembly. And I'm looking forward a lot, of course, to continue building on what Jacques and the team have built in the last years and to working with the management team. As you know, Bucher Industries has a very long history of entrepreneurship of decentralized responsibilities and management and I think also a very disciplined capital allocation process, as Manuela has mentioned. And I want to continue that culture and basically continue driving with the teams along those lines. Now coming to the outlook. I have to admit looking into the future has already been easier in the past with all the uncertainties that we have going on at the moment. The whole planning cycle is challenging. The most recent events in the Middle East are not really making it easier. Nevertheless, I will walk you through the assumptions that we are applying at the moment and what that means for the expectations for this year. So overall, we expect that the recovery in demand that we have seen in the second half of last year will continue. This will be most pronounced with the Kuhn Group and also with Bucher Hydraulics. But again, the uncertainties are still quite large and elevated, and we have to also live with the possibility of headwinds, which might have an adverse impact on the investment mood of our customers and also on the cost side. Walking through the divisions -- this one here. And starting with the Kuhn Group, we can say that based on the higher order book with Kuhn Group, we expect an increase in sales. And when I speak about sales, I always mean comparable basis compared to last year. And in addition, also the operating margin is expected to be higher than the prior year. The improvement in volumes and also the high discipline that we enjoy with Kuhn Group on the operational side will support the profitability as the demand continues to normalize. With Bucher Municipal, we expect a slight decrease in sales on a comparable basis once again and also a slight decrease in the operating margin compared to '25. Overall, the demand should stay intact. We are not worried about the demand. And we also expect the continuation of the benefit from efficiency measures that have been going on. However, the order book going into the new year is substantially lower than what we had a year ago, and this limits a bit the near-term visibility and also weighs on the year-on-year comparison. Bucher Hydraulics. There, we anticipate a slight increase in sales. And correspondingly, we also expect a slightly higher operating margin. As mentioned, the order intake has improved, especially in Europe. And while we remain cautious about the overall situation, the trend is clearly more supportive than in the prior years. Bucher Emhart Glass, obviously, I know that division the best at this moment. There we expect on a comparable basis a significantly lower sales and also a significantly lower operating profit margin. And that has to be put in light with a strong increase in sales that we saw in the last year -- towards end of the last year, which supported in the previous year, the profit margin and the sales. And because of that, we really start the year now with a lower order book, and that will weigh on the Emhart. But we are hopeful that we'll see during the course of this year a trend to the positive again. But the visibility is not the best yet. Finally, Bucher Specials. There, we anticipate a slight sales growth and also the operating profit margin is expected to improve again. And that is supported by the higher capacity utilization that we expect. And also some ongoing efficiency measures. If we put all that together, we can say that Kuhn Group and Bucher Hydraulics and to some extent Bucher Specials they have to compensate in '26 for the shortcomings of Bucher Emhart Glass. And overall, we expect a comparable sales compared to '25 and also a similar operating profit and that is excluding the property gain that we had in the last year. We believe that this picture contains a quite balanced view of the risks that still are there and of the upside potential. So the risks, as I have mentioned before, there are still uncertainties with the trade situation with tariffs and so on. The cost side is difficult to anticipate. On the other hand, on the upside, it could be that agriculture in Europe or also in the U.S. might pick up a little bit faster than we believe at the moment. So overall, the picture, we believe, is quite balanced. And with that, we approach '26, I would say, with a cautious optimism. Before we go into the Q&A, I would like to mention a couple of words about the management team. I'm in a very fortunate situation that I can start working with an extremely experienced management team, which has also -- which is fully aligned also with the culture and the values of Bucher Industries. There is Manuela Suter, responsible for finance as our CFO, whom you know very well. We have Thierry Krier responsible for the Kuhn Group. We have Frank Muhlon driving Bucher Hydraulics. And we have Stefan During responsible for corporate development and for Bucher Specials. I have known these colleagues since a very long time from my term on the management team, and I'm super happy to be working together with them in the future and to have their experience on board. And then as Jacques has briefly mentioned, we have for Bucher Municipal, Martin Starkey, an internal successor who took over from Aurelio Lemos beginning of this year. Martin has been heading the truck-mounted sweeper divisions during the last years, has an automotive background and is a huge asset on our management team. And last but not least, Daniel Schippan, who took over from me at the beginning of the year running now Bucher Emhart Glass. I have known Daniel since many years from the glass industry. He has a very strong entrepreneurial spirit, is strategically quite visionary and I'm convinced that he is the right person to take Emhart Glass through these still difficult times and also bring it back to a growth path. Last but not least, an announcement that you saw as part of the communication packages this morning. We have a change on our Board. It is Urs [indiscernible] our Chairman of the Board, who for personal reasons, has decided not to stand for reelection at the next general assembly. Urs has been on our Board since '23. He has been Chairman of the Board since 2024. And again, for personal reasons, he's not available anymore. And it is Stefan Scheiber, who is being proposed by the Board to be elected as our Chairman. Urs, you know him most likely from Buhler, has had a career there as CEO served for a very long time, a very seasoned international manager. And Stefan has been on the Bucher Board since '22. He knows our company very well. He is in line with the culture. So we are happy that also here, we have a very good solution that will guarantee a seamless continuation. And with that, I would like to hand to Jacques, who will open the Q&A. Jacques Sanche: We'll, of course, do that as a team. I'll try to answer more 2025 questions together with Manuela and then outlook will be a bit more the topic of Matthias. So who's going to break the ice here in the room? Any questions concerning the past year? [indiscernible] please? Unknown Analyst: Yes, I have one question. It's all about capital allocation because you -- the dividend remains unchanged, CHF 11. And you said number 1 is organic growth; number 2 is acquisition. Number 3 is giving back. As you don't give back more money to investor despite the 20 years record operating cash flow, I'm wondering whether you are growing much more organically? Or are you investing much more into M&A? Or did you treat the shareholders badly? Jacques Sanche: The money is still there. It won't be lost. So I don't know if it's -- we're not trying to -- I think one element is if we start growing, then we will need more cash. That is known. So one part will eventually go back into that element. I know we're still conservative, but eventually, we will need it over time. Unknown Analyst: But you guided flat sales growth, so you don't need more money. Jacques Sanche: Let's see what happens. Manuela Suter: In a downturn, we were always able to manage or to reduce the net working capital. I would say we are now quite on a high level of net cash. For next year, we expect an operating free cash flow between CHF 100 million and CHF 150 million. So again, a positive number, but clearly below this year. But yes, you're right. But there are future growth. So we have R&D CapEx, we expect around CHF 150 million next year, also slightly higher than this year. And last acquisition was always on our agenda for the last 10 years. Matthias Kummerle: I can just build on that. It is very clear that with the situation, acquisitions will play a role as we go forward. So we will be obviously continuing to look out for acquisitions that make sense. So that is going to be part of the strategy also in the future. Jacques Sanche: Next question, please. Unknown Analyst: How do you see net working capital, for example, as a percentage of change developing for the next 2 years? Manuela Suter: Right now, we are around 18.5% of sales. Over the last years, it was more 17%, 18%. So I think that's a number that we would like to go again, means for next year or for 2026, we will see a slight reduction, obviously, not to the extent that we had during 2025. I would say, around 0 depends a bit on the movement to CHF 30 million, something like that, but it's hard to say. It depends also a bit on the growth that we will see during 2026 or how it develops depending on the businesses. Unknown Analyst: I have also another question. Can you remind me of your CapEx plans for the next 2 years? Manuela Suter: The CapEx plans. As mentioned before, for 2026, we expect around CHF 150 million, but overall and a good number is always around 4%, 4.5% of sales when it comes to capital expenditure. Unknown Analyst: I have one, maybe to continue on M&A. It sounded, Mr. Kummerle, that you might want to be doing more acquisition in terms of numbers and maybe also in terms of size? And if yes, can you give an indication what would be your ambitions in which areas and geographies? Matthias Kummerle: I mean I can make a couple of general comments, maybe not as specific as you might expect. But in general, I see -- well, the strategy overall is not going to change. So we continue investing in organic growth, and that will be complemented with M&A. And I think it's clear if M&A shall be a growth driver also in the future of our business, the size of the acquisitions needs to be on a certain level. So obviously, we will be building a pipeline and working on a funnel to also have objects which would serve a growth target. And we are in the fortunate situation that with the current balance sheet, we are able to propose those type of propositions to our Board. I would say the type of acquisitions, I mean, that is an ongoing discussion. I personally believe that in areas where we already have a relevant position in fragmented markets, we have a very good chance to further strengthen our position. That is going to be a high priority, but we will be also considering pushing a bit more into geographies where we may not have such a strong position yet or in businesses with a very strong position already to also consider adjacent activities. So I would say that's in a nutshell, what we expect, but it's a bit too early here to go into more details. Unknown Analyst: Okay. Can I ask a question on Kuhn maybe. When I look at the charts that you have presented, Jacques, it seems that the rebound in farmer income or -- farmer income is really driven by the subsidies. So is that coming, first of all? And can you give a bit of an indication about the geographies, if they are coming or not? And then maybe related to that, how is the mood because in the U.S. has been very volatile in the last months. Once up, once down, once up, one down, you never -- you don't know where they are standing. Maybe they don't know themselves either, actually. Jacques Sanche: Well, I think, I mean, the main drivers for farm income are, first of all, of course, weather and yield. The second element then is price of whatever they sell, the commodity that they sell. Then you have the costs for input and finally, subsidies. So there are multiple elements, not just subsidies as such. It's true in the United States where crop production is not very profitable at the moment. The biggest impact on a better income would be subsidies at this time. That's for sure. Now the mood in farming in the United States is no good, at least I'm talking about crop production. Dairy livestock is not a problem, but the mood in farming in crop production is not good at the moment. And I don't really see that it has been up and down. It basically has been down for a while. So that's the part. But that's talking about the United States. And then there are other areas where you might see either maybe a relaxed agricultural policy or less regulations that helps a bit for the self-confidence of the farmer and then the investment attitudes. That's one element, and that is different from country to country. European Unions, although they have been protesting, they're a bit worried about regulations as well. But overall, it is improving the situation, and they're seeming to buy more. Unknown Analyst: Can I ask you a last one maybe here on -- always on agriculture. I don't know if it's relevant. But in Switzerland, we have seen the farmers throwing away milk. Is this something that happens also outside Switzerland? And if yes, how can the milk prices stay high? This is something I don't understand. Jacques Sanche: I would not at all overrate that media coverage that is one action that is not relevant. Unknown Analyst: Yes. But it was not only the throwing away the milk. It was also a lot of additional cheese production because there was just too much milk available. Jacques Sanche: Yes. But that's Switzerland and I mean we're looking at the global scale here. I mean... Unknown Analyst: It's only Switzerland. Jacques Sanche: Yes sometimes. The dairy farmer overall has been doing pretty well. And of course, the milk prices are getting a bit more under pressure now, but it had not very much to do with the milk. Mr. Bamert, you were in action -- somewhere else. Walter Bamert: Walter Bamert from Zurcher Kantonalbank. I have a question regarding the component for John Deere that you mentioned. John Deere has an ambitious growth program for excavators in the U.S. There are 2 questions I have. One is, can you benefit from those new factories and the new offering there? And the second one is when I see what John Deere is doing with closing the gaps, I ask myself, is it also a risk that they would get into implement. I don't know what John Deere already produces in terms of implements and if that would be an attractive business for them to produce on their own. Jacques Sanche: I'll maybe answer the first question, and you can take the implement question at that moment. So the first question is we are -- the John Deere business that we have is agriculture. It's not the building construction side. There might be some small applications, but it's -- the main part is tractors that we're supplying to. So the excavator is not a very important topic for us at this moment. Are they competing with us in implements? That's yes. Matthias Kummerle: I mean the answer is yes and no. I mean they already have implements. So it's not that they're only focusing on tractors, even though that is the biggest part of their business. And on the implement, it's typically more the big, big and few flagship products, which are also the brand shapers. And the big gorillas like John Deere are typically not the ones who have the breadth of the offering like Kuhn, also going into the midsize and the smaller ones. And that's, I think, where companies like Kuhn can really make the difference and can bring a very strong position with the dealers. and the big companies like John Deere, they are struggling to have the complete offering. So it's a yes and no answer. Unknown Analyst: I have a question regarding Emhart Glass. I'm wondering how long are these investment cycles, if I may say. I mean you were mentioning that there's a lot of investments being done, maybe overcapacities around consumption going down, efficiency going up. So it looks like a kind of a textile machinery business almost. Just give us a feeling what's the fair assumption to say, well, at a certain point, all these fillers or glass... Matthias Kummerle: Yes. So in the past, I would say a typical cycle was 3 to 4 years, 3 years, a typical one for a longer one. This one here is a bit longer and a bit deeper to what we have seen. And we believe that it's still to a large part due to an extreme amount of overinvestment that happened after COVID. And so we are still seeing -- we are still in that downswing and it's going to come back up. There is no doubt about that. The only thing that is on top of that is that in the last 2 years, there has been a little bit a shift from glass into aluminum cans. So that adds a bit of an additional element, which we have not seen in the past. But looking globally, we have no concern that we will be back on a typical growth trajectory that we have seen in the past, which is typically 1% to 2% or 2% more in the long run. And with the global footprint that Emhart has being also present in China, in India and emerging markets, we are not concerned. So it's a question of -- it's a question of... Unknown Analyst: You don't think that you're not as good positioned as in the past. Matthias Kummerle: We don't believe that it will shoot back to the post-COVID level anytime soon, but it will be back on a stable trajectory. That's the assumption. Unknown Analyst: And the product extension you did or the acquisition you did, I can't remember the sales. So is that something that helps at least to dampen the cycle? Or is that not -- in that case, because the investment is the same, it's plant. It's like the equipment you put into these plants. So does it accelerate the cycle going forward? Matthias Kummerle: The additional sales from that acquisition is relatively small. was around CHF 7 million to CHF 8 million, the sales on top. The bigger impact that we expect is that we can offer a more complete product to the industry. And there, we expect an amplification of the effect that we get a bigger scope in the different projects and that we get a bigger share of the cake inside the glass plant. Unknown Analyst: Okay. Maybe last question coming back to Kuhn. You had good order intake in Europe, if I may say. So I'm wondering whether we kind of are a little bit on top of the investment cycle in Europe? Or what's the risk that we will see next 12, 18 months? Lower order intake or lower demand from Europe? Matthias Kummerle: I mean the indications that we have at the moment with the level of the dealer stocks, which are on a normal level at the moment, but not on the other side of the curve yet. We don't see an immediate risk yet that we're already overshooting. So we are working with the assumptions that we have mentioned before. Jacques Sanche: Maybe if you look into the past, the downturn of agriculture started mid of 2023. And since then, we had a quarter-over-quarter reduction of demand until basically Q3 of last year. And it's pretty clear, I think it looks like now it's stabilizing. And if anything, I would more assume it's a pent-up demand that will eventually drive the business. But of course, for me, it's easier to say than for Matthias. Any other question? Mr. [indiscernible], once more and then I'll start looking at the online numbers here or the... Unknown Analyst: How do you see the demand backdrop in hydraulics over the next few quarters? Are there any observations in the key end markets that support this view? Matthias Kummerle: I mean we play in different segments. So what has been -- or what is supporting the statements that we made is developments in agriculture, in construction and in general industry, there also in Europe, we have seen a positive momentum again. What is not working yet is on the -- in the U.S., particularly on the transportation side. So those are leveling docks in logistics centers and so on. That segment has been still relatively weak. So that's, I would say, if you go into the applications and the segments, the picture that we have. Manuela Suter: The Material Handling segment is more exposed to U.S. I think that has also a reason why it's still lagging and then we have agriculture and construction. And we are still coming from a very, very low base. I think that's also need to take into account. However, over the last couple of months, it was really a steady improvement also in order intake that we could see in particularly in construction and agricultural segment. Matthias Kummerle: But again, the signs are not super strong, as I said. So it's -- I also cautious optimism that it continues like that. Jacques Sanche: If there are no more questions here, then I would address [indiscernible]. Unknown Analyst: So my question is about Emhart Glasses. Could you give us more details on the competitive landscape in this division? And do you have a different strategy versus your competitor? And do you think you might have a stronger recovery than your competitor? Jacques Sanche: I didn't quite get which... Matthias Kummerle: Yes, okay, glass. I'm happy to take that. So the -- I would say the industry within this glass business is relatively consolidated. So suppliers of those forming machines, there you have 4 players, which are relevant, of which Emhart is the largest one. And then you have the other big segment, which is inspection machines. There Emhart Glass is #2 and our competitor is leading the pack, even though the size of that segment is substantially smaller. And I would say the competitive advantage that Emhart has had is that we have a lot of credibility with our history, with the R&D, with the technology. And also I can say with Bucher Industries behind. It's a very long-term oriented business. It's very much relationship driven, and that's what has helped Emhart Glass in the last, I would say, 15 years to continuously build the market share and to be perceived as the clear #1. And typically, if somebody does not work with Emhart Glass it's because of pure price. So what Jacques said, I think is true. It is on a global scale, every other bottle that we drink of will have been produced at an Emhart Glass machine. Now will the recovery come faster for Emhart Glass? I think what we will see is that the service and the parts side that's typically reacting earlier, that will pick up again. So we hope to see these signals during this year. And then I think with this combined business of this acquisition that we had, we have our foot in those projects probably earlier than anyone else. I think we have a very good chance to benefit of an upswing also when they start investing in CapEx again. Jacques Sanche: I think we can say over the last 10 years and the cycles that we have been living through Emhart Glass has always emerged even stronger than before. Market shares over time have been rising. That story could continue. Thank you, Mr. [indiscernible]. And any other questions from the online participants? I don't see any hand raised. And at that moment, it was my 19th presentation, half of them more or less for BELIMO and then the other half for Bucher. And a lot of the faces I see here have been continuously showing up. I appreciate that very, very much. I had an incredible amount of time. And I'm also very proud that I can hand over a very, very solid company with a lot of potential to the team that deserves it. So thank you very much for showing up. And of course, we'll still be around sharing a glass of wine with you. And at that moment, we will close the session and also turn off the online recording. Thank you very much also for those who joined us online. Thank you very much. Manuela Suter: Thank you.
Russell Loubser: Afternoon, everyone. I really feel that I'm privileged to welcome you to -- it sounds like I've got a little bit of an echo here. okay? Thank you. Well, it's really a great afternoon in the sense that I believe we have a management team that's going to present some sterling results on the one hand. On the other hand, it's really a sad day, which is why I'm standing here because it's Leila, our well versed CEO, forthcoming and last set of results. Leila has obviously had a number of stints at the JSE in different capacities with the final one being as the CEO over a period of almost 7 years. It feels like you came in yesterday, but it's been almost 7 years. And during that period, I have had the privilege and the honor to work with Leila. And I think it would be an understatement to say it's been a period full of cross-pollination, incredible amounts of energy and passion. And as a result, so much was achieved. I will have the opportunity to say more this afternoon, so I don't want to make this a long speech. But suffice to say that on this very last swansong, on your results, Leila has made an incredible contribution to the JSE. Whatever matrices you may want to look at, and I don't want to bore you with a lot of data, we have achieved a lot, firstly, in her leading the modernization of the stock exchange, leading to increased diversification of revenues and operating income in the company, not to mention a whole range of initiatives where she took center stage, some of them really in partnership with government, looking at financing SOEs, Project Phumelela, which really had a very significant role in really looking at the financial architecture and ease of the financial services in this country playing a very, very optimum role. It's a long list. But it's really just to say, Leila will discuss this a little bit more this afternoon. On behalf of the Board, -- and I have no doubt, I'm also speaking on behalf of 600 staff at JSE and the other subsidiaries. You're going to leave an enormous void. And that void is not merely one of strength of leadership, intellect and so on, but also the human aspect of it. which I think is absolutely fundamental. And in fact, without it, we would not have achieved most of what we've achieved. So as I said, it's not to make a long speech. It's just to say it is your final results. You may even have a forthcoming, so we don't want to be too clairvoyant about the future. But thank you very much. Thank you very much. We'll say more later on this afternoon. I think it's the opportunity now with Fawzia to really have your place in the sun quite rightfully given what you're just about to present. So thank you very much. And maybe I should also say a minute to say, Valdene, welcome. And you seem like you're sitting in the hot seat, but I'm sure you do justice. So thank you very much. Leila Fourie: Thank you very much, Chair, for your very generous and kind words, and welcome, everybody, both online and in the room. In fact, we've had a fantastic turnout. I think I should be bowing out more often. It's absolutely wonderful to have my predecessor and a stalwart in the industry, Russell Loubser joining us in person today and Erica, who's been the backbone of the broker community for many years, even Selvan, who is the backbone of BDA and worked alongside me for many, many years. I'm going to -- I see my notes okay. So welcome to the JSE's Full Year 2025 Financial Results Presentation. The JSE enters 2026 with improved performance and sustained strategic momentum. This reflects both an improved operating environment and the cumulative impact of disciplined execution over the recent years. Today, I'm going to begin with an overview of the group's performance and the key drivers behind our results. Our CFO, Fawzia Suliman, will then provide a detailed breakdown of our financial results, and I will conclude by reflecting on the strategic progress made since 2029, what it means for the positioning of the exchange today and how it shapes priorities going forward. We'll then open the floor for questions. The JSE delivered record results for the year. Operating income increased 14.2% year-on-year, driven by growth across all of our core segments and sustained equity market activity. Importantly, 35% of our operating income is now coming from nontrading sources. This structural shift improves the stability and the predictability of our revenue base, allowing the exchange to perform more consistently through market cycles. NPAT was up 16.7%, and it crossed the ZAR 1 billion mark for the first time, reaching an all-time high, while we continued with cost discipline and operational efficiency, and our efforts have resulted in an operating leverage, which we're very pleased with the end of the year of 5.9%. Headline earnings per share for the period were ZAR 13.29, up 17.7% year-on-year, while our ROE increased to 22% from 20.2% the year prior. Reflecting our improved profitability and cash generation, we increased the total dividend to ZAR 10.61 per share, up 28.1% compared to 2024. Operational resilience remains a core asset of the exchange with market availability of 99.96% and only 3 priority 1 incidents during a year of elevated trading volumes. In fact, we haven't had an outage in the equity market, and I'm sure Russell will remember our outages in 3 years, which is quite a record. Overall, the group has delivered a robust financial outcome characterized not only by growth, but by continued improvement in the quality, durability and diversity of our earnings, alongside sustained progress against our long-term strategic agenda. Turning to the macroeconomic and market context of this year's performance. South Africa's capital markets experienced a meaningful re-rating through 2025 and into early 2026. This reflects a combination of improved domestic reform momentum, renewed institutional credibility, supportive commodity dynamics and heightened global capital rotation towards emerging markets. These developments have contributed to the reassessment of South Africa's risk premium and supported renewed international appetite for South African assets. This re-rating was reinforced by several milestones during the period, including South Africa's exit from the FATF grey list, a sovereign rating upgrade, continued fiscal consolidation and progress across key economic reform programs. South Africa's equity markets responded accordingly, delivering outperformance relative to global peers on the back of increased prices for precious metals, a weaker U.S. dollar and as markets reassessed South Africa's risk premium. Between the 1st of January 2025 and the 31st of December 2025, the All Share has grown by 57% in dollar terms, outperforming almost all of global market equity indices, supported, of course, by a combination of strong overall market performance, commodity-led gains in major sectors, improved macroeconomic sentiment and structural enhancements to the market infrastructure and listings that support investor interest. As you can see in the graph next to that, this trend continues this year. Market activity increased materially with average daily value traded growth of 41% and 30% in quarter 3 and quarter 4, so a much stronger second half than first half, ending on 32% for the full year. This momentum was supported by robust performance across key large cap and resource counters, reflecting improved earnings expectations and renewed investor confidence. Notable gains were recorded across several of the heavyweight constituents, including from mining Sibanye, which was up 304%; AngloGold Ashanti, which was up 240%; MTN Group up 84% and Prosus, which was up 37%. Market participation was particularly active during peak trading periods between April and September. While our nontrading -- our nonresident participation increased materially with foreign investors now accounting for 32% of our holdings, up from 29.3% in the prior year, reflecting, of course, international investor confidence in South African equities. Consistent outperformance in 2025 has supported South Africa's increasing prominence within our global emerging market allocations with pleasingly, the country's weighting in the FTSE Emerging Market Index rising to 4.29% from 3.16% at the end of December 2024. As of early 2026, the JSE is the 18th largest market by market capitalization in the world, and that's up from 20th in 2029. Taken together, these developments reflect a broader structural reengagement with South African capital markets. Turning now to Slide 6. We've seen a high correlation between index valuation and value traded. This is an interesting long-run graph, which indicates that market activity has surged since early 2024 with strong growth in indices, market cap and value traded. And this echoes time when Russell was at the helm in the mid-2000s during the commodity-driven boom. Although recent gains signal improved sentiment, it is too early to determine whether these gains are cyclical, structural or a combination of both. Given the risk of a reduction in trading activity or an external shock as we're experiencing as we speak, we assess the downside scenarios and stress test impact of lower value traded. This will guide our cost management responses and also our diversification efforts. ADV growth in -- between 2025 and 2026 marks the strongest momentum since the 2006, 2007 period, following which we had periods of stagnation. While history indicates a precedent for this multiyear growth trajectory, the JSE remains vulnerable to potential global and domestic shocks that could rapidly affect volumes and confidence. Strengthening resilience, preparing for potential reversals in sentiment and accelerating diversification into nontrading revenues remains a key strategic focus in improving the quality and durability of earnings. Turning now to Slide 7. The market momentum created a supportive environment for the exchange, which entered a period of higher quality earnings in terms of our model. Over the last 6 years, we've deliberately diversified revenues, and we've increased our nontrading base. Non-trading income has grown materially over the period. You can see 92% nominal growth. And the model now carries a larger annuity style component alongside our trading activity. Elevated market participation supported a 14% increase in operating performance, while nontrading income grew by 5%. In the first half of the year, we had a more subdued growth mainly due to the higher base in JIS in the prior period and also the lower interest rates in that period. Nontrading income, which includes market data fees, margin income, colocation and listing activity remains an important part of our business, and it ensures that the JSE continues to perform systematically across all market cycles. Now moving to Slide 8. You'll see that the activity across the JSE accelerated across all areas, reflecting the exchange's role as a systemic anchor in increasingly complex macro and geopolitical environments. Stronger participation across asset classes highlights a deepening investor base and the resilience of South Africa's capital markets. Equities saw the strongest uplift with value traded up 28% year-on-year. Higher billable equity volumes were supported by a global commodity resurgence, a more stable domestic backdrop and a recovery in investor sentiment. This performance underscores the continued relevance of South African corporates to global capital flows. Derivatives markets delivered a resilient outcome, benefiting from elevated volatility and a persistent demand for hedging strategies. Equity derivatives grew 14% as value traded increased 15.4% with index futures dominating activity. Similarly, financial derivatives advanced 15%, supported by solid appetite for bond-related instruments as rate uncertainty remained a key global theme. Bond market activity was buoyant with nominal value traded in repos and standard trades rising 9.7% Net foreign flows reached ZAR 122 billion net inflow, up sharply from the ZAR 82 billion in the prior year, driven largely by attractive SA yields amid global rate volatility and a higher for longer inflation narrative. Despite ongoing geopolitics and domestic macro risks, demand for South African bonds remained stable, supported by foreign and local investors. Currency derivative volumes rose 32%, heightened by the ZAR volatility, which was driven by U.S. tariff developments and uncertainty in the GNU and this increased the need for tactical hedging, as you can imagine. Interest rate derivatives saw modest growth with contracts and value traded up 1.2% and 7.2%, respectively. Commodity derivatives experienced a bit of a divergence. Physical activities increased by 26%, yet contracts traded declined by 7%, reflecting weaker maize export demand, firmer local currency and softer global prices. And you'll see a bit of a recovery from the first half year performance in that asset class. The primary market delivered steady growth with revenue up 4%. The upcoming pipeline includes several significant names across our sectors. Moving now to Slide 9, and I think this is where Selvan wakes up. The broad-based growth in trading activity and asset classes that we've just discussed places increasing demands on the JSE's infrastructure. Ensuring that this infrastructure can support higher volumes, greater product complexity and deeper participation is central to sustaining market resilience and future growth. A key component of this investment is the modernization of our broker-dealer accounting system, or BDA platform, which is a foundational program that underpins the next generation of post-trade infrastructure at the exchange. In 2025, we successfully completed the pilot phase ahead of schedule, validating the quality and stability of the migrated code, and we commenced full-scale modernization. The bulk of the transformation and testing activities will continue through 2026 with implementation targeted for 2027. To date, approximately 2.2 million lines of code have been modernized with no critical defects identified, which is really an encouraging indication of robustness and quality of the transformation. Delivery of the remaining modernized components is scheduled for the end of the first quarter of 2026. This will be followed by extensive integration, verification and mass testing across all functional areas alongside ongoing engagement with market participants to ensure operational readiness ahead of our implementation. Subject to the successful completion of these testing and readiness phases, the modernized Java-based BDA platform for the equity market is targeted to move into production in 2027. Strategically, this transition enables the JSE to support higher trading volumes at lower cost, introduce new functionality more rapidly and enhance reporting and analytics capabilities, enhance operational resilience across the post-trade environment. And with that, I will hand over to Fawzia for the financial review. Thank you, Fawzia. Fawzia Suliman: Thank you, Leila, and good afternoon to everyone. Looking at our financial performance, operating income increased 14.2% year-on-year, reflecting higher market activity and solid performance across core segments, including information services. OpEx increased 8.3% year-on-year. And excluding costs linked to higher trading activity, underlying OpEx growth was within guidance, and the group delivered a positive operating leverage of 5.9% as we continue to adopt a balanced approach between strategic investment and operational efficiency. EBITDA margin improved by 1.2 percentage points with the EBITDA margin improving to 38.7%. Net finance income decreased as expected to around ZAR 197 million as a result of lower interest rates. And overall, our NPAT increased 16.7% and our HEPS increased by 17.7%, reflecting both operational delivery and disciplined cost management. Moving on to cash and capital allocation. The JSE is and has always been a highly cash-generative business. For the period, net cash generated was ZAR 1.23 billion, an increase of 12.3% versus last year. Capital expenditure was ZAR 141 million for the year, below the prior period, reflecting phasing and timing of delivery. Our financial position remains strong with our cash balance increasing year-on-year by 12.7% to ZAR 3.16 billion. This grants us flexibility to continue to fund growth without compromising shareholder returns. And on this, our total dividend per share increased by 28.1% year-on-year to ZAR 10.61. Our cash conversion remains strong at 1.64%, reinforcing the quality of our earnings and the capital-light nature of the model. Our ROE increased to 22%, up 1.8 percentage points from the prior year. This slide reflects higher operating income, disciplined cost growth and stronger profitability. This year, we delivered robust revenue growth while maintaining a disciplined approach to cost management, translating into positive operating leverage of 5.9%. Our 2 biggest operating expenses remain personnel and technology, and we continue to proactively manage these costs in a balanced way, being cognizant of the fact that they are critical to our delivery and transformation. Other income decreased by 80%, and this was primarily due to ForEx losses in 2025 compared to a gain in 2024. The decrease also reflects the fact that prior year included higher issuer regulation fines as well as VAT recovery income. As I mentioned previously, our revenue performance this year was robust. Capital markets performance was strong with revenues up 18% as equity market trading activity remained high. And as such, we also saw significant growth in post-trade services due to higher billable value traded and an increase in the number of trades. JSE Investor Services revenue was down 7%, mainly because of the high base effect and the unfavorable interest rate environment. JSE Tier revenues increased by 10% on the back of higher fees driven by the equity, currency and commodity derivatives markets growth. And finally, Information Services revenue increased by 10%, reflecting growth in index revenue, terminal subscriptions and equity derivatives data. On the next few slides, I will unpack the underlying drivers for each revenue segment, starting with Capital Markets and JIS. Capital Markets performance over the period reflects solid revenue growth across all asset classes. Primary Markets revenue was up 4%, driven by higher listing fees and ETFs. Trading revenue was up 28% as billable equity value traded up 32%, driven by global commodity strength, improved macro stability and reinvigorated investor confidence. Colocation revenue was up 15%, while the colo activity to value traded remained flat, we saw an increase in the number of racks to 58 from 56 in the prior year. Equity derivatives revenue grew by 14% year-on-year, driven by strong hedging appetite. Bonds and financial derivatives revenue increased by 15%. Bond nominal value traded was up 8%, while contracts traded for currency derivatives were up 32% as we saw increased volatility in the rand on the back of the news about the U.S. tariffs and concerns over GNU stability. Commodity Derivatives revenue was up 6%, with physical deliveries up 26% and contracts traded down 7% as we experienced subdued market volatility following the above-average local and regional maize production. JIS revenue was down 7% and mainly because of lower interest rates, high base impact and slow corporate actions activity. These were partially offset by an increase in asset reunification revenue as well as the number of customers. Moving on to post-trade services. Revenue increased by 18% compared to last year. Clearing and settlement revenue was up by 34% due to the increase in billable equity value traded. BDA fees were up 4% year-on-year as the 7% increase in equity transactions was partly offset by a slight reduction in the fee from ZAR 0.73 to ZAR 0.69 per transaction. In 2025, we developed a new BDA fee model. However, implementation was deferred because the market consensus was clear. The operating model and the fee structure must evolve together. As a result, the new fee model remains on hold until we finalize the non-mandated BDA operating model. And in light of this, we introduced a mid-2025 fee reduction. The BDA fee per transaction was lowered from ZAR 0.73 to ZAR 0.69. And this adjustment brought the average fee for 2025 down to ZAR 0.71. For 2026, we have maintained the BDA fee at the 2025 average of ZAR 0.71, ensuring stability and predictability for market participants. Funds under management revenue was up 7%, and this was due to the higher JSE Trustees cash balances. And then finally, JSE Clear revenue was up 10% on the back of higher clearing fees and increased activity in equity, commodity and currency derivatives. Information Services revenue was up 10% -- more specifically, U.S. dollar-denominated revenues accounted for 68% of total information services revenue and translated at an average exchange rate of ZAR 17.95 for the year compared with ZAR 18.39 in 2024. Growth in core market data was driven by indices, terminal subscriptions and equity derivatives data with a mix of once-offs and recurring annuity sales. The core market data franchise continues to be strongly cash generative and delivers healthy margins, although organic growth opportunities are relatively modest. Our modern data platform has now completed its foundational technology build and is moving into a more commercial and product-led phase, currently contributing approximately 1% to the portfolio. We continue to see good underlying performance of our growth strategy, where revenue was up 50%, albeit off a modest base. The JSE delivered positive operating leverage while still investing in strategic priorities. Operating expenses increased by 8.3% year-on-year, 6.5% excluding higher trading activity costs. This means that our OpEx growth is in line with the guidance that we provided at year-end of a 5% to 7% increase. Key cost drivers include personnel costs, which were up 12.5%, but excluding performance-related costs of high LTIP vesting and discretionary bonuses, personnel costs increased 6.5% year-on-year. More specifically, permanent headcount remained flat overall, while salaries increased by an average of 5% year-on-year. Technology costs were up 13% due to the implementation of our growth strategy, the reclassification from CapEx to OpEx of cloud-related spend and inflationary and foreign currency impact on license costs. General operating expenses have remained relatively flat, owing to our continued commitment to disciplined cost management. Our focus remains on driving operational efficiency with a continued emphasis on financial discipline while still directing capital toward our key strategic priorities and investments. On CapEx, spend was focused primarily on maintaining and protecting the business, including modernization programs and regulatory enhancements with a smaller portion allocated to growth initiatives such as information services and the bond CCP development. We came in slightly below the guidance range of ZAR 150 million to ZAR 170 million due to savings in infrastructure spend owing to negotiations and the BDA phasing. For 2026, CapEx guidance increases to reflect delivery phasing on the BDA modernization and the work program across our core initiatives. We expect CapEx to be in the range of ZAR 190 million to ZAR 230 million. Let's now look at our cash position as at the end of December. Over the period, cash generated from operations amounted to ZAR 1.2 billion, and the cash and bonds balance as of 31 December 2025 amounted to ZAR 3.2 billion. This reflects a strong liquidity position, meaning that we do not need additional credit lines or external financing, and it speaks to the quality and reliability of our earnings while supporting consistent shareholder returns. Our healthy cash and bond balance highlights the resilience of the balance sheet and the fact that we have maintained a disciplined capital allocation through targeted investment in technology and infrastructure. This is the breakdown of our cash and bonds balance as at the end of December. Our ZAR 3.2 billion in cash and bonds comprises ZAR 1.25 billion allocated to investor protection and regulatory capital, about ZAR 500 million for CapEx and other expenses and ZAR 920 million for shareholder returns. We aim to keep around ZAR 480 million as a strategic reserve, which includes potential M&A and a share repurchase program in 2026. Let me briefly reemphasize how we are thinking about M&A. Our approach is deliberately strategic and centered on bolt-on opportunities that complement what we already do well. We prioritize transactions that strengthen our core franchise and extend our value proposition with a clear aim to broaden revenue sources, maximize synergies and capture growth in adjacent markets and services. When we assess potential deals, we apply a disciplined framework. We look closely at the expected return relative to our hurdle rates, the stand-alone growth prospects of the target and the degree of alignment with our long-term strategy. Delivering tangible synergies is a key requirement to ensure any transaction has real financial value. Moving on to dividends. In 2025, we announced an ordinary dividend of ZAR 9.61 per share, up 16% year-on-year and a special dividend of ZAR 1.00 per share, which brings the total dividend to ZAR 10.61 in financial year 2025, reflecting an increase of 28.1% year-on-year. This has been an exceptional year given the market conditions and the JSE has benefited from the resulting impact on ADV and revenue. Accordingly, the Board has declared a special dividend given the excess cash on hand. This translates into an ordinary payout ratio of 78% and a total payout ratio of 86% -- we maintain our commitment to our dividend policy of a payout ratio between 67% to 100%. And this policy enables us to have a flexible approach to balancing the cash between the shareholder returns and the investments in the business. The group is considering a share repurchase program when market conditions permit and factoring in strategic investments and capital allocation priorities. The final size, terms and timing of any such program will be contingent upon Board approval. Any share repurchases will be disclosed as required. Now let's move to the guidance for full year 2026. From an operating expense perspective, we continue to guide to cost growth in the 5% to 7% range. This will be dependent on trade-related cost, but the underlying cost mix is expected to remain broadly consistent with investment directed toward our people, technology and key growth initiatives. On CapEx, we expect it to be in the range of ZAR 190 million to ZAR 230 million, reflecting a continued prioritization and disciplined spend. And lastly, our approach to shareholders remains unchanged. We are maintaining our dividend policy, targeting a payout ratio of between 67% and 100%. So overall, our guidance reflects a balance between cost discipline, targeted investment for growth and consistent returns to shareholders. Looking ahead, we are on track to achieve our strategic priorities as we continue to protect the core and to grow. In capital markets, the focus is on broadening our product suite and enhancing the trading experience for clients. This includes further ETP functionality and enhancements to block trading services, all of which are progressing well. We are also working on preparations for the launch of a crypto ETF. Within JSE Investor Services, we are working to scale our client base and to deepen our service offering. In JSE Clear and Post Trade Services, progress continues on the bond CCP and the BDA modernization program, both tracking in line with plan. In Information Services, priorities include building scale on the data marketplace, increasing client uptake of new data products and services, rolling out the SENS replacement for issuers and transitioning GIBA to Zeronia. And from an infrastructure and technology perspective, our attention remains on modernizing core platforms, advancing our AI transformation agenda and progressing key initiatives such as the JSE Network Alliance, AWS Outpost and local zones. Taken together, these initiatives position us well to support future growth while continuing to strengthen the core of the business. And with that, I'll hand back over to Leila for the concluding remarks. Thank you. Leila Fourie: Thank you, Fawzia. To fully understand the position of our 2025 performance, it's important to place it in the context of our multiyear transformation under Vision 2026. When I joined the JSE in 2019, we launched Vision 2026 with clear objectives: protect the core franchise, improve quality and resilience of earnings and modernize the business so that the JSE stays relevant and competitive in an increasingly complex and globalized market environment. The delivery of Vision 2026 has unfolded in 3 connected phases. The first phase focused on fortifying foundations of the exchange. We reset the strategy and operating model around clear pillars of delivery and discipline. we strengthened the operational resilience because trust in the market infrastructure is nonnegotiable for an exchange. And we took deliberate steps to rebalance our earnings base, including the JIS acquisition and to increase -- this was really to increase the annuity style components of the model. The second phase centered on capability expansion. We advanced our data and digital agenda. We expanded connectivity and infrastructure services, and we continue to evolve the product set across markets, including sustainability-related initiatives and reforms that support capital formation. For the third and recent phase, focus has been on converting transformation into measurable operational and financial outcomes. That includes continuing to raise the bar on resilience and service delivery while progressing large-scale infrastructure programs such as the BDA modernization, which is the foundation for the next generation of post-trade capability in South Africa. Taken together, Vision 2026 has fundamentally strengthened the JSE as a franchise and an institution. The exchange is today more resilient operationally more robust and strategically clearer about where it can create long-term value within South Africa's capital markets ecosystem. Shifting now to Slide 28. The financial performance of the JSE since 2019 reflects the deliberate execution of Vision 2026 and the transformation of the exchanges operating model. Operating income has increased to ZAR 3.5 billion in 2025, up 56% versus 2029, reflecting more diversified and resilient earnings model. The quality and durability of earnings have improved nontrading income increased from around 29% to around 35% of operating income, reducing reliance on pure trading volumes. The group's operating profile also improved, moving from negative operating leverage in 2019 to positive operating leverage of 5.9% in 2025. Profitability has increased accordingly with NPAT now just over ZAR 1.07 billion and ROE at 22%, and shareholders have participated in that progress with HEPS up from ZAR 8.14 to around ZAR 13.29 and the total dividend increasing from ZAR 730 million to around ZAR 916 million. Together, these financial results reflect the successful transition of the JSE to a more diversified, more resilient and higher quality earnings model that really positions the exchange effectively for future growth. And then on my final slide, Slide 29, I just want to share a little bit about the JSE entering 2026 from a position of genuine strength and strategic clarity. Today, the exchange operates within a diversified and resilient earnings model, world-class operational reliability and modernizing market infrastructure, which is designed to support the next phase of growth in South Africa's capital markets. Market participation is deepening. Client engagement is entrenching and the investments made under Vision 2026 are now translating into sustained operational and financial performance. The JSE remains well positioned to support capital formation and long-term economic growth. This is my final set of financial results as a CEO. And I would just like to say it's been an immense privilege to lead this organization through one of the most tumultuous and transformative periods in history. Since 2019, we've worked to reinforce the JSE's foundations, modernize its infrastructure and expand its capabilities and improve the quality and resilience of earnings. Importantly, this transition of leadership takes place at a position and a moment of momentum and continuity. I've got great confidence in Valdene Reddy as she assumes the role of Group CEO. Valdene, as many of you know, brings deep market experience and institutional knowledge, and she too has been central to the transformation that we've delivered under Vision 2026. The JSE has long reflected South Africa's economic journey. Today, it stands stronger in its ability not only to mirror the confidence of the economy, but to convert that confidence into capital investment and growth. Thank you very much for your time. We will now open for questions. Thanks. Should we start Romy, with anyone in the room? And we've got a couple of roving mics. Anything from anyone in the room? I know we've got a couple of questions online, I think, queuing up. We've got 2 questions, I believe. Romy, can we hand the mic to you? Romy Foltan: Sure. We've got a question from Catherine Bloesch. She said, what are the proactive cost management measures you mentioned in the introduction? And what initiatives are in place to drive efficiencies in the business? And her second question is, can you tell us a bit more about the AI transformation agenda you mentioned? Leila Fourie: Great. Do you want to take the costs? I'll take AI. Fawzia Suliman: Sure. So from a cost perspective and a cost discipline perspective, we've done a lot of work in terms of embedding this culture of cost discipline in the organization. And that includes improving the transparency of the cost throughout the organization. We also have a lot more proactive monitoring of cost, challenging of cost, and that includes controllable cost as well as new headcounts and really any additional costs that we bring into the business. We've also implemented zero-based budget, and I think that has also improved our thinking and the level of scrutiny that we put on cost. And then lastly, what we're also doing is we're managing our book of work and our CapEx spend with a lens of what the impact is going to be on depreciation in the business. And as we implement new projects depending on the delivery methodology, that sometimes has an impact on our technology costs. So there's a real level of transparency, I think, an acknowledgment throughout the business of the need to manage the cost, and we start to see that bear fruit. Romy Foltan: Leila, we have a second AI question along the similar veins from Mark Horrist, which you can probably answer with the initial question. The second one is where exactly do you plan to start embedding AI in 2026, operations, risk management or products? And what early wins are you targeting? Leila Fourie: Okay. Wonderful. Thank you, Catherine, and thank you, Mark. AI is a very important component in our current strategy and into the future. And we have commenced a number of targeted investments in AI capabilities to enhance operational efficiency and support long-term digital competitiveness. Now the first and most obvious area is the use of AI in the transformation of the BDA initiative. Russell will remember in the early 2000s the tremendous amount of work that went into the transformation of the BDA project. The ASX has been through a very difficult period over the last 3 to 5 years where they had to impair a project similar to the BDA project. And what we are doing in the AI project is to -- in the BDA transformation project is to use artificial intelligence to rewrite the code from COBOL into a more modernized language, which is Java. That project has -- I would estimate having worked deeply in the post-trade area in my history, that project would normally take 5 to 6 years to deliver and probably approximately twice what it is costing us now. We are about to deliver the final batch of code, which is, as I said earlier, 5 million lines of code, and that's been done within just over a year. In addition to the actual writing of the code, we are also using artificial intelligence to test our code with our vendor called Trianz. And that mass modernization testing will begin at the end of February. Many of the large institutions with big mainframe systems are looking with interest at the project. It's worked out very well so far. We have -- we delivered the pilot ahead of schedule, and we are on track on all of our other milestones. And looking forward, the JSE's infrastructure and the services that we provide are very infrastructure and technology heavy to the extent that we're able to continue leveraging AI in our other areas of transformation it will most definitely reduce -- have the potential to reduce costing relating to the number of coders that we have and also the number of testers. We are taking a very comprehensive approach, and I have no doubt that Valdene in her Vision 2031 will give you a lot more detail because we're at the beginning of this journey now. We've got detailed policy frameworks, and we've created an AI center of excellence, which is really focusing on the acceleration of the adoption of AI. We've also established an organization-wide productivity pilot, and that's under the leadership of Alicia, who's sitting in the front here to identify impactful use cases where we can build organizational expertise. And then the question from Mark was really around where are we going to use products, et cetera. there is a wide potential. At this point in time, we have initiated a proof of concept to automate listings requirements, processes where we are leveraging AI tools to automate the end-to-end process for issuer regulation, including the automated compliance analysis of listed company annual reports against compliance of listings requirements, which is a very exciting world. I have no doubt that there is possibility for this to expand into market regulation, insurance area and into a number of the other areas. I think we're also running a productivity pilot with Amazon Q Developer and GitHub Copilot. And that's supporting the accelerated software development and testing workflows. So as you can imagine, the largest or some of the largest costs in our projects that we execute on. And as far back as I can remember, the JSE has always been busy with a large-scale multiyear project. And these tools introduce the opportunity to rightsize and reduce and make those projects much more efficient, and it's really through agent AI capability. Of course, looking further ahead, there is potential to build AI into new products such as in Mark's area, the market data space, contextual AI, which market participants could use with JSE as the golden source. So we are very excited about the possibilities that AI holds, but it's a very nascent and early part of the journey, although less so with the BDA project. Romy Foltan: Leila I have 2 more questions on the chat if no one has in the audience. Leila Fourie: Anyone in the audience? Romy Foltan: Okay. We have a question from Adam. Leila Fourie: We'll take one in the front. Sorry about that -- if we can just ask you to state your name and where you're from and then your question. Mike Brown: Mike Brown from ETFSA. Just looking at the vision for the JSE, have you got any comments on gradually moving the JSE or graduating one way or another to a dollar-based -- U.S. dollar-based market. Significant amount of the trading that's taking place by local asset managers into global assets, being able to do that on the JSE would help as well as, of course, attracting international investors. If you got any comments on that? Leila Fourie: Yes, Mike, and thank you for asking that question. It was a topic that I didn't really cover. As some market participants may be aware, I chair and we convened an SA competitiveness committee with some of the top CEOs in the country. We've got Jannie Durand and Johann Holtzhausen, Michael Katz, Daniel Mminele, a number of very important influential participants on that group, and it's called Project Phumelela. And we, as a private sector have been working with -- under National Treasury's leadership to encourage and open up opportunities to bring dollar-based listing, collateral and various other initiatives into our country. We are very delighted and we strongly endorse and support the announcements made in the budget speech by Enoch Godongwana, where he is -- the National Treasury will be introducing the enabling regulatory. I'm going to call it infrastructure. It's called a synthetic financial center. Now what this does is it enables -- it's an enabling -- it will be an enabling policy or legislation that will enable the capital formation, trading, settling, collateral posting in hard currency. The first step is to set up this infrastructure. And the second -- the immediate first step after that infrastructure or alongside that infrastructure establishment is the enabling of our buy side, which we're very excited about for them to manage dollar-based or hard currency-based funds onshore. Currently, legislation prohibits that. Any dollar-based funds have to have a domicile outside of South Africa, which really compromises some of our buy-side participants. And so Project Phumelela and Valdene will no doubt take over from me as I step down. We have been lobbying and working very hard with the policymakers to try and encourage this -- we are hopeful that in the future, in the not-too-distant future, and I am engaging constantly at the most senior levels and all the way down into the more technical components of National Treasury to encourage this. Just to give you a sense of the scale, I think, and Russell will remember, we introduced the ability of the buy side to invest in dual currency or dual listed counters, which didn't count towards their foreign allowance. That completely transformed the market. That I think Russell was around -- I worked on that project with Srivan around 2004. It was a transformational policy. This will probably be the most transformational policy of the last 20 years. Just to give you a sense of the numbers, we -- research estimates that around ZAR 10 trillion worth of assets held by South Africans are invested offshore. Now if we, at this point in time, can start to attract those assets back into South Africa, it's job creating, buy side, sell side, clearing agents, custodians, all of those participants in the value chain will be able to participate in that flow. We are very excited and we are hopeful that the -- what is initially positioned by the National Treasury and the Minister of Finance as the synthetic financial center will very definitely take us forward. We were dropped from the position # 92 to 94 on the world competitiveness rating. That is behind Kigali, behind Mauritius and we need to do more as a country to attract and repatriate funds back into the country and also to repatriate other investors investing in South Africa. The National Treasury right now, if they issue dollar-based bonds, they go to Luxembourg and list on that exchange. We are very excited about the potential into the future of them listing those dollar bonds on the JSE and enabling flow through our local environment. So we welcome what National Treasury is doing, and it's an open-minded and important step in growing and internationalizing our economy. Romy Foltan: We have 2 questions from Admire Mulvani. He said, can you comment on the competition tribunal -- and is the group going to provision for a potential fine? And then the last question he has here is what is the listings pipeline looking like in 2026? Leila Fourie: Great. Who said that? Was it Admire? Romy Foltan: Admire, both questions. Fawzia Suliman: Thanks for those questions. So I'll take the question just on the Competition Commission and also whether or not we're provisioning for it. So the JSE confirms that it has filed its answering affidavit with the Competition Tribunal in response to the Comp Com's complaint referral arising from A2X's complaint against the JSE. The JSE categorically denies the commission's allegations that it has contravened Section 8C of the Previous Competition Act and Section 8(1)(c) of the Current Competition Act. So the JSE believes that the merits of the case is poor, and this is obviously on the advice of our legal counsel as well. In terms of whether or not we're provisioning, the requirements to raise the contingent liability is dependent on 2 things. And the first is the probability of the outcome of this referral. And then the second is the ability to quantify. Now you've asked the question in terms of which revenue lines we would apply this to. That is completely unclear. So the maximum is 10% and what we've seen from what's been levied before that hasn't happened. There's no clarity in terms of which line items it would be applied to. So it's impossible to quantify it at this stage. And given the low probability, our view in terms of the low probability of success, there is no requirement for us to raise a contingent liability. We've obviously discussed this both at Board level as well as our external auditors, and we haven't raised any provision. We don't believe there's a requirement. Leila Fourie: Thanks, Fawzia. Now coming to the question, Admire on listings. Last year, we saw a couple of notable listings, particularly Boxer and Optasia, both of which were signaling points that market conditions have changed. Listings are very much a function of market confidence and timing. And Optasia was the first fintech which was the largest in the EMEA region over, I think it was the last 5 years, and they chose to list on the JSE rather than on the LSE or the NYSE. And that is a very powerful vote of confidence. Boxer was equally well subscribed and very financially successful in their listing and in the re-rating of Pick n Pay. This year and looking forward to the year ahead of this year, we're very excited about Coca-Cola Hellenic Bottling, which will be the largest bottling company in the world looking to list here. Fidelity Security AME, which is a secondary inward listing. And then, of course, in the more medium term, companies like African Bank, TymeBank and Virgin Active are possibilities. And then, of course, Canal+, which we all know closed in their takeout towards the end of last year, and that would be a second listing. Graham, is this our time is up signal? I think the market is overheating. Romy, anything else? Romy Foltan: We have one final question. It's from Chris Logan. He said well done on the results and particularly to Leila for going out on a high. Lots of welcome talk about competitiveness. Any initiatives to get MST scrapped which penalizes smaller and sophisticated investors and not payable in the likes of NASDAQ? Leila Fourie: We are working with market participants and regulators on a number of initiatives like this. But at this stage, I don't think we've got anything -- any meaningful updates. And thank you, Chris, for your comments. We've thoroughly enjoyed working with you and appreciate your sentiment. Russell? Russell Loubser: Outstanding presentation. Well done, guys. Really -- fantastic to see. referred to a forthcoming. Can you shed any light on that? While I agree with that, your position on the provisioning with the Competition Tribunal, that's nonsense. Leila Fourie: Forthcoming in terms of what's forthcoming with me? Russell Loubser: For you. Leila Fourie: Oh, with me. Sorry, that sounded. Well, I -- firstly, perhaps -- and I think there are no -- are there any more questions? If there are none, I'll close with this. Perhaps if I can just say an incredibly warm thanks and sense of appreciation to all market participants, our shareholders, our regulators, our policymakers and importantly, our traders and back office teams. Without you, we have no market. It's been an immense, immense privilege for me, and I've thoroughly enjoyed every minute. So Russell is asking now what next. I am not -- although I'm stepping down, I won't be completely stepping away. I still intend to sit on a couple of boards, and I will contribute to academia. I have a role at the Global Henley Board, and I will continue in more academic pursuits. And some of you may know that I spend my weekends rock climbing, and I'm probably going to swap solids for liquids, looking to spend a lot more time sailing on the water, but also still very much connected to the country of my birth and then, of course, a couple of global roles. I will be supporting Valdene and Fawzia from the sidelines and watching with great joy as they build on this foundation and continue to take the JSE to even greater heights. So thank you. Thank you, Russell. Thank you very much, and please help yourselves to refreshments outside.
Operator: Good morning, everyone, and thank you for standing by. Welcome to Pet Valu's Fourth Quarter 2025 Earnings Conference Call. My name is Harry, and I'll be coordinating today's call. [Operator Instructions] I would now like to turn the call over to James Allison, Investor Relations at Pet Valu. Please go ahead, Mr. Allison. James Allison: Good morning, and thank you for joining Pet Valu's call to discuss our fourth quarter 2025 results, which were released earlier this morning and can be found on our website at investors.petvalu.com. With me on the call is Greg Ramier, Chief Executive Officer; and Linda Drysdale, Chief Financial Officer. Before we begin, I would like to remind you that management may make forward-looking statements, which includes guidance and underlying assumptions. Forward-looking statements are based on expectations that involve risks and uncertainties, which could cause actual results to differ materially from those expressed today. For a broader description of risks related to the business, please see our Q4 2025 MD&A, 2025 annual information form and other filings available on SEDAR+. Today's remarks will also be accompanied by an earnings presentation, which can be viewed through our live webcast and is also available on our website. Now I would like to turn the call over to Greg. Greg Ramier: Thank you, James, and good morning, everyone. I'll start by reviewing some of our key highlights from Q4 and 2025 before handing it over to Linda to discuss our financials and outlook for 2026. 2025 marked another dynamic year in Canadian Pet as macroeconomic uncertainties drove an environment, where devoted pet lovers required higher quality and lean more heavily into value. I'm proud of the decisive actions we took to meet this immediate need, providing the highest quality products and everyday value, especially through our proprietary brands. We also continue to invest in our future by strengthening our omnichannel offering through new stores and online delivery platform options, differentiating on quality with exciting new product introductions, enhancing our expertise with investments in culinary, all the while supporting the success and profitability of our franchisees. This comprehensive strategy is helping us grow share by staying focused on winning the monthly shop while we reinvest in our assets so that we and our franchisees can continue to capture profitable growth over the long term. Together with diligent cost control, we were able to adapt well to 2025 dynamics and deliver full year revenue and adjusted EBITDA within our original guidance ranges, while generating compelling free cash flow to fund record returns to shareholders of over $120 million in buybacks and dividends. Looking specifically at the fourth quarter, we saw heightened levels of consumer value-seeking behavior and specific competitor responses chasing value-driven sales. This, alongside with our everyday value and promotional plan weighed on our same-store sales growth. While the end result didn't achieve the bar we had set for ourselves, what this figure doesn't show are the encouraging underlying factors that tell us we've got the right strategy to win in this environment. First, we once again grew share with more devoted pet lovers choosing Pet Valu, especially for their monthly shops. Second, we saw momentum in our units per transaction or UPT reaching a multiyear high, a direct result of our focus on compelling targeted promotions and in-store execution. Third, our consumable sales were once again led by our proprietary brands, driving deeper customer loyalty. And fourth, our supply chain investments continue to yield savings, which together with good cost control, helped partially offset margin pressures and safeguard profitability. These trends show we are responsibly balancing near-term investments to maintain monthly food shops with our most loyal customers while leveraging promotions to add to the basket to drive UPT and get volume leverage through our world-class supply chain. We are strengthening the foundation from which our momentum will build as confidence and spending conviction improve within Canadian Pet over time. Let me share a few of our operational highlights from the quarter and year, which help support our continued resilience in making Pet Valu one of the strongest pockets of growth within Canadian Pet. Further increasing our competitive advantage as Canada's local and everywhere pet specialty retailer, we and our franchisees opened 14 new stores in the quarter, hitting our target of 40 stores in 2025. With 863 sites coast-to-coast, we have almost 4x as many locations as our nearest pet specialty peer, bringing us closer to our customers every day. We resold 8 corporate stores to franchisees in the quarter, showcasing ongoing strong interest in capacity from new and existing franchisees who form a core element of our continuing success. With over 2,200 inquiries last year, our teams are cultivating a robust pipeline of qualified applicants to whom we can sell stores to in the future. And in 2026, we will keep building on this strength by opening approximately 40 new stores across Canada, leveraging our strong balance sheet and deep real estate industry connections to find profitable new growth opportunities while other pet retailers may be retrenching. Momentum in our digital channel continued as we elevate and leverage our capabilities. In the wake of the success we saw in our limited time AutoShip offers for the fall, we thrilled customers with 20% off Click & Collect orders in December, driving a strong response and new customer acquisition. This offer really leaned into our strengths, providing us with a competitive edge online while driving traffic into our already convenience stores. We also successfully onboarded DoorDash and Uber Eats mid-quarter, expanding the reach of our ecosystem. Our third-party market share tracking shows that our online growth continues to outpace the channel, highlighting how our omnichannel model is meeting customers where and when they choose to buy in-store or online. We also advanced our focus to provide the best pet customer experience in Canada. With value at the forefront of consumers' minds, we delivered, leading with our proprietary brands. Following actions taken in the spring in our Performatrin Prime portfolio, we made targeted investments in Q4 across select SKUs in our Performatrin Ultra and Naturals brands to create compelling entry points for customers looking for high-quality alternatives at lower prices. By strengthening our proprietary brand portfolio, we are creating deeper customer loyalty, furthering our advantages in winning the monthly shop. Altogether, we are pleased with the performance in our proprietary brands, which increased roughly 200 basis points in unit penetration in 2025 with more progress to come in 2026. On the promotional front, we executed an exciting agenda with weekly deals, a stronger year-end Seniors' Day offer and the 20% off Click & Collect event mentioned earlier, all of which were supported by our 360-degree activation that helped keep us top of mind during the promotional holiday season. Loyalty sales penetration reached another all-time high of 88% in 2025 as our over 3 million active members responded to our expanded portfolio of brands eligible for our popular frequent buyer program. The data collected through our program provides a fantastic opportunity to deliver more personalized and meaningful value, and we're leaning into this more everyday testing breed-specific and cross-sell opportunities. And finally, we completed our initial rollout of our enhanced culinary experience in the quarter, bringing us to 120 corporate stores, along with an initial group of 13 franchise stores in 2025. Culinary continues to be one of our fastest-growing segments, and these stores are outperforming the company average in both culinary-specific and total sales. We are now beginning this rollout with our franchise network with roughly 40 projects planned in 2026. Turning to how we fortify strong wholesale and retail fundamentals. With the completion of our distribution network transformation, our supply chain teams have now fully shifted from implementation to optimization mode, focused on extracting further benefits from our investments. We continue to grow our wholesale penetration across our franchise network, in particular with our Chico franchisees, which helped sustain revenue growth ahead of system-wide sales again in the quarter. We believe there is still plenty of opportunity here and expect the gap between revenue and system-wide sales growth seen in the latter half of 2025 to be more indicative of what's to come over the medium term. For me, a particular bright spot in the quarter was the leverage we achieved in distribution costs, fueled by productivity and efficiency improvements. These are the benefits we envisioned at the outset of our supply chain transformation and are proving especially powerful in today's environment, enabling us to compete profitably against peers without this tailwind. We have increased our throughput by more than 60% from our pre-transformation baseline on a per labor hour basis, helping drive down variable costs while adapting to changes in an uneven demand environment. Our supply chain team is now turning their attention to opportunities in labor and transportation management processes to be implemented over the coming quarters and years, supporting a long tail of further productivity opportunities ahead. And finally, late in the quarter, we commenced initial steps towards the implementation of our new finance system, which will support our growing and evolving business alongside other systems investments we've made over the last several years. Linda will touch on this shortly. As we begin a new year, 2026 marks an incredible milestone for us, our 50th anniversary. That's half a century serving devoted pet lovers, half a century building Canada's leading omnichannel offering in Canadian pet and half a century of memorable moments. While we celebrate our accomplishments from the last 50 years, we look forward with tremendous excitement and anticipation for what the next 50 have in store for us, and that all starts with our plans for this year. To recap some of the highlights that I have provided above, we will continue to invest in our convenience through approximately 40 new stores and empower our online capabilities to meet or exceed customer expectations through our ever-improving omnichannel tools. We will continue to deliver everyday value through our high-quality proprietary brand products and new programs like our item of the month, while thrilling customers with exciting events like our participation in Tim Hortons iconic Roll Up to Win contest. We will continue to bring greater quality through innovation in both consumables and hardlines, delivering the breadth of products our devoted pet lovers expect to see. We will continue to evolve our in-store model with a phased rollout of our enhanced culinary experience within our franchise network and enrich our expertise through continued investment in our animal care experts. And we will continue to drive increasing productivity and benefits from our supply chain investments as our teams move fully from build to optimize, not only in our distribution centers, but also through further labor and transportation management investments. This will all support what we expect to be an exciting year, contributing towards solid revenue and profit growth. Before I pass the call to Linda, I'd like to note the restructuring charges we took at the end of 2025. Just as our environment has evolved over the last several years, so have the capabilities, plans and needs of our business as we chart our next chapter of growth. Together with Linda and our executive team, we carefully reflected on this and believe these actions will reposition resources and talent to both win in today's competitive marketplace and drive profitable growth over the long term. We're grateful for the work contributed by those that departed, and we are equally excited by the team and capabilities we're putting in place as we move forward. And with that, I'll pass it over to Linda to review our financials and 2026 outlook. Linda? Linda Drysdale: Thank you, Greg. 2025 once again saw evolving macroeconomic factors keep consumer confidence and discretionary demand suppressed in the Canadian pet industry. Despite these market constraints, the flexibility of our business model, together with the actions Greg discussed, helped deliver resilient financial results, all while advancing strategic initiatives that build shareholder value over the long term. For the full year, we grew revenue over 5% on a 52-week comparable basis, maintained healthy adjusted EBITDA margins of 22% and returned a record $121 million in capital to shareholders through share buybacks and dividends. Turning to the fourth quarter. System-wide sales grew 9% to $424 million. Excluding the extra week this year, system-wide sales grew 2%, fueled by our network expansion as we opened 40 new stores over the last 12 months, bringing us to 863 sites to post by year-end. On a same-store basis, sales increased by 0.3%, driven by growth in average basket and in particular, UPT, which is a direct result from the impact of our targeted promotions and strong execution of our in-store ACEs. While we continue to drive growth in needs-based consumables, the pace eased on a dollar basis in the quarter in response to intentional actions taken throughout 2025 to provide everyday value to devoted pet lovers and drive unit growth as well as higher promotion intensity than last year. Performance in hardlines remained relatively consistent with recent trends. Q4 revenue grew 11% to $326 million. Excluding the extra week this year, revenue increased 3%, once again slightly outpacing system-wide sales, fueled by continued growth in wholesale penetration. As we had indicated last call, the gap between revenue and system-wide sales growth was similar to that seen in Q3, and we believe this to be indicative of what to expect in the coming quarters. Gross profit margin, excluding nonrecurring costs related to the supply chain transformation, declined 90 basis points versus Q4 last year. We drove leverage in our distribution costs as a result of our recently completed supply chain transformation, but this was more than offset by actions we took to provide value to both devoted pet lovers and our franchisees. While this created noise in the quarter, we are confident they are the right actions to help position Pet Valu for long-term growth. One of the many ways we are supporting these investments is through responsible and controlled management of our SG&A expenses. Excluding share-based compensation and costs not indicative of business performance, our SG&A expenses were $54 million or 16.5% of revenue, similar to last year. Leverage in our recurring people costs and lower professional fees helped offset expected inflation in technology SaaS fees. Q4 adjusted EBITDA was $75 million, representing 23% of revenue, a sequential improvement from the third quarter and roughly similar to Q4 last year. Net income was $29 million, similar to last year. Excluding share-based compensation and items not indicative of business performance, adjusted net income was $34 million or $0.49 per diluted share compared to $32 million or $0.45 per diluted share last year. Now turning to our balance sheet and cash flow. We ended the year with $186 million of available liquidity, consisting of $36 million in cash and $150 million under our revolver. Factoring in our growth together with debt repaid in the quarter, our leverage now sits at 2.2x, down from 2.4x at the end of Q3. Fourth quarter net capital expenditures were $8 million as we rounded out our planned culinary renovations, reached our new store target and completed other maintenance projects. For the year, net CapEx was $39 million, slightly below guidance due to strong proceeds from corporate resales in the fourth quarter. This year marked a strong step towards more normalized net capital intensity now that we have completed our supply chain transformation. As I'll discuss shortly, we plan to make further progress in 2026, driven by prudent capital allocation decisions to generate shareholder returns. And finally, we generated $37 million in free cash flow in the fourth quarter, bringing us to over $104 million in 2025. We are pleased to once again deliver free cash flow conversion on a trailing 4-quarter basis of 40%, consistent with our framework. We returned $18 million to shareholders through share buybacks and dividends in the quarter. In 2025, we returned a record $121 million to shareholders, almost twice what we returned in 2024, which is a testament to our commitment to delivering value back into the hands of our shareholders. Now to our outlook for 2026. As we shared back in the fall, industry growth in Canadian pet is likely to remain constrained in the near term without a meaningful improvement to the macroeconomic backdrop. This is how conditions unfolded through Q4 and so far into early 2026 and remains our base case assumption for the year, an approach we believe is pragmatic. That said, the results we delivered in 2025 showed how our unmatched retail and wholesale assets, together with our deep customer data and investments in everyday value position Pet Valu as the best investable pocket of growth in Canadian pet. Within this context, our 2026 outlook is anchored in our continued leverage of these strengths today, while reinforcing our points of difference to create further opportunity over the long term. Please note that we will return to a 52-week fiscal calendar in 2026 compared to 53 weeks in fiscal 2025. On a 52-week comparable basis, we expect to deliver the following in fiscal 2026. Revenue growth of between 2% and 4%, supported by approximately 40 new store openings, flat to 2% same-store sales growth and slight increased wholesale penetration. Flat to slight expansion of our adjusted EBITDA margin, supported by leverage in SG&A and supply chain costs while maintaining our competitiveness and compelling value offering, and adjusted net income per diluted share growth in the mid- to high single digits as we move past the prior headwinds from the step-up in fixed DC costs. And finally, with respect to our capital allocation priorities for 2026, we expect to reinvest approximately $35 million into our business, consisting of approximately $20 million in net capital expenditures related to growth and maintenance capital in our physical assets and approximately $15 million in transformation costs expensed through our income statement. These transformation costs mainly relate to implementation of our new finance system, which we expect to complete in 2027. In aggregate, the $35 million we have earmarked for reinvestment in capital and transformation in 2026 represents a significant reduction from the heightened levels over the last 4 years as we move past the supply chain transformation. In turn, we expect this to help drive continued strong free cash flow conversion at or above 40%. We plan to once again return the bulk of our free cash flow to shareholders through a combination of dividends and share buybacks. We are pleased to announce our Board approved an 8% increase to our quarterly dividend to $0.13 per share, marking 5 consecutive years of dividend growth. At the same time, we've already taken action on buybacks under our recently renewed NCIB and plan to continue to do so throughout the year in a balanced way. Before handing the call back to Greg, I want to reiterate our conviction in the long-term resilience and growth potential of the Canadian pet industry. With half a century serving devoted pet lovers, we've learned how to adapt and succeed in slower growth periods like today while knowing these periods are finite as our industry has shown us time and again. Through prudent fiscal management and continued strategic investment, we've never been better positioned for when that time comes. With that, I'll turn it back to Greg for some closing remarks. Greg Ramier: Thanks, Linda. As we celebrate our 50th anniversary serving as a trusted partner and resource to millions of Canadian devoted pet lovers, I reflect back on what has made and continues to make Pet Valu so successful, our people. From our frontline ACEs and franchisees to our supply chain and field staff to our leaders in our corporate offices, each of us share a common desire, to help Canadians with the health and happiness of their pets. This forms the foundation for every decision and every investment we make. As we embark on the next 50 years building our growing legacy, we plan to remain true to that purpose. Thank you to all our people for all that you do. And with that, we'll be happy to take your questions. Operator: [Operator Instructions] Your first question today will be from the line of Irene Nattel with RBC Capital. Irene Nattel: I was wondering if we could just drill down into what's going on at the industry level. You say your share is up and yet you can all see that sort of the underlying performance is sort of -- we've got the headwinds in there. So what's happening to tonnage? What's happening in terms of channels? Are you losing share to other channels? And what's been the magnitude of price investment to date? And do you think you're where you need to be? Greg Ramier: Irene, it's Greg. I'll take that one. And let me start with a few consistent elements that we saw throughout 2025. Devoted pet lovers continue to seek both quality and value in purchasing for their pets in the quarter. We once again saw solid growth in our most premium food tiers, culinary and premium dry kibble. And this underscored the enduring appeal of specialty brands and formulations only found in the pet specialty channel. At the same time, we saw the pursuit for value continued with customers leaning into our events and promotions, leveraging our frequent buyer program and showing increased interest in our proprietary brands. That said, I'd point out a couple of nuances in the quarter, Irene. First, we did see the level of value-seeking behavior intensify. Consumers took more of their dollars and shifted them into periods of events and promotions. And I will say we had a very strong commercial program in the quarter, including the highlights I called out in my prepared remarks around the year-end Seniors Day and the 20% off Click & Collect offer. But this was also amplified by a general uptick in promotional intensity across the industry, particularly from some of our pet specialty peers. And second, throughout 2025, you saw us sharpen our everyday value positioning in consumables, particularly with our proprietary brands. Devoted pet lovers are taking note. It's been central to our share gains, but it also applied increased pressure on our same-store sales growth on a year-over-year basis. And this all said, I want to reiterate some of the encouraging underlying trends we're seeing in the business that set us up well for 2026 and beyond. First, we continue to gain share, primarily from pet specialty peers as we win the monthly shop through a compelling consumables offering and value. Second, our customers are adding more items to their basket, a direct result of our commercial strategy and in-store execution. And third, we're seeing our proprietary brands lead our growth in consumables, which drives better stickiness as these products are only available through us. Irene Nattel: And Greg, just as a follow-up, do you think -- with the investments that you made in pricing in 2025, do you think you're where you need to be? Or should we be expecting more investments in pricing in 2026? Greg Ramier: Irene, we're very happy with where we are from a value and pricing perspective, led with our brands, but also just value and pricing on key national brands. And you'll remember that started with our Performatrin Prime investments at the end of March and then a number of other investments, especially in key national brands through the summer. So very happy with how we show up to the customer and that we're able to meet them where they want us to be right now. Operator: The next question will be from the line of Martin Landry with Stifel. Martin Landry: I would like to dig a little bit more into the assumptions underlying your guidance for same-store sales for '26 of flat to 2% growth. I mean, that is lower than most of the inflation forecast that people have for '26. So further to Irene's question, is the category expected to be deflationary this year? Are you expected to reinvest in pricing? What's the breakdown between traffic and basket for that flat to 2% same-store sales growth? Greg Ramier: Martin, it's Greg. I'll -- let me provide a few high-level comments on 2026, and then I'll pass it over to Linda to go a bit deeper around some of the underlying elements. So when we think of the construct of the market heading into 2026, we're essentially expecting a similar environment to what we expected in 2025, which has proven to be the case year-to-date. Quality and value remain top of mind for devoted pet lovers. And given the persistent inflation in other areas of the household budget and ongoing uncertainty around economic growth and trade negotiations, we're expecting industry growth to remain tepid and the marketplace to remain competitive. In this context, we're entering the year with a strong understanding of what it takes to win in this environment and a solid track record from 2025 to back that up. We've got a strong set of plans and initiatives to support our continued growth. both in transactions and basket while delivering the benefits from our prior investments to deliver solid earnings. Maybe with that, I'll turn it over to Linda to talk about some of the deeper look at the assumptions. Linda Drysdale: Yes. I would just add that when you look at our top line same-store sales and revenue growth guidance, really similar to what we delivered in 2025 on a 52-week comparable basis, built on the expectations that Greg just described. And depending on several factors, including the level of growth, we expect flat to slight expansion in adjusted EBITDA margin, supported by SG&A leverage and supply chain savings. Once you consider the leverage on depreciation and interest expense, now that we've moved past the step-up in fixed DC costs, all that points to solid earnings growth. And I'll just have to finish by saying that with a normalized reinvestment level, we expect our free cash flow conversion to once again meet or exceed 40%, the bulk of which we intend to return to shareholders through buybacks and dividends. Martin Landry: Okay. And then just a follow-up maybe on the EPS growth of mid- to high single digits. Linda, what does that assume in terms of share buybacks? Linda Drysdale: What I would say there is just we intend to, as I said in my prepared remarks, would return a significant portion of our free cash flow to shareholders through share buybacks as well as dividends. Operator: The next question today will be from the line of Michael Van Aelst with TD Cowen. Michael Van Aelst: I just want to go back to your Q3 conference call when at the time you were expecting same-store sales growth to be similar in Q4 than it was in Q3 and Q3 was 2.3%. So let's call it, maybe 2% that you were maybe 1/3 of the way through the quarter at that time, maybe a bit more. So can you talk about the cadence of the same-store sales growth as you went through the quarter? So how it progressed and what changed to make you fall short of that expectation over the final 11 -- or sorry, 8 weeks? Greg Ramier: Thanks, Michael. It's Greg. In the quarter, we saw a few things. The -- if you think of Q4, there are a number of weeks and it builds through the end where both discretionary purchases and the -- and where consumers will be looking for value intensify. We saw both consumers being more value focused, both in picking promotions and then deciding to spend on discretionary through the latter half of the quarter. We also saw competition, especially in pet specialty, increase their efforts around promotions in the back half of the quarter. That was really how the quarter flowed. Michael Van Aelst: So were you running at 2% to start the quarter and then it fell off or you're expecting a stronger finish to the year? Greg Ramier: I'm not going to give you that -- the first part of that from a results perspective, Michael. But we did slow at the end of the year to land at 0.3% same-store sales growth. Still very happy with the units per transaction that we saw, which showed that the traffic that came through the door, we were very good at being able to build a basket around and we are happy with our market share growth through the quarter. It was a relatively tepid quarter for the whole industry. Michael Van Aelst: Okay. Because I mean, if you were anywhere close to 2% in the first 5 weeks, then you would have been probably slightly negative to finish. So I'm not quite -- I'm just trying to figure out whether that -- whether you're starting off the year below like with negative same-store sales trends and having to work back into the 0% to 2%. Greg Ramier: Michael, the way to think about Q1 so far is we're seeing a very similar environment with very similar results to what we saw in Q4. Operator: The next question today will be from the line of Mark Petrie with CIBC. Mark Petrie: I wanted to ask about the CapEx. And can you give us a gross number and then the implied refranchising activity that you have built into your guidance? Linda Drysdale: Sorry, Michael, I just -- Mark, sorry, I just want to understand the question in terms of the CapEx. Mark Petrie: Yes. Linda Drysdale: Well, $20 million of net CapEx was what's in the guidance. And we -- as I shared in my prepared remarks, I just want to highlight that we are looking at that, and we think it's appropriate to look at that, including transformation costs as well as net CapEx together. So we expect to invest approximately $35 million into the business, consisting of $15 million in transformation costs, $20 million in CapEx. And so that $35 million is down significantly from the last several years following, as you know, the completion of our supply chain transformation. And so I just want to call it longer term, while there are some shifts between CapEx and transformation costs year-to-year, we believe the aggregate level of reinvestment this year is a good starting point for how to think about that over the next few years. And I'm going to pass it over to Greg to talk a bit more about the stores. Greg Ramier: Thanks, Mark. Thanks, Linda. So Mark, from stores and a refranchising perspective, we had a very active resale program in Q4, and we had a relatively similar year-on-year resale program in 2025. You should expect something similar in 2026. For us, it's important to keep our franchise network in and around that 70% range. So you should see both a level of new store openings at 40 and that level of franchise penetration with an active resale helping support it through the year. Mark Petrie: Okay. So the franchise -- I guess that was my follow-up. So the right way to think about corporate store or franchise penetration is the percentage, not the absolute number of stores. And we should expect new openings to continue to skew to corporate with some refranchising activity. Is that fair? Greg Ramier: That's correct. Let me reiterate something as part of that question, though, please. So as you know, with our new stores, we have a best site first strategy, and we have the flexibility to lean into either corporate or franchise networks based on the location and making sure that we get the right real estate. What we've done in the last year and what I'd expect this year is we lean a little more heavily into corporate stores because of where we're looking to open. There still will be a mix between corporate and franchise in our openings. And we'll have a strong resale program like you saw in Q4 in order to make sure that we maintain that healthy balance. Ultimately, our franchise network will continue to be a critical part of our growth, both in new and resold. And we're happy with where we are right now on that. Operator: The next question will be from the line of Vishal Shreedhar with National Bank of Canada. Vishal Shreedhar: Just a clarification. Management for the guidance for 2026, you say we should look at it on a 52-week basis when we look at 2026 relative to '25. And you gave us the 2% adjusted figure, so we can multiply the lines by 0.98. But then you say EBITDA margin should be similar year-over-year. But is there any 52 week adjustment that we should apply to the EBITDA margin? Linda Drysdale: No. Greg Ramier: Not on the margin rates, Vishal. Vishal Shreedhar: Okay. With respect to the transaction, the modest transaction pressure that you saw in the quarter, given that the pricing initiatives that Pet has been taking, should we anticipate the results of the pricing initiatives to have benefited in Q4? Or do you anticipate transactions to improve through the year? And yes, I'll pause there. Greg Ramier: Thanks, Vishal. So we believe the transaction trends we saw in the quarter tie back to the promotional environment. And it was really key for us to win the right type of trips in this environment, so the monthly consumables focused trips, which are central to our DPL's habits and provide the best lifetime value. Our loyalty penetration hit another all-time high in the quarter of -- or sorry, in the year-end in the quarter of 88% and we have excellent visibility to this, and we're continuing to grow monthly shoppers. So we are happy with the types of shops that we won in Q4. What we did see from a basket and inflation perspective is, on one hand, you heard me call out the strong trends in -- that we're seeing in units per transaction, which is hitting multiyear highs, and that's a direct outcome, as Linda said, of the sharpened promotional plan around the basket and great in-store execution and draw attention to it. On the other hand, we saw deflation at a level similar to industry tied to our everyday value actions that we've taken through different segments of last year in our consumables portfolio, together with a higher promotional intensity in the quarter. We do expect to grow both transactions and basket through 2026. And you'll see us doing that leaning into the value investments we've already made using our proprietary brands and getting the most out of our promotional plans and loyalty program. Operator: [Operator Instructions] And the next question today will be from the line of Chris Li with Desjardins. Christopher Li: Maybe just first, a clarification question on market share. So based on your AIF, it shows that Pet's share continues to remain stable at around 18%. You said you're gaining share. Is the difference because the mass market is perhaps growing faster than specialty and therefore, on a total basis, your market share remains stable? Greg Ramier: Thanks for the question, Chris. So we did see share gains. It still rounds to the same number without basis points. We were happy with the share gains we saw both in the year and in the quarter, though. And we're really seeing us win that with the monthly consumables-based shop from pet specialty retailers. Certain other online retailers also gained share. And we -- in our view and our reporting, we showed that coming from the mass retail or mass channel. Christopher Li: Got it. Okay. That's helpful. And that was my follow-up. In the same chart, it shows Amazon gaining share. And I was wondering if you can elaborate a little bit on sort of what you're seeing on e-commerce. Obviously, you have a strong omnichannel platform. It seems to be performing better than what you're expecting. But just overall, just from an e-commerce shift perspective, is that something that for this year or in the coming years, you want to fortify so you're capturing your fair share of that market? Greg Ramier: Thanks for the question, Chris. So we were very pleased with what we're seeing in our digital channel and then really excited about what it will do for this year. Our online sales continue to outpace our company average. We continue to gain share in the digital channel, growing at or above what the digital channel is growing. And really, what's even more important is the role these capabilities and the capabilities we've built play in our omnichannel offering. As we've shared in the past, that customer visits our store and websites 5x more than an online-only customer and spends 4x more. So not only are they more engaged, but they're the most valuable, least price-sensitive segment in our customer base. We were happy with how our auto ship offers helped win subscriptions in the quarter, and you're seeing us continue to do that through this year. We are also happy with the start-up of two more delivery platforms -- and that just -- all three of them now provide a nice way for our customers to be able to find us, and they're a good growth engine for us that you'll see through all of this year. Operator: The next question will be from the line of Adrienne Yih, Barclays. Michael Vu: This is Michael Vu on for Adrienne Yih. First, I know you've emphasized growth in your proprietary brands as a sales driver. Would you be able to remind us of the percentage of sales from your proprietary labels now? I know you mentioned it grew 200 basis points in 2025. And then secondly, how those offerings impacted your margins? Greg Ramier: Thanks, Michael. It's Greg. So again, very happy with the growth in our proprietary brands, especially in consumables. The way to think about it is it's 1/4 of our sales to 25%. It is outpacing our unit and customer growth versus the rest of the store. And there is an approximately on average 1,200 basis points benefit in margin. Think of it as lower price for the consumer, better cost for us, therefore, equals better margin that we share jointly with us and our franchisees to make this a really profitable way to lean into growth. Michael Vu: Awesome. That's great to hear. And then I guess as a follow-up to that, do you see further headroom to expand the penetration of the higher margin specifically for the private label products? And maybe even the in-store services. I haven't heard about that in a little bit. So anything from there that contribute to 2026 performance? Greg Ramier: Michael, we do continue -- like I'm quite bullish on our proprietary brands, especially in consumables and winning the monthly shops through this year. So we will be lapping a number of the changes that we made as you go through the year. We're still seeing ongoing benefits from those everyday pricing actions and the store execution of them. We're also very focused in consumables on innovation within our Performatrin brands. So you are seeing us put more time and energy into that. The -- and remind me the second part of your question, Michael? Michael Vu: It was about the in-store services. I know that you're rolling them out more into the stores, and you've talked about in the past, so I just want to touch on that? Greg Ramier: Thank you. The very focused on dog wash is our primary service that we offer. We're still looking at potential other services, but there's nothing to talk or report about there at this point. Dog wash remains an important part of our offering to devoted pet lovers. It's a great way to interact with the customer in a nice service that differentiates us. It's in the vast majority of our stores now, and we've seen good uptake in it. Operator: The next question will be from the line of Irene Nattel with RBC Capital. Irene Nattel: I was just wondering if we could spend a minute talking about the discretionary piece of the business because in the past, it's been -- or at the time of the IPO, it was about 20%. Certainly, it's been under pressure. Can you talk about what you're seeing there? And also, I believe that you had some initiatives around refreshes or newness in the discretionary offering. Can you give us an update on that, please? Greg Ramier: Absolutely. Thanks, Irene. So maybe start off with just how the category is performing versus consumables. So as Linda shared in her remarks, we continue to grow our consumable sales in the quarter and -- but that pace eased a bit versus relative quarters, both because of our everyday value actions and the higher promotional intensity. Hardlines, though, we continue to see softness here. We would have talked about discretionary spend or improvement pausing in Q3. That stayed paused in Q4. So we saw very comparable results to recent trends, no real change in the actual results. What we are focused on in it because we do believe that hardline categories play an important role in our offering and that they should really complement our strength in consumables in a much better way. But with the pullback we've seen in discretionary spending, that space has certainly become more competitive. So as you asked, there are some things that we're changing to be better positioned to win in this environment. We're continually introducing better value, especially in products where devoted pet lovers are looking for that the most. And that's led by our proprietary brands. We're also continually refreshing products to bring in innovation and instill a sense of newness. We're leaning into national brands to do that more and more. And even in this quarter, you're seeing us introduce a number of new things that we're quite excited about what they will do. And thirdly, we're sharpening the promotional program. So that would -- an example of that would be we just launched an item of the month program within hardlines. It's really consumables-based hardlines and giving our stores and customers another reason to add that extra item into the basket and have a program around that, that we execute really consistently. So the work is ongoing. We'll provide more updates as we move through the year, Irene. Operator: With no further questions on the line at this time. I'd now like to leave the floor to Greg Ramier for any closing remarks. Greg Ramier: Thanks, everybody. Looking forward to speaking to you in May. We're excited about the plans for this year. I'll bring you back to -- we are very focused on growing our proprietary brands, our reach with our store network and taking advantage of the everyday pricing investments that we've made last year to win both the monthly shop and build a basket in 2026. So thank you very much. Operator: This concludes the Pet Valu Q4 2025 Earnings Call. Thank you all for joining. You may now disconnect.
Operator: Ladies and gentlemen, welcome to the Kuehne + Nagel Management AG Full Year 2025 Results Conference Call and Live Webcast. I am Moira, the Chorus Call operator. [Operator Instructions] At this time, it's my pleasure to hand over to Stefan Paul, CEO of Kuehne + Nagel. Please go ahead, sir. Stefan Paul: Thank you very much, Moira, and good afternoon, and welcome to the presentation of Kuehne + Nagel's Full Year 2025 financial results. I'm CEO, Stefan Paul; joined once again by our CFO, Markus Blanka-Graff; and the guest speaker, Chief AI and Innovation Officer, Alireza Nemati. Let's go to Page #2, full year results. First of all, I would like to thank our customers for their trust and our colleagues for their commitment as we reinforced our #1 position in sea and airfreight globally. In the fourth quarter of 2025, we continued to expand our market share in Air Logistics and further improved our share of SME business and Sea Logistics. This contributed to stabilization of yields quarter-over-quarter. We achieved these results despite weak demand and overcapacity. On a full year basis, underlying group EBIT declined by 14%, primarily due to yield pressure in Sea Logistics in the second and the third quarter. Group EPS declined by 25% year-over-year or 15% excluding nonrecurring items and a currency headwind of 3%. The combined sea and air conversion rate was at 28%, excluding nonrecurring items. The consolidation of IMC reduced the combined conversion rate by about 1 percentage point. The improving free cash flow conversion trend continued into the year-end with 147% in Q4 alone, the strongest result since 2022. Free cash conversion on a full year basis was 86%. And finally, in October, we announced measures to reduce operating costs by at least CHF 200 million. We reaffirm that target and now confirm that we implemented all necessary measures prior to year-end 2025. As usual, Markus will provide you with more details shortly. But first, let's review our performance by business unit. Let's go to Page #3, Sea Logistics. As always, volume in TEU on the left-hand, GP per TEU in Swiss francs and then EBIT per TEU in Swiss francs as well. In Sea Logistics, yields stabilized after a period of pressure. We continue to expand our SME market share against a softening market backdrop in our core trade lanes. Sea Logistics volume in 2025 was flat year-over-year. In Q4 alone, volume declined by 2% year-over-year versus a strong year-ago comp supported by front loading to the U.S. Thus far, this was the best result reported amongst our forwarding peer group. On a quarter-over-quarter basis, the Q4 result was in line with historical seasonality. European import volumes were strong. In contrast, volume was weakest on the Transpac where we are a market leader. We are targeting growth by intensifying our sales efforts across numerous trades including China controlled export volumes, complementing our larger European U.S.-led import business. Average yields stabilized in Q4 after 2 consecutive quarters of pressure. This stabilization is clearly evident in the middle chart, where the average yields ticked up by 1% quarter-on-quarter in Q4 after pressure in the second and third quarters. Yields have remained stable into early part of this year. Over the coming quarters, we do not foresee a similar degree of yield pressure as we saw in the second and third quarter 2025. A period when rates and yields came under pressure due to a number of factors, such as new build deliveries, normalization of the Cape of Good Hope routing, the impacts of Liberation Day on U.S. demand and a sharp decline of the U.S. dollar. The Q4 EBIT was in CHF 59 million or CHF 106 million, excluding nonrecurring items. Quarter-on-quarter, this resulted in a broadly stable recurring EBIT per TEU. The underlying Sea Logistics conversion rate stands at 23% in Q4 or 25% on an organic basis. Next is Air Logistics on Page #4. As always, again, volume on the left hand, GP per 100 kilo and then on the right side, EBIT per 100 kilo in Swiss franc. In Air Logistics, our strong market share expansion continued. Volume grew by 7% in Q4, which is in line with the pace for the full year and once again, well ahead of estimated 4% to 5% market growth. Market share gains were centered in the hyperscaler sector alongside health care and aerospace. Average air yields increased by 8% quarter-over-quarter into the Q4 peak season. This reflected a seasonal uplift in Transpacific trades as well as slower relative growth of lower-yielding perishable volumes. Unit costs ticked down by 1% from the third to the fourth quarter. Absolute operating costs increased by 5% quarter-over-quarter, but volume grew faster Q-on-Q with 6%. This resulted in a Q4 EBIT of CHF 107 million or CHF 132 million, excluding nonrecurring items related to the cost reduction program. This translates to a recurring Air Logistics conversion rate of 29%. Next is the view on Road Logistics, Page #5. In Road Logistics, we see signs of demand recovery in Europe as well as ongoing strong demand for customs clearance. We achieved net turnover growth of 6% in Q4, excluding currency effects. This is significantly stronger than the 4% growth for the full year. This growth may mark an inflection point for shipment demand in what has been a weak European road market. At the same time, demand growth for custom solutions has been consistently strong since the emerge of tariff uncertainty in Q2. Excluding nonrecurring items related to the cost reduction program, Road Logistics delivered EBIT of CHF 19 million in Q4, reversing the year-over-year 9% decline in Q3 and nearly doubling last year's result. The recurring conversion rate of 6% in Q4 was in line with Q3 and double the level of last year. Let's move to Page #6, Contract Logistics. In Contract Logistics, a steady growth momentum drives another record result. Contract Logistics produced EBIT of CHF 78 million in Q4, excluding nonrecurring items related to the cost reduction program. That is the strongest quarterly result ever and reflects 20% year-over-year EBIT growth or 23% excluding currency effects. Net turnover grew by 5% year-over-year in Q4 on a constant currency basis, in line with the growth over the previous 3 quarters. We saw continued market share gains centered in the health care and hyperscaler sectors. The recurring conversion rate of 8% in Q4 is also a record, improving on the rate of 7% both last year and most recently in the third quarter. With the fourth quarter result, the rolling last 12 months ROCE for contract logistics is stable at a level of 25%. This concludes my comments on the performance of the business units. I would now like to turn to a strategy update, including a closer look at our AI efforts. Page #7. I would like to briefly touch upon key developments and targets for each of our 4 strategic cornerstones. Starting with the market potential. We now have a strong foothold in attractive markets such as semicon and hyperscalers as our results over the past few quarters show. We remain confident on our capabilities to increase market share building upon our strong momentum. This is also true for customs where we aim to scale rapidly and globally on this solid foundation. Similarly, we aim to scale our suite of sustainable offerings and make even more progress in boosting customer satisfaction. I would now like to spend a bit more time on the fourth cornerstone, digital ecosystem. We completed the migration of our powerful in-house transport management system to the cloud. Now we are building a flexible architecture to accelerate AI deployment at scale and expect a material impact to emerge within the next 18 months. Let me now hand over to Alireza Nemati, our Chief AI and Innovation Officer, who will provide more details on how we will expand our technology leadership in our sector, including the full deployment of AI. Welcome, Alireza, the floor is yours. Alireza Nemati: Thank you, Stefan. As part of our road map to 2026, we have successfully migrated our in-house transportation management system and our key legacy systems to the cloud. Today, every order to cash transaction runs through that cloud, supported entirely by our own software set. This independent platform is the foundation of our AI stack, strengthening our market position in the most practical way by offering superior customer experience and productivity every time customers interact with us. Our confidence in successfully leveraging AI is based on four structural advantages we are executing against an urgency. Allow me to walk you through each of them on this slide. First, our proprietary IT platform. We control our own destiny because we have an independent cloud-based proprietary IT platform, built and operated on the back of our internal technical and engineering skills. This allows us to innovate and scale without depending on third parties. We will remain a leader in these areas because technology has always been the core of our success. As the AI landscape involves to integrate text, image, video and audio, we will involve with it on our own terms. As such, our AI journeys is not complicated by they need to consult in multiple TMS systems or migrate to other systems, challenges that a number of our competitors are navigating. However, as we assume with time, many of our peers may succeed in moving towards a position like ours. And therefore, we must leverage our advantage that we have it and maintain our lead. Second, the data. We control a lot of proprietary data streams that power our platform and provide context for every AI-driven decision. We have applied AI to cleanse and standardize master customer data in weeks rather than months, materially accelerating data readiness. At the same time, we are converting tribal expertise into structured reusable institutional intelligence, ensuring that the judgment of our best operators become scalable across the organization. More than 10,000 employees access this consolidated intelligence each month through our internal AI knowledge platform, embedding it directly into daily workflows. Both elements, the clean master data and digitizing of our tribal knowledge are prerequisite to fully exploit AI. Lastly, our workflow and people. We are in the midst of further centralizing, standardizing and automating repetitive workflows to maximize AI's ROI, a credit to effective change management. To drive AI adoption, we have formed an AI board consisting of global IT and the business and function units. This setup ensures that AI remains a high priority proof initiative at Kuehne + Nagel, not an isolated one. You can already see the initial impact of our AI efforts in customer-facing processes. In Air Logistics, our AI-powered pricing tool delivers quotes twice as fast as before, improving responsiveness and quote capacity. In Sea Logistics, AI is embedded into myKN, reducing booking time from minutes to seconds and lowering human errors at the same time. In customs, AI-driven automation is reducing handling time per declaration, improving service levels and delivering meaningful cost savings. In contract logistics, machine learning for dynamic workforce planning is showing double-digit productivity gains in pilot sets. These positive results only scratched the surface, and it's a big surface. We see more upside on the horizon as these solutions are fully deployed across our global operations and as a host of other AI development projects are implemented. We expect our efforts to yield material AI-related productivity gains over the next 18 months. At present, it is too soon to provide you with a specific quantified productivity estimate, but we will provide more clarity over the coming quarters. To reiterate, we're not stopping with a handful of examples I just mentioned. We are already rethinking how logistics can become faster, more predictable and more responsive by embedding AI into each operational decision with a priority on the largest ROI opportunities. Doing so, we'll expand the scope of further improvements with every customer interaction. We see AI as a flywheel. Every transaction improves our AI platform. Every improvement enhances our customer experience and every better experience drives more transactions. AI is the foundation of an evolving operating model at Kuehne + Nagel that can contribute to compound value. I'm more than happy to answer your questions in the Q&A section. For now, allow me to hand over to Markus. Markus Blanka-Graff: Thank you, Alireza, and good afternoon, everyone. Thank you once again for your interest in Kuehne + Nagel and taking the time today to review our latest financial results. Looking at the income statement for the full year 2025, one can see very clearly an abrupt slowdown of the global business environment after Liberation date in April, amplified by the drop in U.S. dollar value versus the Swiss franc. Looking at the income statement for the most recent quarter. It is important to call out nonrecurring effects. Most notably, a positive CHF 72 million effect on GP from an IMC accounting reclassification effect versus direct expenses with no effect on earnings before tax. And a net drag of CHF 122 million at EBIT chiefly due to provisions related to the cost reduction program. Excluding these effects, we see that underlying gross profit increased by CHF 90 million and EBIT by CHF 50 million quarter-over-quarter from Q3 to Q4. The seasonal uplift of air logistics volumes and yields were the largest driver of our growth. I will revisit this theme shortly in the context of our working capital development. But first, let's have a look at the progress of our cost reduction program. And let me reemphasize these measures are designed in a way not to impede our ability to grow in line with the strategy we have communicated. As Stefan has mentioned at the start of the call, we have completed the implementation of our cost reduction program, and we reaffirm targeted annual gross savings of at least CHF 200 million. That said, the composition of savings has evolved since we first presented the plan in late October. Here, you can see that a greater proportion of savings is now linked to FTE reduction, this means that an even greater majority of targeted savings are structural rather than variable. And we still expect to achieve the full run rate by year-end 2026. Lastly, we do not anticipate any significant additional one-off costs, although we cannot rule out relatively smaller amounts being recorded in 2026. We will inform if and when these will be recorded. Let us now have a look at the working capital development and how it has been impacted by the transformation of the business responding to the macroeconomic changes. We can see an increase of the net working capital intensity to 5.2% at the close of the fourth quarter versus 5.1% at the end of the third quarter and 4.4% at the end of 2024. Whilst DSO remained stable over the last quarters, DPO have improved from Q3 to Q4. We compared to 2024, both DSO and DPO came under pressure, whereby the spread between has been similar in 2025 compared to 2024. This and the volume growth contributed to an 8% year-over-year increase in the net working capital. Due to the overproportionate increase of airfreight charter business, for cloud infrastructure customers that we started to enjoy over the last 2 quarters 2025, we will adjust the net working capital intensity corridor to 4.5% to 5.5%. What does that mean for our free cash flow generation? In Q4, we produced CHF 396 million of free cash flow or a conversion rate of 147% versus 93% last year. Let me just for better illustration, move on to the next slide. In Q4, overall net working capital generated a net positive inflow of CHF 13 million despite an expansion of our core net working capital. Free cash flow of CHF 396 million was generated, this against a value of CHF 306 million in the fourth quarter 2024. That all resulted in a significantly improved fourth quarter cash conversion of 147%, which compares to the 93% last year, which is above the historical average for a fourth quarter that you can see on the slide. We do expect the strong free cash flow generation along the usual seasonal pattern to continue also in 2026. Now based on the strong development, the Supervisory Board has decided to propose a dividend distribution of CHF 6 per share, to the Annual General Meeting on May 6, 2026. It reflects our healthy profitability, well-managed cash conversion and our success in balancing future cash needs for adapting the workforce for the markets, investing into AI solutions as well as supporting our ambitions for growth. Turning to the financial guidance for 2026. We expect recurring group EBIT in the range of CHF 1.2 billion to CHF 1.4 billion. In terms of expectations for recurring EBIT in Q1, note that it is typically a weaker relative to the seasonal peak in the second half. In the current quarter, we expect the result comparable to that of the third quarter 2025. And as an additional information, we expect already now a further 5% pressure on currency translation due to the U.S. dollar depreciation 2026 versus 2025. Looking forward, our expected effective tax rate for 2026 remains approximately 25%. Our underlying core guidance assumptions include global GDP will grow, but with persistent uncertainty across geopolitics, macroeconomics policies and trade. And base case, global sea and airfreight volume demand growing no faster than the GDP. Our own cost reduction program is on track and we would expect more than CHF 200 of gross savings. These savings will ramp up over the course of 2026 with an estimated impact of net CHF 100 million in the current year. With this, I would now like to close our presentation with a summary of key takeaways. Our focus remains on market beating growth in targeted attractive sectors. Yield pressure moderated in the most recent quarter, a trend which has continued into the early part of 2026. Our cost reduction program is on track, fully implemented with savings to ramp up over the course of 2026. We have a strong foundation to achieve AI productivity gains and project material tractions from 2027 onwards. And lastly, we introduced our 2026 recurring EBIT guidance of CHF 1.2 billion to CHF 1.4 billion. With this, I want to thank you for your attention and hand back to the operator to open the Q&A session. Just one more housekeeping information. We will move the analyst call for the first quarter 2026 by 1 day to Friday, April 24. Please take note of this. Back to the operator. Operator: [Operator Instructions] The first question comes from the line of James Hollins from BNP Paribas. James Hollins: Two for me, please. I was wondering if, Stefan, you might want to run us through your reaction to, I guess, the share price to those sort of general fears that we had last month on Open Mercato algorithm. And how you would, I guess, give your own opinion on the sort of fears around AI disruption rather than the benefit to the general forwarding model, whether you're quite passionate about it or whether it's something you're sort of looking at seriously. And then the second one, GP TEU trends sequentially into Q1. I think you noted [ fee ] was stable. Clearly, Q-on-Q, Q3 to Q4 last year, you're well ahead of your competitors. So well done there. I just wonder if you could give a bit more detail on how you're seeing things in Q1. Stefan Paul: Yes, James, thank you very much, Stefan speaking. So the glass is always half full, right? So I see AI as an opportunity for us, right? And as Alireza have mentioned it, it's based on the proprietary IT platform as well on our capability to clean our own data and to the workflow ownership based on the fact that we have our own TMS landscape. That's the first thing. And if you remember what we have done in 2024, where we have started to dismantle the regions, right, that was as well something which is helping us now because now we have the business units, the products pretty much driving the process. So process stability and a certain process reliability on a global basis is the prerequisite for AI. So overall, I see it rather positive for us because we have all the ingredients now with Alireza and the team, we are pretty sure that we can create certain value, and we have mentioned a couple of times that we see productivity gains coming our way in the next 18 months. The other question -- or the other part of the question was with the algorithm and everything what we have seen in the white paper coming up 2 or 3 weeks ago and the reaction from the marketplace, I think these reaction will continue. The question is, is the substance behind. This is the first question. And the second question is, we have seen it already a couple of years from now when there was a wave which we call digital forwarders. And everybody was in the belief 5, 6, 7 years ago that the digital forwarder industry will be able to disrupt the old economy, so to say, and the result is pretty clear. I think AI, and we should not forget, right, a pellet is not talking. A pellet has no voice other than our label, right? But at the end of the day, it's a combination of infrastructure, people and the knowledge of people and then backed up and supported by AI. So overall, my take is we see it as an opportunity and not as a threat. But on the other side, we need to really march ahead and we need to be quick in adapting and executing our AI strategy. Markus Blanka-Graff: So James, maybe for me for the second question on the gross profit per TEU. Correct observation, Q3, Q4, stable gross profit per TEU. And as far as we may tell at the current stage, also into the first quarter, broadly stable, at least what we have seen over the first 2 months. Operator: The next question comes from the line of Alexia Dogani from JPMorgan. Alexia Dogani: Just firstly, net debt to EBITDA, I believe, is now 1.5x. Is that the level you want to sustain? Or do you want to actively bring down? And then secondly, if we look at the fourth quarter performance, it was really very strongly driven by the air freight peak. When we look at the seasonally adjusted kind of profitability level, is it fair to look at the 3Q as a kind of starting point for the year, before with the next year's season? Stefan Paul: Alexia, Stefan speaking. I'll take the first one. We still stick to the 1.5% growth aspiration in the [ transactional ] business units. And let me reiterate or go a little bit more into the details. So in airfreight, we have achieved it already now. The last couple of quarters, full year result with 7%, and I think this is pretty much in line with our promise we made during the Capital Markets Day back in March. And we do not see any change in the pattern the first 2 months. And as well, the pipeline is very strong, and I strongly believe that we can continue with the growth pattern which we have seen in the last couple of quarters. So a clear tick in airfreight. We all know that in sea freight, we need to become a bit better in terms of the volume growth aspiration is concerned. Despite of the fact that we have been done quite well in comparison to our peers, but nevertheless, we will stick to it. I said a couple of minutes ago that we will strengthen and foster our sales efforts out of China with a prepaid business. There are a lot of new comers in the marketplace in terms of customers are [ designing ] on the Chinese prepaid market where we can leverage even more. And in Road, I think we have seen the tipping point. February so far has seen quite nice growth, single digit still, but no decline anymore. So I believe in Road, if that is going to continue including the customs brokerage agenda, we have a fair chance to deliver as promised in Air and in Road and see we do the utmost in order to keep our promise as well. Markus Blanka-Graff: So next, maybe for the second question on the, let's say, starting level I think we have mentioned that for us, Q3 is a good starting point. Yes, the air freight peak has happened in the fourth quarter. I have to say, which is also a seasonal pattern that we have seen for many, many years. We have not been used to it anymore because for some years, that hasn't been the case, but that is how it is usually. More importantly, we have a very strong volume growth and the volume growth pattern is still intact. So I would expect fourth quarter and also volume growth to continue into the first quarter on the air freight side. But not to forget, for 2026, we should see, and we do in the first 2 months, clearly, that cost savings are ramping up. So that's going to support certainly the results in 2026. And contract logistics has been a very strong contributor in the fourth quarter as well. So I think they are various elements that play together into the starting point -- starting point being Q3 2025 to let's say, a good development into 2026. Alexia Dogani: And just to clarify because, I think, my first question was slightly misunderstood, but Stefan, your comments on growth were very helpful. I meant financial leverage of the group is now at 1.5x net debt to EBITDA. Are you comfortable with this level? And should we expect it to be maintained? Or will you actively reduce it? Markus Blanka-Graff: Okay. Sorry, Alexia, that was my mistake. I understood something about growth, the 1.5x. So at least we have already answered a question, which probably would have come up later in the call. Alexia Dogani: Yes. Markus Blanka-Graff: Leverage. Yes, we are comfortable at the current situation with 1.5x leverage. You will see we have a couple of ideas how to refinance the current situation in appropriate way so that we are going to reduce a little bit on the interest cost as well. So yes, that's the current situation. Clearly, and you know that we, over time, kind of not saying this is 2026, but it's a longer time that we are looking at. We would prefer to come back to a situation that brings us closer to a net cash position. But for the time being we are fine where we are. Operator: The next question comes from the line of Alex Irving from Bernstein. Alexander Irving: I have two on AI, please. First of all, I hear the argument about you've got the good proprietary TMS. You've got clean data, you've got workflow ownership. You've got all the ingredients to reduce cost through AI. But how do you feel about change management? Do you have the right skill set or are the risks you worry about in actually implementing AI and how you're seeking to limit those? Second question, also on AI. Let's say you're able to achieve cost reduction. To what extent do you expect to be able to hold on to those cost savings in higher margins? Or is the aim here to use this price more competitively and to grow volumes faster? Stefan Paul: Alex, Stefan here. I take the first part of the question or the first question, change management, right? I think this is one of the most crucial questions and most crucial topics and aspects when it comes to AI deployment and execution. I think Alireza mentioned that we have already 10,000 people working with our internal AI stack. That's the first prerequisite. The second one is that you need to train, educate and coach your people, right? We all know in a couple of years from now, middle management and leadership is both managing human beings alongside with digital agents. And none of us, I would say, has a good experience about how do you manage a digital agent, right? A digital agent can execute 25,000 activities in a certain time frame, but you need to manage the activities. You need to manage the agent as well. And here, it comes about -- everything comes about change management, education, coaching. As I mentioned before, you need to invest, and we will invest this year quite a lot into our people, into the entire organization, how to leverage, how to work, how to understand AI and what needs to be done from a leadership perspective. And I believe that Alireza would like to conclude and add a little bit on that as well. Alireza, please. Alireza Nemati: I think also what is -- thank you, Stefan. I think what's also important is we will not just deploy AI for the sake of AI. We will work together with our people to identify where we can utilize AI to streamline repetitive work to free up time for them to focus on what matters, closer customer relationship, expectation management. So that's one angle of it. The second angle of it is that we have dedicated tiger teams that work together with the business and functional unit to really identify what are the challenges that the people are facing in the ground that we can then utilize AI to solve that. So on top of what Stefan just said, the technical aspect is working closer with people and really understanding how we can utilize technology to solve the problems. Markus Blanka-Graff: And Alex, to your second -- or to your second part of the question, let's say, on the cost reduction and how it's going to be remaining or allocating or ultimately transitioning to the customer. I think it's reasonable at least to assume that a certain portion of productivity gains will be shared with customers, right, but not all. But I think what is even more important is that is that fact that you can create productivity gains and capitalize on it is only true for the largest and the well-resourced forwarders, yes. Because when we look into much smaller units that, that will become insignificant, if at all, reachable due to standardization, data quality and all the stacks that we have seen that Alireza has been talking about. So for me, it's not so much how much can we keep. For me, it's how much can we generate versus our competitors that are eventually not able to generate any. Operator: The next question comes from the line of Muneeba Kayani from Bank of America. Muneeba Kayani: So first one on AI and just following on from your comments right now. Like what is proprietary about your in-house IT stack? Like why can't it be replicated by other forwarders using third-party software? We've seen Descartes, Magaya, all of these coming up. And could -- like is there something really differentiated about your tech stack that allows you to have more cost savings that others cannot replicate? It's kind of the first question on AI. And then secondly, just on the guidance for 2026 and the EBIT range of CHF 1.2 billion to CHF 1.4 billion. Can you talk about how you thought about that range? Like what are the scenarios on volumes and yields at the low and the top end of that range? Because you talked about the stable yield's trend. Is that kind of the midpoint is what you're talking about? Just some clarity on that would be helpful. Stefan Paul: I will take the first question. So what the difference is towards the third -- relying on third-party data stack is the following: the first one is given that we own our own TMS, we have full control of the end-to-end processes, meaning that instead of individually improving independent use cases, you can exactly integrate end-to-end and really make a big impact on improving the entire workflow. You can only do that if you own your own TMS. If you're not, you have to negotiate with third parties on the improvements of their stack. That's the first element. The second element of that is with owning your own TMS, you are capable of controlling and centralizing our own data. One of the biggest challenge in this space is to really harness and centralize the data that you have, cleanse that data and use that data to feed your AI models. By being able of having our own TMS in the cloud, having our own proprietary data, we can now start to centralize and standardize workflows on top of it, which gives us an advantage compared to the others. Markus Blanka-Graff: Excellent. Thank you. And for the question around guidance, let me just reflect a little bit on our presentation, Page #16. I think the 4 major elements that are out there, we have listed our assumptions around global GDP, market demand on the sea and airfreight side, and obviously, the expectations around cost reduction as well as what we know today on the translation -- on the potential translation impact because obviously, that's always a different question. If you were to look for more detailed information on gross profit per TEU or 100 kilos or so, I would politely ask you to get in touch with Chris on the IR side, if you can share a bit more details than I would like to do here on the larger call. Operator: The next question comes from the line of Jason Seidl from TD Cowen. Jason Seidl: I'm going to switch it up a little bit away from AI. Your small businesses accounted for about half of your Sea Logistics volumes. Can you touch a little bit on the margin profile differential with this group? And if you think this is the desired mix? Or should we expect to see further penetration in that market? And then for my second question, recently, a CEO of another forwarder mentioned, I think, in a post that about 18% of the airfreight capacity was being grounded due to the conflict in the Middle East. I guess, one, do you expect this to continue? And two, what near-term impacts do you expect this for you -- to have on this air business? Stefan Paul: Yes. Jason, thank you very much. I was the guy who was talking about the 18% this morning, most probably, right? So what you see is -- I tackle the second one first, what you see is -- now with the Middle East crisis is that 18% of the airfreight capacity in belly and charter is grounded for the time being. And what the impact is that most probably in the next, let's say, week or so, by end of the week, beginning of next week, we will see most probably certain backlogs arising in Southeast Asia and in China for the European and the U.S. marketplace. And then the question is, what is happening on the demand side, on the customer side because there is a mismatch most probably them coming similar to the COVID times on supply and demand. And then, our aim is to help as much as we can to put additional capacity for this 18% directly in charter capacity from the various origins into the destinations, right? But it's too early to say what the impact will be because it's only -- we are only 3 or 4 days into the situation. But the likelihood that this is changing the demand and supply situation is rather high, and this is on the horizon for the next couple of days, and we are monitoring the situation extremely closely. On the SME side, it's 50%. We mention that now we are really getting traction on the SME side. I think it's -- we said it a couple of times, profitability is 1.6x roughly. And I would like to use this question to give a little bit more color in terms of what is happening. So we are growing with our SME business or with our own controlled business quite nicely, and let's call it, everything outside of the U.S. If you look into the trading pattern for the first 2 months, we see -- we have seen single-digit uplift in terms of volume, but at the same time, roughly 10%, 12% lower volumes into the U.S. marketplace. And as one of the key or as the market leader into the transpac, that means twofold for us. First of all, we have a significant upside potential for the later of this year as soon as the market bounces back. And it as well underpins what I have said before that focusing on SME with our own Blue Anchor Line activities is paying off outside of the U.S. marketplace. So that hopefully gives you a little bit more color on the situation in sea freight. Operator: The next question comes from the line of Marco Limite from Barclays. Marco Limite: I've got 2, which are follow-ups to some of the topics that have been already discussed. So AI, you have been talking about expectation of improvements over the next 18 months. But can you confirm if you expect any AI benefit in 2026 or that is going to be all 2027, so back-end loaded in the, let's say, 18 months you were mentioning? And in the context of that, you are not changing the CHF 200 million gross cost savings guidance, but you're actually changing a bit the drivers of those cost savings with quite a few more FTE reduction versus the previous guidance. So just wondering whether that higher FTE reduction is actually driven by AI and -- yes. So this is the first question. The second question, just a follow-up on your guidance. What extent, let's say, Iran-related scenarios are reflected into the guidance? Or -- I mean, Iran is just too fresh, and therefore, it's not included at all in your guidance? Markus Blanka-Graff: Marco, it's Markus. Well, I think these 2 questions, they are broadly in one bucket. I think from a guidance perspective, indeed, the most recent development have not been accounted for. As we said, we have taken some assumptions around currencies and markets. If this is now changing dramatically through the event, then obviously, we will have to look deeper into it. It's too early really to make any conclusion out of this. From an AI perspective, you're right to assume that for 2026, we have not factored any material productivity gains yet. But as AI is AI, right, sometimes you see phenomenal results sooner than what you thought. But for the time being, we would like to stay on the safe side and say for 2026, we are not expecting and not factoring any productivity gains into it. Marco Limite: Okay. And just a quick one, which is a bit more technical. So you had CHF 122 million of one-off costs in Q4. Just wondering whether those are cash costs, and if yes, are cash costs for '25 or will be a headwind in '26? Markus Blanka-Graff: The vast majority of cash out will be in 2026. Operator: The next question comes from the line of Patrick Creuset from Goldman Sachs. Patrick Creuset: My first question is just to get a better sense of the overall ambition here on conversion margins in Air and Sea. I think, when you look at the starting point in the second half of '25, you're basically at a 20-year low, I think, on air and sea conversion margins. And then, I think you've highlighted the productivity upside from rolling out AI tools. So I think overall, when we -- when you put those together, I mean, it's the idea to go back to, let's say, historic average conversion margins somewhere in the 30% range. Or do you think, basically, the ambition without guiding that when we look at this in a few years time, you could be materially higher? Markus Blanka-Graff: Patrick, it's Markus. Twofold as an answer, I think. When we look into the operational results, so backing out the CHF 122 million, obviously, for the fourth quarter as a one-off cost, right? We are currently trading at a conversion rate in the fourth quarter, just to get our starting point right to 23%; for the full year '25, it was 29%. We are trading in airfreight around 28%, 29% the full year '26. Not to forget, at the same time, we are not only at the historic low, as you said, on some of the quarters conversion rate, we're also on a historic low for the U.S. dollar. So that certainly had an impact for us as well. Recognizing that U.S. dollar translation not only impacts the gross profit, but also the cost, I'm fully aware of that. But since sea freight is fully U.S. dollar-denominated and not all of our costs are in U.S. dollar denominated, there is a gap that is significant, not as an excuse, just as an explanation. Going forward, clearly, automation, standardization, AI, they are just 3 drivers, I think, of our productivity going forward. One single one doesn't work. We have to get also standardization at the forefront, including the change management that will realize these or materialize these cost savings. But to answer your question simply, we stick with our 35% conversion ambition that is collective or together sea and airfreight. Patrick Creuset: Okay. And then, Stefan, your point on change management leads to my second question. I think it's pretty clear you're -- from the tech stack, you're well positioned here conceptually to extract a lot of productivity gains. But in terms of how you would suggest we directionally model this, would we -- basically, as your people become more productive, would you say that we go back to the growth algorithm, let's say, that one would have known from Kuehne 10, 15 years ago, where you have substantially higher volume growth than the market on a stable-ish cost base or FTE base, and that's the way you get the margins and result up? Or would you say that if the volume environment remains weaker, then we could see continued absolute cost out further around of what you've done in the fourth quarter? Stefan Paul: So overall, if I could wish for, right, I would go for the first, of course, right? Significant more volume in both sea and air, road and contract logistics with the same amount of cost position over the same manpower. But I think the world is not perfect. And you might see in certain areas that we can do exactly that. And in other areas, we need to adjust our cost base, right? So it will be most probably a combination. But in a perfect scenario, we add significant volume with the same amount of cost and manpower. Patrick Creuset: But do you see this as sort of a bit more of the same sort of thinking back to eTouch and was kind of standard digitization where you have a couple of percent productivity growth? Or do you see a step change to something that could be more mid- to high single-digit productivity pace? Stefan Paul: I think it has -- it comes back a little bit to this eTouch when we started it, right? But AI, we all know, has a bigger potential. And it's a little bit too soon, as we said, right? So give us a little bit more time, and we will -- we have committed ourselves during the next couple of quarters to give more color or to add more color to that, but it's too early to make a statement now. Operator: The next question comes from the line of Andy Chu from Deutsche Bank. Andy Chu: Just one question, please. On the cost savings, could you just give us some help in terms of the phasing of those cost savings by quarter, please, for this year? Markus Blanka-Graff: Andy, now you're challenging me, right? By quarter is a bit of a tricky one, but I would say we are running up to the full quarterly cost saving of -- so of the full annual cost saving of CHF 200 million on a quarterly basis in the fourth quarter. So that would be around CHF 50 million. And I would see it largely linear to be open. I think from the first to the fourth quarter, there is a continuous -- how do I put that rightly? I think a continuous outflow of cost that is pretty much linear, I think, over the quarters to go. Andy Chu: Okay. So you will have some benefits already in Q1? I think I had maybe understood that the -- sorry, the CHF 285 million wouldn't carry any cost benefit, it will come from Q2? Markus Blanka-Graff: No. We will already see some cost benefits in the first quarter, but they will certainly be much smaller than obviously the ones in the fourth. But the development between the first and the fourth quarter should be a linear development. Operator: The next question comes from the line of Sebastian Vogel from UBS. Sebastian Vogel: The first question is on the guidance, and potentially, it's also impacted, of course, by Iran, but nonetheless, did you discount in your guidance or what sort of situation for the Red Sea you discounted in your guidance? That would be my first question. The second one is coming back to the AI topic. And, of course, it's not easy, but nonetheless, is there any sort of thoughts that you can share with us on quantifying the benefits on EBIT or straight line over time that you can allude to. Markus Blanka-Graff: Sebastian, it's Markus. Can you repeat the first question on the guidance? I didn't really fully understand the question. Sebastian Vogel: Sure. What sort of situation for the Red Sea have you discounted in your guidance? Markus Blanka-Graff: Red Sea, okay. Sorry, I got that. So we were originally thinking like during the year 2026 that Red Sea would slowly go back into operation, right? That obviously is probably moved out a little bit in time. It seems unlikely, at least from where we currently sit. So that could still have an impact. As you can imagine, it can have an impact on rates and everything else. But for our guidance, we had assumed that at the back end of 2026, there will be carriers regularly using the Red Sea. What it now means for the guidance, frankly, I don't know yet. And on AI, quantifying future benefits and productivity gains, I think it's -- we are in such an early stage that it's really hard for me to tell you, I don't know. I cannot quantify reliably, and I think it would be not entirely serious to put a number out there. What I can say is we clearly look for material impact that is going to come into 2027 and the following years. Maybe as an anecdotal evidence to that, I can confirm that in the use cases that we are having already live today, the impact is very material. So that gives us confidence and hope, obviously, that things are going to progress in that way. But as Alireza also said, it's not a software that you apply. It's something far more fundamental that is -- that has an impact on your entire service delivery execution operation. And hence, the benefit is much bigger, but also the uncertainty, how much is going to come out of it. But let's stay with material at the current point in time. Operator: The next question comes from the line of Arthur Truslove from Citi. Arthur Truslove: Three, if I may. First one, please, can you just tell us what your assumptions for air and sea freight trends are over the course of 2026? Obviously, there's a range within your guidance. So obviously keen to sort of get a feel for what that -- how that looks. Second question, it's -- clearly, the conflict in the Middle East delays the Suez Canal reopening. That doesn't really change the current supply situation on the sea freight side. Can you talk about whether you think it will drive demand in any way at all, indeed in which direction? And then thirdly, what are you seeing in terms of demand from an air perspective? Obviously, you have the grounding of the planes in respect of the Gulf Airlines. What are you seeing on demand there? Stefan Paul: Yes. Arthur, Stefan here. I try to answer the airfreight questions and the Red Sea. So airfreight basically from a volume assumption into 2026. As I said at the beginning, I believe that we see a continuation of the growth we have demonstrated in 2025. So similar kind of numbers. And automotive and mobility was the sector where we have seen the highest decline in terms of the volume is concerned. That has now equalized in the first couple of weeks this year. We see a strong demand in aerospace, health care, pharma, hi-tech, semicon, hyperscalers as well the industrial piece is coming back. So overall, we are quite confident that we see the same pattern in terms of airfreight growth for 2026 versus 2025. I think in sea freight, I mentioned, we will intensify our sales efforts for the Chinese prepaid market into the world, which will help us hopefully as well to see a better growth into 2026. On the Suez Canal, this is difficult to quantify. I think the overall situation in the Middle East, as soon as we see a shift from sea to air, there will be further demand coming in into the air freight. So I would be -- I would say -- at the current stage, I would say that the airfreight business will benefit more than the sea freight business from the current crisis situation we see. It's basically for sea freight, too early to judge after 3 days. And maybe a little bit -- you didn't ask it, but I think taking the opportunity as well because we had such a good year in Contract Logistics in 2025, so we have the most healthiest pipeline ever in Contract Logistics. And I believe from what I see and from the gain ratio, we will see a very good traction for the Contract Logistics business unit into 2026. Operator: The next question comes from the line of Rajpal, Kulwinder from Baader Europe-AlphaValue. Kulwinder Rajpal: So I wanted to firstly ask about hyperscaler business within Air Logistics division. And how much volumes came from that particular business in 2025? And how did that business grow for you? And when we talk about developing that business further, what sort of initiatives do you need to take? And what sort of investments you need to make when we think about accelerating that towards 2030? So that's the first one. And secondly, I just wanted to quickly check with you, how do you -- how should we think about M&A in 2026? Is it fair to assume that it would be similar to what we saw in 2025, so a couple of bolt-ons? Stefan Paul: Should I start with the hyperscalers? So we will not disclose the volume figures. But what we can share with you is out of the magnificent 6 or 7, including Tesla, right, so we have somehow -- with 50% of them, we have a decent business. With the others, we are starting the business opportunities. We are gaining traction. We implement business trade lanes on the transactional business on the freight side and as well now since a couple of weeks in contract logistics with our vendor management service offerings. So in other words, the room to maneuver, the room to grow is significant still because we have just started a year ago, right? But I will not disclose exactly the numbers how much volume have we gained, but there is quite some room to maneuver. Markus Blanka-Graff: And maybe quickly on the M&A side, you're right, I think it's fair to assume we will continue with smaller bolt-ons, high-quality businesses where we can scale that knowledge through our own network. So on that side, I think we shouldn't expect any major changes. Operator: The next question comes from the line of Marc Zeck from Kepler Cheuvreux. Marc Zeck: I guess 2 left for me, one on the cost savings and maybe you can elaborate a bit what is behind changing the kind of composition of the cost saving. Is it that your efforts fell a bit short on the non-staff-related part, and therefore, you kind of squeezed staff part more? Or did you feel like there was an opportunity on the staff side and to not be overly aggressive if you kept kind of the headline number unchanged, but there's maybe a bit of dry powder, so to say, on the non-staff side to maybe over deliver? That's the first question. And second question, maybe for Alireza on AI. I guess, you mentioned bookings and quoting as parts where you currently already employ AI, where you see large opportunities. To me, that seems like, say, low-hanging fruits. And maybe that's not you tell me, but wouldn't kind of larger savings or efficiency gains be more like on handling disruptions, having AI handling disruptions, rebooking, rerouting, whatever. Do you see that as something that is close, let's say, in it from a time perspective? Or are we still quite far away from that, especially in air and sea freight? And if there was any progress, would you expect that we see that first in road, be it U.S. road or European road and only at a later point in air and sea freight? That's my 2 questions. Markus Blanka-Graff: Marc, it's Markus. So on the cost savings, interesting observation, you're fishing for more savings. And I think what is important for us is that we are saving on the structural side. And I think this is -- sustainable structural cost reductions is our paramount task. And I think with the cost reduction on the FTE side, this is not simple adjustment of operation workforce to volume development. This is structural change. This is a sustainable change of overall cost structure. And I think that was our primary and most or top priority activities. Yes, on the other side, when we talk about facilities, network and all the other costs that are on the variable side or the non-staff side, that is something where we see further potential going forward, consolidation of locations. And so, on the other hand, some of them also take a bit more time to be implemented. Hence, I think our priority was right to work on the staff topics first. Alireza Nemati: On the AI bit, I would divide it into 2 buckets. They are clearly repetitive workflows or processes where AI can quickly help us to automate that and standardize it. But there are going to be also tremendous improvements in the entire value chain, specifically around the TMS, but then it requires to recreate the workflows with AI at the core, and that will take them some more time. Operator: The last question for today comes from the line of Gian-Marco Werro from ZKB. Gian Werro: Two from my side. First one is your progress that you will do for your volumes in sea freight now that's serving for the first time more than half of your volumes to SME customers. Can you tell us if you have more ambitions for 2026 to increase this even further? And then, I remember over the last few years, we also spoke about potential profitability improvement with cold chain solutions, and also, for example, special trade routes that you want to expand. What have your recent developments been in relation to this? Stefan Paul: Yes. Let me take the first question on the SME, Gian-Marco. So as more is better, pretty clear, right? Because the profitability is 1.6x of the average. That is something which we put further. We have a pretty good hunting force on the SME, which we will leverage to the maximum. So the question is how fast can we grow, what can AI do for us in order to compete, as we always said, with the smaller forwarders, how can we exceptionally grow on the customer experience side on the Net Promoter, what do we need to do in order to convince more mid-sized customers to go with Kuehne + Nagel. So overall, the message is, of course, as much as we can and with full-speed ahead. Markus Blanka-Graff: Maybe on the second part, Gian-Marco, although it links very much into the initiatives that Stefan just talked about, yes, there is always new trade lanes, special services, areas where we want to grow in attractive sectors. And I think without repeating, but our development on volumes, right, on hyperscalers has been one of these proof points. And our development that we are potentially looking into markets where currently we are not 100% covering the geographies. So especially in air, the cold chain has been designed some while ago and is continuing to evolve. So this is our normal course of business, if you like, to pick attractive sectors, move in either through organic growth, or in my words, as small as possible, but as well managed as possible businesses and then leverage that through our network. So strategy confirmed, I would say. Operator: Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Stefan Paul for any closing remarks. Stefan Paul: Thank you very much, Moira. Thank you very much for listening in, for your questions. And looking forward to the next call. Have a good spring time, weather is becoming better and enjoy it. And thanks again for listening in. Operator: Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.
Operator: Ladies and gentlemen, welcome to the Kuehne + Nagel Management AG Full Year 2025 Results Conference Call and Live Webcast. I am Moira, the Chorus Call operator. [Operator Instructions] At this time, it's my pleasure to hand over to Stefan Paul, CEO of Kuehne + Nagel. Please go ahead, sir. Stefan Paul: Thank you very much, Moira, and good afternoon, and welcome to the presentation of Kuehne + Nagel's Full Year 2025 financial results. I'm CEO, Stefan Paul; joined once again by our CFO, Markus Blanka-Graff; and the guest speaker, Chief AI and Innovation Officer, Alireza Nemati. Let's go to Page #2, full year results. First of all, I would like to thank our customers for their trust and our colleagues for their commitment as we reinforced our #1 position in sea and airfreight globally. In the fourth quarter of 2025, we continued to expand our market share in Air Logistics and further improved our share of SME business and Sea Logistics. This contributed to stabilization of yields quarter-over-quarter. We achieved these results despite weak demand and overcapacity. On a full year basis, underlying group EBIT declined by 14%, primarily due to yield pressure in Sea Logistics in the second and the third quarter. Group EPS declined by 25% year-over-year or 15% excluding nonrecurring items and a currency headwind of 3%. The combined sea and air conversion rate was at 28%, excluding nonrecurring items. The consolidation of IMC reduced the combined conversion rate by about 1 percentage point. The improving free cash flow conversion trend continued into the year-end with 147% in Q4 alone, the strongest result since 2022. Free cash conversion on a full year basis was 86%. And finally, in October, we announced measures to reduce operating costs by at least CHF 200 million. We reaffirm that target and now confirm that we implemented all necessary measures prior to year-end 2025. As usual, Markus will provide you with more details shortly. But first, let's review our performance by business unit. Let's go to Page #3, Sea Logistics. As always, volume in TEU on the left-hand, GP per TEU in Swiss francs and then EBIT per TEU in Swiss francs as well. In Sea Logistics, yields stabilized after a period of pressure. We continue to expand our SME market share against a softening market backdrop in our core trade lanes. Sea Logistics volume in 2025 was flat year-over-year. In Q4 alone, volume declined by 2% year-over-year versus a strong year-ago comp supported by front loading to the U.S. Thus far, this was the best result reported amongst our forwarding peer group. On a quarter-over-quarter basis, the Q4 result was in line with historical seasonality. European import volumes were strong. In contrast, volume was weakest on the Transpac where we are a market leader. We are targeting growth by intensifying our sales efforts across numerous trades including China controlled export volumes, complementing our larger European U.S.-led import business. Average yields stabilized in Q4 after 2 consecutive quarters of pressure. This stabilization is clearly evident in the middle chart, where the average yields ticked up by 1% quarter-on-quarter in Q4 after pressure in the second and third quarters. Yields have remained stable into early part of this year. Over the coming quarters, we do not foresee a similar degree of yield pressure as we saw in the second and third quarter 2025. A period when rates and yields came under pressure due to a number of factors, such as new build deliveries, normalization of the Cape of Good Hope routing, the impacts of Liberation Day on U.S. demand and a sharp decline of the U.S. dollar. The Q4 EBIT was in CHF 59 million or CHF 106 million, excluding nonrecurring items. Quarter-on-quarter, this resulted in a broadly stable recurring EBIT per TEU. The underlying Sea Logistics conversion rate stands at 23% in Q4 or 25% on an organic basis. Next is Air Logistics on Page #4. As always, again, volume on the left hand, GP per 100 kilo and then on the right side, EBIT per 100 kilo in Swiss franc. In Air Logistics, our strong market share expansion continued. Volume grew by 7% in Q4, which is in line with the pace for the full year and once again, well ahead of estimated 4% to 5% market growth. Market share gains were centered in the hyperscaler sector alongside health care and aerospace. Average air yields increased by 8% quarter-over-quarter into the Q4 peak season. This reflected a seasonal uplift in Transpacific trades as well as slower relative growth of lower-yielding perishable volumes. Unit costs ticked down by 1% from the third to the fourth quarter. Absolute operating costs increased by 5% quarter-over-quarter, but volume grew faster Q-on-Q with 6%. This resulted in a Q4 EBIT of CHF 107 million or CHF 132 million, excluding nonrecurring items related to the cost reduction program. This translates to a recurring Air Logistics conversion rate of 29%. Next is the view on Road Logistics, Page #5. In Road Logistics, we see signs of demand recovery in Europe as well as ongoing strong demand for customs clearance. We achieved net turnover growth of 6% in Q4, excluding currency effects. This is significantly stronger than the 4% growth for the full year. This growth may mark an inflection point for shipment demand in what has been a weak European road market. At the same time, demand growth for custom solutions has been consistently strong since the emerge of tariff uncertainty in Q2. Excluding nonrecurring items related to the cost reduction program, Road Logistics delivered EBIT of CHF 19 million in Q4, reversing the year-over-year 9% decline in Q3 and nearly doubling last year's result. The recurring conversion rate of 6% in Q4 was in line with Q3 and double the level of last year. Let's move to Page #6, Contract Logistics. In Contract Logistics, a steady growth momentum drives another record result. Contract Logistics produced EBIT of CHF 78 million in Q4, excluding nonrecurring items related to the cost reduction program. That is the strongest quarterly result ever and reflects 20% year-over-year EBIT growth or 23% excluding currency effects. Net turnover grew by 5% year-over-year in Q4 on a constant currency basis, in line with the growth over the previous 3 quarters. We saw continued market share gains centered in the health care and hyperscaler sectors. The recurring conversion rate of 8% in Q4 is also a record, improving on the rate of 7% both last year and most recently in the third quarter. With the fourth quarter result, the rolling last 12 months ROCE for contract logistics is stable at a level of 25%. This concludes my comments on the performance of the business units. I would now like to turn to a strategy update, including a closer look at our AI efforts. Page #7. I would like to briefly touch upon key developments and targets for each of our 4 strategic cornerstones. Starting with the market potential. We now have a strong foothold in attractive markets such as semicon and hyperscalers as our results over the past few quarters show. We remain confident on our capabilities to increase market share building upon our strong momentum. This is also true for customs where we aim to scale rapidly and globally on this solid foundation. Similarly, we aim to scale our suite of sustainable offerings and make even more progress in boosting customer satisfaction. I would now like to spend a bit more time on the fourth cornerstone, digital ecosystem. We completed the migration of our powerful in-house transport management system to the cloud. Now we are building a flexible architecture to accelerate AI deployment at scale and expect a material impact to emerge within the next 18 months. Let me now hand over to Alireza Nemati, our Chief AI and Innovation Officer, who will provide more details on how we will expand our technology leadership in our sector, including the full deployment of AI. Welcome, Alireza, the floor is yours. Alireza Nemati: Thank you, Stefan. As part of our road map to 2026, we have successfully migrated our in-house transportation management system and our key legacy systems to the cloud. Today, every order to cash transaction runs through that cloud, supported entirely by our own software set. This independent platform is the foundation of our AI stack, strengthening our market position in the most practical way by offering superior customer experience and productivity every time customers interact with us. Our confidence in successfully leveraging AI is based on four structural advantages we are executing against an urgency. Allow me to walk you through each of them on this slide. First, our proprietary IT platform. We control our own destiny because we have an independent cloud-based proprietary IT platform, built and operated on the back of our internal technical and engineering skills. This allows us to innovate and scale without depending on third parties. We will remain a leader in these areas because technology has always been the core of our success. As the AI landscape involves to integrate text, image, video and audio, we will involve with it on our own terms. As such, our AI journeys is not complicated by they need to consult in multiple TMS systems or migrate to other systems, challenges that a number of our competitors are navigating. However, as we assume with time, many of our peers may succeed in moving towards a position like ours. And therefore, we must leverage our advantage that we have it and maintain our lead. Second, the data. We control a lot of proprietary data streams that power our platform and provide context for every AI-driven decision. We have applied AI to cleanse and standardize master customer data in weeks rather than months, materially accelerating data readiness. At the same time, we are converting tribal expertise into structured reusable institutional intelligence, ensuring that the judgment of our best operators become scalable across the organization. More than 10,000 employees access this consolidated intelligence each month through our internal AI knowledge platform, embedding it directly into daily workflows. Both elements, the clean master data and digitizing of our tribal knowledge are prerequisite to fully exploit AI. Lastly, our workflow and people. We are in the midst of further centralizing, standardizing and automating repetitive workflows to maximize AI's ROI, a credit to effective change management. To drive AI adoption, we have formed an AI board consisting of global IT and the business and function units. This setup ensures that AI remains a high priority proof initiative at Kuehne + Nagel, not an isolated one. You can already see the initial impact of our AI efforts in customer-facing processes. In Air Logistics, our AI-powered pricing tool delivers quotes twice as fast as before, improving responsiveness and quote capacity. In Sea Logistics, AI is embedded into myKN, reducing booking time from minutes to seconds and lowering human errors at the same time. In customs, AI-driven automation is reducing handling time per declaration, improving service levels and delivering meaningful cost savings. In contract logistics, machine learning for dynamic workforce planning is showing double-digit productivity gains in pilot sets. These positive results only scratched the surface, and it's a big surface. We see more upside on the horizon as these solutions are fully deployed across our global operations and as a host of other AI development projects are implemented. We expect our efforts to yield material AI-related productivity gains over the next 18 months. At present, it is too soon to provide you with a specific quantified productivity estimate, but we will provide more clarity over the coming quarters. To reiterate, we're not stopping with a handful of examples I just mentioned. We are already rethinking how logistics can become faster, more predictable and more responsive by embedding AI into each operational decision with a priority on the largest ROI opportunities. Doing so, we'll expand the scope of further improvements with every customer interaction. We see AI as a flywheel. Every transaction improves our AI platform. Every improvement enhances our customer experience and every better experience drives more transactions. AI is the foundation of an evolving operating model at Kuehne + Nagel that can contribute to compound value. I'm more than happy to answer your questions in the Q&A section. For now, allow me to hand over to Markus. Markus Blanka-Graff: Thank you, Alireza, and good afternoon, everyone. Thank you once again for your interest in Kuehne + Nagel and taking the time today to review our latest financial results. Looking at the income statement for the full year 2025, one can see very clearly an abrupt slowdown of the global business environment after Liberation date in April, amplified by the drop in U.S. dollar value versus the Swiss franc. Looking at the income statement for the most recent quarter. It is important to call out nonrecurring effects. Most notably, a positive CHF 72 million effect on GP from an IMC accounting reclassification effect versus direct expenses with no effect on earnings before tax. And a net drag of CHF 122 million at EBIT chiefly due to provisions related to the cost reduction program. Excluding these effects, we see that underlying gross profit increased by CHF 90 million and EBIT by CHF 50 million quarter-over-quarter from Q3 to Q4. The seasonal uplift of air logistics volumes and yields were the largest driver of our growth. I will revisit this theme shortly in the context of our working capital development. But first, let's have a look at the progress of our cost reduction program. And let me reemphasize these measures are designed in a way not to impede our ability to grow in line with the strategy we have communicated. As Stefan has mentioned at the start of the call, we have completed the implementation of our cost reduction program, and we reaffirm targeted annual gross savings of at least CHF 200 million. That said, the composition of savings has evolved since we first presented the plan in late October. Here, you can see that a greater proportion of savings is now linked to FTE reduction, this means that an even greater majority of targeted savings are structural rather than variable. And we still expect to achieve the full run rate by year-end 2026. Lastly, we do not anticipate any significant additional one-off costs, although we cannot rule out relatively smaller amounts being recorded in 2026. We will inform if and when these will be recorded. Let us now have a look at the working capital development and how it has been impacted by the transformation of the business responding to the macroeconomic changes. We can see an increase of the net working capital intensity to 5.2% at the close of the fourth quarter versus 5.1% at the end of the third quarter and 4.4% at the end of 2024. Whilst DSO remained stable over the last quarters, DPO have improved from Q3 to Q4. We compared to 2024, both DSO and DPO came under pressure, whereby the spread between has been similar in 2025 compared to 2024. This and the volume growth contributed to an 8% year-over-year increase in the net working capital. Due to the overproportionate increase of airfreight charter business, for cloud infrastructure customers that we started to enjoy over the last 2 quarters 2025, we will adjust the net working capital intensity corridor to 4.5% to 5.5%. What does that mean for our free cash flow generation? In Q4, we produced CHF 396 million of free cash flow or a conversion rate of 147% versus 93% last year. Let me just for better illustration, move on to the next slide. In Q4, overall net working capital generated a net positive inflow of CHF 13 million despite an expansion of our core net working capital. Free cash flow of CHF 396 million was generated, this against a value of CHF 306 million in the fourth quarter 2024. That all resulted in a significantly improved fourth quarter cash conversion of 147%, which compares to the 93% last year, which is above the historical average for a fourth quarter that you can see on the slide. We do expect the strong free cash flow generation along the usual seasonal pattern to continue also in 2026. Now based on the strong development, the Supervisory Board has decided to propose a dividend distribution of CHF 6 per share, to the Annual General Meeting on May 6, 2026. It reflects our healthy profitability, well-managed cash conversion and our success in balancing future cash needs for adapting the workforce for the markets, investing into AI solutions as well as supporting our ambitions for growth. Turning to the financial guidance for 2026. We expect recurring group EBIT in the range of CHF 1.2 billion to CHF 1.4 billion. In terms of expectations for recurring EBIT in Q1, note that it is typically a weaker relative to the seasonal peak in the second half. In the current quarter, we expect the result comparable to that of the third quarter 2025. And as an additional information, we expect already now a further 5% pressure on currency translation due to the U.S. dollar depreciation 2026 versus 2025. Looking forward, our expected effective tax rate for 2026 remains approximately 25%. Our underlying core guidance assumptions include global GDP will grow, but with persistent uncertainty across geopolitics, macroeconomics policies and trade. And base case, global sea and airfreight volume demand growing no faster than the GDP. Our own cost reduction program is on track and we would expect more than CHF 200 of gross savings. These savings will ramp up over the course of 2026 with an estimated impact of net CHF 100 million in the current year. With this, I would now like to close our presentation with a summary of key takeaways. Our focus remains on market beating growth in targeted attractive sectors. Yield pressure moderated in the most recent quarter, a trend which has continued into the early part of 2026. Our cost reduction program is on track, fully implemented with savings to ramp up over the course of 2026. We have a strong foundation to achieve AI productivity gains and project material tractions from 2027 onwards. And lastly, we introduced our 2026 recurring EBIT guidance of CHF 1.2 billion to CHF 1.4 billion. With this, I want to thank you for your attention and hand back to the operator to open the Q&A session. Just one more housekeeping information. We will move the analyst call for the first quarter 2026 by 1 day to Friday, April 24. Please take note of this. Back to the operator. Operator: [Operator Instructions] The first question comes from the line of James Hollins from BNP Paribas. James Hollins: Two for me, please. I was wondering if, Stefan, you might want to run us through your reaction to, I guess, the share price to those sort of general fears that we had last month on Open Mercato algorithm. And how you would, I guess, give your own opinion on the sort of fears around AI disruption rather than the benefit to the general forwarding model, whether you're quite passionate about it or whether it's something you're sort of looking at seriously. And then the second one, GP TEU trends sequentially into Q1. I think you noted [ fee ] was stable. Clearly, Q-on-Q, Q3 to Q4 last year, you're well ahead of your competitors. So well done there. I just wonder if you could give a bit more detail on how you're seeing things in Q1. Stefan Paul: Yes, James, thank you very much, Stefan speaking. So the glass is always half full, right? So I see AI as an opportunity for us, right? And as Alireza have mentioned it, it's based on the proprietary IT platform as well on our capability to clean our own data and to the workflow ownership based on the fact that we have our own TMS landscape. That's the first thing. And if you remember what we have done in 2024, where we have started to dismantle the regions, right, that was as well something which is helping us now because now we have the business units, the products pretty much driving the process. So process stability and a certain process reliability on a global basis is the prerequisite for AI. So overall, I see it rather positive for us because we have all the ingredients now with Alireza and the team, we are pretty sure that we can create certain value, and we have mentioned a couple of times that we see productivity gains coming our way in the next 18 months. The other question -- or the other part of the question was with the algorithm and everything what we have seen in the white paper coming up 2 or 3 weeks ago and the reaction from the marketplace, I think these reaction will continue. The question is, is the substance behind. This is the first question. And the second question is, we have seen it already a couple of years from now when there was a wave which we call digital forwarders. And everybody was in the belief 5, 6, 7 years ago that the digital forwarder industry will be able to disrupt the old economy, so to say, and the result is pretty clear. I think AI, and we should not forget, right, a pellet is not talking. A pellet has no voice other than our label, right? But at the end of the day, it's a combination of infrastructure, people and the knowledge of people and then backed up and supported by AI. So overall, my take is we see it as an opportunity and not as a threat. But on the other side, we need to really march ahead and we need to be quick in adapting and executing our AI strategy. Markus Blanka-Graff: So James, maybe for me for the second question on the gross profit per TEU. Correct observation, Q3, Q4, stable gross profit per TEU. And as far as we may tell at the current stage, also into the first quarter, broadly stable, at least what we have seen over the first 2 months. Operator: The next question comes from the line of Alexia Dogani from JPMorgan. Alexia Dogani: Just firstly, net debt to EBITDA, I believe, is now 1.5x. Is that the level you want to sustain? Or do you want to actively bring down? And then secondly, if we look at the fourth quarter performance, it was really very strongly driven by the air freight peak. When we look at the seasonally adjusted kind of profitability level, is it fair to look at the 3Q as a kind of starting point for the year, before with the next year's season? Stefan Paul: Alexia, Stefan speaking. I'll take the first one. We still stick to the 1.5% growth aspiration in the [ transactional ] business units. And let me reiterate or go a little bit more into the details. So in airfreight, we have achieved it already now. The last couple of quarters, full year result with 7%, and I think this is pretty much in line with our promise we made during the Capital Markets Day back in March. And we do not see any change in the pattern the first 2 months. And as well, the pipeline is very strong, and I strongly believe that we can continue with the growth pattern which we have seen in the last couple of quarters. So a clear tick in airfreight. We all know that in sea freight, we need to become a bit better in terms of the volume growth aspiration is concerned. Despite of the fact that we have been done quite well in comparison to our peers, but nevertheless, we will stick to it. I said a couple of minutes ago that we will strengthen and foster our sales efforts out of China with a prepaid business. There are a lot of new comers in the marketplace in terms of customers are [ designing ] on the Chinese prepaid market where we can leverage even more. And in Road, I think we have seen the tipping point. February so far has seen quite nice growth, single digit still, but no decline anymore. So I believe in Road, if that is going to continue including the customs brokerage agenda, we have a fair chance to deliver as promised in Air and in Road and see we do the utmost in order to keep our promise as well. Markus Blanka-Graff: So next, maybe for the second question on the, let's say, starting level I think we have mentioned that for us, Q3 is a good starting point. Yes, the air freight peak has happened in the fourth quarter. I have to say, which is also a seasonal pattern that we have seen for many, many years. We have not been used to it anymore because for some years, that hasn't been the case, but that is how it is usually. More importantly, we have a very strong volume growth and the volume growth pattern is still intact. So I would expect fourth quarter and also volume growth to continue into the first quarter on the air freight side. But not to forget, for 2026, we should see, and we do in the first 2 months, clearly, that cost savings are ramping up. So that's going to support certainly the results in 2026. And contract logistics has been a very strong contributor in the fourth quarter as well. So I think they are various elements that play together into the starting point -- starting point being Q3 2025 to let's say, a good development into 2026. Alexia Dogani: And just to clarify because, I think, my first question was slightly misunderstood, but Stefan, your comments on growth were very helpful. I meant financial leverage of the group is now at 1.5x net debt to EBITDA. Are you comfortable with this level? And should we expect it to be maintained? Or will you actively reduce it? Markus Blanka-Graff: Okay. Sorry, Alexia, that was my mistake. I understood something about growth, the 1.5x. So at least we have already answered a question, which probably would have come up later in the call. Alexia Dogani: Yes. Markus Blanka-Graff: Leverage. Yes, we are comfortable at the current situation with 1.5x leverage. You will see we have a couple of ideas how to refinance the current situation in appropriate way so that we are going to reduce a little bit on the interest cost as well. So yes, that's the current situation. Clearly, and you know that we, over time, kind of not saying this is 2026, but it's a longer time that we are looking at. We would prefer to come back to a situation that brings us closer to a net cash position. But for the time being we are fine where we are. Operator: The next question comes from the line of Alex Irving from Bernstein. Alexander Irving: I have two on AI, please. First of all, I hear the argument about you've got the good proprietary TMS. You've got clean data, you've got workflow ownership. You've got all the ingredients to reduce cost through AI. But how do you feel about change management? Do you have the right skill set or are the risks you worry about in actually implementing AI and how you're seeking to limit those? Second question, also on AI. Let's say you're able to achieve cost reduction. To what extent do you expect to be able to hold on to those cost savings in higher margins? Or is the aim here to use this price more competitively and to grow volumes faster? Stefan Paul: Alex, Stefan here. I take the first part of the question or the first question, change management, right? I think this is one of the most crucial questions and most crucial topics and aspects when it comes to AI deployment and execution. I think Alireza mentioned that we have already 10,000 people working with our internal AI stack. That's the first prerequisite. The second one is that you need to train, educate and coach your people, right? We all know in a couple of years from now, middle management and leadership is both managing human beings alongside with digital agents. And none of us, I would say, has a good experience about how do you manage a digital agent, right? A digital agent can execute 25,000 activities in a certain time frame, but you need to manage the activities. You need to manage the agent as well. And here, it comes about -- everything comes about change management, education, coaching. As I mentioned before, you need to invest, and we will invest this year quite a lot into our people, into the entire organization, how to leverage, how to work, how to understand AI and what needs to be done from a leadership perspective. And I believe that Alireza would like to conclude and add a little bit on that as well. Alireza, please. Alireza Nemati: I think also what is -- thank you, Stefan. I think what's also important is we will not just deploy AI for the sake of AI. We will work together with our people to identify where we can utilize AI to streamline repetitive work to free up time for them to focus on what matters, closer customer relationship, expectation management. So that's one angle of it. The second angle of it is that we have dedicated tiger teams that work together with the business and functional unit to really identify what are the challenges that the people are facing in the ground that we can then utilize AI to solve that. So on top of what Stefan just said, the technical aspect is working closer with people and really understanding how we can utilize technology to solve the problems. Markus Blanka-Graff: And Alex, to your second -- or to your second part of the question, let's say, on the cost reduction and how it's going to be remaining or allocating or ultimately transitioning to the customer. I think it's reasonable at least to assume that a certain portion of productivity gains will be shared with customers, right, but not all. But I think what is even more important is that is that fact that you can create productivity gains and capitalize on it is only true for the largest and the well-resourced forwarders, yes. Because when we look into much smaller units that, that will become insignificant, if at all, reachable due to standardization, data quality and all the stacks that we have seen that Alireza has been talking about. So for me, it's not so much how much can we keep. For me, it's how much can we generate versus our competitors that are eventually not able to generate any. Operator: The next question comes from the line of Muneeba Kayani from Bank of America. Muneeba Kayani: So first one on AI and just following on from your comments right now. Like what is proprietary about your in-house IT stack? Like why can't it be replicated by other forwarders using third-party software? We've seen Descartes, Magaya, all of these coming up. And could -- like is there something really differentiated about your tech stack that allows you to have more cost savings that others cannot replicate? It's kind of the first question on AI. And then secondly, just on the guidance for 2026 and the EBIT range of CHF 1.2 billion to CHF 1.4 billion. Can you talk about how you thought about that range? Like what are the scenarios on volumes and yields at the low and the top end of that range? Because you talked about the stable yield's trend. Is that kind of the midpoint is what you're talking about? Just some clarity on that would be helpful. Stefan Paul: I will take the first question. So what the difference is towards the third -- relying on third-party data stack is the following: the first one is given that we own our own TMS, we have full control of the end-to-end processes, meaning that instead of individually improving independent use cases, you can exactly integrate end-to-end and really make a big impact on improving the entire workflow. You can only do that if you own your own TMS. If you're not, you have to negotiate with third parties on the improvements of their stack. That's the first element. The second element of that is with owning your own TMS, you are capable of controlling and centralizing our own data. One of the biggest challenge in this space is to really harness and centralize the data that you have, cleanse that data and use that data to feed your AI models. By being able of having our own TMS in the cloud, having our own proprietary data, we can now start to centralize and standardize workflows on top of it, which gives us an advantage compared to the others. Markus Blanka-Graff: Excellent. Thank you. And for the question around guidance, let me just reflect a little bit on our presentation, Page #16. I think the 4 major elements that are out there, we have listed our assumptions around global GDP, market demand on the sea and airfreight side, and obviously, the expectations around cost reduction as well as what we know today on the translation -- on the potential translation impact because obviously, that's always a different question. If you were to look for more detailed information on gross profit per TEU or 100 kilos or so, I would politely ask you to get in touch with Chris on the IR side, if you can share a bit more details than I would like to do here on the larger call. Operator: The next question comes from the line of Jason Seidl from TD Cowen. Jason Seidl: I'm going to switch it up a little bit away from AI. Your small businesses accounted for about half of your Sea Logistics volumes. Can you touch a little bit on the margin profile differential with this group? And if you think this is the desired mix? Or should we expect to see further penetration in that market? And then for my second question, recently, a CEO of another forwarder mentioned, I think, in a post that about 18% of the airfreight capacity was being grounded due to the conflict in the Middle East. I guess, one, do you expect this to continue? And two, what near-term impacts do you expect this for you -- to have on this air business? Stefan Paul: Yes. Jason, thank you very much. I was the guy who was talking about the 18% this morning, most probably, right? So what you see is -- I tackle the second one first, what you see is -- now with the Middle East crisis is that 18% of the airfreight capacity in belly and charter is grounded for the time being. And what the impact is that most probably in the next, let's say, week or so, by end of the week, beginning of next week, we will see most probably certain backlogs arising in Southeast Asia and in China for the European and the U.S. marketplace. And then the question is, what is happening on the demand side, on the customer side because there is a mismatch most probably them coming similar to the COVID times on supply and demand. And then, our aim is to help as much as we can to put additional capacity for this 18% directly in charter capacity from the various origins into the destinations, right? But it's too early to say what the impact will be because it's only -- we are only 3 or 4 days into the situation. But the likelihood that this is changing the demand and supply situation is rather high, and this is on the horizon for the next couple of days, and we are monitoring the situation extremely closely. On the SME side, it's 50%. We mention that now we are really getting traction on the SME side. I think it's -- we said it a couple of times, profitability is 1.6x roughly. And I would like to use this question to give a little bit more color in terms of what is happening. So we are growing with our SME business or with our own controlled business quite nicely, and let's call it, everything outside of the U.S. If you look into the trading pattern for the first 2 months, we see -- we have seen single-digit uplift in terms of volume, but at the same time, roughly 10%, 12% lower volumes into the U.S. marketplace. And as one of the key or as the market leader into the transpac, that means twofold for us. First of all, we have a significant upside potential for the later of this year as soon as the market bounces back. And it as well underpins what I have said before that focusing on SME with our own Blue Anchor Line activities is paying off outside of the U.S. marketplace. So that hopefully gives you a little bit more color on the situation in sea freight. Operator: The next question comes from the line of Marco Limite from Barclays. Marco Limite: I've got 2, which are follow-ups to some of the topics that have been already discussed. So AI, you have been talking about expectation of improvements over the next 18 months. But can you confirm if you expect any AI benefit in 2026 or that is going to be all 2027, so back-end loaded in the, let's say, 18 months you were mentioning? And in the context of that, you are not changing the CHF 200 million gross cost savings guidance, but you're actually changing a bit the drivers of those cost savings with quite a few more FTE reduction versus the previous guidance. So just wondering whether that higher FTE reduction is actually driven by AI and -- yes. So this is the first question. The second question, just a follow-up on your guidance. What extent, let's say, Iran-related scenarios are reflected into the guidance? Or -- I mean, Iran is just too fresh, and therefore, it's not included at all in your guidance? Markus Blanka-Graff: Marco, it's Markus. Well, I think these 2 questions, they are broadly in one bucket. I think from a guidance perspective, indeed, the most recent development have not been accounted for. As we said, we have taken some assumptions around currencies and markets. If this is now changing dramatically through the event, then obviously, we will have to look deeper into it. It's too early really to make any conclusion out of this. From an AI perspective, you're right to assume that for 2026, we have not factored any material productivity gains yet. But as AI is AI, right, sometimes you see phenomenal results sooner than what you thought. But for the time being, we would like to stay on the safe side and say for 2026, we are not expecting and not factoring any productivity gains into it. Marco Limite: Okay. And just a quick one, which is a bit more technical. So you had CHF 122 million of one-off costs in Q4. Just wondering whether those are cash costs, and if yes, are cash costs for '25 or will be a headwind in '26? Markus Blanka-Graff: The vast majority of cash out will be in 2026. Operator: The next question comes from the line of Patrick Creuset from Goldman Sachs. Patrick Creuset: My first question is just to get a better sense of the overall ambition here on conversion margins in Air and Sea. I think, when you look at the starting point in the second half of '25, you're basically at a 20-year low, I think, on air and sea conversion margins. And then, I think you've highlighted the productivity upside from rolling out AI tools. So I think overall, when we -- when you put those together, I mean, it's the idea to go back to, let's say, historic average conversion margins somewhere in the 30% range. Or do you think, basically, the ambition without guiding that when we look at this in a few years time, you could be materially higher? Markus Blanka-Graff: Patrick, it's Markus. Twofold as an answer, I think. When we look into the operational results, so backing out the CHF 122 million, obviously, for the fourth quarter as a one-off cost, right? We are currently trading at a conversion rate in the fourth quarter, just to get our starting point right to 23%; for the full year '25, it was 29%. We are trading in airfreight around 28%, 29% the full year '26. Not to forget, at the same time, we are not only at the historic low, as you said, on some of the quarters conversion rate, we're also on a historic low for the U.S. dollar. So that certainly had an impact for us as well. Recognizing that U.S. dollar translation not only impacts the gross profit, but also the cost, I'm fully aware of that. But since sea freight is fully U.S. dollar-denominated and not all of our costs are in U.S. dollar denominated, there is a gap that is significant, not as an excuse, just as an explanation. Going forward, clearly, automation, standardization, AI, they are just 3 drivers, I think, of our productivity going forward. One single one doesn't work. We have to get also standardization at the forefront, including the change management that will realize these or materialize these cost savings. But to answer your question simply, we stick with our 35% conversion ambition that is collective or together sea and airfreight. Patrick Creuset: Okay. And then, Stefan, your point on change management leads to my second question. I think it's pretty clear you're -- from the tech stack, you're well positioned here conceptually to extract a lot of productivity gains. But in terms of how you would suggest we directionally model this, would we -- basically, as your people become more productive, would you say that we go back to the growth algorithm, let's say, that one would have known from Kuehne 10, 15 years ago, where you have substantially higher volume growth than the market on a stable-ish cost base or FTE base, and that's the way you get the margins and result up? Or would you say that if the volume environment remains weaker, then we could see continued absolute cost out further around of what you've done in the fourth quarter? Stefan Paul: So overall, if I could wish for, right, I would go for the first, of course, right? Significant more volume in both sea and air, road and contract logistics with the same amount of cost position over the same manpower. But I think the world is not perfect. And you might see in certain areas that we can do exactly that. And in other areas, we need to adjust our cost base, right? So it will be most probably a combination. But in a perfect scenario, we add significant volume with the same amount of cost and manpower. Patrick Creuset: But do you see this as sort of a bit more of the same sort of thinking back to eTouch and was kind of standard digitization where you have a couple of percent productivity growth? Or do you see a step change to something that could be more mid- to high single-digit productivity pace? Stefan Paul: I think it has -- it comes back a little bit to this eTouch when we started it, right? But AI, we all know, has a bigger potential. And it's a little bit too soon, as we said, right? So give us a little bit more time, and we will -- we have committed ourselves during the next couple of quarters to give more color or to add more color to that, but it's too early to make a statement now. Operator: The next question comes from the line of Andy Chu from Deutsche Bank. Andy Chu: Just one question, please. On the cost savings, could you just give us some help in terms of the phasing of those cost savings by quarter, please, for this year? Markus Blanka-Graff: Andy, now you're challenging me, right? By quarter is a bit of a tricky one, but I would say we are running up to the full quarterly cost saving of -- so of the full annual cost saving of CHF 200 million on a quarterly basis in the fourth quarter. So that would be around CHF 50 million. And I would see it largely linear to be open. I think from the first to the fourth quarter, there is a continuous -- how do I put that rightly? I think a continuous outflow of cost that is pretty much linear, I think, over the quarters to go. Andy Chu: Okay. So you will have some benefits already in Q1? I think I had maybe understood that the -- sorry, the CHF 285 million wouldn't carry any cost benefit, it will come from Q2? Markus Blanka-Graff: No. We will already see some cost benefits in the first quarter, but they will certainly be much smaller than obviously the ones in the fourth. But the development between the first and the fourth quarter should be a linear development. Operator: The next question comes from the line of Sebastian Vogel from UBS. Sebastian Vogel: The first question is on the guidance, and potentially, it's also impacted, of course, by Iran, but nonetheless, did you discount in your guidance or what sort of situation for the Red Sea you discounted in your guidance? That would be my first question. The second one is coming back to the AI topic. And, of course, it's not easy, but nonetheless, is there any sort of thoughts that you can share with us on quantifying the benefits on EBIT or straight line over time that you can allude to. Markus Blanka-Graff: Sebastian, it's Markus. Can you repeat the first question on the guidance? I didn't really fully understand the question. Sebastian Vogel: Sure. What sort of situation for the Red Sea have you discounted in your guidance? Markus Blanka-Graff: Red Sea, okay. Sorry, I got that. So we were originally thinking like during the year 2026 that Red Sea would slowly go back into operation, right? That obviously is probably moved out a little bit in time. It seems unlikely, at least from where we currently sit. So that could still have an impact. As you can imagine, it can have an impact on rates and everything else. But for our guidance, we had assumed that at the back end of 2026, there will be carriers regularly using the Red Sea. What it now means for the guidance, frankly, I don't know yet. And on AI, quantifying future benefits and productivity gains, I think it's -- we are in such an early stage that it's really hard for me to tell you, I don't know. I cannot quantify reliably, and I think it would be not entirely serious to put a number out there. What I can say is we clearly look for material impact that is going to come into 2027 and the following years. Maybe as an anecdotal evidence to that, I can confirm that in the use cases that we are having already live today, the impact is very material. So that gives us confidence and hope, obviously, that things are going to progress in that way. But as Alireza also said, it's not a software that you apply. It's something far more fundamental that is -- that has an impact on your entire service delivery execution operation. And hence, the benefit is much bigger, but also the uncertainty, how much is going to come out of it. But let's stay with material at the current point in time. Operator: The next question comes from the line of Arthur Truslove from Citi. Arthur Truslove: Three, if I may. First one, please, can you just tell us what your assumptions for air and sea freight trends are over the course of 2026? Obviously, there's a range within your guidance. So obviously keen to sort of get a feel for what that -- how that looks. Second question, it's -- clearly, the conflict in the Middle East delays the Suez Canal reopening. That doesn't really change the current supply situation on the sea freight side. Can you talk about whether you think it will drive demand in any way at all, indeed in which direction? And then thirdly, what are you seeing in terms of demand from an air perspective? Obviously, you have the grounding of the planes in respect of the Gulf Airlines. What are you seeing on demand there? Stefan Paul: Yes. Arthur, Stefan here. I try to answer the airfreight questions and the Red Sea. So airfreight basically from a volume assumption into 2026. As I said at the beginning, I believe that we see a continuation of the growth we have demonstrated in 2025. So similar kind of numbers. And automotive and mobility was the sector where we have seen the highest decline in terms of the volume is concerned. That has now equalized in the first couple of weeks this year. We see a strong demand in aerospace, health care, pharma, hi-tech, semicon, hyperscalers as well the industrial piece is coming back. So overall, we are quite confident that we see the same pattern in terms of airfreight growth for 2026 versus 2025. I think in sea freight, I mentioned, we will intensify our sales efforts for the Chinese prepaid market into the world, which will help us hopefully as well to see a better growth into 2026. On the Suez Canal, this is difficult to quantify. I think the overall situation in the Middle East, as soon as we see a shift from sea to air, there will be further demand coming in into the air freight. So I would be -- I would say -- at the current stage, I would say that the airfreight business will benefit more than the sea freight business from the current crisis situation we see. It's basically for sea freight, too early to judge after 3 days. And maybe a little bit -- you didn't ask it, but I think taking the opportunity as well because we had such a good year in Contract Logistics in 2025, so we have the most healthiest pipeline ever in Contract Logistics. And I believe from what I see and from the gain ratio, we will see a very good traction for the Contract Logistics business unit into 2026. Operator: The next question comes from the line of Rajpal, Kulwinder from Baader Europe-AlphaValue. Kulwinder Rajpal: So I wanted to firstly ask about hyperscaler business within Air Logistics division. And how much volumes came from that particular business in 2025? And how did that business grow for you? And when we talk about developing that business further, what sort of initiatives do you need to take? And what sort of investments you need to make when we think about accelerating that towards 2030? So that's the first one. And secondly, I just wanted to quickly check with you, how do you -- how should we think about M&A in 2026? Is it fair to assume that it would be similar to what we saw in 2025, so a couple of bolt-ons? Stefan Paul: Should I start with the hyperscalers? So we will not disclose the volume figures. But what we can share with you is out of the magnificent 6 or 7, including Tesla, right, so we have somehow -- with 50% of them, we have a decent business. With the others, we are starting the business opportunities. We are gaining traction. We implement business trade lanes on the transactional business on the freight side and as well now since a couple of weeks in contract logistics with our vendor management service offerings. So in other words, the room to maneuver, the room to grow is significant still because we have just started a year ago, right? But I will not disclose exactly the numbers how much volume have we gained, but there is quite some room to maneuver. Markus Blanka-Graff: And maybe quickly on the M&A side, you're right, I think it's fair to assume we will continue with smaller bolt-ons, high-quality businesses where we can scale that knowledge through our own network. So on that side, I think we shouldn't expect any major changes. Operator: The next question comes from the line of Marc Zeck from Kepler Cheuvreux. Marc Zeck: I guess 2 left for me, one on the cost savings and maybe you can elaborate a bit what is behind changing the kind of composition of the cost saving. Is it that your efforts fell a bit short on the non-staff-related part, and therefore, you kind of squeezed staff part more? Or did you feel like there was an opportunity on the staff side and to not be overly aggressive if you kept kind of the headline number unchanged, but there's maybe a bit of dry powder, so to say, on the non-staff side to maybe over deliver? That's the first question. And second question, maybe for Alireza on AI. I guess, you mentioned bookings and quoting as parts where you currently already employ AI, where you see large opportunities. To me, that seems like, say, low-hanging fruits. And maybe that's not you tell me, but wouldn't kind of larger savings or efficiency gains be more like on handling disruptions, having AI handling disruptions, rebooking, rerouting, whatever. Do you see that as something that is close, let's say, in it from a time perspective? Or are we still quite far away from that, especially in air and sea freight? And if there was any progress, would you expect that we see that first in road, be it U.S. road or European road and only at a later point in air and sea freight? That's my 2 questions. Markus Blanka-Graff: Marc, it's Markus. So on the cost savings, interesting observation, you're fishing for more savings. And I think what is important for us is that we are saving on the structural side. And I think this is -- sustainable structural cost reductions is our paramount task. And I think with the cost reduction on the FTE side, this is not simple adjustment of operation workforce to volume development. This is structural change. This is a sustainable change of overall cost structure. And I think that was our primary and most or top priority activities. Yes, on the other side, when we talk about facilities, network and all the other costs that are on the variable side or the non-staff side, that is something where we see further potential going forward, consolidation of locations. And so, on the other hand, some of them also take a bit more time to be implemented. Hence, I think our priority was right to work on the staff topics first. Alireza Nemati: On the AI bit, I would divide it into 2 buckets. They are clearly repetitive workflows or processes where AI can quickly help us to automate that and standardize it. But there are going to be also tremendous improvements in the entire value chain, specifically around the TMS, but then it requires to recreate the workflows with AI at the core, and that will take them some more time. Operator: The last question for today comes from the line of Gian-Marco Werro from ZKB. Gian Werro: Two from my side. First one is your progress that you will do for your volumes in sea freight now that's serving for the first time more than half of your volumes to SME customers. Can you tell us if you have more ambitions for 2026 to increase this even further? And then, I remember over the last few years, we also spoke about potential profitability improvement with cold chain solutions, and also, for example, special trade routes that you want to expand. What have your recent developments been in relation to this? Stefan Paul: Yes. Let me take the first question on the SME, Gian-Marco. So as more is better, pretty clear, right? Because the profitability is 1.6x of the average. That is something which we put further. We have a pretty good hunting force on the SME, which we will leverage to the maximum. So the question is how fast can we grow, what can AI do for us in order to compete, as we always said, with the smaller forwarders, how can we exceptionally grow on the customer experience side on the Net Promoter, what do we need to do in order to convince more mid-sized customers to go with Kuehne + Nagel. So overall, the message is, of course, as much as we can and with full-speed ahead. Markus Blanka-Graff: Maybe on the second part, Gian-Marco, although it links very much into the initiatives that Stefan just talked about, yes, there is always new trade lanes, special services, areas where we want to grow in attractive sectors. And I think without repeating, but our development on volumes, right, on hyperscalers has been one of these proof points. And our development that we are potentially looking into markets where currently we are not 100% covering the geographies. So especially in air, the cold chain has been designed some while ago and is continuing to evolve. So this is our normal course of business, if you like, to pick attractive sectors, move in either through organic growth, or in my words, as small as possible, but as well managed as possible businesses and then leverage that through our network. So strategy confirmed, I would say. Operator: Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Stefan Paul for any closing remarks. Stefan Paul: Thank you very much, Moira. Thank you very much for listening in, for your questions. And looking forward to the next call. Have a good spring time, weather is becoming better and enjoy it. And thanks again for listening in. Operator: Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.
Michel Gerber: Good morning, everybody, and welcome to VAT's Fourth Quarter and Full Year Results Presentation. We have today with us, as usual, our CEO, Urs Gantner. I think it's the second or the third time, right? Yes, the third time that you are doing this since you took over. And of course, Fabian Chiozza, whom you know very well, too. We published our annual report, the media release or presentation this morning. I apologize for some delays for you who got it in the inbox directly at a somewhat later stage, only shortly before 7:00, not 6:30. But the e-mail provider, EQS had issues with sending out the e-mails to the recipients on the mailing list. So on Bloomberg Reuters, you already have seen the news, but you only got it a little bit later in your personal inbox. So apologies for that. So without further ado, I would like to hand over to Urs for the presentation together with Fabian. Then we have the normal Q&A session, taking questions from the room, but also from people on either the webcast or over the phone. And then after that, for those who are here in present, they can then also join us for a small buffet lunch later on for further discussions. So with that, Urs, the floor is yours. U. Gantner: Thank you, Michel. Thanks for the introduction. And also from my side, welcome. [Foreign Language] Happy that I see more and more faces that I already know. So as Michel mentioned, my third time now, and the last 2 years, I was always promising that the ramp was coming, right? And what you will hear today, the ramp is here. So it's certainly a special day also for me today. So you have -- we released our numbers already early in January. So you will notice no big deviation on that, no big changes, except that we can really confirm the ramp is coming. I always say semiconductor in any part of the cycle, in any phase of the cycle, it's really an exciting field and an exciting industry. At the moment, it's really vibrant. We see that with our customers, with the end users. You see the numbers are going up almost every day, what will happen. And often, it's not really rational what we hear. So there will be a kind of a leveling out over time. So what we show -- what we -- today, we will go through the highlights shortly, review on 2025. And then I will hand over to Fabian, who will do a deep dive in all the financials and then maybe the most exciting and what you are most interested in the outlook for 2026 and beyond that. We will also have enough time in the end for Q&A. So the same setup for those who are online, use the chat box. And of course, we will also answer the questions coming up here in the room. So let's turn to Slide #4 on the presentation that is also online available. So 2025 was a year about a broad adoption of the AI investments. And also this turned in the end in wafer fab equipment. Often, we say semiconductor is cyclical. But if you see the wafer fab equipment, basically in the last year, it was always a growth and then it kind of went on a plateau and then it grow again. And at the moment, we are just at this stage where we strongly believe that the growth will come again. Also for 2025, wafer fab equipment was a new record. Depending on the models, it was roughly USD 115 billion means roughly 12% growth compared to 2024. For VAT, the highlights, 2025, it marked our 6 years anniversary. So we had some celebrations, of course. And while the best gift we could give ourselves is come up with new records. And we had new records last year. One of it is factory output. It was the record high in factory output. We had new records in spec wins, specification wins. So this is our future business. And also financially, we had a fantastic record in free cash flow. Orders, what you see we were kind of flat year-over-year, but actually about 6% up on constant currency. Sales was up 14%. And also here, constant currency would have been up 20%. And as I mentioned, innovation, this is the driver. This is -- also my heart is this innovation. This guarantees that we are ready for the future and shows our power and the collaboration with the customers with 150 spec wins and also a record in investments in R&D. It underlines that we are investing in the future. Last year, we also launched new products called our [ Mod ] Horizon 2 products, we call it. So the first time we are also reporting our gas inlet, the ALD valves that were launched last year and also very interesting for us, the inauguration of the innovation center. So we have now a new home, a new home where all the engineers are under one roof, very close to operations. And this is the strength of VAT that we bring people together and innovate. So we not only had a new building in Switzerland with the innovation center. We also had the opening of our new facility in Romania. It acts at the moment as an internal supplier, but also gives us much more flexibility in the long run to scale up in this region. Financially, Well, we had headwinds. You know that pretty well. But despite these headwinds, I think we came up with very strong results with an EBITDA of 30%. And as mentioned, with a free cash flow of CHF 230 million, which is a record for VAT. This also shows resilience. Whatever happens outside in the world, our flexible operating model is agile. We can adapt fast to come up with outstanding results. And now before we move on, I would also like to take a moment to thank the global VAT team for these outstanding results. Their commitment and agility, they know they have to react fast. They know our market. And I already mentioned them this year, well, it's going the other direction, but it's not being a quiet year at all. So I often say once in such a phase of the cycle, it's like a diesel engine that was idle for some time. When you start it again, it makes some noise and smoke and then it runs smoothly. And I think this is how the industry works now, a lot of expectation going forward, but it will also a few months that it runs smoothly. On Slide 5, we see the split in our segments. So there is no big change. So it is roughly 80% in valves and 20% in service. About 80% of our service -- of our business is in semiconductor with about 20% in the service business. Regionally, you see it's more and more moving to Asia. So almost 3/4 of all our business, our products go into that region. That's, of course, the customers in Asia or Western OEMs that are Asian-based. So -- and in China, still about 30% of the business is in China. You might remember that after half year, that ratio was even higher so that China business was a little bit half year, first half year front-loaded and then muted or the others did pick up in the second half. So overall, let's say, 1/3 of the business going directly into China. Yes, on Slide 6, we update our market share numbers for our core products for our valves, our vacuum valves. And here, these underlying numbers are still preliminary, so not completely finalized from the market research. But we continue to have a very comfortable market share of 71% in semi and semi-related. And if you would go only in semi, valves, it remains on the 75%. Outstanding still is our market share in control valves. So the most advanced products, it is clearly above 80%. As we go to Slide #7 and also here, it's important to mention that all these providers are still gathering also the data for wafer fab equipment. We see that the growth was roughly 11% year-over-year. Interestingly, we see that the vacuum-related wafer fab equipment did win about 5 percentage points. And this is also what we always told if the leading edge is kicking in, more and more vacuum will be required, and this is what we see also compared to 2024. Also spending in new technologies, so we differentiate between the node size below 7-nanometer and above. Also here, we saw a growth of 37%. And China, also an interesting lost a little bit, but actually in absolute dollar value was kind of stable. It's also important to mention that some of these investments, not all of these investments are greenfield. So they are not all of them are equipped new fabs. It's also a lot of upgrades, especially last year in the NAND business, there was a lot of upgrades and some of these upgrades, we could -- we are not participating because it's not related to the vacuum systems. We will have some more details about the wafer fab equipment and how this will evolve in the third part of our presentation in the outlook. On Slide 8, we see one of another record. I already mentioned the growth in spec wins. So we achieved about 150 specification wins. About 70% of it is in the semiconductor-related environment and about 18% in our so-called adjacent products. This means the advanced modules, motion components and the gas inlet valves. Well, what does that show -- what does it mean to me? It shows that our customer, they are, first of all, feel comfortable to work with us on IP-related topics and prepare the future with us. And secondly, it demonstrates that we are spec-ed in and we are ready and will grow once the adoption of these new tools go to the market. Growing with the adjacencies, I mentioned it's about 18% of the spec wins also helps us to increase our share of wallet on the tool. So we have a very high share on valves and with the adjacent products, we increase the share of wallet on the tool, and this is also a big part of our future growth story. So broadening the footprint across the tool architecture gives us resilience also in the long run. With that short feedback, I hand over to Fabian, who will give us a deep dive now in all the financial numbers. Fabian Chiozza: Fantastic. Thank you, Urs. So good morning, everyone, and also a very warm welcome to those of you who are listening in on the webcast. 2025 was a year that demonstrated both the strength but also the resilience of our organization. We delivered solid results and made tangible progress on our strategic priorities despite operating in an environment that remained demanding and uncertain throughout the year. Volatile markets, external shocks and FX swings require continuous focus and disciplined execution. Against this backdrop, our teams performed exceptionally, managing complexity, adapting to changing conditions and ensuring ramp readiness. On the following pages, we'll take you through the financial highlights, key drivers behind our performance and also the opportunities in 2026. Let's start with a recap of orders on Slide 10. Order intake 2025 amounts to almost exactly the same number as the year before, CHF 1.033 billion, up about CHF 60 million or 6% on constant currencies. Seemingly no change in order flow. However, the underlying trends have seen a shift whereas '24 and also the first half of 2025 was mainly driven by mature nodes and China. The acceleration in leading-edge build-out was noticeable in the second semester of last year. Furthermore, global service, a key leading indicator for fab activity, saw a 76% rise in retrofit orders in the second semester and a 21% increase in demand for consumables as memory fabs are running at higher utilization rates. Let me also remind you about the preorders we mentioned in the high-level release mid of January. This CHF 30 million to CHF 35 million were predominantly driven by price increases for 2026, which come into effect during the current quarter. On the next slide, we show the development of orders in Q4 and full year. The number that stands out is the acceleration of order intake in Q4. Orders grew 28% quarter-on-quarter. Book-to-bill increased to 1.2. This also helped the order book to grow 18% quarter-over-quarter. Sales were flat Q4 versus Q3 or just 1% up on a like-for-like basis. Overall, for 2025, orders shared a mixed pattern with a trend of increasing leading-edge activity accelerating orders but also sales. Moving on to Slide 12. As you know, adjacencies is one of our pillars of growth in order to deepen our customer intimacy and to expand our share of wallet. Adjacencies is thus a great indicator for leading -edge build-out and activity. As you can see, we saw a 23% growth year-over-year in adjacency revenue. At circa 9% of group sales, we are progressing to our target of 15% of total sales in the near term. We also added a tangible example of how we are expanding our content in a customer jewel. On the right-hand side, we see a generic schematic based on actual customer example of VAT gaining share by selling load locks and also transfer chambers, being able to offer our pin lifters and gas inlet valves on top of it. In the future, this approach will enable us to get to our target of 3% to 5% share of wallet. Why are we certain to reach this? Worth mentioned our 150 specification wins at the start. Around 18% of these were in adjacencies, providing us good visibility on future growth opportunities. Following last year's strong gross profit improvement, we saw a slight decline by 2 percentage points to 64%. The main driver was a reversal of our net working capital buildup we saw in 2024. Further pain points were the FX development with ongoing strengthening of the Swiss franc against all major currencies. Our continuous improvement program, DarWin, again yielded about 2% gross savings on gross profit, which not only softened adverse FX and working capital effects, but also compensated raw material price increases, such as our main commodity aluminum. On the next chart, 14, we see the stability of our EBITDA margin, testament to the resilience of our flexible operating model. As previously discussed, significant working capital reduction of 8 percentage points versus prior year down to 25% over sales burdened our P&L. We adapted our structure to market demand and established our global business service hub in Malaysia to cope with ongoing FX challenges. Together with our DarWin program and favorable hedging gains, we increased the H2 margin to 30.4% while at the same time, continuing our R&D spend that reached also a record level of CHF 75 million, up 22% versus prior year. Let's now get to the bottom line with some of the other financials on Slide 15. D&A increased by about 11% on the back of our front-loaded infrastructure investments. EBITDA thus reached CHF 273 million, a margin of 25.4%, slightly below prior year. The net finance result is reflecting the ugly side of FX developments with a revaluation on bank balances and intercompany financing. Taxes slightly increased to 16.7% versus 16.1% a year before, mainly due to higher profit share earned abroad with higher statutory tax rates. Taking all of that together, net income increased slightly to CHF 214 million or an EPS of CHF 7.15. Once again, I want to remind you about the economic value creation potential of VAT. We measure this as return on invested capital and cash return on invested capital. Both metrics despite record R&D spend and continued ramp readiness preparations are significantly above our weighted average cost of capital. With major CapEx projects in place and operating leverage to kick in during 2026, we expect continued expansion of both KPIs in the near term. Free cash flow generation is shown on Chart 17. Free cash flow increased to all-time record levels of CHF 230 million, up 26% year-over-year. While VAT always demonstrated its strong cash generation ability, 2025 certainly was a year of strength. VAT increased free cash flow as a percentage of sales to 22% and the conversion rate rose above the long-term average to 72%. Slide 18 addresses our CapEx, which amounted to CHF 68 million in 2025 or about 6% of sales. Last year, we have completed major infrastructure projects around the world, including our innovation center in Switzerland, moved into a new enlarged factory in Arad, Romania, and established infrastructure in Malaysia to further expand in a targeted manner as demand builds. Our commitment to customers of 30% quarter-over-quarter ramp-up capability is in place, and we work closely with customers to ensure our part of the supply chain delivers. R&D reached, as I said, new records of CHF 75 million, up 22%. Spec wins up 14% to maintain VAT's technology edge and drive future growth. When summarizing the full year 2025 financial performance, we can state that our preparation for the ramp over the last years is complete. Major infrastructure needed to satisfy demand is in place. We maintained readiness for market growth over the year, focusing on current and future capabilities. We proved EBITDA resilience within communicated range of 30% to 37% despite internal and external headwinds. Strict financial discipline, focus on free cash flow generation demonstrated premature repayment of our term loan facility in January 2026 and the replacement through an incremental RCF facility. In this year, the start of the ramp is critical to get right, and we continue to remain disciplined around cost and monitor our customer requirements. We continue to build out core capabilities in close coordination with those requirements. We will maintain a high degree of R&D spend to ensure VAT retains its competitive edge to generate the next generation of products. We will also enter the last stage of our ERP project with the implementation of D365 in the sales and service entities during this year. Last but not least, managing geopolitical risks as well as mitigating continuing FX volatility will remain a key element of our financial steering. To conclude my remarks on a positive note, after maintaining a stable dividend for 2 years, we decided that the increased free cash flow allows us to also propose to distribute a slightly higher dividend of CHF 7 per share, up 12% compared to 2024. With that, I conclude my remarks on the financial performance, and I would like to hand back to Urs for the market expectations and the outlook. Thank you very much. U. Gantner: Yes. Thank you, Fabian. Yes, I'd say, fantastic numbers. Congratulations to the entire team again. And now we are at the beginning of 2026. And can say that just at the beginning of January, it came for many of us a little bit as a surprise when the latest -- when we attended all the ISS, this is an industry strategy conference, always very early in January. And suddenly, this $1 trillion market where we were always postulating that this will come in 2030, suddenly came in that said, well, maybe this will happen in 2028. Some said, well, no, it will for sure happen in 2027. And the totally crazy one we already said, well, this is happening this year. So it's at least 3 years pull in. What you also see here that we postulate now that about in 2027, the semiconductor market, the chip market will grow to this USD 1 trillion. So quite an acceleration. Of course, one is based on pricing as well. You have seen that also chip pricing increased quite a bit over the last quarters and months. And secondly, of course, the build-out of the entire AI structure, so the sheer demand of chip contribute as well. So what we are entering now is kind of -- we call it a structural change in semiconductor. So the first step now is the creation of this new infrastructure. So all the data centers, what is invested now by the hyperscaler. I think it was about $400 billion last year and will nearly double for this year. So there's a lot of money invested in all this infrastructure for AI. And then we can also see, well, our -- today's devices, I think they will change. They will change. The AI will also be a kind of an inflection point that our smartphones, our laptops and I think I'm sure there will be a lot of creativity there that we can use then also the AI center and bring AI also to the edge. So this will be in a second wave that is coming. And so that means that there will be a multiyear of growth in semiconductor continuing. And what we see just at the moment, also 2026, there is a tightening of the chip manufacturing. So some of the fabs are already sold out since quite some time. And of course, this increased also the pricing. So this means investment must happen. Almost every day, these wafer fab equipment numbers are going up and up. So we are still kind of on a level that we say the 130 is a reasonable number for this year. But we already see now in 2027, the highest was about 180. Yes, maybe the demand would be here, but for sure, the infrastructure is not ready. So where they should deliver this 180, they need a fab, right? So maybe you already heard that some fabs, they're already buying old fabs because they don't have enough clean room. This is what they mean. They don't have the shell to put in all the equipment. So new bottlenecks are coming up. So -- but these, of course, are the interesting challenges to overcome because this is growth. And here, we have to align always with our customers, what do you need when shouldn't -- do not overshoot our time. These are the maps now at fab. We always postulated that as well. These are from semi organization. It's more than 100 fabs currently built. But this 100 fab, they are not enough for this $1 trillion. And if you go one decade to 2023 -- 2035, so 10 years ahead, then they already say it will be a $2 trillion market. So it's huge. So if you compare to normal industries with the GDP growth, semiconductor will always outgrow this market by the demand. I also have to mention here, we think computing is already mature. We are using it every day, everywhere. But historically, we will say that this is actually the beginning of the computing. So we are not yet there. We will change a lot going forward as well. Very interesting to be in that phase of growth, there will be, as I mentioned, challenges as well. The whole machine has to start. Supply chain has to start. There might be bottlenecks coming up. Industry is pretty small as well. So we know each other very well, and we will overcome all these challenges going forward. Now why all these investments are needed? Why AI needs now suddenly completely different tools and microchips. I think the main issue is an energy problem. that AI, the current chips are using too much energy that almost 50% of, for example, of a country would just use the energy for data centers on the AI use. This means we have to reduce the energy consumption of the chips, and this goes with miniaturization. Smaller chips and at the moment, we are at this inflection point of this gate-all-around technology. So for the last 12 to 15 years, it's always called FinFET. It's a technology and architecture of the microchips and now moving into gate-all-around technology. And why it becomes suddenly more challenging? Of course, first of all, it goes to the atomic size, atomic level. And secondly, what we try to show here on the picture, it's not only, for example, etching and deposition in one direction, but it goes in 2 directions. And how can you do that? Just try to drill a hole in one direction, yes, I can do that. But then suddenly go to the other way, it becomes challenging. And they are doing that, so that the fabs, the microchip manufacturers, they find ways to do things like that. That's art. For us, it means the purity level goes up, particle is very important and the matching of the chamber, matching of the component that they always behave the same way, it's even more critical than before. Often get asked about China as well. So how is China? So we have the, let's say, the Western world meanwhile, and then we have China. China is building up its own ecosystem as well. They are already clear #1 in all the mature chips. So in volume, they certainly are producing most of the mature chips. But of course, they strive for leading-edge chips as well. With the restrictions they got to that they don't get some of the technologies, they have to invent on their own to find -- to develop their own tools. Overall, wafer fab equipment in China will be probably flat with single-digit growth. Interesting will be that the self-sufficiency rate also on the wafer fab equipment tool will go up. Today, it's around 15% to 20%, depending on the application. And the clear goal from China is that this will go up to 70% by 2030. So this means a lot of innovation is happening in China and also Chinese OEMs, they need the technology from the West. They are working with component suppliers to make that happen. One word to our service business. Service, always the most profitable business. So we track that in the installed base, what kind of installed base we have in the market. So it needs repair, upgrade, consumable business. This kick in quite nicely in Q4 last year. And with the fab utilization now going up and almost being at the max, for example, for DRAM, also here, we will see quite a growth in this year. And also, we anticipate by 2030, the installed base of our valves will also double. So it's about the same doubling we had since the IPO in 2016. And now in the next 4 to 5 years, we will double again. And of course, the installed base is kind of the foundation then for our service business going forward. The non-semi business, we reported about 14% of our sales in 2025. So this is kind of -- we are focusing here on some critical vacuum applications. I always say it's kind of our scouting as well, what's coming up. So 20 or 30 years ago, semiconductor was very small as well. So you need some scouts and get the foot into the door if something is growing. Here, we see certainly growth in the field of scientific instruments, metrology also semi-related business in one way. Research is always very close to our heart at VAT as well because the first valve was delivered to R&D at that time as well. And of course, there, you see what's going on, what kind of application could make it to the industry and high volume. Interesting for us also the energy market. So of course, solar at the moment, muted, but this will come back maybe in 2027, 2028, all the nuclear business as well. So the uranium enrichment kind of a revival as well that everybody understands we need the energy and maybe more in the long term, fusion as well. So we are very deep in fusion technology as well. They need huge vacuum systems to run fusion reactor but of course, that's not in the midterm plan. But here, we learn about ultra-high vacuum application, extreme conditions. And I think that's the field we want to be in as well. A good example also so ADV Advanced Industrial, a lot of project business. Another good example for project business is the display. There is a lot of investments ongoing as well, especially in OLED. So in the future, all the laptops and all the eye-care relevant displays will be OLED, and there is investments ongoing, especially in Korea and China. And over the last years, we did win a lot of market share on these new tools. You see a picture and also the size of a human being, how big these tools are. It's massive. It's hundreds of meter vacuum systems where they produce these panels and a lot of investments going in there. It will remain a cyclical business as well, but it's always good in the long run that you can participate in such investment cycles. So summary, the ramp this year. I think that's the most important. That's exciting. And what we expect for 2026 will be new records again this time, records in orders, records in sales and again, records in free cash flow. So very promising for 2026. This is what we want to achieve. At the same time, we want to also improve EBITDA, EBITDA margin and net income compared to 2025 and this is all based on these investments now in AI, wafer fab equipment going up, fab utilization on record high that we have a service business and also ADV kicking in with some interesting markets. We keep investing about CHF 70 million to CHF 80 million in CapEx and also R&D investments will remain very high. This is our future. This is where we want to invest. So the guidance for Q1 is roughly CHF 240 million to CHF 260 million with a substantial above 1 book-to-bill ratio. This we can promise you already. Then 3 things you should take home from here. First, 2025 was a year of record for VAT. So looking back, especially factory output, we ramped that, and we are ramping again in our Q1 factory output. We completed major investments in R&D center in our facilities, record high in the R&D spend, so with record high of specification wins. And certainly, Switzerland remains the hub for R&D, new product development. The second, as I mentioned, 2026, finally, the ramp is here and coming. This will change the behavior in the market quite a bit. The USD 1 trillion semiconductor market is very close. So it's an acceleration in the market. We will ramp up the factory in Penang in Romania, but you always have to be also cautious, and we will, as Fabian also mentioned, invest very disciplined as well because we know the market. It can change tomorrow again. So we have to be ready and alert on and keep stay flexible. And beyond 2026, I think it's still a fantastic growth story. The sub-2-nanometer chip manufacturers will continue. As I mentioned, the FinFET was about 12, 15 years and now gate-all-around starts. And this is not one technology. This is again a road map to the next one. And this is just starting with all the challenges the industry will have, and we are very well positioned to benefit on that. With that, I think future is bright. I will hand over to Michel Gerber. Michel Gerber: Okay. Thank you very much, Urs. What is always a little bit frustrating to me is when you start talking about the time beyond 2030. And unfortunately, we are not at liberty to give you yet too much detail about what's happening there, but I'm sure it's going to be very exciting. And maybe at the next Capital Market Day, we can tell you a little bit more. Anyway. Thank you very much. Michel Gerber: So the Q&A, you know the drill. I'll take questions from the room. Carol will help us with the microphone because, as you know, we have people on the phone, we have people on the webcast. [Operator Instructions]. And with that, I would start here. And ladies first, Maybe I can give you mic closer. Laura Bucher: Laura Bucher with Octavian. I have 2. First, very straightforward. On your outlook for Q1, you mentioned book-to-bill substantially above 1. So just trying to understand your use of the terminology there. Does that mean we should expect something similar to Q4 '25? That would be the first one. U. Gantner: Yes, similar to Q4 is a good assumption, yes. Laura Bucher: Okay. And the second one, you mentioned factory output increase, preparation for the ramp is done. Can you comment a little bit on the trajectory of the margin in '26, maybe something a bit more tangible than the outlook. We know there will be a big FX impact. Is there anything else you need to do from your side that would prevent you from reaching already the higher end of the guidance by year-end? Are you just waiting on volumes? Just looking for some comments there. Fabian Chiozza: Yes. Thanks for your question, Laura. I think we have to disaggregate a little bit on the margin, what is gross profit and what is EBITDA because especially on the FX side, you have negative effects on gross profit. But then on the other hand, all your hedging gains support your EBITDA. So on a -- let's say, on a like-for-like basis, I would not expect any substantial impact from the FX going forward on EBITDA. Whereas on the gross profit, we will definitely see now a reversion of the negative impacts that we have suffered during the course of 2025 as we were reducing the inventory now going again into a ramp, I would expect there a bit in accretive development from trade working capital buildup. And then last but not least, as I have also mentioned, VAT has always been very exposed to strong operating leverage once we saw growth kicking in. And I mentioned that the capacity is in place. So I would expect our bottom line EBITDA margin and also to certainly hover in the, let's say, first half of the communicated margin band most likely towards the upper end of it. Michael Foeth: Michael Foeth, Vontobel. Two related questions. The first one is if you can comment on your current lead times, if customers put an order in today, what's the -- approximately what's the lead time on those orders? And if you could also -- that's the second question, provide us with a sort of relate the Q1 sales guidance to the high Q4 order intake so that we understand why we're quite a bit below that -- below the order intake. U. Gantner: Yes. Thanks for that question. Lead time, I think lead times are completely different than maybe some of you had in mind during the COVID time where there were clear shortages first in aluminum, then in chips and then in elastomers at the moment that supply chain certainly is ready. It doesn't mean that there might pop up other challenges as well, especially also if you see geopolitics as well. I never know what's happening there. But lead times are back to the 8 to 12 weeks normally. And anyway, with our large customers, we have our consignment programs. So there is always a buffer. I think the biggest challenge also for our customers at the moment is which configuration they will need when. And this already shows that at the moment, there's no way to just ship something. So we also need to know what kind of configuration they will need for their customers. And this also translates already a little bit in the second question. So as soon as it's not fully clear what configuration they will need for the production in which fab we cannot ship. So we can, of course, already ship the base. That's fine for high runners. But the specific configuration for this -- what I showed this gate-all-around technology, which is completely new. That's not 100% clear, and we need here close alignment with the customers. Furthermore, Q1 is always kind of also -- has also a seasonal impact as well with the many holidays, especially in Asia, and you have seen 75% of our business goes to Asia. And basically, some of the counters are really shut down for 2 weeks as well as we do, of course, for Christmas break. And I think this year, even Ramadan is also in Q1. So that is more a seasonal impact. So that's why at the moment, it's very positive on all the order intake, the collaboration with the customer, a very close alignment, what they need when. I think that's the message, maybe less -- the Q1 is now not the fantastic sales, but what we are doing now is ramping up capacity. Factory output will go up quite a bit in Q1, and this will then turn into sales the following quarters. Nabeel Aziz: It's Nabeel Aziz from Rothschild & Co Redburn. The first one was just on your major Western semi cap customers have guided revenues '26 kind of up 20%. Your China semi cap, if you look at consensus, are up kind of 30% this year. Other than FX, is there any reason why VAT shouldn't deliver similar sorts of revenue growth in 2026 for semi valves? U. Gantner: No, if they order, we are ready. No, I think that's certainly in line what we see. I think the configuration, as I mentioned before, it will be critical. Do they more legacy tools or they go in leading-edge tools. This will also then impact our sales growth. Nabeel Aziz: Yes. Very clear. And then one of the topics that often comes up in our discussions is the topic of localization in China and specifically valve localization. So if there's a localization theme from the semi cap side, could you provide some more color in terms of what it is that's difficult to replicate about a VAT valve and what it is that makes your valves more resistant to disintermediation by a local supplier? Anything on that would be really helpful. U. Gantner: Interesting questions. And of course, you can imagine we are discussing this topic quite a bit as well. I think, first of all, valves are still a niche. It's a niche product in an ecosystem. And as also mentioned, China they have to do a lot of development on their tools to bring that to the leading edge. And there are multiple components. And I think as long as they can, they rely on something that exists and works. It's proven in the market. Why you should do something in your bill of material, maybe valves are roughly in the 2%, right? Why you should focus now on valves, a critical component, but not changing your entire pump structure as long as you get the kind of the confidence that you get the products. So here, valves for such a tool, if you take the leading-edge tools, of course, my engineers don't like if I say that what it's like a screw for such a tool, right? It's not very critical in purity and ceiling and -- but still, they have other issues to solve than thinking about valves. And I think that's something that's very important. And then it's -- also I mentioned the semiconductor is a small industry still. People know each other and also here, very human being relationship is very important and supporting each other. Yes, you can replace anything if you want. But I think the strength of a company is always if something goes wrong, how to solve an issue. And there you can prove that you are the right partner. So coming from a supplier, we were clearly suppliers 20 years ago. And today, we are more partners in the industry. And losing a partner is something hurts, right? Replacing a supplier, you can do. Michel Gerber: Okay. So maybe I take one more question from the room at the moment, [indiscernible] for you, and then we go to the questions that we receive over the phone. Unknown Analyst: [indiscernible]. First one is on price increases. You mentioned that you had -- if I understood you correctly, you had preorders because you will increase your prices in Q1. I was just trying to understand, so you -- I guess you stick to your 2x wafer fab equipment growth that you can achieve. So how much -- so let's assume that's volumes. So how much would come on top in terms of pricing for 2026? I mean what's your idea or plan on price increases for 2026? Fabian Chiozza: Maybe I can take that question. Look, I think the semiconductor industry is one of stable prices, not just the end product for the customers, it should remain affordable and economically viable. But I think we also learned how to ensure we work with our customer on this ever-increasing pressure of cost reductions. So we don't just adjust prices on a regular basis. Therefore, we have had, let's say, a pause on it. And after 2 years, we ran selective price increases that that's important. And we're certainly not exploiting the position that we have. So you can assume that those price increases have been placed in areas where, for instance, our margins suffered extremely under currency devaluations or also where we have not been able to get the required volumes in the past. So to quantify that, I said previously that the price increases are low to mid-single digit in percentage and the contribution of those are very low 2-digit million Swiss franc number. So it's definitely nothing that we will have to highlight on one of the slides when we would disaggregate volume from price in our growth. Unknown Analyst: Okay. That's very clear. And a second one on the clean room space. I mean you read it obviously everywhere, yes, that there is an issue with clean room space, so basically fab space. I was just wondering what's your opinion on, let's say, the CHF 130 billion wafer fab equipment and next year, you showed on the graph, CHF 148 billion. I mean, at what point would you think it's becoming a real issue and actually stopping that accelerated growth in the next couple of years because still someone has to build those factories, yes? U. Gantner: Well, here, I think the ones who invested ahead of the cycle, they are ready, right? They will win again. And I think that's typical in semiconductor. We have to invest ahead of the cycle to be and benefit. So we do it on our level as well with our factories in Romania and Malaysia. And the fabs are doing the same. The OEMs are doing the same. So they invest, they are ready. And some of the fabs, we see now that maybe they did not invest enough and more got surprised that their products, for example, DRAM is just ramping like hell at the moment, and they try to find fabs at the moment. So the issue for -- I think it's not a general issue, but for some companies, they might have an issue and might also then lose or they have to deprioritize the fabs to go to the leading edge. That's how they manage -- they have to manage that in the future. So certainly good that there is not enough clean room space. I think there is another element as well that every region and sometimes every country wants to get self-sufficiency. U.S. is doing a lot of -- because they want to have self-sufficient. China is doing -- the only country that is self-sufficient is Taiwan. Of course, they don't need a lot, but they have really the leading edge and also South Korea is very close to that. All the others are dependent on each other. So this is also a driver why they are building the fabs as well. And also even in Europe, there are some fabs, but maybe not fast enough. Michel Gerber: Good. Thank you very much. So with that, I would turn over the Q&A to people on the phone. And operator, please, the first question. Operator: The first question from the phone comes from Meihan Yang from Goldman Sachs. Meihan Yang: [Technical Difficulty] Michel Gerber: Can you please repeat the question? You were breaking up a bit here. Meihan Yang: Yes, sure. [Technical Difficulty] basically your aluminum exposure. Michel Gerber: Well, our exposure is to raw material and raw material price increases, I think you... Fabian Chiozza: Yes. Okay. Yes. Thanks for that question. Look, we were already exposed to raw material inflation during the course of 2025. But thanks to our continuous improvement program, we could not only mitigate that effect, but also have had a positive net effect on our gross profit. And with these, let's say, measures being sustainable in our cost base, and we continue to deliver further improvements. I do not expect a negative impact from raw material swings during the course of the next 6 months, at least, as we also hedge our key commodity aluminum for about the annual volume that we expect. So the LME increases that we have seen, let's say, from $2,400 now to about $3,300, $3,200 will not directly impact our P&L. And hence, I'm pretty comfortable that we can sustain, if not slightly increase the gross profit margin that we have reported now for 2025. Meihan Yang: On services margins. do you see your global [Technical Difficulty] and if you could remind us [Technical Difficulty] geographically? U. Gantner: Well, I think service margin are always higher than what you do with an OEM. That's I think probably in every business like that. And I think we are on a very healthy level. And of course, as soon as also volume is kicking in, this will be getting even better. So the different -- on the different product lines, so consumables, spares, upgrades, retrofits. And certainly in consumables, it's -- normally, it's single parts, it's higher margin. And if it comes to upgrades, then it goes more into complete products like valves. And of course, there is margin then lower than in single parts as this is just normal probably also here in different businesses. Fabian Chiozza: Yes. And maybe just to quantify that a little bit. So we have seen a nice increase of the EBITDA of our service business in the second half to about 47.6%. And this was mainly driven by the increased absorption of the cost structure. So with the strong increase in order intake, I would also see that level to sustain well into 2026. And on the margins, again, we have for spares and repairs, we have definitely the highest margins together with the upgrade and retrofits. And then on some of the consumables, as Urs has already said, it is slightly lower. But overall, the service business will definitely return as a very accretive driver to our bottom line margin in 2026. Operator: Next question comes from Oliver Wong from Bank of America. Oliver Wong: My first question is on China growth. So I think you guys [indiscernible] mid-single digits, and you're expecting [indiscernible] I was just wondering given your mix more important to domestic semi cap, which as we mentioned, some of them grow [indiscernible] Could that be potential upside that may grow more than the market? U. Gantner: Yes, certainly. As mentioned, maybe total wafer fab equipment spend in China will be flat, maybe single digit up. And as mentioned as well, the domestic wafer fab equipment tool manufacturers they will grow to increase the self-sufficiency rate. But also here, it's -- visibility is not that clear because they also have to go through the qualification. So their tools need also to go to the level that the next node can be produced. Once it is qualified in China, it can be -- go extremely fast. So you always have to be ready in China to deliver yesterday and not tomorrow. So -- but first, they need, of course, to qualify the tools as well. I expect that the China business will certainly grow for VAT this year in the region of -- as the OEMs will grow as well in the 20%. Oliver Wong: And my third question is on [indiscernible] what should be expect progressively higher orders especially [Technical Difficulty] kind of how you see the revenue, any kind of impact upon the preordering for that [Technical Difficulty] rest of the year? U. Gantner: I think the preordering in the end, if you look at the whole year will be not that material. So it will be quite almost noise. I expect that the order pattern will grow what we see at the moment, what's going on in the market that is more and more clarity coming on the fabs going online. So I expect that the order cadence will grow. There could be kind of, let's say, shocks out there. If there is somewhere a shortage, then suddenly customers start ordering more without the business impact. So similar behavior as during the chip shortages, right? They just started to order full year. And then it can, of course, be not a cadence. It can be a peak and then maybe go back. So the behavior is hard to say. At the moment, I think the communication is quite open through all the supply chain. I don't expect it at the moment, but something like a shortage somewhere kind of trigger something like that. Operator: The next question comes from Jörn Iffert from UBS. Joern Iffert: I will take them one by one. [indiscernible] the first one is the outlook [indiscernible] is there any anything you're seeing [indiscernible] for example others, which is a [indiscernible] first question, please. U. Gantner: Well, you're now focusing on one segment in the wafer fab equipment, particularly the lithography. I think there, the EUV, if you see the numbers, is up at least 2x this year. So -- but in general, of course, still lithography is a smaller business for VAT overall. The biggest business is always going to the deposition and etch application. But EUV certainly is also growing this year, what we heard from the customer side, and that's a very interesting growth business for us as well. Joern Iffert: Okay. So just to clarify [Technical Difficulty] This was more or less... U. Gantner: Yes, you say correctly up to 2x. So there is some room. Yes, there's no reason. Now if the investments are coming, especially in the leading edge fabs, we are on track. And if all these major OEMs equip the fabs where we are specified where we had a spec win in the past, then, of course, we are on that track. Joern Iffert: And then the second question [indiscernible] on the CMD in May, you had this CHF 1.6 billion revenue target for '27 [indiscernible] CapEx. Now I see in your slide that you mentioned CHF 135 billion, I assume it's a typo or has something changed here? And then after this one, maybe a follow-up to this related, please. U. Gantner: No, you see that at the moment, it's a very dynamic market. I also showed that some already displayed that it's CHF 180 billion wafer fab equipment. In the end, it's all about what can the industry digest in the end? Is there enough shelves there? Do they really understand what technology they need is also the chip manufacturers already ready to do high volume or are there process issues? This is still in floating. It's not just that like in automotive, you have a new car, you build a factory and you want to produce 100,000 cars a year. And this is planned and they will achieve probably plus/minus 1%. Here, I try to show you it's an atomic layer, atomic level what they have to do. They have to drill these fancy structures. Sometimes they don't know yet how they want to -- they can do that. The guys in [ IMEC ] they did it. They know it works, but now they have to bring it to high volume with a certain yield on a wafer as well. And I think that's the big challenge the industry has. And that's why, yes, the forecast looks brilliant, but there are a lot of technical challenges as well. And that's why this wafer fab equipment can, of course, also you see that a little bit shift or pull in or push out. So that's always critical. So overall, under these circumstances, yes, we're still confident that we can achieve this CHF 1.6 billion with all the FX and headwinds that come, but it's certainly a good reference for you what you want to achieve by then. Joern Iffert: Okay. [indiscernible] revenue on an underlying CapEx of CHF 125 million. And now in the earnings slides, I see that this is now based on the equipment CapEx of CHF 135 million. My question was really, is it a typo or has something changed regarding the correlation here. U. Gantner: I don't have it at the moment in the mind, so maybe we can do that offline with Fabian. Fabian Chiozza: No, Jorn, I can take that. It's not a typo and your house was actually pretty bullish on the WFE number. So you certainly also indirectly drove that up. And I think ultimately, the answer lies in what Urs was explaining that, yes, of course, we also observed these numbers. At times, we're also surprised of the volatility and the dynamic that the researchers bring into the WFE development. And at the end of the day, there are 2 thoughts I just want to give you. The first one is we always have to remember that we are a Swiss franc reporter and WFE numbers are in U.S. dollars. So was the reference at the Capital Markets Day, which was at -- I think it was CHF 0.835 at the time. And secondly, also mentioned by Urs, I think we need to see how the phasing of these investments is ultimately happening and how the supply chain is digesting this massive amount of CapEx into industrialization of tools. So I think overall, we are ready. We are cranking up the machine. And if investments are going to develop into the heights that are stipulated right now by market observers, then obviously, VAT's revenue will also develop accordingly. Michel Gerber: Okay. So we just heard that there was a bit of an echo on the questions. But now maybe next question, please operator. Unknown Analyst: I would like to ask on China again [Technical Difficulty] probably still close to 50% exposure there. Then I recall you said China is the highest margin market for individual valves. If you now expect the market to grow China by 0% to maybe 5%, but you expect the Western market to grow maybe 15% to get to this 11% market growth, would that mean a negative mix effect for you? And can you maybe a little bit elaborate on the impact here. That would be my first question. Fabian Chiozza: Yes, we have stated before that the China business certainly has a higher margin profile than our long-standing huge Western customers. But as you can imagine, China has grown quite a bit over the years. And also these guys have to work on cost-down initiatives. They have to ensure that the yield gets into an economically viable pattern. And therefore, these margins will also adjust over time. Now talking about 2026, I do not expect a material negative mix effect on the bottom line. As I have stipulated before, we expect very good contributions from our service business. We are ramping significantly the output of Malaysia, which will also help. We are also continuing to ramp the new factory in Romania. And then also on the personnel cost side to soften the impact from the Swiss franc. We established a new legal unit in Malaysia, and we're now also starting to provide shared services out of Malaysia. So all of that together will help to still provide an increased margin profile and make us even more resilient as we move forward. Unknown Analyst: Understood. Second question on operating leverage. You mentioned that [Technical Difficulty] at the same time I would assume that VAT is mostly an assembly company. So if you want to raise output, you want to raise volume, you raise staff -- safety staff, which gives you a relatively small operating leverage. But I would assume that you have certain staff quantities in place as of today that allow you to ramp to a certain extent without adding people. Could you maybe give us a little bit of an idea how -- where the utilization rate is at the moment, which then allows us to calculate incremental volume without adding too much new people, if that makes sense. Fabian Chiozza: Yes. Look, we are running our operations always with 2 mindsets. There's also the vigorous debates I have with my COO colleagues. On the one hand side, obviously, we have the cost discipline. On the other hand, we have the scalability, the ramp capability. Now fortunately, we have developed over the years a model that really allows us to timely adjust capacities, both down, but then also up. We talked at the end of summer last year that we have taken out in Switzerland about 110, 115 people. And you can imagine that some weeks ago, we started to bring them back on board, and this is continuing. So therefore, the personnel cost effects are pretty well synced also with the increase in factory output, which then translates into revenue. And therefore, the biggest lever for me is really the measures that I have just discussed a moment ago in combination with a much higher fixed cost absorption. Remember, we have about 30% of our costs are fixed. So any additional franc of revenue will substantially help to bring more bottom line profit. With regards to the utilization rates, we are in Switzerland, still in the low 60s. That is now cranking up. And in Malaysia, in the existing factory, we're operating around 90% right now. And as I said before, the second factory is basically ready. It is right now working as an internal machining supplier. And once we see now demand unfolding, we will bring in the clean rooms and then also switch this factory on for end product production. Michel Gerber: Now maybe one question from the webcast still. I'd like to ask you, Fabian. And it's more a little bit of a clarification to a statement you made earlier. and it has to do with the 2026 EBITDA margin expectation range or whatever. And the question is whether you said the top half of the 30% to 37% corridor or what kind of like statement. It was a little bit misleading. Fabian Chiozza: Yes. No, I said that I want to move back in the upper end of the first half of that band. So the first half being 30% to 33.5%, I hope that clarifies it. Michel Gerber: Okay. Thank you very much. So as they say, time flies when you're having fun. We're already past the hour. We don't have any more questions neither from the webcast nor over the phone. And I think for the guys who we likely -- we'd like to invite you now to a quick standing lunch. It's one floor down. And there will be, again, opportunity for additional questions unless you have one burning one that you want to express now to be heard over the air. So otherwise, I would like to thank you, Fabian and Urs for today. Thank you for coming. And next results will be on the 16th of April, our Q1 trading update. And we're confident that we can show you the nice book-to-bill ratio that we alluded to today. So thank you very much, and see you later with drinks and something to eat.
Operator: Ladies and gentlemen, thank you for standing by. I am Geli, your Chorus Call operator. Welcome, and thank you for joining the OPAP S.A. conference call and live webcast question-and-answer session to discuss the fourth quarter 2025 financial results. At this time, I would like to turn the conference over to Mr. Jan Karas, Chairman and CEO of OPAP S.A. Mr. Karas, you may now proceed. Jan Karas: Thank you, Geli Good evening or good morning to everyone. We are glad to welcome you here and present to you our solid set of full year 2025 financial results. Hope you have enjoyed the presentation distributed earlier today, and we would be glad to answer any questions related to our financial performance. We are pleased with our 4.9% GGR growth for the year, in line with our provided outlook and remain optimistic that Greek operations will continue to be a strong asset of the combined Allwyn and provide significant contribution to its future success. Let's proceed directly to the Q&A together to make the discussion more engaging. Geli, over to you. Operator: The first question is from the line of Kourtesis, Iakovos with Piraeus Securities. Iakovos Kourtesis: A number of questions from my side. First question has to -- we're glad to see that Hellenic Lotteries license was secured. I was wondering if there is an update for the big license that expires in 2030, if you have something to comment on this. Second thing from my side is about the expected acquisition of Novibet. As far as I remember, the whole process goes on the Competition Committee. If you have any update on this front? And maybe I have another follow-up. Can you comment on this, please? Jan Karas: Apologies, what was the third point? Iakovos Kourtesis: The third question? Jan Karas: After Novibet, the third point? Iakovos Kourtesis: Yes. The third point is about -- recently, we have a new draft bill on illegal betting. Obviously, this should move on the positive side for you. If you have any comments for the new draft bill on illegal betting and how it affects -- you expect to positively affect your business? Jan Karas: Clear, thank you very much. Thank you for all the questions. Apologies, we had some technical issue here. We couldn't hear you properly on the last part, but all questions are clear. So let me take them one by one. Point #1, about the licenses, thank you for your kind words, just for the sake of full transparency. We have been recently informed that the Court of Auditors greenlighted the signing of the concession agreement for Hellenic Lotteries. And as such, we expect that soon we will be called to sign the agreement. After that, the agreement must be ratified by the parliament and the relevant law will be issued in the government gazette. That is just a point where the full process will be completed. At this moment, given these developments, we don't expect any delays, and we expect that we will start from the beginning of May, operating with the new concession, the new 12-year concession. So that's just on the clarity on the Hellenic Lotteries. When it comes to the legacy games, as we have stated before, many times, we are certainly interested to extend our exclusive games rights beyond 2030, for sure. At this moment, we don't have any update on this front. But again, you will be the first one to know once there will be any progress here. When it comes to Novibet and the HCC, this is something for our Allwyn colleagues to comment on our side. We don't have any comments and updates on the developments there. For the illegal betting on the other side, this is something very much relevant to us, and we obviously have welcomed the new legislation when it comes to illegal gaming. This is in many elements of what is being proposed is meeting the demands or suggestions we have been stating with our ongoing conversations with the authorities. Our interest is obviously aligned with the state -- with the Greek state here. We want to protect our players. We want to make sure that Greek state doesn't lose taxes in favor of illegals. So we are absolutely looking forward to explore the new opportunities to fight illegals that this new bill should bring. As for the expected impact, it's a bit, obviously, too early to judge. The final law should be voted in the coming months, hopefully soon. So then we will see the full definition of it. And very importantly, we will be with the authorities cooperating to the maximum to explore the benefits of the new legislation and translate it into actions in the real world leading into minimization of the illegal betting in Greece. So as stated by the government also on our side, we certainly expect a significant impact of this law on our business for the coming year, and in our case, positive impact in the coming years. Iakovos Kourtesis: Okay. Since this is the last time I suppose that you report results as OPAP, as a sole entity. I would like to thank you for your collaboration and give my congrats to the IR team. They've been extremely helpful all these years, and I'm so glad that they will continue this collaboration with us. Thank you very much. Jan Karas: Thank you for your kind words. We will come to that at the end of our call, but it's very much appreciated that you feel this way. And yes, don't worry, we will not disappear. We will stay in touch for sure. Operator: The next question is from the line of Draziotis, Stamatios with Eurobank Equities. Stamatios Draziotis: Can I -- well, just a couple actually. Can I start with Q4? If you could comment on 2 items, please. Firstly, the increase in expenses, I know you said there were some one-off elements, but just wondering to what extent we should expect this to continue in FY '25? And also the decline in online, you obviously said that this is mainly attributed to the customer-friendly results in sports betting. If you could maybe isolate the effect of the latter. And secondly, on '26 I think you mentioned that you expect this to be a year of great success in your remarks. I'm just wondering what this means exactly in terms of revenue and profitability for the Greek and Cypriot business. Pavel Mucha: Okay. Thank you. Good afternoon from me. Yes, the increase in expenses in Q4 is largely related to the digital agenda, both in retail and in online, where we are strengthening the team. So that's why the payroll expenses are coming higher. Also on the marketing side, both in terms of CRM, communication and sponsoring assets. And last but not least, on the technology front, again, digitalization, both in retail and ongoing improvement of customer propositions in online. Really, these 3 categories are related -- are driving the increase in costs. Obviously, you asked what to expect going forward. It's not that the OpEx would be increasing at this pace every quarter going forward. But we've reached a certain level by now. And this was all cautiously managed. It wasn't something out of control or out of a blue. That's why we also guided that when we provided the guidance for '25 that we will be heading towards mid-30s towards the 35% levels. And if you exclude the one-off expenses, indeed, the margin for the whole year came to 34.7%. So not only we delivered the outlook on the GGR, but also on the expenses. Now on the second, maybe. Jan Karas: For the outlook? Pavel Mucha: For the online. No, for the online and customer-friendly results. Jan Karas: Yes. Well, we don't have a -- you were asking for the specific impact of the results versus anything else. I think it's important to say that while we don't exactly have this split, and it would be a bit difficult to calculate anyway. What is important is that we see now in Q1, the business back on track. So the underlying solid performance of the sports betting continues. So we really have seen the Q4 as a disturbance that doesn't have any continuous trend for Q1. If I may also on your -- this is -- a small bridge towards your question about 2026 expectations. We are not officially providing any outlook for the Greek operations for obvious reason. Allwyn has already provided some initial guidance and more details will certainly be announced during the upcoming Full Year '25 Allwyn International Analyst Conference Call. Yet what we expect for the Greek operation is 2026 to be another year of great success entering the new year of the company with really good prospects. So we are quite confident of not only continuation but further strengthening of what we do here. Stamatios Draziotis: Okay. That's great. And thank you for the open dialogue over the years. And as you move into the next phase with Allwyn, we look forward to seeing the same transparency, hopefully, that has underpinned the OPAP's equity story to date. So thank you. Jan Karas: As in any other area, we -- our ambition is to be same and better. So hopefully, we will meet and exceed your expectations going forward on this front as well. Thank you for your trust. Operator: The next question comes from the line of Pointon, Russell with Edison Group. Russell Pointon: A couple of questions, if that's okay. First of all, just to come back on this digital investment in Q4. Does this -- with more investments in digital staff, does this mean that you're looking for a greater rate of innovation in the digital activities in the coming year or so? And the second question is just a minor question really in terms of the retail lottery business. I think the revenue went backwards a little bit in Q4. I was just wondering if there was anything in particular that affected the retail lottery business? Jan Karas: Thank you. So when it comes to digital investments, it is indeed a big topic for us. The whole 2030 strategy that we have recently introduced to our employees and partners, and we will be sharing with the investment community shortly is all around digital-first customer experiences. So the next day that we are looking at is certainly focused on attracting new generation players and that's not only in online, but also in retail. So while evolution and exploring the prospects of the online world continues to be very high on our priority list. The second close is now upgrade of the retail experiences with the implementation of a completely new digital layer. So if you want moving from paper cash agent into a fully autonomous digital gameplay in our retail stores where especially the new generation players will be able to benefit from digital interactions that are personalized where their interaction is rewarded and appreciated. And generally, the gameplay is of a new generation -- of a kind. Here, probably one picture better than thousand words. So we will be bringing you more information on that front shortly. So what is the necessary driving vehicle of that is the technological evolution that powers all these customer experiences from implementation of fiber connectivity in our stores all the way through to development of the apps estate, so that we will be merging all the different apps we have today into one digital ecosystem with one app that comes first and makes the interaction for customers way much more simple. One customer account, one app, one wallet, many new things coming that should simplify gamers or customers' life when it comes to gaming and as always, improve the entertainment factor as well as the rewards; and very importantly, the simplicity of gameplay. So it is really much more than for -- compared to the past where we have done some digital upgrades in the stores like bringing the SSBTs. This time, we are really taking it to the next level, and we see it more as a historical milestone of a step change from the traditional analog world towards a completely digital world of the future. Hope that helps. Pavel, on the second comment, if you may? Pavel Mucha: Yes. On retail lottery, look, we were really pleased with the performance of the lotteries in retail in Q4. It was very solid performance, not only on jackpot games, but also on KINO. If your question implied that it was a bit -- not so strong performance. So I just remind the tough comparisons with Q4 2024, where we entered the year in January with building up record jackpot in JOKER. And that those jackpots were already building during December. So it's more the comps with the 2024 very good performance, which may imply that the year-on-year growth in Q4 in retail lottery was not so significant. Russell Pointon: That's great. And let me reiterate the thanks to the team. Operator: The next question is from the line of Nekrasov, Maksim with Citi. Maksim Nekrasov: I have a few questions. The first is a continuation on the online sports betting right, and it looks like it has been declining for a few quarters in a row. But I just wanted to ask if you can provide any color on the competitive dynamic and on your market share dynamic in particularly in the sports betting online? And also, if you can remind us about the status of the prediction market platforms in Greece and whether you have seen some impact from those platforms? And finally, since we're rebranding, it would be interesting to hear what's the initial customer feedback? Is there something that surprised you? And if there is any color on the -- if the traffic has changed to some extent to the rebranded stores versus nonrebranded? So yes, any color on that would be appreciated. Thank you. Jan Karas: Well, when it comes to the big picture of the of the sports betting and iCasino market share, while we may be facing some headwinds here and there, we generally see us being on a very right track to protect our market shares and continue performing strongly. The recent rebranding of not only Allwyn, but also Stickiman (sic) [ STOIXIMAN ] is something that should further help in remaining and not only remaining relevancy to the younger audiences, but even further strengthening it. The new generation players are of our utmost importance. So we really remain confident in maintaining and further improving -- aiming for further improvement of our leadership in this market. Second question was on the prediction markets, we don't see any impact here. Obviously, with the acquisition of PrizePicks, this is a gaming vertical that is of our utmost interest, and we will be exploring the opportunities in this area. But at this moment, this is not something that we see as a gaming vertical significantly influencing sports betting in the Greek market. And the third question was on? Rebranding. First impressions of the rebranding are very positive. I think we have done a good job in 2025, preparing the Greek market for the rebranding with all the communication and campaign of OPAP being part of Allwyn. And as such, now the transition starting January 19, where we have changed the consumer-facing brand from OPAP to Allwyn has been really smooth. Overall, there is a positive reception from both customers as well as our agents and rest assured that our retail partners are always a very good thermometer of making the right customer moves. So we are very confident that we are on a good track. To let some numbers speak, currently, we are around 50% of awareness of the society about the Allwyn brand, and that's something that we will continue to build. So this exercise is far from over. The whole year 2026 is about building the brand awareness and building the attributes of the brand like the trust, like giving back to society, like winability to assure that our customers believe not only they haven't lost something, but that they have stepped into the new era that is better than before. And that is our ultimate commercial goal for this year. And so far, it's going well on this front. Thank you for your question. Maksim Nekrasov: Understood. And good luck in the new chapter of the company, and thank you for all the years of -- all the presentations and special thanks to the Investor Relations team, Nikos and John. It's really helpful and a very transparent reporting. So we hope that we will continue going forward. Thank you so much. Jan Karas: Thank you so much for your kind words. Much appreciated. Operator: The next question is from the line of Zouzoulas, Constantinos with Axia Ventures. Constantinos Zouzoulas: Two questions from my side. Some more color on the good performance of the VLTs, especially I'm referring to the increased visits per year. What can you tell us about this? And my other question has to do with Hellenic Lotteries. Now with the new -- you're going to be operating the new concession, do you have any plans for -- to refurbish the other games of this vertical? Jan Karas: On the second -- I will ask you for some clarification on the second question. But let's start with the. Constantinos Zouzoulas: We're talking about the scratch. Yes, we're talking about the scratch and the lottery tickets. The performance has not been that great during the past few years. Are there any plans to do something on this front? Jan Karas: Yes, yes. Sorry, I got confused when you said the other products. I was not sure I understand. So you are interested in what we will do with the Hellenic Lotteries portfolio, right? Constantinos Zouzoulas: Correct. Correct, correct. Jan Karas: And I will comment on that. Okay. Great. Thank you. So the first question? Pavel Mucha: VLT's performance. Jan Karas: VLT's performance. We are very happy for the performance we observed this year. And we are very clear as to where it is coming from because this is a return on investment into upgrading the customer experiences in our Play stores and in our -- with the new terminology Allwyn stores. We have -- as we have presented in our presentation, we have upgraded now a very significant part of the estate with much better customer experiences when it comes to game play. At the same time, we have invested a lot of efforts into the loyalty schemes that are appreciating and rewarding for the customers for being with us and for their activity with us. And last but not least, we are doing a lot of promotion events in the stores themselves so that we improve the entertainment element of the experience. And we don't stop here because going forward, our main focus is actually in significant upgrades of the venues where, believe it or not -- but the ones we have now, we have built some of them also already 10 years ago. So we are proceeding with a significant refresh of the stores, and we will be refreshing not only the color schemes, but very importantly, the look and feel. So the stores from the outside will be much more open, much more transparent, much more visible, much more inviting for the customers walking down the street, and we will be moving from the current, in most cases, white non-see-through facets and shop windows into something that allows you to see what is inside and that something is happening inside and will be bringing you in. Alongside of the technology upgrades like big digital screens, et cetera, that should help us in this important gaming vertical where we are not allowed to communicate too much and the shop windows communication plays an important role to bring people in the store. This should have further positive impact on the overall performance, especially when it comes to visitation and number of visits per customer per month. So overall, good momentum that we expect to not only continue but further strengthen. On the second question of Hellenic Lotteries, that is super exciting because as we say, everything bad is good for something. So obviously, the Hellenic Lotteries change of the license has a lot of administrative technical implications that do imply a certain degree of disruption of the business, and we are doing everything we can to minimize this impact on the customer experiences in our stores. It also brings a lot of benefits and one of them is that we will be, as of May 1, able to launch a completely new portfolio of scratch products. And we will be doing so certain -- building on some of the successful ones that we will keep, bringing some new ones that will be new in the market and overall strengthening the families, the 3 big families in scratch. So a refresh of the portfolio and complete refresh of the design of the whole portfolio. Zooming out from a customer perspective, the whole new license environment should bring new refreshed product portfolio, new gaming experiences because we are changing also the -- some of the games that we provide under scratch. And we are also looking at upgrading and refreshing the more traditional products like Laiko or Ethniko or the special editions of Laiko that you will see and our customers will benefit from during the year 2026. So hopefully, that covered your question. Thank you very much. Constantinos Zouzoulas: Thank you. Also from my side, thank you for the communication all these years and looking forward to continue the cooperation with you, Nikos and John. Thank you. Jan Karas: Thank you so much. Thank you very much. Operator: Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Mr. Karas for any closing comments. Thank you. Jan Karas: Thank you so much. Thank you, Geli. Thank you, everyone. Thank you for many of your kind words already expressed during the Q&A. And obviously, also from my side before we conclude today's call; not only on my side, on behalf of Pavel Mucha, myself, Nikos, John, the whole IR team and everybody who is supporting us on this journey. I would like to share some closing reflections on what I think is truly a historic milestone for our organization. We are -- very excited to embark on this new era that is ahead of us. And as we move towards the final stages of our business combination with Allwyn, I want to reaffirm our unwavering commitment to the investment community, to all of you here with us today as well as to those who could not be with us today that you have supported us and supported OPAP throughout this journey. And on behalf of both Pavel and myself, I want to express our deepest gratitude to our shareholders themselves and to our analyst community. Your support and collaboration over these years have been certainly the key of our success. Together, we have achieved financial robustness, created significant value, allowing us to enter this next chapter based on really solid foundations. For so many years also, the Investor Relations team in Athens has been the heartbeat of our communication, their expertise and deep-rooted relationships have been vital to OPAP's success and to the trust we share with you. As the cornerstone of our strategy remains transparency and accessibility, values that are at the very core of Allwyn as well, I'm really pleased to confirm to all of you that our IR team in Athens, led by Nikos Polymenakos, will continue to provide the high-quality support you have come to expect. And as such, while we are expanding our horizons, your points of contact in Greece remain unchanged. To better serve our new global footprint, our Athens-based colleagues will be fully integrated into a larger unified IR team working in daily collaboration with our partners in the London office. And this collaborative structure hopefully ensures that whether your inquiries are local or international, you will still benefit from a broader pool of expertise and global coverage. Finally, we are proud that the combined entity will retain its listing on the Athens Stock Exchange, soon Euronext Athens, remaining a central pillar of the Greek capital market. We look forward to this next chapter together as a leading listed lottery and global gaming operator. Thank you so much for your partnership, your trust and for being an integral part of this remarkable journey. We look forward to speaking with you again soon from this new global platform that I'm sure will be as exciting interactions and connections as until now, as we have stated before. Ladies and gentlemen, thank you very much. Dear colleagues, thank you very much. Last but not least, dear Geli, thank you so much for all the years of your fantastic support. Thank you all, and we will stay in touch. Have a nice rest of the day. Goodbye.
Operator: Good morning, and good evening to all, and welcome to the Sea Limited Fourth Quarter and Full Year 2025 Results Conference Call. [Operator Instructions] And finally, I would like to advise all participants that this call is being recorded. Thank you. I would now like to welcome Mr. Elson Choi to begin the conference. Please go ahead, sir. Elson Choi: Hello, everyone, and welcome to Sea's 2025 Fourth Quarter and Full Year Earnings Conference Call. I'm Elson from Sea's Investor Relations team. On this call, we may make forward-looking statements, which are inherently subject to risks and uncertainties and may not be realized in the future for various reasons as stated in our press release. Also, this call includes the discussion of certain non-GAAP financial measures such as adjusted EBITDA. We believe these measures can enhance our investors' understanding of the actual cash flows of our major businesses when used as a complement to our GAAP disclosures. For the discussion of the use of non-GAAP financial measures and reconciliation with the closest GAAP measures, please refer to the section on non-GAAP financial measures in our press release. I have with me Sea's Chairman and Chief Executive Officer, Forrest Li; President, Chris Feng; and Chief Financial Officer, Tony Hou. Our management will share strategy and business updates, operating highlights and financial performance for the fourth quarter and full year of 2025. This will be followed by a Q&A session in which we welcome any questions you have. With that, let me turn the call over to Forrest. Forrest Li: Hello, everyone, and thank you for joining today's call. 2025 has been a great year for Sea. We generated a record $23 billion in revenue, representing 36% year-on-year growth, an acceleration from 2024. At the same time, we improved our bottom line profit. Our full year net income reached $1.6 billion and adjusted EBITDA reached $3.4 billion, representing a 260% and a 75% year-on-year increase, respectively. All our businesses scaled well in 2025, exceeding our initial growth expectations. This broad-based robust growth is healthy and sustainable, underpinned by the growing scale of users that we serve. In 2025, Shopee served around 400 million active buyers and 20 million sellers, achieving $127 billion in GMV. Monee gained over 20 million unique first-time borrowers and grew its loan book beyond $9 billion, while maintaining stable risk. And Garena connected with over 100 million players on average every day throughout the year, generating almost $3 billion in bookings. We were successful in 2025 because we chose the right set of strategies and we executed them well. 2026 will be a continuation of this approach. Our strategies will be consistent and execution remains key. We will double down on operational excellence and work towards delivering another year of strong growth and healthy profit. With that, let me take you through each business' performance. First, starting with Shopee. Shopee achieved another record second quarter with new highs in GMV, gross order volume and revenue. Our full year GMV grew 27% year-on-year alongside significant profit improvement. We generated a full year adjusted EBITDA of over $880 million in 2025. Our strong GMV growth was driven by tangible improvements we made for both buyers and sellers. We made product discovery easier, broadened our assortment of offerings at competitive prices and widened access to fast, reliable shipping. We also improved our monetization further in the fourth quarter. Ad-paying sellers increased by more than 20% and their average ad spend increased by more than 45% year-on-year. As a result, ad revenue grew over 70% and ad take rate increased by more than 80 basis points year-on-year. The strong set of 2025 results is a validation of the effectiveness of our strategic choices for Shopee. We have shown our ability to enhance monetization as demonstrated by our consistently improving take rate over the past 2 years. For the near term, we choose to prioritize growth while upholding financial discipline. For 2026, we aim to grow Shopee's annual GMV by around 25% year-on-year with its full year adjusted EBITDA no lower than 2025 in absolute dollars. We believe this is the right strategy to optimize Shopee's long-term profitability. Let me highlight a few areas where we are investing to further enhance our scale and market leadership. This includes our continued efforts into logistics, Shopee VIP membership program and expansion of our content ecosystem. The objective is clear. We want to serve more users and engage them better. In 2025, monthly active buyers and average monthly purchase frequency increased by 15% and 10%, respectively, compared to a year ago. In 2026, we will remain focused on executing these priorities well. It will benefit us with deeper structural moats that can further differentiate Shopee from its peers. First, logistics. Our logistics capabilities have become an increasingly important differentiator for Shopee. SPX Express now processes on average over 30 million parcels every day, making it one of the largest e-commerce logistics solution providers in our market. In 2025, we improved speed and cost efficiency across our markets while customizing delivery options for different user needs. In dense urban areas, we scaled instant and same-day delivery for buyers who value speed and convenience. We expanded instant delivery into additional use cases, including partnering with local supermarkets and suppliers to deliver fresh groceries in Thailand in as little as 1 hour. Our faster delivery services reached a double-digit share of order volume in greater metropolitan areas such as Bangkok and Jakarta by the end of 2025. Buyers using instant and same-day delivery also spend around 15% more on average after adoption. At the same time, we scaled economical shipping to serve buyers seeking affordability. In Indonesia, orders using economical shipping more than doubled year-on-year in the fourth quarter. With our delivery capability well scaled, we started to roll out fulfillment service in various markets across 2025. We are seeing encouraging adoption trends from both buyers and sellers with double-digit order penetration in some markets. In 2026, we plan to expand fulfillment further across all our markets and aim to double our fulfillment order penetration by the end of the year. Second, the Shopee VIP membership program. In 2025, we introduced this program to deepen engagement among our most active buyers. This paid program gives subscribers more generous free shipping entitlements, daily vouchers and exclusive discounts. We have now rolled out Shopee VIP to all our Asian markets. Total subscribers surpassed 7 million at the end of the year, more than double the number from a quarter ago. Across every market where it has launched, the program has consistently produced double-digit spending uplift by members after they join. In Indonesia, VIP members have been spending about 30% to 40% more than before joining. In some markets, VIP members already contributed more than 15% of total GMV in the fourth quarter. Building on Shopee VIP's success in Asia, we plan to launch it in Brazil in the coming months. Third, our content ecosystem. We strengthened our content and affiliate ecosystem in 2025, making discovery more engaging and supporting higher purchase conversion. We saw strong momentum in our partnership with YouTube, with orders driven by YouTube content more than tripling in the fourth quarter year-on-year. Our collaboration with Meta has also scaled well since its launch in October. By the end of the year, more than 3 million affiliates had linked their Shopee and Facebook accounts. This partnership has extended our ecosystem coverage across multiple channels to the benefit of both our buyers and sellers. I would also like to highlight our strong achievements in Taiwan and Brazil. In Taiwan, GMV growth accelerated to double digits in 2025. Our wide product assortment, highly competitive pricing and differentiated logistics have made us the clear e-commerce leader there. In particular, our large-scale network of Shopee collection points, including automated locker stores, has reinforced our popularity in Taiwan. It addresses Taiwanese buyers' desire for convenience while lowering our cost to serve, allowing us to offer free shipping at a much lower minimum spend. By the end of the year, our network has grown to over 2,800 locations. This last-mile delivery model has contributed to broader user adoption and stronger repurchase behavior while creating a structural moat that is difficult for any peers to replicate at scale. We still see much headroom to strengthen our market leadership and improve e-commerce penetration in Taiwan. Brazil was our fastest-growing market in 2025, delivering robust GMV growth and market share gains while remaining profitable. Mass market penetration improved, thanks to our ability to offer free shipping at the lowest cost structure in the market. Upmarket penetration also improved as our fast, reliable delivery made us more attractive in higher-value categories. In the fourth quarter, buyer waiting time improved by around 1.5 days year-on-year. Over the same period, we onboarded more than 300 new brands to Shopping Mall and Shopping Mall GMV more than doubled year-on-year. With these efforts, newer buyer cohorts are showing higher average spend levels. In 2026, we will accelerate the rollout of our fulfillment capability in Brazil. This will enable us to attract and serve even more sellers, especially in higher-value categories and keep improving our average basket size. Shopee delivered an exceptional 2025, setting new growth records every quarter. This has proven the effectiveness of our strategic choices. It has also validated the efforts we made across the year to constantly improve our execution capabilities. In 2026, we will remain consistent on both our strategies and our focus on high-quality execution. We believe our strong growth momentum and healthy profitability will continue into the year ahead. Next, moving to Monee. We are very proud of the progress Monee has made in both growth and profit while maintaining a healthy risk profile. In 2025, Monee's annual revenue reached $3.8 billion, representing 60% year-on-year growth. Adjusted EBITDA exceeded $1 billion, representing 43% year-on-year growth. Credit business remains our primary driver of growth and profit. In 2025, we grew our credit business in three ways: acquiring more new users, deepening engagement with existing users and expanding credit use cases. First, we acquired many more new users by shifting from a whitelist-based approach to a broader all-can-apply approach. We progressively rolled this out across our markets for both SPayLater Pay and personal cash loans. New user cohorts scaled well with generally positive unit economics. In the fourth quarter, we added 5.8 million unique first-time borrowers. Our active credit users crossed 37 million at the end of the quarter, up more than 40% year-on-year. Second, we deepened our engagement with existing credit users for borrowers with longer credit track record. We offered access to higher loan limits and longer tenure. To target more prime users, we introduced differentiated pricing and more product features, such as first-month interest-free loans. By the end of the fourth quarter, average loan outstanding per user was around $240, a 27% increase year-on-year. Third, we expanded credit use cases beyond Shopee into more consumer spend scenarios, letting us penetrate a much larger addressable market. Off-Shopee SPayLater has evolved from a nascent offering into a meaningful contributor to our overall loan portfolio. By the end of 2025, off-Shopee SPayLater loans grew over 300% year-on-year, accounting for over 15% of our total SPayLater portfolio. In Malaysia, close to 30% of SPayLater usage was already off-Shopee. Our success with off-Shopee SPayLater has been driven by the close attention we pay to user experience. We took great efforts to ensure that SPayLater could be activated in seconds and used seamlessly for in-store purchases. We integrated SPayLater with national QR payment systems across key markets, making it much easier for consumers to use in day-to-day purchases. We also expanded the use of SPayLater into higher ticket offline categories such as electronics and 2-wheelers. We are encouraged by the early traction we are seeing with off-Shopee SPayLater and see substantial headroom to expand its use cases. Our credit business expansion in 2025 was made possible by improvement in our risk underwriting capabilities. This improvement tapped on our rich ecosystem data and advancement in AI. Over the year, we made good progress training our risk models to better understand and map how user behavior evolves over time. We are better able to access individual repayment capacity alongside evolving market risk and dynamically adjust the credit limits as needed. Enhancing our models precision and performance enabled us to scale rapidly in 2025, while still maintaining a stable risk profile. Our 90-day NPL ratio held steady at 1.1% as of the end of the fourth quarter. Looking ahead, I'm incredibly excited about Monee's growth potential. Many of our initiatives are still in early stage with huge opportunities we have yet to capture. We are also making good progress growing our products and services beyond credit from digital banking to insurance and more. We believe Monee will be a significant long-term profit contributor for us. Next, turning to Garena. 2025 was a blockbuster year for Garena. Bookings grew 37% year-on-year and adjusted EBITDA grew 38% year-on-year. Free Fire expanded its reach and scale globally, and we saw solid momentum across our broader portfolio from Arena of Valor to new titles such as Delta Force and EA SPORTS FC Mobile. Free Fire's journey over the last 8 years has been truly special. It is remarkable for a franchise of this vintage to still be growing so fast. Free Fire has now achieved two consecutive years of bookings growth exceeding 30%, with 2025 bookings nearly double the level reported in 2023. Even at this massive scale, average daily active users in 2025 continued to grow year-on-year. Free Fire's success is driven by our ability to consistently deliver high-impact experiences that bring communities together. 2025 was a defining year in this regard, showcasing our excellent execution across a full spectrum of major in-game and real-world initiatives. We delivered a content pack year. In Q1, we launched NARUTO SHIPPUDEN Chapter 1. In Q2, we released our eighth anniversary map, Solara. And in Q3, we launched the Squid Game collaboration and NARUTO SHIPPUDEN Chapter 2. This blockbuster year was the product of more than 2 years of intense preparation, collaboration and game development. We started working on the NARUTO SHIPPUDEN project in 2023 when the global game industry was struggling with the post-pandemic headwinds. We knew this project required a long development time line. In that difficult time, the easier path would have been to focus on smaller shorter-term wins, but we were convinced that this was the right thing to do and remain committed to the long-term vision we had for the project. Our conviction, patience and hard work has been hugely rewarded with the collaboration's resounding success. Garena's culture of always prioritizing what is best for our players even through hard times has sustained Free Fire's popularity and relevance, making it an evergreen game. 2025 was also a big year for our Esports ecosystem. The Free Fire World Series Global Finals held in Jakarta in November marked a historical moment for the franchise. More than 600,000 players competed worldwide across grassroots qualifiers, regional leagues and global finals. This earned Free Fire the Guinness World Records title for the Largest Mobile Team-Based Esports Tournament. Over the past 8 years, we have built Free Fire into more than just a game. It is now a global franchise spanning gameplay, social engagement and real-world experiences. This approach has deepened the game's emotional connection with players and continues to fuel its organic growth. We are already laying the groundwork for Free Fire's next phase, including preparation for its landmark 10th anniversary in 2027. Beyond Free Fire, EA Sports FC Mobile has delivered a strong early performance. Since its launch in October, it has become the most downloaded mobile game in Vietnam according to Sensor Tower. We hosted FC Pro Festival 2025, a flagship esports and fan event in Ho Chi Minh City. The event was incredibly popular, reaching 18 million viewers online. To build excitement for event, we brought in global football icons, Luis Figo and Ricardo Kaka to play with local footballers and influencers in a friendly match. Our success with this game demonstrates our ability to localize the global franchise through deep engagement with fan communities on the ground. We look forward to further strengthening our long-standing partnership with EA. We are very proud of Garena's sustained success across Free Fire, our long-standing published games and the exciting new titles we have added to our portfolio. Garena is entering 2026 with strong momentum. We will keep delivering high-quality content and experiences to our global gaming community. As we enter 2026, we see exciting opportunities across our businesses and markets. Our excellent performance in 2025 has strengthened our conviction in our operational strategies. We will double down on executing these strategies with excellence in the year ahead. As always, we greatly appreciate your trust and support along the way. We look forward to delivering another strong year. With that, I invite Tony to discuss our financials. Hou Tianyu: Thank you, Forrest, and thanks to everyone for joining the call. For Sea overall, total GAAP revenue increased 38% year-on-year to $6.9 billion in the fourth quarter of 2025 and 36% year-on-year to $22.9 billion for the full year of 2025. This was primarily driven by growth in Shopee and Monee. Our total adjusted EBITDA was up by 33% year-on-year to $787 million in the fourth quarter of 2025 and up by 75% year-on-year to $3.4 billion for the full year of 2025. On Shopee, gross orders increased 30% year-on-year to $4 billion in the fourth quarter of 2025 and GMV increased by 29% year-on-year to $36.7 billion in the fourth quarter of 2025. Our fourth quarter GAAP revenue of $5 billion included GAAP marketplace revenue of $4.3 billion, up 36% year-on-year and GAAP product revenue of $0.6 billion. Within GAAP marketplace revenue, core marketplace revenue, mainly consisting of transactional fees and advertising revenues was $3.6 billion, up 50% year-on-year. Value-added services revenue, mainly consisting of revenues related to logistics services was $0.7 billion. For the full year of 2025, GAAP revenue of $17 billion included GAAP marketplace revenue of $15 billion, up 34% year-on-year and GAAP product revenue of $2 billion. Shopee adjusted EBITDA was up by 33% year-on-year to $202 million in the fourth quarter of 2025. Full year adjusted EBITDA was $881 million for 2025 compared to a full year adjusted EBITDA of $156 million for 2024. Monee GAAP revenue was up by 54% year-on-year to $1.1 billion in the fourth quarter and up by 60% year-on-year to $3.8 billion for the full year of 2025. Adjusted EBITDA was up by 25% year-on-year to $263 million in the fourth quarter of 2025 and up by 43% year-on-year to $1 billion for the full year of 2025. As of the end of December, our consumer and SME loans principal outstanding reached $9.2 billion, up 80% year-on-year. This consists of $8.2 billion on book and $1 billion of booked loans principal outstanding. Nonperforming loans past due by more than 90 days as a percentage of total consumer and SME loans was 1.1% at the end of the quarter. Garena bookings grew 24% year-on-year to $672 million in the fourth quarter and grew 37% year-on-year to $2.9 billion for the full year of 2025. GAAP revenue was up by 35% year-on-year to $701 million in the fourth quarter and up by 26% year-on-year to $2.4 billion for the full year of 2025. The growth was primarily due to the increase in our active user base as well as the deepened paying user penetration. Garena adjusted EBITDA was up by 26% year-on-year to $364 million in the fourth quarter and up by 38% year-on-year to $1.7 billion for the full year of 2025. Returning to our consolidated numbers. We recognized a net nonoperating income of $62 million in the fourth quarter of 2025 compared to a net nonoperating income of $28 million in the fourth quarter of 2024. For the full year of 2025, nonoperating income was $296 million compared to nonoperating income of $117 million for the full year of 2024. We had a net income tax expense of $210 million for the fourth quarter of 2025 compared to net income tax expense of $89 million in the fourth quarter of 2024. For the full year, our net income tax expense was $651 million compared to $321 million for the full year of 2024. As a result, net income was up by 73% year-on-year to $411 million in the fourth quarter of 2025. For the full year, net income was $1.6 billion as compared to net income of $448 million for the full year of 2024. Elson Choi: Thank you, Forrest and Tony. We are now ready to open the call to questions. Operator? Operator: [Operator Instructions] Your first question comes from the line of Pang Vitt from Goldman Sachs. Pang Vittayaamnuaykoon: Two questions from me. The first question is on Shopee. Can you provide more details on how you plan to achieve the target growth in 2026, while maintain at least flat year-on-year absolute EBITDA? What assumption in specific are you making regarding the competitive landscape? And given the trajectory of lower year-on-year margin potentially, what are the key investment areas? And how long should we expect the investment to last? That's question number one. Question number two, this will be on Monee. The loan book grew very strongly, closing the year more than 80% year-on-year. Can you elaborate on the key drivers of this strong performance? Was this primarily driven by new products, new market pricing or stronger demand? Or how should we think particularly about growth in this year, 2026? Likewise, how should we think about the EBITDA margin trend going forward as well for the segment? Hou Tianyu: If we start from the Shopee side, the first question, I think the -- as Forrest mentioned in the opening, there are a few areas we are investing for growth. If you start with the South Asia, essentially, there are kind of two core elements of this. The first element is to increase the share of wallet of the core users. Second is to increase the buyer base. If you start with the first one, the thing we are doing essentially are kind of similar to what we did before, but further enhanced in 2026 is to have better user experience through our logistics. For example, the instant delivery, same-day delivery, so users have a better experience. On top of the general improvement of our delivery qualities, if you're in South Asia, if you try our services, you will see a general faster deliveries and better reliability over the year. We want to continue to do that. The second part is to have a bigger fulfillment network. And I think this will both, reducing the speed of user will receive item because we can move the items closer to the users before the user actually ordered the items. I think in South Asia, most of countries have seller concentrated in the capital regions. So if you're after capital regions, having a warehouse closer to your area is a big speed improvement. But not only the speed, but also the reliabilities of the services and also helping the seller to offload many of their work, essentially to make it easier for sellers to sell our platforms. The other area is to increase the wallet share of the VIP programs, not only sort of like offering better service for our own -- through our own platforms, we are working with many different external partners to offer benefit to the VIP users as well. As you probably can see that we work with OpenAI and ChatGPT. We are also working with many local partners in different countries, and there are many global and local partners pending in the process. The -- again, this is on top of the many other things we are doing, for example, the price initiatives to make sure that our platform is always price competitive. We also continued the effort on the content side. Our content share of businesses has been growing over the years, more than 20% already. And I think that trend still will continue, not only for our own content, but we work with external partners like YouTube, like Facebook apps, and we are discussing more collaboration for the external content providers as well for this. Again, this is a broader segment of increasing the wallet share for our core users. Another part of the effort, as I shared earlier, to increase the buyer base. I think the -- if you look at where we are right now versus, let's say, a year ago, one of the difference, you will see that our gross unit economics has been improved meaningfully with the high take rate through the ad effort and also part of the commission effort, we have essentially a higher take rate on the top line, but also reduce our cost to serve essentially for the logistics plus payment. Essentially, this is the raw cost to serve with the better gross margins, there are more and more users we can serve in a profitable way. So this enables us to be able to essentially serve a larger group of users. And what we are doing in 2026 is essentially to reach out those users to convert them to our platforms and hence, enhance the overall -- the MTUs -- the MAUs for our platforms. So that's kind of a broader theme of what we are doing in South Asia. In Brazil and Taiwan, many things are similar, but I just want to highlight a few things that's specific to the market as well. In Brazil, we have been operating with a much efficient logistics network compared to what's available to our -- to the other players in the market with much lower cost. And we are able to run the businesses profitably with sort of a much lower basket size. With this, we would like to essentially build on top of this to serve the high-end customers well over time in a higher basket size categories. In order to do that, there are essentially three things that's important. One is to increase the speed of deliveries. I think as Forrest mentioned in the opening, we have reduced the shipping speed over time meaningfully. -- like if you compare Q4 this year versus Q4 the year before -- sorry, I mean 2025 versus 2024, you will see 1 to 2 days difference on the delivery time in Brazil. I think that's very important to make sure that the user gets the item faster with a lower cost without impacting the cost. That's very important. Second one is the fulfillment network that we are building in Brazil. We have been ramping up this in the past quarter, but 2026 is really time that we're going to grow this much larger. I think we spent quite a few months to get all the detail right, the system right, get the location right, get the process right. I think it's a time to actually to grow this much faster. The third one is to make sure we have all the right sellers for certain particular categories, like, for example, auto electronics, et cetera, but also for the more branded sellers coming to our platform. I think with all the three elements coming in place, I think this will enable us to reach out to a new segment that we are not able to serve in the market, right? I think in Taiwan, we have a kind of quite special network we built for our deliveries. I think in order for us to capitalize on that, we also start building the fulfillment part as well to have an integrated operation. So not only sort of just, but it's an integrated operation with our local networks. So we are able to serve the users in a much lower cost end-to-end, but also faster speed compared to what they experience before with the other networks in the market. Yes. So all in all, this is kind of the things we are doing. And many of this has an investment cycle as well. If you look at the fulfillment network, there will be a period of time we build it up, but there's a clear investment cycle come with it rather than that is ongoing perpetual investment that, for example, if you look at the faster deliveries we're building, I think there is a pure time that we will scale the delivery fleet, et cetera. It's a separate fleet from the typical SPX services. For example, if you look at the VIP program, there's a pure time that we will kind of educate the market, but -- and also attract our partners. As we get everything in place, I think the cost structure will be a lot better. I think it's been proven in many other markets, as you probably been aware. If you look at the sort of the overall profitability margins, our Q4 EBITDA margin is around 0.55 as you can see. Compared to the year before 2024, we are actually improving on the margins. If you look at over the years, in the early part of the year in 2025, we guided the market to grow around 20% for our top line. Over the year, we actually realized that we are able to grow the businesses much faster. We end up with much higher than that. If you look at the year-to-year growth, if you look at Q4 growth, we grow much larger, much higher than 20%. I think essentially over the year, we've realized that there are areas we are able to drive the market to grow. And we also learned that there are different levers that we can pull to drive the market growth. And 2026 essentially is extension from where we are in Q4 2025. And if you look at sort of like Q4 2025, if you look at the end of the year 2026, I do believe that we are able to expand the profitabilities, the margin there as well. And this trend can continue over the years. And I think we talked about the 2% to 3% margin for e-commerce businesses over time. I think the belief is still clearly there, and we will demonstrate it to the market over the years. And at the same time, we also believe that the market potential is probably larger than kind of many projections before. And the 2026, as we shared earlier, we are able to grow around 25%. And of course, the -- we will observe how the market behave over the years and over the quarters. I think the core thing for us is, I think the business is I think, is in a shape that we are very confident that there are things we can do to drive the business growth and the things are within our control and the things we are doing has a clear investment cycles that we can drive over time. Regarding your question on the competitive landscape, I think what we observed is relatively stable competitive landscape across most of our markets. Yes. And I think that we didn't observe anything very different from what we see from last quarter. I think that's the sort of a question to the e-commerce side. On the Monee businesses, there are multiple drivers driving the growth. On the broader scale, we see that there is a different phase of our businesses that will roll out in different markets. There are also different products we roll out in different markets in different phases. For example, the early market that we start our financial service businesses was Indonesia. So clearly, Indonesia was the first country that grow much faster than others. Then over time, we started kind of like the services in countries like Thailand, Malaysia, et cetera. So these kind of countries will catch up on the growth. And the initial phase of those new market clearly will grow faster than the market has been there for quite a period of time. Another example would be like Brazil. If you look at -- essentially, it's actually our latest market when we launched many of our products, Brazil also in a pretty high growth phase as well. The other drivers on the product side as well. In most of the countries, we started with SPayLater, which is our consumption loans. So that's the first growth driver. And then later, we roll out the cash loans, the personal cash loans. We also roll out the off-Shopee's and then the cash loan and off-Shopee -- off-platform loans will be the growth driver. So if you look at the growth, the on-Shopee side, we still see more penetration possible on Shopee. And even within SPayLater, we have differentiated products for different users, especially for the more higher income segment. We offer a differentiated product with longer tenure, slightly lower interest rates, et cetera, to those segments. So we still see opportunity to grow this segment. And for the off platform lending, I think we shared quite some in the opening as well. For example, in some countries like in Malaysia, we see the off-Shopee SPayLater has been 30% of the overall portfolio already. And I think all these are driving the growth for our loan book. Regarding the margins, I think the margin influenced quite a lot by the country mix, product mix and also whether we see a good opportunity to acquire users. I think it might fluctuate a little bit quarter-to-quarter. But the fundamental of this is how is our risk management capabilities that we see. We are seeing very stable risks. If you look at a particular product for a particular market, the risk is very stable for us. You can see this from our NPL number as well. And we track this very closely internally to make sure that we don't sort of like grow the loan book because we want to grow the loan book on the top line. We want to do it very prudently. At the same time, we actually upgrade our risk management models over the years, especially with many of the new AI technology. We're experimenting with the new AI -- new risk model with the transformer structure as well to do a sort of a long sequence data training fit into our model to utilize many of the e-commerce data that we are not able to use in the traditional risk modeling, and it has been showing us very good performance. And so many of this will help us to manage our risks to reach out to the user base we are not able to serve before so that we can grow the loan books over time. Operator: Your next question comes from the line of Piyush Choudhary of HSBC. Piyush Choudhary: First question is on Shopee. You have elaborated on various investment buckets. Could you also elaborate on how long these investment cycle could last in the context of how we should think about margins for 2027? And what are the likely deliverables from your partnership with Google to deepen AI-powered solutions for Shopee? And second question is on Garena. Could you talk about the outlook for the booking growth in 2026, pipeline for any IP collaborations which you can share? Hou Tianyu: For the investment cycle, as I shared earlier, I think for different initiatives, there are different investment cycles and also for different markets, there are different investment cycles. So it's a little bit sort of like tricky to generalize it, I guess, from a top-down perspective. But I -- as we guided in the opening that we do want to make sure, number one, that the total probability in the absolute numbers in 2026 is better than 2025. And also, if you look at the profitability levels, I do believe that if you look at sort of like end of the year -- over the years, I think it will not be worse than Q4 2025 and it should be able to grow over years. And if you look at -- we're not providing guidance, let's say, for FY 2027 yet, but as a medium-term to long-term trend, I think the 2% to 3% EBITDA margin, I think it's well achievable based on what we see so far. It's in a way, our choices on how much we want to draw on the margins versus the growth levers that we have in our hand. From what we see, it's -- we don't have any concern on that. In terms of the partnership for -- with Google, we are still in the process of developing the product. And I think it shouldn't take too long, I believe. I think when we have the product ready, I think we'll be able to share with everyone. It's largely sort of working with -- we've been working with Google for many years on Google Shopping and Google Ads and many other things like YouTube as well, so this is extension of our partnership. Forrest Li: Regarding the outlook for Garena, at this moment, we still see the double-digit growth for Garena for 2026. And in terms of the collaborations pipeline, as we shared, we are super excited and motivated by seeing the success of the collaboration with IP such as NARUTO. Actually, this year, we're going to extend that IP collaboration. So this probably the delivery will be around Q3, so based on our current time line. And we are also actively working with other potential like IP collaboration. Meanwhile, this year is a big football year for FIFA World Cup. So -- and we realized actually the global football community has a very, very high overlap with our global gamer community. So during the FIFA World Cup time, so we're going to have a lot of like football-related promotion as well. Operator: Next question comes from the line of Alicia Yap of Citi. Alicis a Yap: Two questions here. Number one, could management provide some insights into the retentions and also the renewal rates for your VIP member subscription program? And then furthermore, if you can give us how does the VIP members influence the different purchasing frequencies and also the preferred product category? And also, are there any difference between the behavior in the customer profile across the different countries? And how does this affect your strategy? And then second question is on AI. So I wanted to ask, given like can management share with us on your investment priority given how are you prioritizing your investment given -- so how are you prioritizing investment between the e-commerce, Fintech and AI amid the latest competitive environment, and also the importance of the AI initiative. So if management can share how you are leveraging your synergies between your three core business to strengthen your competitive advantage and also to enhance your ecosystem value? Hou Tianyu: For the Shopee VIP program, it has been growing quite a lot over the past few months. In some countries, it has been more than 15% of our total GMV for the VIP members. I think we do believe that this will grow further to double or triple from where we are right now. The retention has been pretty good actually. The renewal rate -- so one of the core challenge historically for similar program in our region is the payment success rate sort of when they roll from sort of 1 month subscription to another, many people drop off simply because there's no credit card available for many of our users in our region versus if you look at the more credit card market. I think we saw this by working closely between Shopee and Monee to enable the smooth payment process for our VIP program. And as a result, our kind of the subscription retention rate has grown from 40% to 70%, let's say for Indonesia over the past few quarters. This is a big achievement for us in terms of how we can retain the VIP members on an ongoing basis. And in term -- for most of the VIP members, if you look at the average purchasing, we do see that much higher frequent purchase and sometimes with a higher basket as well. I think overall, if you look at the general number, the VIP members spend 30% to 40% more than the average. For different markets, actually, we see quite similar behaviors in different market. I think probably the difference, I guess, in the market is probably the offerings because there are different preferences in different market in terms of user behaviors and what people care about. So we actually tailor the VIP offering quite customized tailored for each of the local market. I think that's probably more the difference than the sort of the other behaviors. On the investment front, so if you look at our different businesses, our Monee businesses is a very profitable businesses. And for most of the new user growth or for most of the new initiatives, it comes with a quite positive customer life cycle value. So it's kind of like -- so in a way, every initiative has a positive ROI. I think if you look at the e-commerce side, we do spend quite a lot of effort on the AI. I think you mentioned about AI investment there. For every -- for the investment on the e-commerce for AI, we also look at the positive return of investment across the initiatives. For example, if you look at one of the area we spend on AI is our search recommendation and also ad systems. The uplift on our ad take rate is a consequence of many of our AI efforts. For example, how do we actually expand the description for our products, we can understand the product better. For example, how can we expand the queries from the users, we can understand user intention better. Recently, we also rolled out a multimodal search in our platform as well. So user can search a picture plus a long description, and we are able to serve that just similar to how Gemini or ChatGPT would do. I think all those AI investment has a clear ROI. We also spent quite a lot of effort using AI to help our sellers. For example, if you go to many of our countries, you can talk to the sellers with the help of AI already. So we built an AI chatbot for our sellers. Our sellers can customize it for their own purposes. This will help the seller to reduce their manpower and also make it not only reduce cost, but also have the better upsell for the buyers. And we also have tools for the seller to create videos and picture descriptions for their products, et cetera. All those typically come with a fairly positive return on investment for our ecosystems. For the synergy across our businesses, clearly, there is a lot of synergy between e-commerce and financial service businesses. The financial services are essentially leveraging a lot of data, a lot of user behaviors from Shopee to be able to risk assess the users. And we still believe, as I shared earlier on the previous questions, we still believe there's a sizable room for the money to penetrate the Shopee user base there, not only for credit, but also for our banking businesses, insurance businesses, our payment business, et cetera. Our payment -- our Monee business also work with our game site to help the game on the payment process as well that is a collaboration with gaming business from Shopee as well in terms of the merchandising, in terms of the user acquisition side. So there are different type of collaboration among our businesses. Operator: Your next question comes from the line of Divya Gangahar of Morgan Stanley. Divya Kothiyal: My first question is on the Brazil space. So could you comment if you expect GMV growth in Brazil to accelerate this year given all that we are doing on the fulfillment capability? And what kind of impact would that have on our AOVs? Are the AOVs still significantly lower or 1/3 of the market leader? And what kind of gap do you expect to be able to cover with this fulfillment uplift? Could you also comment on what the penetration levels for Shopee PayLater in Brazil are? And should that also see a significant uplift this year? So that's my first question on Brazil. And my second question is on the content ecosystem that you alluded to. Could you comment on where do you see the e-commerce content ecosystem plateauing in ASEAN specifically? And what are the unit economics now versus shelf e-commerce for us? And how is our market share trending in this? Hou Tianyu: For Brazil, we come with a pretty high growth rate in 2025. We do believe the growth will continue in 2026. We don't have a guidance for a particular country on the growth rate. But in general, we will see pretty good growth in the market. We also believe that we will outgrow the overall market in Brazil. On the AOV, we do believe that the AOV will, over time, grow. The gap with [indiscernible], I think it will still have, but I think we will narrow down the gap over time. For the SPayLater penetration in Brazil, it's still in a very early stage, honestly. I think we grew quite a lot in Brazil. And the penetration in Brazil is still -- I think essentially, we start Brazil a lot later in other countries. And the penetration level in Brazil is still similar to the early time of what we observed in our early markets. So we believe the trend will continue in terms of the penetration of SPayLater in Brazil in 2026, similar to what we observed in other Asian markets. For the content ecosystem, we don't think it's plateauing yet for our platform. I wouldn't comment on other platforms, but for our platform, we do believe there are further room to grow in the coming quarters. The unit economics has been improving over years. I mean, sometimes there's a slight fluctuation from month-to-month, but general direction is the economics still improving over the time. I think the gap between the content ecosystem and the non-content unit economics will be narrow over time, and it will not be too much difference in the future. Operator: This concludes our question-and-answer session. I would like to turn the conference back to Mr. Elson Choi for any closing remarks. Elson Choi: Thank you all for joining today's call. We look forward to speaking to all of you again next quarter. Operator: Thank you for attending today's call. You may now disconnect. Goodbye.
Douglas Constantine: Good morning, and thank you for joining us today for Progressive's fourth quarter Investor event. I am Doug Constantine, Treasury Controller, and I will be a moderator for today's event. The company will not make detailed comments related to its results in addition to those provided in its annual report on Form 10-K and a letter to shareholders, which have been posted to the company's website. This quarter includes a presentation on a specific portion of our business, followed by a question-and-answer session with members of our leadership team. The introductory comments and the presentation were previously recorded. Upon completion of the previously recorded remarks, we will use the balance of the 90 minutes scheduled for this event for live question and answers with the leaders featured in our recorded remarks as well as other members of our management team. As always, discussions in this event may include forward-looking statements. These statements are based on management's current expectations and are subject to many risks and uncertainties that could cause actual events and results to differ materially from those discussed during today's event. Additional information concerning those risks and uncertainties is available in our annual report on Form 10-K for the year ended December 31, 2025, where you will find discussions of the risk factors affecting our business, safe harbor statements related to forward-looking statements and other discussions of the challenges we face. These documents can be found via the Investor Relations section of our website at investors.progressive.com. To begin today, I'm pleased to introduce our CFO, John Sauerland, who will kick us off with some introductory comments. John? John Sauerland: Thanks, Doug, and good morning, everyone. While we're already in March, I would like to take a couple of minutes to review the very strong year that we had in 2025. Following a year of incredible growth in 2024, we added almost $9 billion in net premiums written in 2025 and almost 3.7 million additional policies in force. When we look at statutory results for the private passenger auto market through the third quarter of 2025, we believe we picked up close to an additional 2 points of market share versus last year to move to around 18.5% market share. However, what made 2025 even more exceptional was that along with that growth came remarkable profitability. We earned almost $13 billion in comprehensive income across our operating and investing units or a comprehensive return on equity of 40%. Profitability across our businesses was excellent, and policy in force growth was also positive across all the businesses with personal vehicles leading at 12% or almost 3.5 million more policies than last year. That equates to almost 5.5 million more vehicles insured by Progressive versus year-end 2024. Property profitability was the beneficiary of a lighter-than-average catastrophe year and is also a reflection of the significant work we've done to manage the risk in this product. As we indicated in our Q2 2025 investor call, we're much more comfortable with the property line and are actively looking for ways to increase growth in property through bundling. In Commercial Lines, PIF growth was primarily from business auto and contractor risks while growth in trucking was challenging as the industry continued to face headwinds. Commercial Lines also had an excellent profitability in contrast to what we believe was an underwriting loss for the Commercial Auto insurance industry. As you know, Progressive is very focused on our underwriting operations, and we believe this is the primary driver of our success. We focus on our 4 strategic pillars to win in the marketplace and grow as fast as we can at less than or equal to a 96 combined ratio at the enterprise level as long as we can provide high-quality customer service. These 4 pillars have served us quite well since we established them formally as our strategy in 2015. Our culture and our focus on the growth and profitability operating mandate are supported by a very efficient capital model and strong risk-adjusted portfolio returns. This leads to high comprehensive returns on equity over the medium and longer term. We view our comprehensive return on equity along with growth to be the ultimate measures of our financial success. And we believe success on these measures drives higher multiples for Progressive stock. As you can see from the slide, return on equity in our industry is correlated with price-to-book ratio. Additionally, we believe growth plays a considerable role in our multiple being substantially above the line derived from the large public property and casualty competitors. Comprehensive return on equity is a function of the operating discipline we so frequently discussed on these calls and also very much a function of discipline around our financial policies. Today's discussion will go deeper on those policies, highlighting recent changes in operating leverage, providing insight around our variable dividend and detailing our approach to managing our nearly $100 billion portfolio at year-end. At the same time we execute our capital-efficient strategy, we need to ensure that we give ourselves maximum flexibility as we encounter uncertainty. While we believe strongly in our operating model, we are unable to predict broader geopolitical and macroeconomic changes with certainty. Therefore, we have set up a model that allows for flexibility in both our capital allocation and our investment risk. Since we run with higher operating leverage and a fair amount of financial leverage, we need to make sure that we can retain more capital when we believe it is beneficial to the business. We believe that our variable dividend policy and a liquid more conservative investment portfolio give us the capital we need to grow when growth is significant and an off-ramp when we hit periods of volatility. As an example of how our model balances these goals, if we look back to the 2022 to 2023 period, Progressive saw faster premium growth that required a significant amount of capital. On top of that, margins were volatile due to the surge of auto-related inflation. Further, that same inflation drove significant investment market volatility. In response, we are able to significantly reduce share repurchases and variable dividend payments, take down investment risk, and raise debt capital in order to ensure the fuel for our strong organic growth in 2022 and beyond. This flexibility allows us to aim for strong growth while also operating with a high degree of capital efficiency. More recently, capital generation has been very strong. In 2025, we earned almost $13 billion in comprehensive income across our operating and investing units. Our below 90 combined ratio, along with more than a 7% return on the investment portfolio, drove historically high profits for Progressive. The combination of the strong capital position in which we entered 2025, robust income generation and increased operating leverage allowed for Progressive to reward our shareholders with a $13.50 per share variable dividend in January. This came on top of modestly higher pace of share repurchases in recent months. Given this pace of income generation, the variable dividend and the announced change in our operating leverage last year, we thought this would be a good time for us to review with you how we think about capital, leverage, capital allocation and investment risk at Progressive. While we focus on comprehensive ROE for the purpose of benchmarking, I want to share the history of results around ROE. Over the medium and longer term, our model has produced returns on capital that have outperformed not only our P&C peers, but most other financial firms. In order to achieve this continued outperformance, we have to not only be disciplined on the operating side, but also with our investments and our capital allocation. A key consideration around capital allocation is our operating leverage or, in other words, premium to surplus ratios at our insurance companies. As we conveyed in our Form 10-Q for the third quarter of 2025, we have received approval from our regulators that oversee most of our operating entities to move our operating leverage up to a maximum of 3.5:1 premiums to surplus. As a reminder, The Progressive Corporation is a holding company, and we own 45 insurance entities and some non-insurance companies. Insurance companies follow statutory accounting rules and are subject to regulation in their state of domicile. Surplus in statutory accounting is essentially equivalent to equity in GAAP accounting. Statutory accounting differs slightly from GAAP accounting, primarily around recognition of expenses more in line with cash flow and investment-grade bonds are valued at amortized cost versus mark-to-market. Regulators have numerous tests to monitor and regulate insurance company solvency. Premiums divided by surplus is one ratio for which limitations are set by regulators to ensure that insurance companies have the capital necessary to pay out policyholders when needed. For our core vehicle lines of business, we have always believed that based on our rigorous underwriting acumen, conservative investment posture and relatively modest reserve development that we did not need to hold as much capital as regulators were expecting us to. Those same factors are generally considered in risk-based capital ratios that regulators use to monitor solvency, and in extreme cases, to force changes in the management of insurance companies. Our risk-based capital ratios are very good in most of our insurance companies, and this fact helped us receive approval to hold less capital or surplus at most of our operating subsidiaries. We hold a significant amount of capital outside the insurance companies as well, and we'll talk more about that in future slides. As you can see, there's a wide range of operating leverage models in the property and casualty insurance industry. Progressive, with our consistent operating results, is normally near the top. This exhibit shows just the surplus in our insurance subsidiaries relative to net premiums written. As noted previously, The Progressive Corporation is a holding company, and we hold surplus in the insurance companies and generally balance those insurance companies to our target premiums to surplus ratios towards the end of each year. At year-end, we generally hold contingent and additional capital at the holding company level. At year-end 2025, we held around $13 billion in an investment subsidiary of the holding company. In January, we paid almost $8 billion in a variable dividend out of that $13 billion. Naturally, the next question is what this change in operating leverage means for our overall capital position. We think of capital in terms of 3 different layers, which are regulatory, contingent and additional capital. As I previously mentioned, our regulatory capital is overseen by our state regulators. However, our contingent capital layer is fully determined by our risk appetite and controls. It is currently set at an amount in which it would take a one in 200-year modeled scenario to go from the top of our contingent capital to our regulatory layer. As the name is contingent, our goal is for that layer to generally not be fully eroded to the point of reaching the regulatory layer. So we normally hold some level of capital above the contingent layer. How much additional capital we hold on an ongoing basis is a function of factors such as operating and investment volatility and financial leverage and the potential opportunity to deploy capital towards investments, acquisitions or share repurchases. While we will always be open to holding on to additional capital for future opportunities, management is very focused on Progressive's return on equity over the medium and longer term. We won't do a deep dive on our reinsurance program today, but it is certainly worth noting that our reinsurance program is integral to the size of our contingent capital layer. Relative to our balance sheet, we have fairly modest retentions in our reinsurance program, and our catastrophe limits are relatively high. This naturally allows us to need to hold a lower level of contingent capital all else equal. As you can see from the graphic on this slide, the change in our premiums to surplus means lower capital needs at our insurance subsidiaries but does not require us to hold any more capital at either our contingent or additional layers. Therefore, this move has the potential to incrementally raise Progressive return on equity due to the lower capital needs. I will also note that the incremental $1.6 billion freed up in 2025 resulting in our premiums to surplus ratio at the enterprise level to move closer to 3, relative to an average of 2.8 over the previous 5 years. Our insurance company subsidiaries are subject to numerous regulations on capital beyond net premiums written to surplus. So while we may have approval from the state of domicile to move to 3.5 for the net premiums to surplus ratio, additional regulations may limit at what pace we may move to that ratio and how close exactly we get to that ratio. Our intent is to work to move closer to 3.5 going forward. Our operating leverage has historically helped us to achieve industry-leading returns on equity and this change will naturally further that positioning. And while operating leverage is important, it is only one element of our capital model. Now to continue the discussion on financial leverage and capital allocation, I will pass it along to our Treasurer, Maureen Spooner. Before I do that, allow me to give a brief bio on Maureen and our Chief Investment Officer, Jonathan Bauer. Maureen has been with Progressive more than 20 years and has previous experience in Treasury at another public company as well as public accounting. During her tenure at Progressive, she has held controller roles in our special lines and IT groups, managed our comparison rating offering in our direct group served as our Ohio Auto Product Manager and most recently, our Audit Business Leader. Jonathan Bauer has been with Progressive almost 20 years, all within our investment management group and has previous experience in investment banking in New York and London. Thank you again for your time this morning. And now to you, Maureen. Maureen Spooner: Thanks, John. While operating leverage is important, it does not tell the full financial or capital picture. First, because it only reflects the capital needs at our insurance subsidiaries. Second, it does not differentiate between equity and debt capital. So it does not consider financial leverage. And finally, it doesn't include our capital allocation policy or it does not consider where we can invest. So I will briefly review our financial policies while sharing our capital allocation process. First, we want to ensure we have the capital we need to write as much profitable insurance as we can. This is our best use of capital. We want to ensure we have the regulatory surplus plus contingency capital to grow our business at less than or equal to a 96 combined ratio. While our decisioning is not linear, we have a decision tree on the next few slides to demonstrate how we think about capital allocation. Once we have determined we have excess capital over and above our operating needs. If we have excess or additional capital, we then consider how we would deploy that excess capital, and we consider the valuation of each opportunity. We consider 3 areas of potential investment. Additional capital may be deployed for corporate development or acquisitions and strategic investments, for share repurchase or for increased investment risk. Jonathan Bauer, our Chief Investment Officer, will be covering investment risk here shortly. In all three instances, we evaluate the investment and valuation and determine if the return is attractive for the investment. With respect to corporate development, we introduced our Three Horizons framework to you back in 2019, which covers our strategic approach, including acquisitions. Horizon 1, our products within our current constellation of businesses. Horizon 2 are products that are adjacent to our current product footprint. Then Horizon 3 includes businesses outside of the P&C insurance landscape that we currently play in. We continue to fully integrate and optimize our previous two acquisitions, and we have continued to work on our skill set throughout the organization in preparing for future investments. Secondly, we may use excess capital to repurchase shares. Our policy is to repurchase shares to neutralize the impact of employee stock compensation. We also consider repurchasing shares if the share price is attractive to what we believe is our intrinsic value. We have not repurchased a significant number of shares over recent years, even though we have board authorization to repurchase 25 million shares annually for the past 9 years. In some recent periods, our growth rate was high enough that we needed to preserve capital to support growth. At other times over recent years, we had additional capital available to repurchase shares but we did not view the market price of our shares to be attractive or below our view of intrinsic value. Over the past few months, we have begun to be more active with repurchases, but obviously not yet at a significant level. As highlighted in the chart, in January 2026 in 1 month, we repurchased shares at a value similar to the repurchases made for all of 2025 as we felt the share price was attractive. Once we have exhausted considering capital needs for both business growth and investments, we consider returning underleveraged capital to shareholders via dividends. For greater flexibility, we modified our dividend policy in 2019, moving to a modest quarterly fixed dividend of $0.10 per share and an annual variable dividend that is no longer formulaic and is completely variable. Before 2019, we tied the annual variable dividend to our gain share factor, which is a score we use internally to calculate annual cash bonuses for all Progressive employees. We made the change because there were times that the formulaic approach had us returning capital via dividends and at the same time, needing to raise capital to support growth. The annual variable dividend is entirely at the discretion of the Board, which considers current capital levels relative to prospective expected capital needs and determines generally in December of each year, if to pay a variable dividend, and if so, how much. The $13.50 annual variable dividend declared in December and paid in January 2026 largely reflected robust capital generation in 2025 from both underwriting and investments, along with the shift to higher operating leverage at our insurance subsidiaries. As John noted, we held $13 billion of capital at the holding company level at our year-end and naturally net of the declared dividend, that number was $5 billion. There's obviously judgment here, and we believe it's prudent to retain some capital above our operating needs for growth above our expectations, stock repurchases, investment risk, other strategic opportunities or contingency growth. And the $5 billion, along with our ongoing earnings, certainly provides us that flexibility. Once we have determined how much capital we are retaining for operating growth and investing, we need to consider what is the right mix of equity and debt. We have a publicly stated guideline of keeping our leverage under a debt-to-capitalization ratio of 30%. That does not mean that we will take any dramatic action if it drifts over that level. but that our intention will be to have it under 30% over the longer term. You might ask why 30% is the right limit. Given Progressive's very steady stream of earnings and cash flow generation, we could likely support a more leveraged balance sheet. While we always keep challenging ourselves as part of Progressive's culture. At the current moment, we believe that the 30% level strikes the right balance between efficiency and having a strong balance sheet, which gives us strong debt ratings and allows us to prosper through economic cycles. When reviewing our historical monthly financial leverage ratio, we did surpass the 30% guideline of debt to total capital during the financial crisis and then again briefly in 2022, largely due to unrealized losses in our investment portfolio. However, in both instances, we brought the ratio in line with our guidelines through the normal course of business. While we have a goal of staying below 30%, we do not have a policy regarding a minimum amount of leverage as we want to give ourselves maximum flexibility. Over the last 18 months, you can see that we have been trending below our historic range. The main drivers of that decrease have been significant income generation in 2024 and 2025 from both our underwriting business and investment portfolio. Also, when you look at our financial leverage relative to our stock insurance company competitors, you'll note it is broadly in a similar range. Ultimately, we believe that an appropriate amount of financial leverage will help ensure a strong balance sheet and along with our now higher operating leverage, maintain our industry-leading return on equity. In summary, while operating leverage is important, strong financial discipline is also a focus. We ensure we have enough capital for our operating growth or to write as much insurance as possible at less than or equal to a 96 combined ratio. We allocate additional capital where it can be beneficial to the business in corporate development, share repurchases or increased investment risk, while also neutralizing impact of employee stock compensation. We look to return underleveraged capital to shareholders via dividends and we maintain a debt to total capital target below 30%. That covers our financial policies at a high level, and I'll now turn it over to Jonathan Bauer, our Chief Investment Officer, to discuss our close to $100 billion investment portfolio. Jonathan Bauer: Thanks, Maureen. I'm happy to get a chance to speak about how our investment risk decisions are part of the overall Progressive model that has driven strong shareholder returns over time. Given the relatively high operating and financial leverage that we spoke about earlier in the presentation, along with a focus on capital efficiency, our investment leverage defined as invested assets over shareholders' equity runs relatively high. This means that gains and losses are more magnified than many of our peers, who run with a more significant capital base. Therefore, we tend to run with a more conservative investment policy, especially in times of significant operating growth. So if we go back to the broader discussion of our capital deployment, if we have excess capital, we could deploy it towards corporate development, share repurchase and another option is to take more investment risk. In order to assess this decision, we think it might be useful to take a step back to review our investment policy since it has been a few years since we have engaged on this topic. We have two different parts of the portfolio that are managed distinctly. Our fixed income portfolio, which currently makes up about 95% of the portfolio is actively managed by our team. Our equities portfolio, just under 5% of the portfolio is a passive replication strategy to the Russell 1000 Index. We decide how much to allocate to equities, but after that, you should expect returns to broadly match the index. Our goals are twofold for the portfolio: first, we want to ensure that the operating business has all the capital it needs to grow as fast as it can at a 96 or better combined ratio. Second, after we have comfort in the capital position, is to achieve a strong risk-adjusted return over the longer term. If we look at two distinct periods over the last 6 years, you can see how our priorities are borne out in specific actions. In 2020, as COVID caused immense volatility in both the world and financial markets, we were in a strong enough capital position to both support our internal growth and take on additional investment risk at attractive levels. However, in the inflationary period between 2021 and 2023 that we spoke about earlier, the combination of incredibly strong growth with volatility in both operating margins and investment markets meant that a reduction in investment risk was appropriate to ensure no hindrance to our growth model. If we take a step back, we can see that over the last 10 years, Progressive's explosive premium growth has led to a portfolio that neared $100 billion at the end of 2025, up from $21 billion at the end of 2015. The portfolio growth is even more impressive when accounting for the significant dividends paid out over that time. We thought it might be useful to review how the different elements of our portfolio flow through our financial statements. The investment income that you see on our income statement is mostly driven by our interest income, along with the dividend income from our equities portfolio. These flow through into our operating income and are generally viewed as more recurring in nature. As we will talk about on the next slide, we have seen strong growth in this category over the last 10 years. Further down our income statement, you will see the realized gains and losses in our fixed income portfolio as well as the holding period gains and losses within our equities portfolio. This is driven by the actual sales in our portfolio and any change in the unrealized value of our equities. The final element of our investment returns and flows is the changes in unrealized gains and losses in our fixed income portfolio. This number does not flow through to our net income, but only through our comprehensive income. If we think about the significant interest rate volatility felt across the insurance industry over the last 5 years, that has been mostly seen through comprehensive income. But the important point that I would want to get across is that we manage the portfolio on a total return basis as opposed to a book yield or an investment income number. We believe this allows us greater flexibility in our investment decisions and allows for a longer-term thinking in our strategy. Our portfolio growth as well as the shorter duration nature of our portfolio has combined with rising interest rates to create significantly larger investment income flows over the last few years. We believe that if valuations improve in the fixed income credit markets over the next few years that we could have a further opportunity to drive additional returns. As John mentioned earlier, 2025 was an incredibly strong year for capital generation. Our investment portfolio returned 7.33%, with strong results coming from both our fixed income and equity portfolios. On the fixed income side, the combination of lower interest rates and tighter credit spreads drove strong absolute gains. The after-tax contribution of our investment results was just short of $5 billion, which combined with our operating results made up the almost $13 billion in comprehensive income. As mentioned earlier, Progressive continues to be a company with significant growth and we run with higher leverage. So it's important that we have the right guidelines in place for our investment team. You can see some of the more important guidelines on this slide. Our Group 1 allocation is a combination of what we consider our riskiest or at least most volatile assets in the portfolio, which include high-yield bonds, certain preferred stocks and common equities. As you can see, we are nowhere near our limit due to our view on where valuations sit amongst these assets. The second guideline measures our duration or interest rate risk. As can be seen, we are in the upper half of our range as we have been shifting our duration higher since mid-2022. The third guideline establishes our minimum average credit rating on the portfolio as A rated or better. While the team does its own credit work on all securities in the portfolio, we feel it's an important benchmark for our stakeholders to have a general idea of the credit strength of our portfolio. At year-end, the average credit rating of the portfolio was AA- as the current valuation environment does not lend itself to significant investment in lower-rated securities. The last guideline addresses the financial leverage that Maureen spoke to earlier, which even after our significant variable dividend remains below 20%. Our investment team is based in Stamford, Connecticut and manages over $95 billion using year-end numbers. As mentioned earlier, the portfolio is split between an actively managed fixed income portfolio and an equities portfolio that is managed through an index replication strategy. This split in strategy is based on the view that active management and fixed income can provide value that is more difficult to achieve on the equity side. The goals of the investment portfolio are to both support the operating business while also achieving a strong risk-adjusted return on the portfolio. That portfolio return is measured versus a benchmark on a 1- and 3-year basis. We believe we are able to attract unique talent to our team, both due to Progressive's culture and the structure of our team that allows for employees to rotate amongst different asset classes and industries throughout their career. The investment group is split up into three units: Our economics team provides macroeconomic research and analysis to both the investment team as well as broader Progressive. They've done a great job of helping with investment strategy through some significant swings in growth, inflation and employment. As our operating business has dealt with a very dynamic insurance marketplace, the economics team has partnered with them to understand and model out labor and claims trends. Our core investment research team drives our portfolio strategy as well as our security selection. Our model is somewhat different in that after spending several years in an asset class, we will rotate those individuals around to other portfolios. We believe this broader investment knowledge assists our portfolio managers and analysts in determining relative value across different investment types. Our trading and execution team supports all of our fixed income trading as well as the company's share repurchase program. I should also take this time to mention that we have an incredibly strong investment reporting and accounting group based in Cleveland that reports separately up through John. Each of our investment professionals are informed by the team's macroeconomic views, but are focused on detailed analysis at the security level. They are examining not only the credit risk, but the relative value versus other securities in their sector and other asset classes in the portfolio. The incentive compensation of the team is partly measured based on the overall portfolio performance. This is meant to encourage collaboration and discourage building the size of one's portfolio if there is no absolute or relative value. One of the major focuses of the investment team is our interest rate risk, which is measured by duration. The investment team spends a significant amount of time on macroeconomic analysis and engagement with our internal economics team to determine our interest rate positioning. You can see at year-end, we were close to 3.5 years in duration, which is close to the highest we have been over the last 25 years. This is up from 2.75 years in mid-2022 and 1.6 years in 2014. The movement to a higher duration over the last couple of years has been driven by a view that we had turned the corner on inflation and the Federal Reserve was likely to move to an easing posture. Our portfolio duration is reported monthly in our earnings release. The other major focus of our investment team is on credit risk. We invest across the fixed income universe, including asset-backed securities, commercial mortgage-backed securities, corporate debt, municipal bonds, preferred stocks, residential mortgage-backed securities, short-term or cash and U.S. treasuries. There are not fixed sizes of any of these portfolios, and we will shift our exposures around significantly over the short, medium and long term. One great example of that is our municipal bond portfolio, which has shrunk significantly over the last decade due to corporate tax reform, which has made municipal bonds significantly more attractive to high net worth individuals as opposed to corporations. As we look at comparisons versus our competitors, we see that Progressive has historically held more common equities than our public peer group, but significantly less than the mutuals and conglomerates that we compete against. We have not historically invested in the alternative space viewing public fixed income and public equities as a better risk return and liquidity profile. However, as some of those alternative markets develop, we will continue to search for the best way to achieve our goals of capital stability and strong total returns. Our relative fixed income performance has been strong over various time periods. The drivers of that outperformance come from interest rate risk and credit risk throughout the portfolio. We believe that our ability to take a long-term view towards investment valuations has allowed for us to continue to outperform our benchmarks over time. With a portfolio that is extremely liquid with mostly publicly traded securities, even though we have grown to a significant size, asset allocation changes are not difficult to execute. An easy example to look at is how quickly we were able to generate the cash needed for our variable dividend from under $2 billion at the end of October to over $10 billion at the end of December, we were able to satisfy the dividend needs with very low transaction costs. To bring the conversation back to where we started, Progressive's #1 focus is to grow as fast as we can at a 96 or better combined ratio. We believe that goal, along with our incredibly strong culture will continue to drive Progressive's growth over time. The focus of this call has been to try to inform about how we can best translate that growth and a capital-efficient structure into strong financial results. We believe that higher operating leverage, combined with an appropriate amount of financial leverage and a relatively more conservative investment portfolio can provide Progressive with both a strong financial position that can withstand volatility while also generating significant returns over time. With that, I will pass it back to Doug. Douglas Constantine: This concludes the previously recorded portion of today's event. Before we take questions today, our CEO, Tricia Griffith, would like to take a few minutes to discuss changes in our executive leadership. Tricia? Susan Griffith: Thanks, Doug. As we stated in our recent news release, our CFO, John Sauerland announced he will be retiring in July of this year. And as you know, we are planning for Andrew Quigg to assume that role in July. I thought it would be great if you started to sit in on the IR calls and today, before we start Q&A, I've asked Andrew to talk a few minutes -- take a few minutes to introduce himself to all of you. Likely, you've seen him over the years if you've covered us for a longer period of time. Andrew? Andrew Quigg: Thank you, Tricia, and good morning, everyone. I'm excited to join you for this earnings call as I transition to the role of CFO of The Progressive Corporation, when John Sauerland retires in July. My background is available on our Investor Relations site. I thought I might provide three themes you'll see in that bio. First, I know Progressive. Since joining Progressive more than 18 years ago, I've been inspired by the extraordinary people of Progressive. What has kept me energized is how deeply our core value is aligned with my own values. Our culture and people give me confidence in our ability to continually innovate and bring value for our customers, while also delivering industry-leading returns for shareholders. I'm also very proud of the past 7 years during which I served as Chief Strategy Officer, reporting to Tricia. I've been a member of the executive team that has led our company through the pandemic and the subsequent cost inflation environment. This period has been great training for the CFO role. The second theme is that I'm a lifelong learner. I received a Bachelor of Science from Yale University. I earned an MBA from Harvard Business School, graduating as a Baker Scholar. I've grown through many roles in investment banking, finance at General Mills, consulting and a handful of different opportunities at Progressive. I enjoyed learning about new aspects of Progressive and our industry. I'm bringing that mindset to the CFO role. Finally, I love solving big problems. My career at Progressive began as a Personal Auto product manager, a core role where we balance growth and profitability. In particular, I led a turnaround of our Massachusetts Personal Auto business, after we entered the state and found we were underpriced for the environment. I also led our Direct Media team, buying advertising for our direct-to-consumer businesses. My first investor presentation came at this time in 2013. And as I shared insights into the marketing and competitive advantages we achieved from [ Dana ]. In 2015, I moved to be a General Manager in customer relationship management. where my team created experience improvements for our customers. I spoke to investors in 2016 about the science around our experience and retention efforts. During these years, I was proud to pioneer notable advancements as the business sponsor for our first big data project and the data science team that implemented our first AI chatbot. Nearly 8 years ago, I was asked to build a new strategy organization at Progressive from the ground up. This has included creating corporate strategy and corporate development teams. The strategy organization has also started Progressive life insurance and recently Progressive pet insurance as we add products around our market-leading vehicle insurance a franchise. In 2019, I spoke with investors for the third time, sharing our plans to grow across the Three Horizons. Just a final word of thanks to Tricia and our Board of Directors for providing me with several months to learn from our current CFO, John Sauerland. John is an institution at Progressive, and I am accelerating my learning to have a smooth handoff from John. I'm excited for this opportunity and look forward to connecting with you all on future investor relations calls. Thank you. Douglas Constantine: Thanks, Andrew. We now have members of our management team available live to answer questions, including presenters Maureen Spooner and Jonathan Bauer, who can answer questions about the presentation. [Operator Instructions] We'll now take our first question. Operator: Our first question comes from Bob Huang with Morgan Stanley. Jian Huang: My first question is on severity. On the 10-K, when we look at auto severity, it does look like it's marginally deteriorating, but it looks very manageable. It really hasn't spiked as the way I think we all thought it would have at the middle of 2025. Just curious, as we head into 2026, can you maybe comment on your thoughts on severity? Is it still a big concern for you going forward? Or do you feel in the current environment, the inflationary pressure is just simply not going to be there? Susan Griffith: Yes. I think overall, severity isn't as concerning. It's been relatively flat for both the trailing 12 and the quarter. Probably the one area that we watch closely is BI severity. And of course, we report incurred. And we see that through more attorney reps, larger loss costs. We've been seeing more specials in generals. But overall, we will continue to watch as the world evolves. And we do see some parts prices increasing, a little bit higher than labor rates. So we'll continue to watch that with the supply and demand of both parts and labor. Jian Huang: Okay. My follow-up is on autonomous. Previously, I believe, 3 quarters ago, but I'm probably wrong on that. You were saying that the progress in autonomous has been faster than you previously thought? But just curious as we're seeing more autonomous becoming gradually commercially viable, I just curious how you plan to navigate the future of autonomous from a Personal Auto insurance context? And also from a Commercial Auto insurance context as well so. Susan Griffith: Yes, absolutely. There's a longer answer to that question. I'm going to have Andrew answer it because his team is split into three areas and one is what we call a process group. And for years, they have looked at what we call runway. So the addressable market across the board, but specifically for private passenger auto. But before Andrew speaks and kind of goes into what his team models. And in fact, they just are wrapping up a model for our next 3-year strategy. I want to reiterate both what Maureen had talked about and also Andrew mentioned, and that was our Three Horizons. So many, many years ago, not long after I took this role, my team and I really thought about how are we going to position ourselves for the future. And we used the construct, it was from McKinsey for the Three Horizons. And so at that point, we were a little bit over $20 billion overall in written premium. And so we really thought about, okay, how are we going to use these Horizons, and really make sure we're investing in all three of them concurrently. So the first one, and you saw Maureen's side was execute. We want to execute the heck out of increasing more Commercial Auto and more private passenger auto, and we did just that. We maintained our #1 spot in Commercial Auto. And we went from #4 in private passenger auto to #2. So we're very proud of that. But we also knew we wanted a diversified portfolio. So as we thought about Horizon 2, we thought about sort of adjacent products we could do. And most of those fell into Commercial Lines. So think of our relationships with TNC providers where we've learned a lot about autonomy. We bought protective insurance to kind of expand our fleet. And now we've been really focusing on the last 5, 6 years on BOP, which we now are in 46 states and really ready to grow on that in small fleet. So having that diversity is really important. And then, of course, Andrew just mentioned what we work on in terms of a little bit further field, but products that where we think we have the ability to win, and we believe we can win. And that is a couple that we've done so far, and we have more in the pipeline, direct-to-consumer life and pet insurance. Those are products that people want, but also they help with retention for our auto. So looking at those Three Horizons, execute, we've been doing that. We're going to continue to do that. Grow as fast as we can at 96. Expand, we are going to continue to work on relationships with both mobility and overall in our commercial business specifically. And then explore, Andrew's team and our next CSO, will continue to work on really thinking about exploring, again, where we have the right to play and the right to win. So I just wanted to kind of set that in motion before I have Andrew answer the question on autonomous vehicles. Andrew Quigg: Yes, Bob, thanks for the question on autonomous vehicles. We've been thinking about advanced safety technology for more than a decade. We initially provided thoughts to our investor community in 2013 by providing long-term trends on frequency, severity and ultimately, the size of the insurance market. In 2017, we provided investors with thoughts and projections while providing modeling on outcomes that we could see in the future. The framework from those presentations are still applicable today, we think. As Tricia mentioned, we continue to invest in modeling future scenarios, including both personal and commercial, as you indicated. We have recently updated our projections. And we would say, even with strong assumptions around the efficacy of vehicle safety technology, we still project personal and commercial vehicle insurance in the United States will grow robustly for decades. It's also worth noting that our projections of the U.S. vehicle insurance market have consistently underestimated actual market growth. I'd like to spend just a couple of minutes talking about how we think about the modeling and also how we think about Progressive's position within the industry. First, on the modeling side. We do expect safety technologies like autonomous driving to continue to be added to vehicles. We often see these new technologies, first arriving in the most expensive new models. In addition, the ramp-up of voluntary new technologies and new vehicles can take a long time. The average vehicle on the road is about 13 years old. So even when mandated after a certain model year, fleet penetration is slow. To be specific, we have tracked different technologies over time. An example is electronic stability control, which we consider to be fast. We find it takes about a decade for 1% of vehicles to have a new technology like ESC and 20 years for it to reach 45% of the fleet. Reaching 90% of vehicles can take more than 3 decades. When we model on the frequency side, we consistently see that vehicle technology can lower the rate of accidents. It's worth noting that sometimes safety statistics don't provide incremental improvement above what is already present in the fleet. Double counting is a persistent challenge that we and others have to navigate through. On modeling severity, we also see that these technologies can increase the cost of claims. An example here is Tesla vehicles. I recently saw a model for the size of the auto insurance industry that assumed Teslas were already fully autonomous vehicles, providing much lower frequency with similar severity. In Progressive loss experience, we see that Tesla Model 3s have higher loss costs than similar EVs. This is due both to higher frequency and higher severity. We're also aware of some pilot insurance programs for FSD on Teslas. Teslas represent less than 1% of vehicles on the road. Only a portion of these vehicles have an FSD subscription and FSD is used on less than 100% of trips. So in total, it represents a small opportunity today. This is not to say that Teslas will not lower pure premium in the future, it just isn't in our fleet data currently. One additional aspect in the modeling that is not often called out, if drivers aren't required to monitor vehicles all the time in L3 to L5, we may see consumers increase the amount of vehicle miles traveled as they substitute personal auto transportation for other forms of transportation. So access per mile may be reduced, but the VMTs might go up. It's also worth noting that 3.2 trillion miles are driven annually in the United States. As you mentioned, we've seen companies like Waymo that seem to be leading in the commercialization of autonomous vehicles. But over the past decade, it appears that Waymo has about 200 million AV miles, which is a very small fraction of overall VMTs. On the Progressive side, we think Progressive is well positioned for changes in mobility whenever they may come. Progressive continues to invest in segmenting risk down to the vehicle level. Not all technology is equal, not all technology impacts every line coverage equally. We continue to invest in the data and the math to be extremely accurate, and we believe the proliferation of safety technology will make this focus even more valuable. Beyond the vehicle level, our UBI capabilities allow us to understand how a driver performs using this technology. Progressive has access to tens of billions of driving miles annually to observe changes in driving behavior and technology. With our Snapshot, customers now allowing us to continuously monitor their driving behavior, we will pick up any tech-enabled changes in loss costs over time and adjust our rates as individual drivers harness technologies to different degrees. We also have the capability to accept data streams directly from OEMs and third parties on an individual vehicle basis with consumer consent. This has been part of our UBI technology for many years, and our UBI capabilities extend beyond our own devices and our own applications. Progressive also has over a decade of experience in insuring transportation network companies. We believe this infrastructure on our Commercial Line side can be leveraged for further commercial deployments like robotaxis. Finally, Progressive has historically been able to compete very effectively at a local and state level. Auto insurance is regulated at a state level. And as regulations adapt, we expect that this local knowledge will continue to be critical. We certainly don't know how the world will change in the coming decades, but we believe that our competitive advantages, our very robust data assets, our leading analytics and of course, our history of execution will serve us well as safety technology changes. Susan Griffith: Thanks, Andrew. I hope what you got out of that, Bob, was that we do a lot of modeling, a lot of detailed modeling, have been doing it for decades, and rely on that, and we put some conservatism, but we believe that there's a lot of runway under all of our Horizons. Operator: Our next question comes from Michael Zaremski with BMO. Michael Zaremski: Congrats to John and to Andrew. My first question is specifically on premiums for Personal Lines policy. I know there's a lot that goes into this but I believe the overarching theme is it's been slightly negative because of just healthy competition and also price reductions in Florida. If you agree with that, just kind of curious where should we expect that ratio to stay negative in '26 or maybe it will revert back to positive territory later in the year as the Florida pricing decreases kind of level off? Susan Griffith: Yes. It's hard to say how the year will unfold. We're going to continue to grow as fast as we can at or below 96. So if we see states where we might want to reduce new business rates in order to grow, we might do that. Florida was one big piece of it. But we're always adjusting our rates accordingly. And now we're doing more small bites to the apple of a little bit up, a little bit down. But you're right, when you look at the kind of difference between net premium growth and PIF growth, a lot of it is reducing some of those new business rates in order to grow. Some of it is highly influenced by mix. So as we've opened up our aperture to grow more in the last couple of years. Our mix has shifted back to probably more pre-COVID levels. And that's okay because every customer that comes in, we believe we have the data to make sure that we get to our target profit margin. So that's one piece of it, and wouldn't necessarily have that be your barometer. And then we are selling more 6-month policies, which is about half the premium you get in a 12-month policy. Again, just trying to kind of balance that affordability for customers that want to stay insured. Michael Zaremski: Got it. That's helpful. My final question is on technology. I'm curious if advances in recent months or quarters have kind of materially changed Progressive's view on the ability for the, let's say, the combined ratio, the LAE ratio to benefit from efficiencies on claims and underwriting. Susan Griffith: Are you talking to more in like the artificial intelligence technology, the technology that Andrew was speaking of on the vehicles? Michael Zaremski: Correct. AI specifically. Susan Griffith: Got you. Yes, here's what I would say. This is probably a longer answer than you need, Mike. But we have a history of innovation. And so we are really concentrating on AI across the board and have win for a while. But if you go way back, into 1995, we were the first to put our auto rates online, like we saw the future, and we did that and that was before Google was even in existence. And what a great bet that was because over half of our private passenger auto is on the direct side and increasing more of our Commercial Auto. So we're going to continue with the history of innovation, including our usage-based insurance where we evolve and are getting better and better and more closely to price to the whole curve with surcharges and discounts. And more than that, using technology for our customers. So we've talked about our accident response. That's a really powerful message when people get into accidents and they're unable to call an ambulance or a tow truck, we're able to do that for them. So we've talked I think a little bit over the last year or 2 years, maybe even longer on what we've worked on in predictive AI, a lot of models using unstructured data, voice data to trigger models, and we'll continue to do that. And I think 2 quarters ago, we had someone from claims come in and talk about Gaussian Splatting for our claims analytics. So know that we are working a lot on AI and have a lot that we are focused on. I'm not going to share with you all that we're doing. We have an inventory of items that we're doing across really the enterprise, and we're speaking across the enterprise to make sure we're doing the right thing for our customers, our employees in order to make sure -- just making insurance easier and just easier to understand, easier to work with. So whether it's digital or agentic, we're going to continue to focus on that. I did talk in my letter about marketing commercial that we did called, Drive Like an Animal, that was all AI generated with the exception of Flo's voice. And we did that in so much less time than a regular commercial and so much less money and more importantly, it worked. So we measure our new prospects, and it worked very well. So we're excited about that as well. We're going to have business models, rigorous controls and we're going to continue to invest in this, and we're going to continue to lean into now Gen AI. We recently formed an AI Strategy Council. And so while we're working on sort of the next year and here's where we're at and working with vendors and making sure that we're testing things to make sure it's a really fluid process. This AI Strategy Council is sort of looking to where the puck is going in the next 3 to 5 years. So think of how -- one, clearly efficiencies, we're going to want those. But how is this going to change our industry? How is it going to change Progressive? How is it going to change how customers shop, et cetera? And they should report to my team in a few months, and we're going to continue to evolve that because we think the puck will move because this is going really fast. Here's what I would say. Lastly, I'm super excited about the promise that AI holds for Progressive and I'm excited about all the work we're doing. As with past innovations, I'm confident we will be a leader in our execution, and we'll do it responsibly. So that's where we're at. We are getting -- we're seeing efficiencies when you look at our data, and I think that will continue. Operator: Our next question comes from Peter Knudsen with Evercore ISI. Peter Knudsen: Just another question on AI. I'm wondering if you could talk a little bit about how you think AI agents potentially could change the Personal Lines distribution, specifically for Progressive, but also the market overall? Susan Griffith: I mean I think it's probably a different answer if I'm talking about our direct business versus our agency business. Our direct business, I think it could change it dramatically because if we have agentic agents for some policies. So I think there'll still be the desire for more complexity to talk to a human. But for some easy policies, and if I think it flows well, we should be able to change as these evolve and get better and better. Independent agents, I think it's a little bit different. Oftentimes, customers go to independent agents for more complexity of needs, feeling confident in their decisions. We've seen that especially on the Commercial Line side, where it's a little bit more of a complex policy coverage contract, and so they want to be able to kind of have that knee to knee. But I do think it's changing. If we can make it easy for our customers, one of our strategic pillars, John shared those is broad coverage. We want to be aware when and how customers want to shop and be serviced and some of that might be through an agentic AI agent. Peter Knudsen: Okay. And then one thing I've seen in the past cycles is that frequency on first-party coverages has bounced back 1 year or 2 after we've seen auto prices moderate. And so I'm wondering if you would sort of agree with that hypothesis, if you have seen any evidence of this in your book? And then if yes, basically, how is that changing your assumption for frequency in the coming year now that we've seen a softer prices? Susan Griffith: Yes. I think frequency is obviously -- there's so many attributions that happen, but we have seen that. John, do you want to take a little bit more detail on that? John Sauerland: Sure. We are always analyzing frequency at the coverage at the state, at the most finite level we can and our product managers are constantly assessing what they think the future looks like to ensure that our prices that we are setting today ensure that 96 or better combined ratio moving forward. You're right. When the market tightens up, we do -- we believe it's tough to see it exactly. But when the market tightens up, there is some change in claiming behavior. And as the market loosens, we do think sometimes we see some loosening in claiming behavior. It's, again, tough to tease out relative to everything else going on in the marketplace. Additionally, we watch coverages very closely when things like recessions happen because claiming behavior changes there as well. So yes, we are certainly in a softening environment. The availability of insurance is certainly opening up relative to where it's been, and that can have influences on first-party claiming behavior. I won't try and put a number on it for you today. And I would tell you, it's not a large number ever, but it does have some influence in the direction of frequency. Operator: Our next question comes from Katie Sakys with Autonomous Research. Katie Sakys: Can you hear me? Susan Griffith: Yes, Katie. Katie Sakys: My first question is really on the regulatory environment. I think as you guys are well aware, there have been several state legislatures that are looking to push forward legislation that would focus on consumer affordability. Several states have pointed to Progressive specifically as an example of ways in which the auto insurance industry can be further regulated to support this goal. I'm just kind of curious how you guys are thinking about the potential for additional regulatory changes over the next year or 2? And really what that might mean for your overall approach to underwriting in those states. Susan Griffith: Yes, it's hard to say, except for where we have the data, and that's from Florida. And so you saw the tort reform, the House Bill 837 that they put into play. And that has had a tremendous effect on affordability for Floridians. And in fact, if you bought a policy today versus 1 year, 1.5 years ago, you're going to pay on a new policy, 20% less, which I think is really significant. So that's been pretty powerful. I know Governor Hochul from New York is, I think, proposing some legislation on to reduce fraud and lawsuit abuse in New York, we think we support that. So we support that because we do think affordability is an issue, and competitive prices, again, is one of our strategic pillars, and we want to make sure that we take into account things like affordability. I'll talk about some of the other things we've been doing internally, though. So we will abide by the rules of any state. We know how to work, state to state. We've done that for nearly 90 years. But we internally also have felt it important to make sure that we take actions to help with affordability. So specifically on the CRM side, and we've talked about this before as it relates to PLE, we have something called customer preservation team. And customers can call in and we can talk about maybe changing coverage. We'll do a whole policy review. So maybe it could be changing coverages, lower deductibles and we can kind of work our way around different types of that. Sometimes when people call in, they will have a different product model. We rewrite that. But the 4 million customers that called in, in 2025, had an average decrease of 21%, which is significant for those customers. We also do proactively call out to customers that we think might defect to kind of help them work through the policy review. Another piece that we've had for a long time are our loyalty rewards. So think of loyalty for tenure, for minor child discounts, accident forgiveness, things like that. And that's equated to about $1.5 billion in savings in 2025. I've talked about this for years, especially during and after the pandemic, Snapshot. If you -- Snapshot whether it's the OBD device or the mobile device, if you're a good driver, you can have really, really generous discounts because we understand that rate to risk. And then we try to be flexible with what's happening in our country at any given time. So when the federal government shut down, we made sure if those employees called in that we gave them some lenience in terms of when they would pay their bill. And I know that really helped a lot of our federal employees. We talked a little bit about reducing some new business rates where we want to grow, and I think that is important. We feel like right now, we're in a really great competitiveness from a price perspective, there's a lot of shopping, and it is a soft market. But we are having really high conversion. In fact, the highest we've had in decades. So we do feel really good about that. But we applaud any reforms that can make insurance more affordable. And we think Florida is a perfect example of that. Katie Sakys: I appreciate the extra color there. I guess maybe zooming in on Florida then, it was great to see that loss trend on the Florida Personal Auto book sort of came in below you guys' expectations last year and drove a lot of the favorable development on that book. On the flip side, that also translated to the policyholder credit charge growing to $1.2 billion by the end of last year. How are you guys thinking about rate relief in Florida over the course of '26? And how that might translate to a policyholder credit charge, if any, taken this year? Susan Griffith: Yes. We're watching our combined ratio there closely. You sort of think of it's a 3-year rolling, so you've got '24 and '25 sort of in the book with this credit. In '26, we'll continue to watch. We've reduced rates 3x in the last year. The hard part about that area of the country is catastrophes usually come towards the end of the year. But I know Pat's team is watching that. And if we feel like we need to take more new business rate decreases, we'll do that. So more to come on that. I will tell you, we're watching it very closely and modeling it continuously. Douglas Constantine: That was our last question. And so that concludes our event. Daniel, I'll hand the call back over to you for the closing scripts. Operator: That concludes The Progressive Corporation's Fourth Quarter Investor Event. Information about a replay of the event will be available on the Investor Relations section of Progressive's website for the next year. You may now disconnect.
Octavio Alvidréz: Good morning, everyone. Thank you for joining us today. My name is Octavio Alvidrez, and I'm the CEO of Fresnillo plc. Here with me this morning, we have Mario Arreguin, our CFO. I'm joined also by our Chief Operating Officer, Tomas Iturriaga of the Central Region; and Daniel Diez of the Northern Region; and our Vice President of Exploration, Guillermo Gastelum. I would like to welcome to our full year results presentation. Before we begin, and as always, I would like to point out to our disclaimer, but I will quickly move to set out what we will cover in our presentation. I will take you through the investment proposition and some of the 2025 highlights and also our key recent HSECR initiatives. Guillermo then will go -- well, before then -- before Guillermo, Tomas and Daniel will provide an operational update from their respective regions. Mario will provide our financial update. Guillermo will talk us about resources and reserves. And then I will come back to close the presentation with some final comments and the outlook. I'm pleased with the performance of our business. As we have already reported, gold exceeding guidance and silver was in line with guidance. I believe this shows how we have stabilized our operations and are now in a strong position to capitalize on future growth opportunities. We remain, and this is going to be a continuous effort, very focused on control of the cost and mitigate the first initial signs of inflation that we see in our operations. Let's remind that in 2025, we achieved cost savings for $46 million through a number of initiatives, most of them and the majority of them in the Herradura district. But this will continue to be our focus in 2026. Of course, having the ounces and controlling the cost, even decreasing for 2 years, I would say, '24 to '25, and having in the ounces, we are enjoying the record prices and turning that into a record financial performance. In 2025, we delivered also on our mergers and acquisition strategy with the acquisition of Probe Gold in Canada. This is an outstanding asset, which added 10 million ounces of gold to our resource base, and we look forward to taking the right steps to develop this exciting project in due course. This goes along our strategy of acquiring quality assets. And in terms of exploration, we will see the Probe Gold acquisition to turn into a district for exploration for many years. Finally, we returned $950 million to shareholders in dividends, a record amount. So turning to our investment proposition. We are still the largest producer of silver in the world and Mexico's leading gold miner. We benefit from a large portfolio of high-quality assets with over 2 billion ounces of silver resources and 44 million ounces of gold resources. Let's comment that this does not include the most recent acquisition of our project in Canada, as we closed that transaction in January of this year. We have strong EBITDA margins and low costs and remain very focused on running our operations efficiently. This approach has seen us generate significant free cash flow of over $2 billion alongside very strong earnings per share, which has enabled us to reward our shareholders with strong returns in the form of dividends. As you can see, we have distributed 69% of earnings in 2025, well above our stated dividend policy. Though I should be clear, our policy remains in place. Some highlights on the financial performance. This is a record performance as we are announcing it today. Revenue was up strongly. But as you can see, our overall profitability was up sharply with significant margin improvements as we continue to focus on costs across the business so we can fully capitalize on the high precious metals price environment. And we have delivered considerable value to our shareholders, while retaining an extremely strong balance sheet. I should state here, we believe the strong balance sheet is a competitive advantage. We have generated significantly cash flow, returning value to shareholders ahead of our stated dividend policy, but we also continue to look for opportunities, which we believe will be value enhancing in the long term. And our balance sheet give us the flexibility to be able to act quickly if we feel our shareholders will be better served by other uses of capital, then, of course, we will act on that accordingly. Some few comments on gold and silver markets. We continue to see strong fundamentals driving demand for both silver and gold. As we have seen sadly this weekend, global economic instability, geopolitical tensions and trade disputes have increased demand for safe haven assets like gold and silver. We are seeing growing interest in precious metals as an investment class, which has boosted demand. Gold has hit record highs in the period, reflecting geopolitical tensions, while we are also seeing a strong underlying support from central banks. We expect these themes or aspects to continue for the foreseeable future. We have also seen increased demand not just from traditional drivers such as jewelry for silver, but in particular, in use in various industries, including electronic solar panels and automobiles, increasing industrialization has contributed to rising silver prices. And as we can see on the silver graph, I mean, it is one trend from 2018 to 2020, but increasingly use and demand from 2020 till now. So that is quite a healthy market, I would say, increased because the scarcity of silver projects also increased the foundations for this market. Finally, and most significantly, we are seeing supply constraints, as I mentioned, not only in gold, but also in silver. In short, we remain very confident in the outlook for silver and gold prices. Moving quickly to HSECR highlights. Safety is at the heart of everything we do. And as we can see in the graph, I mean, the trend is quite positive, decreasing the long-term injury frequency rates as well as total recordable injury frequency rates. But still, the two fatalities we had this last year is a strong reminder that we can -- we should continue putting across all of our operations, our policy and protocols and our philosophy, "I Care, We Care." So we continue and finally achieve a year with no fatalities. On the environment front, our work on improving our carbon emission performance is also ongoing as we work towards decarbonizing our operations, improving water recycling rates and upgrading our mining fleets. We achieved 78% renewable energy consumption in the period, ahead of our target. As I said before, we are not still increasing that target as we have some other mining projects that will increase our footprint. And therefore, that target remains at the same level that we have stated at 75%. On community relations, in particular, I would like to highlight local health campaigns where we have provided nearly 7,000 medical consultations and our new water initiatives on San Julian in partnerships with Metals for Humanity. As I highlighted before, our relationship with our communities is central to our license to operate, and we continue to make a huge contribution to our communities, both in terms of investment, employment and taxes we pay. I now would like to turn the presentation to Tomas Iturriaga and then after to Daniel. Do you want to present over there or... Tomas Iturriaga-Hidalgo: Okay. Thank you, Octavio, and good morning, everyone. So let's move to the following page here to start giving you some color on the operations performance. I would say that accounting for the different realities of the -- and challenges of the three mines, as a whole, the Fresnillo district had a solid year, meeting production expectation and achieving relevant progress in the different projects across mines. Getting to the mine-by-mine details at Fresnillo, we managed to stop the production decline that we have seen during the past 2 years with the silver grade increasing 10% year-on-year. That offset by a throughput decrease of the same magnitude due to lower bandwidth and/or shorter stope lengths at the San Alberto, Santa Elena and Candelaria areas. I think we've made significant progress adjusting our mine operations to the new reality of the mine at depth, improved our dilution control discipline as seen in the silver grade increase year-on-year. During 2023, it's key that we advanced development of and mine infrastructure at San Mateo and San Alberto areas required to support grade and throughput increases expected in 2027 and 2028. We saw good results at Fresnillo in the reserves front with 20 million ore tonnes at almost 200 grams per tonne of silver in reserve and most of it in the proven category, replenishing mine tonnes during the year and adding some to the reserve inventory. Moving into Saucito, another solid year at Saucito in terms of production with a very slight decrease in silver production due to lower volume processed, mainly driven by lower equipment availability and some delays on ventilation robbins due to permitting. Development meters were also impacted during the year by these same factors. But as we already have obtained the permits for these ventilation robbins, and we have established a very rigorous availability program improvement with our mine equipment OEMs. We are expecting an improved 2026 performance. Lead and zinc production were both strong at Saucito, helping a good financial result at the mine. Key for this year will be the interconnection of the deepened section of the Jarillas shaft is scheduled to be completed by Q3 this year, for what we need to shut down the shaft in a couple of weeks with some impact to this year's production and cost. But very positive impact expected starting in 2027 and on. So once we have this project conclude, we should see improvements in our cost per tonne due to decreased haulage. I think the team did a very good job keeping the operations stable and under control at Saucito, which is becoming a complex mine to manage. We saw also good results in the reserve front at Saucito with almost 17.5 million tonnes of ore at above 200 grams per tonne of silver and also most of it in the proven category. Finally, on to Juanicipio, where we had another very good year of operations with production of silver and the rest of the byproduct metals right or above expected levels and considering that silver grade decrease was expected and accounted for. So it was not a surprise, good year at operations. For this year, the conclusion of and commissioning of our underground conveyor project scheduled for midyear. It's very key. We will need to shut down the San Jose del Bajio, main haulage ramp for the installation of this conveyor, which is going to impact our cost this year, but we'll see relevant cost benefits starting in 2027 and on. Good result also in the reserve for -- in the reserve front at Juanicipio. 10.3 million tonnes of ore in reserve at about 200 grams per tonne of silver, pretty much all of it in the proven category. So efficiency and improvements and cost control initiatives will continue to be a focus in the district for this year. And just to counterbalance the inflationary pressures as well as exchange rate pressures. So we will keep a very disciplined approach to cost and efficiency. And just to reiterate that I think we have a strong performance at the Fresnillo district all-in-all for the year. Thank you. On to my colleague, Daniel Diez. Daniel Diezas: Thank you. Good morning, everybody. Happy to present the results of the operations in the Northern District, starting with Herradura. This was a very solid year in terms of results, consolidating the efforts on optimizing our operation and stabilizing first and now starting the process of growth and to optimize the installed capacity that we have for the coming years. First of all, our annual gold production was significantly above expectations, both on target and the overall guidance. As you see, this was a strong support for surpassing the company guidance for 2025. A slight decrease compared to previous year, 1.2%, but as mentioned, was above our internal expectations. So all-in-all, a very solid year in Herradura. The foundations of the results are the operational excellence and cost control initiatives that we started in 2023 and were consolidated in 2024. In particular, I'm highlighting this year, together with the efforts of the last year, mostly around the mine side of the operation. This year, in particular, we put a strong focus on optimizing the drilling patterns for increased recovery that was becoming one of the issues in our heap leach and also some enhancements on the DLP plants for throughput increase, supporting the results that we have right now. In parallel, we are executing several structural projects to optimize our operation. The first one that we started, it's the construction of the new Carbon in Column plant that we are finalizing that during this month. And in parallel, we are working on the engineering for the Sulphides Crushing Circuit and for the ADR plant that we expect to have built and operating during somewhere next year. Some capital deployment, it's included, and you see some increase in our overall capital profile. The structural projects that we are executing in Herradura, together with the sustaining, we are totalizing around $170 million for this 2026. These projects that I'm mentioning here, all of them have been strictly evaluated. All of them have between 8 months and 1.5 years of payback period, so are very accretive in terms of returns for the company is what we're trying to do, continue a very strict capital allocation policy, trying to invest in smart investments to optimize our operations. And in particular, in 2026, we have a strong focus on the district optimization. We have been explaining and communicated the view that we have in Herradura as a new gold-producing district. In this year, we are going to finalize the integrated planning, including all the assets that we are putting into production that we'll mention later on and maximization of the returns on the installed capacity that we have there. Moving to Cienega. Cienega, we had a more difficult year this year. 2024 was very successful. In 2025, we experienced some specific issues around metallurgy that hit us mostly on silver production. As you can see, we decreased from 4.8 million ounces on '24 to 2.8 million during 2025. However, the good news is that, that was specific to one zone of the mine that we expect to deplete during the first half of this year. So after that, that specific problem will be solved. In exploration, we're very happy with the results that we're having. I think we mentioned this on the previous announcement during midyear, the new discovery on a new high-grade gold zone called Victoria Complex, has been starting to deliver results starting in Q4 2025, and it's going to be the base of production for '26 and '27 in Cienega. And we also have some optionality through a few satellite deposits, in particular, one that we are finalizing to engineer and going through the permitting process to hopefully being able to complement production from Cienega. In terms of cost profile in Cienega, it's higher than expected due to lower production. However, during this year and next, we expect to be below $2,000 all-in sustaining cost with, which is still very healthy in terms of margin and still accretive as part of our portfolio. And finally, in San Julian, also a very positive year. If you recall, one of the main challenges in San Julian for us was to being able to transition successfully from the operation with two deposits and plants to only one. That has been done with very positive results. In terms of production, we have surpassed gold production and sustained silver production, which is very good. In terms of unit cost, as expected, it is slightly higher because operations in Vein is slightly more costly than operating the DOB. However, it's within the range that we set as a target that was having an all-in sustaining cost below $20, and we delivered $19.8 during 2025. So we're very happy with the results. And also on the exploration side, some very good results on exploration and new discoveries. We expect to extend the mine life in San Julian. The current life of mine goes all the way up to 2030. We expect to extend that lease for 2 additional years, and we continue to have new discoveries. So we have an operation that is well controlled in terms of cost performance and also with possibilities to extend. So it's also a good part of our portfolio. Handing over to Guillermo. Guillermo Gastelum: Good morning, everyone. Well, a few comments about our resources and reserves. Most of it is all good news. And I would like to remind you that the number that you're looking at are current as of April 2025. So those numbers have not benefited yet from the current higher precious metal prices. We took a hit though of minus 8.5% in our silver resources due to the application of the RPEEE principle, which is being required, we formalized later on this year as a requirement for the disclosure of resources, that's a reasonable prospectus of eventual economic extraction. So we lost -- we lost some silver resources. However, on the other hand, the remaining silver resources have a much higher probability to be converted into reserves in the future. The rest of the numbers are very positive. The resources in gold grew 14%, mostly due to good exploration results at the Herradura district and at Lucerito and other projects in Mexico. On the reserve side, the silver reserves grew 9.4%, as you can see. So most of the reserves were replenished at the Fresnillo district. And also our gold reserves grew 7.4% mostly coming out from the Herradura district. So those are good numbers. And as Octavio mentioned before, this number do not include any of the new resources that we came to Fresnillo with the acquisition of Probe Gold. Highlight for 2025 was, of course, the acquisition of the Canadian junior company, Probe Gold, which has a very significant asset at one of the premium locations of the Val d'Or mining camp in Quebec, along one of these major structural breaks that cost millions of ounces of several other mines around. So the Novador project, that's a flagship asset now of Fresnillo in Canada is located about 25 minutes drive east from the Val d'Or town site. So it's an excellent location. So overall, this acquisition is adding around 10 million ounces of gold resources, and most of them are located in the Novador project, which has a good potential to be -- well, and we are going to turn it into a producing asset, expecting to deliver in 2030 -- 2032, if I'm correct. So very importantly, we have continued the work that was being carried out by Probe Gold. We are drilling right now, and we have good plans for additional geological and geophysical studies in the rest of the properties. I would like to highlight a couple of issues here that this acquisition didn't come only with Novador, but with a significant land position in two major mineralized gold belts in Quebec. It's very important to say as well that the -- after the transaction, the key personnel of Probe Gold was retained. So -- and most -- and basically all of the professionals and technicians working at Val d'Or are now working for Fresnillo. So we haven't had any issue in continuing the operations and the exploration plans at Val d'Or. Now a few comments about some highlights of what we did in 2025. We spent $175 million drilling slightly over 800,000 meters overall in all of our projects in Mexico, Peru and in Chile. As usual, we have a very strong focus on brownfields exploration. We allocated about 80% of the budget to brownfields, which is coming out of the normal, say, exploration programs by the mine exploration teams following their targets of converting resources, adding new resources to the mine operations and also infill drilling in the reserves to increase the certainty of the reserve for medium- to long-term planning. And the remaining 20% was allocated mostly in the advanced exploration projects such as Guanajuato, Orisyvo, Rodeo, Tajitos, and the emerging Lucerito project, which is delivering good results in the latest exploration. So, all of this work is supported by a significant land that we owned -- in the land concessions that we own in all the countries where we operate, we can see the numbers to the left of the triangle there. And our focus for 2026 will be an increase of the exploration budget up to $308 million. Now we're seeing a shift of more investment being put in the advanced exploration project and 35% of this total budget will be devoted to the advanced exploration projects that you see in the upper levels of the triangle, like places like Valles, Noche Buena at the Herradura district and also the Herradura underground also in Herradura and the other advanced projects I just mentioned. But also some investment will continue to be made on the early-stage projects to keep our portfolio alive and dynamic with the -- still the brownfields around San Julian and Fresnillo and some of the projects that we have in Peru and Chile and now in Canada. We'll finalize this slide just by mentioning that we continue to have the deployment of regional prospecting teams in the four countries where we operate, trying to advance new projects to make -- to show some progress or to make decisions as to optimizing the land that we control. Okay. Having said that, now we will turn into a more detailed description of our project pipeline, and we will start talking about the brownfield projects. And of course, you all know that the advanced exploration projects are now being sponsored and championed by our COOs. So, we will start out of Valles. So I will hand this over to Daniel. Daniel Diezas: Thank you, Guillermo. As mentioned before, part of the efforts of optimizing our portfolio, in particular, on the Herradura district is about capturing short-term opportunities and increase value where possible. What you see here, and I think this is the first time in some time that we present what we're doing in the different projects, it's exactly that. What opportunities we can capture in the short term while we keep -- we remain optimizing our portfolio and our production profile in the district moving forward. To begin with, we have Valles. Valles is an underground operation that will run in parallel with Herradura. We are pretty much starting production next year. We completed the detailed engineering during the last year and the beginning of this one. The operational model is completed, the section that will be operated by contractors. So we have selected our main contractor in there as well. And the rehabilitation works in the underground mine will start on Q3 this year. We expect production to commence by mid-2027. And the expected average production will be in the range of 60,000 to 80,000 ounces per year. That will be processed through the same processing facilities in Herradura. So it's going to be an increase in gold ounces through higher grades by using the same capacity. So the capital is very limited, a very accretive project that we expect to have running for 7 years with a possibility to extend the mine life through exploration that depth is still open. So we're very excited about Valles coming online. On the right-hand side, Noche Buena. Noche Buena, as you probably know, it's an open pit that operated up to 2022, where the reserves were depleted at that point in time. Some potential remained. So we kept analyzing opportunities. And together with some good exploration results and the new price scenarios, we rerun an evaluation, and we are actually restarting operations. We expect early next year. We have completed the studies for that. We expect an average production of between 40,000 and 50,000 ounces additional for the next 8 years in Noche Buena. So another very good news for the district and for the production profile of the company. This is not included in our forecast so far. That is in the short term. And by the end of the presentation, Octavio will show a general time line of our project pipeline. But in the longer run, as we mentioned before as well, we have Herradura Underground that is the main portion of the deposit at depth. We completed conceptual studies. This is on earlier stages. So we expect production between 120,000 and 160,000 ounces per year. This is a longer implementation project. It requires some development in the open pit in order to be able to start. So we expect to start by 2031. We have scheduled the definitive PEA during 2026 as part of the exercise that I mentioned before around the optimization of the district. And with this new long-term view of prices, what is the right transition between open pit and underground and how they coexist in the long run. We expect to comment on that by midyear this year. And finally, it's a greenfield, but also part of the Herradura district is Tajitos. I will leave to Guillermo to comment a little bit on that one. Guillermo Gastelum: Thank you, Daniel. Well, Tajitos is a disseminated gold deposit, very similar to Noche Buena. It's located in the Herradura district, as already mentioned, and it has a resource around 1.1 million ounces, most of it in the indicated category. So that's the -- for us the Tajitos as we know it now, but in 2025, we discovered additional mineralization west of it. So the district is much larger. We have -- we are exploring a vein system, which is outcropping that has very good gold grades and is amenable to underground mining. And also, we have defined additional exploration targets for disseminated mineralization west of the non-resource. So that's a good news. And we will be advancing studies at the PEA level in the first half of this year at Tajitos. Now moving forward. And in this slide, you are seeing the advanced greenfield projects. Starting off with Rodeo, you'll just mention a few words before letting Daniel go into the details. Rodeo is also a disseminated deposit. It's not much a vein-type. It's a different style of mineralization hosted in volcanic rocks, which are thoroughly oxidized through depths in excess of 300 meters, which is -- allows for very good metallurgical recovery and also has good exploration potential, and we have four rigs spinning right now at Rodeo looking for additional mineralization at this project. So Daniel, would you like to continue on the plans? Daniel Diezas: Yes, quickly around. As you can see, we have been making significant efforts in order to optimize and put more focus on the development of our project's portfolio. Rodeo is one example. It's an open pit, as Guillermo commented. During 2025, the focus of what we call an advanced PEA was on two fronts. The first one was extension and metallurgical drilling, and we successfully completed a campaign with 25,000 meters with good results. And the second objective was the metallurgical test work. That is the key for a Heap Leach operation. We completed that, very detailed test work for a PEA, and the results are quite promising. So we're very confident on what's coming for Rodeo. That just was completed in December this year -- last year. So we are starting by the end of this month, the PEA study for the optimization, and we expect to have that completed before the end of Q2 this year and hopefully start the PFS stage moving forward. What we expect out of Rodeo, it's a production for what we know now, we think we have a possibility to slightly increase. But what we know now is between 75,000 and 90,000 ounces of gold per year, potentially starting in 2029 with a life of mine of between 8 and 9 years. Guillermo Gastelum: Then moving on to the next project, which is Guanajuato, Guanajuato Sur. Remember that Guanajuato is a historical mining district located in Central Mexico. But now we are exploring in new parts, new portions of this district where significant silver and gold veins have been discovered, brand-new structures, which were discovered by the use of epithermal methodology for going about exploring this type of deposits. And we had a very successful 2025 exploration results. So Tomas, would you like to comment on the progress work? Tomas Iturriaga-Hidalgo: Thank you, Guillermo. So during 2025, we concluded conceptual level studies with excellent results. This is a high-grade silver-gold project, very strong on the financial side at the conceptual level, very well located, rather accessible land, flat land at a very mine-friendly state as Guanajuato. So we're very excited with the results of the conceptual studies. We have selected already the ramp development and shaft sinking technology. Those are the critical path items in the project. So, we have already selected the technology and we are proceeding with detailed engineering of those pieces of infrastructure. We will immediately continue to pre-feasibility level studies this year. And like I said, very, very interesting project. Potential is still open. The geological potential is still open at length and depth. So that's why Guillermo and his team are focusing very heavily on exploring the site. And the expected start of the production is by 2033 at this point. Do you want to comment Orisyvo, let me tackle that? Guillermo Gastelum: Yes. Just let me mention about Orisyvo that is also significant that you've seen this name around for some time, is a significant disseminated gold deposit, the largest of its type ever discovered in Mexico. But fortunately, this system, which costs around 10 million ounces of gold has a core of higher rate, and that's been -- that we are targeting now. And that's -- about these studies, Tomas will continue on explaining. Tomas Iturriaga-Hidalgo: Yes, Orisyvo. So this is a gold project up in the mountains in Chihuahua, as you know. During the year, we concluded the pre-feasibility A studies. And given the capital intensity of the project and some OpEx requirements, we decided to do a third-party review of that pre-feasibility A with very good results. We were able to -- during this review to improve the project economics. So we will continue to pre-feasibility B during the year and advanced permitting engineering, which at this point is a critical part of the project, the permits. So we are already on it. Expected average production of Orisyvo is between 180,000 and 220,000 ounces of gold a year, also with the start projected for 2033 at this point. Guillermo Gastelum: Okay. I will finalize this section just by adding a few words on Novador. One of the targets when we get up to Val d'Or, and after the acquisition, it was not to disrupt the activities that were in progress. So we were able to continue the exploration drilling. As I said, we have six rigs now in operation and also a very strong focus, of course, on the development of Novador. And for that reason, we have a number of consultants, which are supported by Fresnillo's technical services team to continue to advance the pre-feasibility level studies. So we are expecting results of the pre-feasibility by midyear, around July. And a little mistake there, production is scheduled to commence in 2032. So I think with this, I will hand the microphone over to Mario Arreguin. Mario Arreguín: Thank you, Guillermo, and good morning to all of you. So, it's always a pleasure to be back here in London and to have the opportunity to share with you our financial numbers, especially when those numbers are record high numbers. So it's easier. As you can see in the lines which are highlighted in yellow, gross profit was above last year by 114%. Operating profit was 142% above last year. Profit for the period was almost 600% above last year and EBITDA was above 81% last year. So very, very good numbers. But let me start with gross profit. Again, as you can see, we were up by $1.4 billion. And here, what I would like to touch on are basically two line items. One has to do with adjusted revenues, which grew up by $1 billion. And that combined with the fact that we have a lower adjusted production cost compared to last year of almost 11%. Well, that resulted in great margins for us. So let me start again with adjusted revenues. Okay. As you can see from this slide, in terms of sales volumes, as expected, and this was included in our guidance. Volumes sold were lower compared to last year. In the case of silver, we sold 11% less, which had a negative effect of $293 million. We sold less gold by 4.5% compared to last year, which had a negative effect of $94 million. So in general terms, in terms of sales volume, the total effect was a negative $429 million. Fortunately, that was more than compensated by the higher average prices that we saw both in gold and silver. In the case of silver, (sic) [ gold, ] silver (sic) [ gold ] went up by 44%, the average price, which had a very positive effect, of almost $651 million. And silver went up by 51.5%. As a matter of fact, the average price of silver (sic) [ gold ] last year was $43.6. And currently, the spot price is almost twice that for this year. So things are looking good. And like I said, that had a positive effect of $781 million. Let me share with you the main reasons behind the decrease in the adjusted production cost. And let me start first with the factors that are outside of our control. For example, in column #5, you will see the favorable impact that the devaluation of the Mexican peso had. We're talking here about the average exchange rate for both years. So the average exchange rate in 2024 was MXN 18.3 per dollar. And in 2024, (sic) [ 2025, ] it was MXN 19.22. So that translated into a 5.1% devaluation, again in terms of average exchange rate. Because I'm sure you've all seen that the peso has been coming down quite substantially throughout the year. However, what we take into consideration is the average exchange rate. So that had a positive effect of reducing our cost by almost $52 million. Now when you combine that with the other factor, which is outside of our control, which is basically shown in graph #1, cost inflation, excluding the effect of the exchange rate was 3.2%, that had a negative effect of $45.8 million, which pretty much offset the benefit of the devaluation. But still, net, we had a positive effect. And let me just go back to the previous slide. This is what we call our consolidated cost inflation, which basically takes into consideration our own consolidated basket of goods and services. And when you combine the two effects, the exchange rate effect together with inflation, this is what we obtained for 2025, a 0.24% deflation, if you will. So fortunately, for us, in 2025, inflation was not an issue when you look at it in dollar terms. So to sum it up, when you look at the increase in gross profit of approximately $1.4 billion, there are two bars that stand out here. Clearly, prices, the higher prices shown on the #1 column, had the most important impact, which was estimated at $1.4 billion. And again, if you look at bar #9, that was a bit offset by the lower sales volume that I just mentioned. Other favorable aspects were the lower depreciation that had a benefit of $129 million. The lower treatment and refining charges, which are worth mentioning because it's been a very favorable market for us, and that had a positive effect of $60 million. The devaluation, which I already mentioned, $52 million. And the rest are smaller numbers, but you can see them in the graph there. Let me just go back to the income statement to comment on a couple of line items. I'm not going to go through each one of them, but worth mentioning here perhaps is the exploration expenses line, which was $174 million. I would say, invested in exploration, which was 6% higher compared to that last year, and that was again expected. Actually, we were below what we had budgeted of close to $187 million. And one additional line item that I would like to comment on is the income tax expense. And I guess maybe some of you may be wondering why income tax expense decreased by 19% when profit before income tax increased by almost 180%. That's a bit strange for some. And the answer to that is, and I'm sure you're familiar with this now because this has been happening for some years now, is the effect of the exchange rate on the deferred taxes. For example, in 2024, if you look at the $390 million tax expense that we recognized in that year, this is equivalent to an effective tax rate of 52.5%, which is way above the 30% statutory tax rate. What happened there? Well, we had an initial exchange rate back then in 2024, at the beginning of the year of MXN 16.9 per dollar and a year-end exchange rate of MXN 20.8 per dollar. So we had an important devaluation, which resulted in this effect in recognizing a 52.5% effective tax rate. Whereas in 2025, we had exactly the opposite effect. The beginning exchange rate was MXN 20.8 and the year-end exchange rate was close to MXN 18. So that's the reason why you see this effect. The exchange rate is generating a lot of volatility in this line item. And I guess, it's bit difficult for my friends, analysts to be able to predict this. You would need to have a lot of information in order to model this. But I just wanted you to be aware of this. Moving now to the cash flow statement. Okay. So what I would like to point out here is basically in the first column at the bottom, a record high cash balance at the end of the year of almost $2.8 billion, which compared to our initial cash balance of almost $1.3 billion that resulted in a net increase of almost $1.46 billion. Main source of cash, of course, is the top line, the operations, which generated $2.8 billion, almost 80% higher compared to last year. I think it's worthwhile commenting on some of the main uses of cash. And of course, one that I believe you would be interested in getting a little bit more detail would be the third line, which is income tax special mining rights. And as you can see, we had a very important increase from $97 million in 2024 to $369.5 million this year. Let me just remind you that in this particular line, we have three items that make most of this. One has to do with the provisional tax payments that are done on a monthly basis from January to December and which is basically an advanced payment of taxes related to 2025. That alone was $250 million compared to the previous year, which was only $98 million. The other item, which is important is the year-end tax return that we do in March and which is related to the previous year. So what you do is you calculate your taxes and net the previous year provisional tax payments and you only pay the net amount. So in March 2025, we paid $72 million corresponding to the 2024 fiscal year. compared to only $5.4 million in 2024. And last but not least, is the special mining right corresponding to 2024 again, but it's paid in March 2025. And here, we're talking about $63 million. So those are the three main items which confirm this number here. I do want to make you aware that in 2026, provisional tax payments will be higher. Remember, provisional tax payments is a factor that you apply to your revenues. So with higher prices, higher revenues and a higher factor, because it will be based on the 2025 tax payments, you can expect to see higher provisional tax payments. And in March, when we conclude our tax return for 2025, the provision tax payments that we made in '25 will not be sufficient to cover the year-end final calculations. So you can expect that in March, we will have a very important cash out to pay for taxes, just to make you aware of that. Of course, another important use of cash was CapEx, $400 million. Dividends paid to our friends at Pan American in December, $105 million, minority shareholders of our Juanicipio project. And of course, dividends paid to our majority shareholders of $654 million. Lastly, and to close, I never make many or any comments on our balance sheet. But I thought it would be worthwhile pointing out the line that you see in yellow there, which is basically short-term liabilities, which grew quite substantially from $339 million to $903 million, almost $500-and-so million, and that's precisely related to tax payments that we will make next year. So again, just to make you aware of that, so you can include that in your cash flow projections. Other than that, very sound balance sheet, of course. And now moving on to something that I think is more of your interest, which is capital allocation. Let me start by saying that our dividend policy remains unchanged. And you know our dividend policy has been historically since we did the IPO to pay out between 33% to 50% of our profit after tax, after making certain adjustments, of course. But even though we have that range, we should point out that we have always paid a dividend of at least 50% or more. So that range is really just conceptual because we have paid at least 50%. In 2025, we have just announced a total dividend of $950 million, which is above our traditional dividend policy. In other words, it's above our 50% policy. And this is made up of $797 million final dividend that we just announced, together with the $153 million interim dividend that was paid back in September last year. So as I just mentioned, we closed the year with $2.76 billion. But just bear in mind that some of the important uses of funds that we see -- of course, payment of the final dividend, which will be made in May of approximately $800 million. Our CapEx budget for this year is $765 million. The acquisition of Probe Gold, which was paid in January this year, required $550 million. And our exploration budget for this year is $308 million. So that adds up to an important amount of money. Just to continue with capital allocation. Over the next 5 years, we are prepared to invest around $3 billion in growth projects to align with our project time line. These are basically all the projects that you are familiar with in our pipeline. And just in the next 5 years, if everything goes as planned, we would be requiring around $3 billion. Of course, we will continue to analyze opportunistic acquisition targets with a long-term view and in accordance with our very strict returns criteria. We will follow a criteria similar to the one that we applied when we purchased Probe Gold, right? And in line with market expectations, we remain bullish on precious metal prices, although our balance sheet strength and cash generation ensure we are prepared for the cyclical nature of prices. You never know when those prices may come down, and we need to be prepared just in case. And lastly, we maintain our disciplined approach to capital allocation. And if the strong price environment persists by year-end, we are committed to shareholder returns. So with that, I will pass it on to, I believe, Octavio. Octavio Alvidréz: Thank you, Mario. Just a few words on our outlook before turning to your questions. And as we see here, I mean, 2026, we see it as a transition year, very specific aspects that have affected our guidance for silver in 2026, as Tomas mentioned, in the Fresnillo district. Fresnillo, we are preparing zone of the area in the mine. And this year, we are not bringing those higher grades from that area. And also the connection of the Saucito shaft in addition to what Daniel mentioned also in Cienega, Cienega is turning into more of a gold mine than silver, a lower production there. But then after having that or be better prepared in Fresnillo and with the connection of the Saucito shaft, we are expecting to increase the silver production '27 and '28. Gold as well, another transition year, I would say, in the Herradura district. But the good thing is that in 2027 and 2028, we are expecting to bring brownfield project production that has the best returns, lower investment and those ounces will be there through Valles and Noche Buena as well. As well as higher production in Herradura. As you can see on the base metal side, I mean, higher zinc production coming out of the Fresnillo district as we go to deeper areas as well. On the CapEx side, and Mario mentioned part of that. I mean, we are preparing or making additional investments across our mines, as well timely so that we continue to have a strong position and a strong production outlooks at each one of the mines. As we mentioned, we are also increasing in 2027 and 2028. In the following years, '27 and '28, lower CapEx expected. And as you can see here, I mean, we have adjusted our timetable for the different projects described by Tomas, Daniel and Guillermo. This is a more sensible table or time table according to longer permitting process in Mexico. But as we stated that 2 years ago, our focus was going to bring initially brownfield production. And you see reflected production from Valles, Noche Buena, and whenever we are at a deeper area in Herradura pit as well and bringing stronger projects in Rodeo, Tajitos by '29-'30. And Novador is reflected there, as Guillermo mentioned, the outlook to bring that into production, Orisyvo and Guanajuato. I would like to finalize this chart by saying that one more of our very important strategies is to operate in districts, in which we can be operating for many years. We have, as you know, the Fresnillo district, Fresnillo Saucito and Juanicipio for many years. The Herradura cluster of the Herradura district as well is proven to be the case, a strong gold production. In the future, we have Guanajuato in which we have identified, as Guillermo mentioned, not only the project, Guanajuato Sur, but also several targets from the historic areas of Guanajuato into the south to our project. And one more is Novador. Novador is coming not only with those 10 million ounces in resources, 8 of those in the Novador project, but also a large exploration package that has identified already some exploration targets for many years to be explored as well. Just to conclude, I mean, we have record financial performance for Fresnillo this year. We have been able to capitalize on a higher precious metals price environment with a stable production performance, combined with a strong cost control for 2 years despite inflationary pressures. As a result, we have delivered considerable shareholder returns, including a record dividend payout in 2026 of $950 million. We are also making good progress on our brownfield development pipeline with the ounces that provide a better return. And we are also advancing the greenfields, as we mentioned. And with that, I would like to turn to your questions. Yes, Jason? Jason Fairclough: Jason Fairclough, Bank of America. A couple of questions, one for Mario and then one for Tomas. Mario, I mean, strong numbers. And then on top of that, it was a big beat versus consensus. And it just seems to be in the revenue line. And I think maybe part of that is TC/RCs. Maybe we didn't realize how much better they were getting for you. But is there something else going on in the revenue line there? Did you sell more metal than you produced? Tomas Iturriaga-Hidalgo: No, we did not sell. If you look at the variation in inventories, actually, it increased. So we didn't sell more than... Jason Fairclough: Was it provisional pricing then or... Mario Arreguín: It's purely pricing. Purely pricing. As you saw, actually, we produced less, sold less volume. So the real reason behind our revenue increase is prices. Jason Fairclough: And in terms of the TC/RCs, is this the new normal? Or could they go down further? Mario Arreguín: Well, it's hard to predict how treatment charges are going to behave. But during the last 3 years, we've seen a downward trend, pushed a lot by the Chinese. It's putting a lot of pressure. And one of the things that we are concerned about, that you mentioned it, is the possibility of this continuing and the Chinese getting more market participation. And if some of the smelting and refining companies go out of business and with the Chinese have all the -- gather all the basically all the volume that might have a very unfavorable and sudden change. So we have to watch this very carefully. Jason Fairclough: Just a quick one... Octavio Alvidréz: That is correct, Jason. And I would say, I mean, that trend, as Mario mentioned, continues. We operate on a long-term agreement with Met-Mex. And when you compare -- I mean, those long-term agreement treatment charges and refining charges for silver continue to trend lower, but it's still a difference to the spot treatment charges that are quite very different. Jason Fairclough: Just to add, Tomas, a quick one. So quite a different trend in cost per tonne between Saucito and Fresnillo. I think Fresnillo was up 17% year-on-year and then Saucito down 10% year-on-year. Again, is this the new normal? Or is there some one-off effects in here? Tomas Iturriaga-Hidalgo: I would say Saucito is a one-off, and we're going to see probably a bit of an increase this year because of the cost related to hauling while we interconnect the shaft. And Fresnillo tends to be normalizing at those levels. Jason Fairclough: So we should think about it being normalized at these new higher levels, cost per tonne, even by volume? Tomas Iturriaga-Hidalgo: Yes. The volume is impacting and that's a normal level. Octavio Alvidréz: Daniel? Daniel Major: Dan Major from UBS. First question, just looking at the project pipeline and your outlook for CapEx. It seems like, again, we appreciate the more details on the projects. But if I look at Page 38 and 39, those of us that have been following the company for some time, these charts look fairly familiar. And then most years, the one on Page 39 moves a little bit further to the right, and really the Canadian projects, any new one in there. I guess the first part of the question, what is included in your CapEx guidance, production guidance in terms of the pipeline of projects? Is it just the two brownfields that are entering production? Or what else have you factored in? And then I guess to add to that, you've identified $3 billion of potential spend. What is -- how much of that is included in your CapEx projections for '26 to '28 already? And how much is incremental upside, assuming the projects move forward? Octavio Alvidréz: Yes, you're right. I mean, as I mentioned it, I mean, this is a more sensible thing in terms of timing, how to develop the next projects. But as we have stressed and we are achieving that, initially, as we were realizing the greenfield projects were going to be -- take a bit longer to be developed, we prioritized the brownfield production, Valles and Noche Buena, which is a good surprise. And then a more sensible approach to the rest of the greenfields. So on the CapEx side, in 2026, we have the shaft connection in Saucito. We have leaching pads in Herradura and the carbon project, the carbon recovery gold project in Herradura and also the conveyor belt in Juanicipio. Also, we continue to put some studies and in Orisyvo and also in Guanajuato Sur as well, as Daniel mentioned, that is included there. But the only one CapEx investment reflected in 2026 that will provide additional production is what we are investing in Valles in 2026. Daniel Major: Sorry, just to follow up on that. So if Valles is the only one out of the $3 billion bucket, is it fair to say that if the projects progress as you suggest, you've got sort of $600 million, $800 million per annum upside to what you're guiding in CapEx out to 2030? Is that the right way we should be thinking about it? Octavio Alvidréz: The right way to see it is with the time line of projects, for example, Rodeo, which is pointing to the start of production in 2029, 2 years or 1.5 years, you will start to see the deployment of the CapEx that we will provide at some other time, at Tajitos as well. But I mean the large majority of that CapEx that Mario mentioned would go with the higher CapEx projects such as Orisyvo, Guanajuato, Novador at that time, yes, in some 4 years, 5 years to come. Daniel Major: All right. And then just next question, one for Mario. On the tax side, quite complicated. Could you just provide us some more basic guidance? What would you expect cash tax and P&L effective tax rate to be in 2026 if current prices stay the same? Mario Arreguín: I would expect in terms of income tax recognized in our income statement. Again, it depends on the exchange rate. And I've been very much surprised by the strength of the Mexican peso. As you can see, currently, it's around MXN 17.4 -- MXN 17.3 per dollar. So if that continues to be the case and it remains strong, then you will see, again, another revaluation of the Mexican peso this year. So that might have, as a consequence, again, a lower effective tax rate compared to the 30% statutory tax rate. But having said that, you never know. We've seen some volatility if the peso at the end of the year because what you take into consideration is basically the end of the year spot exchange rate. It depends on that. But assuming no exchange rate effect, zero, which is a very important assumption, then we would expect to see something close to 30% effective tax rate. Daniel Major: And the cash tax, I noticed that the increase in provisional tax payments increased by $565 million. Mario Arreguín: Cash tax. Okay. As I mentioned, we will be finalizing our tax return in March this year for the 2025 fiscal year. And there, just for that, we are expecting something close to $500 million just to add to the provisional taxes that were paid in 2025. That's related to that year. Now during 2026 from January to December, we will be paying the provisional tax payments as an advanced tax for the 2026 fiscal year. And those are going to go up quite substantially. Why? Because of the higher prices? I said this is a factor or a percentage that you apply on revenue. If we foresee the current spot prices being maintained throughout the year, that will translate into higher revenue with a higher factor, so higher provisional tax payments. That will have an effect on the cash flow, not in the income statement though. Daniel Major: Okay. So somewhere in the region of $500 million cash tax more than the P&L tax. Is that the simple way of thinking about it? Mario Arreguín: $500 million more? Daniel Major: Yes. Additional cash tax to the P&L tax? Mario Arreguín: Yes. Marina Calero Ródenas: Marina Calero from RBC. A couple of questions on my side. Can you give us a bit more color on the trends that you're seeing in your sustaining CapEx? Is it fair to assume that $600 million is the new normal you need for to sustain production at your operations? Octavio Alvidréz: For 2026? Marina Calero Ródenas: Yes, and going forward as well. Octavio Alvidréz: And going forward. Yes, for 2026, let me -- I mean, as you know, I mean, the majority is mining works. And that has not varied because the development rates at our mines, underground mines keep at a similar level, approximately $180 million, sustaining, $250 million to $280 million more or less. Tailings dams, I mean, that's a large part of our investments every year. In 2026, we continue to do tailings at Saucito, at Fresnillo, Herradura as well. So that's a large investment, approximately $150 million or so. Then the projects that I mentioned at Saucito, Herradura and Juanicipio, very much, I mean, you -- and then the investment for brownfields and greenfields, as I mentioned, is Valles, some in Orisyvo and some in Guanajuato. Yes. And then after, I mean, as we have already in 2026, invested in tailings dams, that will -- CapEx will decrease in 2027 and 2028. The connection of the shafts and the other conveyor belts and everything, I mean, we will not have that, and that's why the CapEx goes a bit lower and also a sustaining part as well. Marina Calero Ródenas: Just one follow-up on that. If I recall correctly, your old guidance was roughly $500 million for this year. How do you explain the difference to the $760 million that you're guiding today? Octavio Alvidréz: Yes. What we used to mention before was for the set of operating mines, sustaining and mining works and everything should be around $500 million, $550 million per year. Daniel Diezas: Marina, on the addition of Valles to the portfolio that is already included in these numbers. It requires around $40 million per year in mine development just in Valles. So that tops off on the $500 million guidance that we provided before. Marina Calero Ródenas: Okay. That's very helpful. And just one final question. On M&A, you commented that you keep looking for opportunities. In which jurisdictions are you finding more compelling opportunities? Is it Mexico more attractive relative to the rest of the world? How are you thinking about that? Octavio Alvidréz: Yes. We continue to see the projects in Mexico. There are some good discoveries in silver. We continue to see mostly in countries with geological potential, of course, and the mining culture. You know that we've been exploring in Peru and Chile for quite some time. This year, we are starting drilling in Peru in some of our very interesting projects there. But for M&A, we continue and we've looked in Canada. And as we mentioned, I mean, we had a very good acquisition there. Canada is one of those countries with good exploration potential, mining culture. In the U.S., we've seen some in the past. I mean, but given -- Novador is a very good example of what we try to do. It has to be value accretive, of course, has to have some exploration potential. We have looked in those -- in the recent 2 to 3 years, some operating mines. However, given the expectation on the current record metal prices, I mean, the prices paid for those assets have been out of our expectation for value creation. So we continue to look. We will continue to look, but under a very disciplined approach as well. Unknown Analyst: This is Fernando of Morgan Stanley. A question on the portfolio mix. So we see a very high gold focus in your pipeline and also we have the Probe Gold acquisition. So are these things reflective of a broader strategy to increase the exposure to gold in your portfolio going forward? Octavio Alvidréz: Well, that has happened through times. If we look back at what we did from 2008 to 2018, initially, we grew faster on the gold side, bringing into production Noche Buena and then Soledad-Dipolos at that time. Then after we had Saucito that took longer to be developed, vein system there, the expansion of Saucito. So it depends on the portfolio we have. From what we have reflected in the chart, yes, you're right. The brownfields will come first, Valles and Noche Buena, then after Rodeo and Tajitos, because those are not complex -- so complex projects to be developed and the larger investments in terms of silver will come with Guanajuato. And that's because we -- the veins and the values start what, 600, 700 meters below. Guillermo Gastelum: Around 500 meters below the surface. Octavio Alvidréz: It takes time. Amos Fletcher: It's Amos Fletcher from Barclays. I just wanted to ask a couple of questions. First one was just on cost inflation guidance. Mario, what would you be guiding us to in terms of dollar per tonne milled for 2026 inflation, excluding the impact of the peso? Mario Arreguín: Typically, when you have such huge increases in the price of gold and silver, following that, you see some sort of inflationary pressure. For budgeting purpose, what we have considered for 2026 is approximately a 6% increase in cost inflation. But again, we are in a very volatile environment. But if you're asking me what we're expecting, it would be somewhere close to 6%. Amos Fletcher: Okay. And then I just wanted to ask also, you've obviously given the list of potential projects on Page 39. Could you give us sort of indicative CapEx numbers for each of those projects to the extent they're available? Mario Arreguín: Yes. Yes, I can give you a bit more flavor on that. Bear with me for a second. Octavio Alvidréz: You have to realize, before Mario, that these projects are at different stages, of course. And according to that stage, we have the plus/minus percentage in terms of CapEx and everything. Go ahead, Mario, please. Mario Arreguín: Yes. Thank you. So here, I'm going to talk only about Orisyvo, Rodeo, Guanajuato Sur, Novador and the possibility of bringing back Soledad-Dipolos to operation. So considering those projects, for example, in 2027, in total, we're expecting there something around $250 million just on those projects alone. And in 2028, around $560 million. In 2029, somewhere around $800 million, just for those projects, excluding sustaining CapEx. Amos Fletcher: Okay. And then one final follow-up, I guess, was just to ask from the sort of the CapEx guidance you've given on Page 38. Just to clarify, I guess, what projects are included in that guidance? Octavio Alvidréz: This is only CapEx for the current operations. There is no CapEx for projects there with the exception of 2027 for Valles, that I mentioned and a bit for Orisyvo and Guanajuato. Jason? Jason Fairclough: Slightly bigger picture question. So we're starting to see people increase the metal prices that they're using to calculate reserves and resources and also increase the metal prices they're using for mine planning. Can you just remind us what you're using to calculate your reserves for gold and silver? And how do you think about potential changes to your operating philosophy at some of the mines? Is it time to allow for more dilution? Octavio Alvidréz: Do you want to mention the prices? The answer is no. What is the question, Jason? But let me -- for the resources and reserves that have been reflected in this statement, we use for reserves $2,102.650 and for resources $2,300.030. Those are the ones in the statement. We are -- we are starting that process again, and we are increasing those up to $2,800 gold for resources and $33 for silver for reserves and $30.35 for resources. And to your question, I mean, dilution is always a killer. I mean, when you dilute, of course, that tonne does not come with any value. So despite the fact that the higher prices will give us the possibility to mine profitably what used to be marginal blocks now are economic, but reducing dilution as much as possible. Jason Fairclough: Are you able to give us any color on the sensitivity of the reserves and resources to change in the prices? So for example, if you raise your long-term gold price from $3,000 to $4,000, how much do reserves increase by? Octavio Alvidréz: If you want to comment, also memo, in the Fresnillo district, the value per tonne of ore is above -- well above the cost that we have right now. So it will not bring a huge increase whenever we use higher prices. When we will see sensible ore will be probably in Cienega, a bit more help there. San Julian probably. Daniel Diezas: Marginal, I would say the main impact it's around the Herradura when you increase the price, size of the pit. And as mentioned during the presentation, the exercise of finding the right transition moment between underground and open pit is exactly that. Now the pit grows significantly. However, those are ounces that would come online in 2050 or beyond that. So we are in that trade-off of when is the better timing to bring production forward from the underground with higher rates. Guillermo Gastelum: I will just reinforce what Daniel said is the resources and reserves will be more sensitive in the -- for the open pit, the disseminated deposit that we just described for you. However, we're reaching -- it doesn't matter how much higher you go, there is a limit to the geology. I mean, and to grade. So there's nothing further to add once we get to extremely high prices. And also in the underground operations, some of the narrow veins or lower vein material may be back into resources. But I don't know if in reserves because a more deeper analysis is required as to what sort of infrastructure and services are required to reach some sections of the mine that were left for some reason. So it all comes to the detailed engineering work for the reserves, no matter how the prices may go high, because it will give you less margin if we force things to be mined out just because at any given scenario, it turn economic, but the margin will decrease significantly. Daniel Major: Dan from UBS again. Just to kind of follow-up on Jason's question. What is the projected cost of production and the restart at Noche Buena? Daniel Diezas: We expect between $2,100 and $2,200 all in. Daniel Major: Yes. Okay. And sorry, I could probably take it offline, but I didn't actually catch. The first set of numbers of $2,100 and $2,300 for gold reserves and resources. Is that what you use for your 2025 calculation? And then the second set of numbers are what you're considering for your '26? Octavio Alvidréz: That's correct. Yes. Daniel Major: Okay. And then just a final one on the balance sheet and capital returns. You obviously, healthy payout this year. You've outlined the Probe Gold acquisition, more capital, more projects. Is there a threshold of net debt or cash on the balance sheet above which you'd pay out 100% of free cash flow? Octavio Alvidréz: Mario? Mario Arreguín: That's a decision for the Board to make, but we want to make sure that we have sufficient funds to be able to fund all of the $3 billion pipeline that we have defined. And what we -- what I can tell you is that definitely by year-end, if prices do remain where they are, we will definitely have a much bigger cash balance, and we will reevaluate again the possibility of paying an extraordinary special dividend. That I can tell you. How much? That's for the Board to decide. Octavio Alvidréz: All right. Thank you very much for joining us today. Thank you, guys.
Operator: Good day, and welcome to the Netlist Fourth Quarter 2025 Earnings Conference Call and webcast. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Mike Smargiassi, Investor Relations. Please go ahead, sir. Michael Smargiassi: Thank you, Nick, and good day, everyone. Welcome to Netlist's Fourth Quarter 2025 Conference Call. Leading today's call will be Chuck Hong, Chief Executive Officer of Netlist; and Gail Sasaki, Chief Financial Officer. As a reminder, you can access the earnings release and a replay of today's call on the Investors section of the Netlist website at netlist.com. Before we start the call, I would note that today's presentation of Netlist's results and the answers to questions may include forward-looking statements, which are based on current expectations. The actual results could differ materially from those projected in the forward-looking statements because of the number of risks and uncertainties that are expressed in the call, annual and current SEC filings and the cautionary statements contained in today's press release. Netlist assumes no obligation to update forward-looking statements. I will now turn the call over to Chuck. Chuck Hong: Thank you, Mike, and hello, everyone. In 2025, we strengthened Netlist's long-term strategic position as we made substantial progress across product and IP initiatives. We saw significant improvement in full year financial results, both the top and bottom line, and we ended 2025 with revenue more than doubling in the fourth quarter. Financial performance was driven by strong demand for memory in the second half of 2025 and the strong execution of our sales and marketing teams in delivering the value of our products to customers across key markets. Rapid growth in AI has created a supply-demand imbalance leading to a global memory chip shortage and sharp price increases across all product categories. These industry dynamics are expected to persist through this year and into 2027 when new fab capacity is expected to come online and increase supply of memory chips. In the current environment, Netlist is well positioned to grow its product business. Sales volume for Lightning, Netlist's overclocked and low latency DDR5 line of products, is ramping up nicely in the system integrator market segment. Adding to this, we've completed qualifications at a global server OEM, and they, in turn, are currently in testing with many of their end customers. We anticipate continued growth of our existing customers as well as new customers in high-frequency trading and high-performance computing applications. On the legacy products front, industrial and networking customers continue to require DDR4-based Netlist custom solutions. We will support these customers through 2026 and into 2027 through last-time buy agreements that were concluded in 2025. As AI workloads continue to drive demand for higher performance and higher capacity memory, we are investing in strategic R&D for next-generation technologies. Those include CXL NVDIMM and low-power MRDIMM. We are sampling our CXL NVDIMM proof-of-concept products to Intel and AMD for testing and validation on next-generation platforms. NVDIMM was invented by Netlist over a decade ago, and we are now moving this storage backup solution onto the CXL channel. As DDR5 DIMM speeds continue to increase, MRDIMM and LPMRDIMM are projected to become the primary memory module used in high-capacity, high-performance server applications. Netlist is developing a unique solution in this space. which takes LPDDR5 DRAMs currently used in mobile devices and deploying them in high-end servers via our unique LPMRDIMM design. On the IP front, we continue our defense of multiple favorable jury verdicts. We secured important appellate affirmances of the validity of our patents and expanded enforcement actions covering next-generation DDR5 and HBM technologies that are foundational to AI computing. In December, the ITC or the U.S. International Trade Commission instituted an investigation into Samsung, Google and Super Micro based on the complaint Netlist filed in September. The investigation centers on the importation of Samsung memory products that infringe on 6 Netlist patents: The '366, the '731, the '608, '523, '035 and '087. Each of these patents reads on one or more of the following products: DDR5 memory modules such as DDR5 RDIMM, UDIMM, SODIMM and MRDIMM and high-bandwidth memory, HBM. In 2025, the validity of Netlist's '608 and '523 patents were affirmed by the U.S. Court of Appeals for the Federal Circuit, upholding the PTAB's IPR decisions. As a result, Samsung is not able to challenge the validity of these patents going forward. The ITC has assigned the investigation to an administrative law judge and the procedural schedule has been set. The Markman hearing is scheduled for April and the trial is set to start on November. A ruling in Netlist's favor would direct U.S. Customs and Border Protection to stop Samsung memory products that infringe these patents from entering the U.S. The discovery phase of the ITC investigation will take place over the coming months. In the federal courts, Netlist filed 4 separate actions in 2025 in the U.S. District Court for the Eastern District of Texas against Samsung and Micron and their distributor, Avnet. In these actions, Netlist is asserting newly issued patents covering DDR5 memory modules and HBM for AI computing. They include the '087, '731 and '366 patents, which read on memory products that represent tens of billions in annual revenue for these defendants. In the breach of contract case against Samsung in March 2025, the Federal Court for the Central District of California found that Samsung materially breached the joint development and license agreement Netlist and Samsung signed in 2015. This was actually the third separate time Samsung has lost this case. Samsung filed its appeal -- appellate brief in December, and Netlist will file its brief in the coming weeks. We estimate that the briefing process will be completed this summer with a possible hearing before the U.S. Court of Appeals for the Ninth Circuit before year-end. In other appellate activity, Micron's appeal of the $445 million jury award to Netlist is in the briefing process with oral arguments expected in mid-2027. In the $303 million damages award against Samsung, the appeal has been companioned with the IPR appeals of Netlist's '319, '918, '054, '106 and '064 patents, which were asserted in this case. Oral arguments on these appeals will be heard on March 6, 2026, this Friday in Washington, D.C. Regarding other IPRs in late February, the Federal Court of Appeals affirmed the October '23 final written decision by the PTAB upholding the validity of Netlist's '314 patent in an IPR brought by Micron. Micron has 90 days from the CAFC's judgment to file a petition to the U.S. Supreme Court. This is the third time within the past 12 months that the Fed Circuit appellate court has affirmed the validity of Netlist patents against -- asserted against Micron and/or Samsung. These affirmances of the validity of these patented technologies attest to the Netlist's role as a technology leader in memory subsystems. The '314 and the '508 patent, which was also affirmed by the CAFC are asserted in Netlist's case against Micron in the U.S. District Court for the Western District of Texas, which is currently stayed. Finally, we expect oral arguments before the CAFC for the '912 and the '417 patents later this year. Netlist continues to advocate for the rights of patent owners from meeting government officials to urging Congress to take action on proposed patent reform legislation. In the fall, we provided our comments in support of the Patent and Trademark Office's Notice of Proposed Rulemaking, NPRM. The proposed rules seek to level the playing field between small technology innovators and big tech in the patent dispute process, especially when it comes to IPRs. We will be participating in the upcoming IPWatchdog Conference in Arlington, Virginia at the end of March. The conference will bring together leaders in the intellectual property community and will feature speakers from the USPTO leadership as well as district court judges. I look forward to being part of the panelists discussions. In summary, 2025 was a year of progress for Netlist. We entered 2026 well positioned to build on our success and capitalize on the transition to next-generation memory through our products and IP assets. I will now turn the call over to Gail for the financial review. Gail Sasaki: Thanks, Chuck. For the 12 months ended December 27, 2025, revenue was $188.6 million, an increase of 28% from 2024. We ended the year with strong fourth quarter performance as revenue improved 121% as compared to the fourth quarter of 2024. Top line results reflect the current industry environment, which Chuck noted earlier, with solid demand from both OEM and resale customers as well as significant price increases, which supported gross profit margin improvement for both the full year and quarter. While we do not formally guide, given booking and shipping for the first quarter of 2026 to date and subject to the visibility we have today, we currently expect total first quarter revenue to show further improvement from the fourth quarter of 2025. Operating expense for the full year 2025 declined 36%, driven by reductions in IP legal fees and SG&A cost controls. We ended 2025 with cash and cash equivalents and restricted cash of $42.1 million compared to $20.8 million at the end of the third quarter with minimal debt. In the fourth quarter, we strengthened our cash position, raising $10 million through a registered direct offering. With a $10 million working capital line of credit and approximately $74 million available on our equity line of credit, we continue to maintain significant financial flexibility and liquidity going forward. As always, we manage the operational cash cycle very carefully as inventory turn improved by 32 days over 2024 and days sales outstanding improved by about a week year-over-year. I would note that we will once again be attending the ROTH Annual Conference in March and look forward to meeting with investors. Operator, we are now ready for questions. Operator: [Operator Instructions] The first question will come from Jared Osteen with ROTH Capital Partners. Jared Osteen: This is Jared Osteen on for Suji Desilva. In relation to the current market supply and demand environment, Chuck, can you share your perspective on the current memory supply and demand environment? I know you shared a little bit in the formal remarks. And how much of this is being driven by the transition to DDR5 versus AI capacity driven? And then with the new fabs that have been announced, do you think these are sufficient to meet demand or is more needed? Chuck Hong: Jared, there's a global shortage of memory chips, really the raw material for all computing hardware really from laptops to mobile phones to servers and AI servers. While we focus mostly on high-end servers, servers for AI, we're feeling the effects of the access to raw material, the shortage of DRAM -- mostly DRAM raw material and some NAND. But on the other hand, the ASPs, the prices of all products that are related to memory have increased significantly. So that is offsetting the lower volumes in supply. And I don't know that any of this is impacted or due to transition to DDR5. A lot of it is driven by AI. I think OpenAI committed to some 40% of the output of HBM over the next few years. But they're not buying that yet. And then you've got commitments to companies like NVIDIA and AMD for HBMs. So that's taking up a lot of the DRAM components that are going into mobile phones and PCs that are now allocated for HBMs. And fundamentally, until there is new capacity, this capacity that's in place has been -- it was a CapEx that was invested some 3, 4 years ago. So there's really not too many ways to increase the overall capacity. It's kind of a zero-sum game. If you allocate more to one segment of the market, you get less on the other side. And until there is new capacity that comes online towards second half of '27, I think all sectors of computing will continue to face this memory shortage. Jared Osteen: And then to go a little bit deeper into demand and pricing, how do you see the demand environment playing out for the remainder of the year? Do you expect it to be front-loaded as customers grab all the product supply that they can today? And do you think that the significant price increases for memory that we've seen in the past couple of quarters will hold? Chuck Hong: There's 2 different points -- price points that we look at in our industry. One is the OEM pricing that are to manufacturers from the DRAM manufacturers being sold to computer manufacturers. And then there is the spot pricing, kind of the broker market. So the -- in the last 6 months, the OEM pricing for DRAMs have gone up probably 3 to 4x, the spot market has gone up probably 7 to 8x. So it's kind of unprecedented type of increase. We think most of that price increase will hold through this year, which means revenues for people that are able to secure supply of DRAMs for most people that are in this industry should go up despite the fact that unit supply and unit sales will likely go down for most people. So I think if you're able to secure supply, I think you're in a good position. And over time, if supply becomes an issue, I think it's going to become more difficult. Jared Osteen: Switching topics a little bit. Now that you have 2 CAFC-affirmed patents, the '314 and the '608, what are the next steps to get the stayed Micron case in the Western District of Texas moving? And is there anything else that might keep it stayed? Chuck Hong: Yes. I think this case now is open to being unstayed now that the patents have been affirmed by the appellate court. So our outside lawyers will take steps to reopen this case and get it moving again. So it's a legal motion practice that they'll undertake to get the cases -- get this case back open and on track. Jared Osteen: And then in terms of litigation expense cadence expectations for 2026, it seems like there's a little bit more activity in the pipeline this year with the hearing at the end of this week, some additional IPR deals and ITC in November. How are litigation expenses expected to track in the remainder of calendar year '26 relative to 2025 levels? Any color would be helpful. Gail Sasaki: I'll take that. So we believe it will be about the same as 2025. As you can see, I mean, even if the Western District of Texas case is unstayed, it won't happen in 2026. So there won't be any court cases in 2026. Obviously, the ITC will be spread out throughout the year, even though the trial is not until the end of the year. But we don't expect expenses to be much higher than 2025. Jared Osteen: Great. And then my final question in terms of products. How do you see Lightning revenue building in 2026? And what's your visibility into the duration of the process from proof of concept to material order process? Chuck Hong: Well, we've gone through this process. We're kind of at the tail end of the qualification and validation at the major OEM, our top customer, and they have their end customers. So we're finalizing those validations. We've been -- it's been ongoing for 6 to 9 months. In terms of the system integrator market, we're already shipping in some good volume, and that is ramping up. And the demand in that side of the market is very strong, not just because of the shortage, but people moving to overclock higher-speed DRAMs, both for high-frequency trading and a lot of these applications that require very fast execution, trade executions. So yes, we're seeing good traction, and we look forward to seeing continuing growth of this product line through the course of this year. Operator: This concludes our question-and-answer session as well as conference call. Thank you for attending today's presentation. You may now disconnect.