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Operator: Good day, and thank you for standing by. Welcome to Monadelphous 2026 Half Year Results Presentation. [Operator Instructions] Please be advised that today's conference is being recorded. I'd now like to hand the conference over to Kristy Glasgow, Company Secretary. Please go ahead. Kristy Glasgow: Hello, and welcome to the Monadelphous 2026 Half Year Results Investor and Analyst Briefing. I'd like to begin by acknowledging the traditional owners of the lands on which we are joining you from today in Boorloo, Perth, the Whadjuk people of the Noongar nation and the traditional owners of country and her respects to elders, past, present and emerging and extend that respect to all aboriginal and Torres Strait Islander people. Presenting from Perth are Monadelphous' Managing Director, Zoran Bebic; and Chief Financial Officer, Phil Trueman, who are joined in the room by our Chair, Rob Velletri. Throughout this presentation, the speakers will guide you on when to click through to the next slide. The structure of this morning's presentation will be similar to previous results presentations with some further detail provided as appendices. Copies of today's presentation and associated materials are available on our website at monadelphous.com.au. I will now hand over to our first presenter today, Zoran Bebic, who will start on Slide 2. Zoran Bebic: Thanks, Kristy, and welcome to our 2026 half year results briefing. Today, Phil and I will present our financial and operational performance for the 6 months ended 31 December 2025, as well as our outlook. We will then answer any questions you may have. I'll begin with our group performance and highlights on Slide 3. Monadelphous has had a fantastic start to FY '26, achieving a record revenue of $1.53 billion for the half year, which is a 46% increase on the prior corresponding period. We experienced strong operating conditions across all sectors with activity levels supported by the record level of work secured during the previous financial year. Our Engineering & Construction division delivered revenue of $677.8 million, up around 67% on the prior year, supported by service expansion and growing capability in end-to-end delivery, particularly from Melchor and Inteforge. Zenviron, our renewable energy business, also saw increased levels of project activity from larger wind and battery energy storage projects. Our Maintenance and Industrial Services division reported a record half year revenue result of $852 million, up 32% on the same time last year, reflecting an increase in energy sector activity and sustained strong demand in iron ore. Earnings before interest, tax, depreciation and amortization was $116.2 million, an increase of 46% on the prior year, delivering an EBITDA margin of 7.59%. Strong operational performance resulted in net profit after tax increasing 53% on the prior year to $64.9 million, delivering earnings per share of $0.652. The Board declared a fully franked interim dividend of $0.49 per share. We ended the half year with a cash balance of $322 million and a very strong cash flow from operations of $171 million, resulting in a cash flow conversion rate of 186%. Phil will talk about this more later. We continue to progress our markets and growth strategy. In late 2025, we acquired Perth-based Kerman Contracting, a design and construct business specializing in nonprocess infrastructure, with a long-established reputation for the successful delivery of site infrastructure and accommodation, bulk storage and materials handling facilities across a range of sectors. We also acquired Australian Power Industry Partners, APIP, a high-voltage electrical contractor based in Brisbane. APIP is a specialist provider of end-to-end high-voltage solutions, including design management, procurement, construction and renewals of power transmission, distribution and substation infrastructure. We also completed the acquisition of Perth-based high-voltage business, High Energy Service, further strengthening our electrical capability. These acquisitions support the broadening of our delivery capability and open new markets for us. Moving now to Slide 4. Monadelphous has secured a healthy $1.4 billion in new contracts and contract extensions since the beginning of the 2026 financial year. Strong demand for construction and maintenance services from Western Australia's iron ore sector continued, and we were awarded more than $1 billion of contracts with blue-chip customers. This comprised several major construction contracts, including a multidisciplinary contract for BHP’s Jimblebar Train Loadout replacement project with earthworks and civils to be delivered by Melchor and fabrication and procurement provided by Inteforge. We also secured a $175 million contract with BHP associated with the car dumper project at Finucane Island in Port Hedland as well as an integrated multidisciplinary contract with Rio valued at around $250 million associated with the Brockman Syncline 1 iron ore deposit development. We're awarded a 5-year maintenance services contract with Rio Tinto totaling approximately $300 million to continue providing fixed plant and shutdown services across Rio's Pilbara iron ore operations. We also secured a 3-year extension to our maintenance master services agreement across BHP's Pilbara operations and were appointed to the BHP WAIO Site Engineering Panel for another 2 years. In the energy sector, we expanded our customer base with the award of a 4-year contract with BW Offshore to provide maintenance services at the BW Opal FPSO facility, approximately 300 kilometers north, northwest of Darwin. We also secured a contract for the hookup and commissioning of Shell's Crux platform off the coast of WA, which forms part of the long-term backfill to Shell's Prelude facility. Zenviron was awarded a contract with Flow Power for the delivery of the Bennetts Creek Battery Energy Storage System in the Latrobe Valley, Victoria, which includes a balance of plant design, construction, installation and commissioning. Over the next few slides, we will cover the key areas of focus under our sustainability framework being people, safety and well-being, diversity and inclusion, community and environment. Moving now to Slide 5, People. Our total workforce at 31 December 2025, including subcontractors, was around 8,400, reflecting sustained high levels of activity across the business. We remain focused on investing in the development of our people and saw around 150 emerging leaders participating in our suite of leadership and mentoring programs and approximately 340 graduates, apprentices and trainees participating in our early career programs. Our registered training organization engaged with over 5,000 trades personnel with more than 6,500 training interactions during the period, comprising high-risk work license accreditation and verification of competency. We also continue to offer services such as skin checks and resources to support our employees' physical, mental and emotional well-being. Let's now look at Safety and Wellbeing on Slide 6. Our high potential incident frequency rate returned to historically low levels and the 12-month injury frequency rate at the end of December was 4.34 incidents, a slight improvement to that of 30 June 2025. In line with our guiding principle, the safe way is the only way, we continue to implement targeted campaigns to drive improved safety performance. Our ongoing fatal risk awareness program is focused on active hazard monitoring and verification of controls during high-risk tasks. As a part of this, we reviewed our forklift operations and implemented a range of improvements aimed at preventing loss of control of loads and making pedestrian interactions with mobile plant safer. We also reviewed the effectiveness and efficiency of high-risk work competency assessments and continue to use drone technology to eliminate the need for people to enter confined spaces. We again achieved recognition for our commitment to safety, wellbeing and innovation with awards and nominations from various industry bodies, including ARIA, the Crane Industry Council of Australia, Workplace Health and Safety Foundation and Demos. Moving now to Diversity and Inclusion, Community and Environment on Slide 7. We maintained our focus on leaving a positive legacy in our local communities, strengthening diversity and inclusion across our workplaces and progressing towards our goal of Net Zero. We continue to support employment pathways and development opportunities for indigenous Australians through traineeships, apprenticeships and the Indigenous Pathways program in partnership with Rio Tinto. Pleasingly, our Aboriginal and Torres Strait Islander workforce participation rate of 3.3% continues to exceed our target. We progressed renewing our next stretch reconciliation action plan, continuing to focus on indigenous employment, training and development and supporting indigenous businesses. Our spend with indigenous businesses continues to grow, more than doubling that compared to the same period last year to around $20 million. We continue to promote development opportunities for women across the business, and our efforts were recognized externally with a number of our people honored at industry awards, including at the BHP Women in Resources National Awards and the Gladstone Engineering Alliance Awards. Our community grants program expanded to include Gladstone in Queensland, Roxby Downs in South Australia and Kalgoorlie, Newman and Port Hedland in WA, with 8 regions now participating in the program. We also launched our inaugural Local Legends campaign to showcase our people making exceptional contributions to the community. To minimize the impact of our operations on the environment, we continued transitioning our facilities to renewable power with the installation of the sold system at our workshop facility in Darwin and expanded the rollout of our electric and hybrid vehicles. Turning now to our Engineering Construction divisional highlights on Slide 8. Our Engineering Construction division reported revenue of $677.8 million for the 6 months, an increase of 67% on the prior corresponding period. The result was driven by strong demand for construction services across all sectors, particularly iron ore and energy with a greater contribution from vertically integrated projects. The division has secured approximately $770 million of new work since 1 July 2025. We successfully completed BHP's Car Dumper 3 renewal project in Port Hedland and Orebody 32 in Newman as well as services at Rio Tinto's Western Range project in Paraburdoo. We also secured an electrical and instrumentation package at Rio Tinto's Parker Point near Dampier. Work progressed on a multidisciplinary contract at BHP's Prominent Hill copper expansion project in South Australia. We also completed work at Talison Lithium's Greenbushes site in the southwest of WA. Melchor continued structural concrete works at Perdaman's urea plant located near Dampier, with Alevro providing heavy haulage services to the project. Melchor also progressed work on the Geraldton Port maximization project in WA for Midwest Ports Authority. In the energy sector, we progressed construction works on modifications to the existing Woodside-operated Pluto LNG Train 1 facility near Karratha, with Alevro also providing specialist haulage and lifting services to other Woodside-operated facilities in the region. We also continued the installation and modification of essential electrical power and control infrastructure at Chevron Australia's Jansz-Io compression project. Inteforge continues to support Iluka's Eneabba Rare earths refinery project with the supply and fabrication of structural steel work and pipe racks and secured a 2-year extension to its agreement with Origin for the supply of modularized equipment for APLNG in Queensland. In the renewable energy sector, Zenviron progressed the balance of plant works for the Warren Battery Energy Storage System, or BESS, for EnergyAustralia in the Latrobe Valley, Victoria, as well as balance of plant works at CS Energy's Lotus Creek wind farm in Central Queensland. Work also progressed with the construction of Fortescue's North Star Junction Best supporting Fortescue's commitment to decarbonizing its Pilbara operations. Looking now at our Maintenance and Industrial Services division on Slide 9. Our Maintenance and Industrial Services division reported revenue of $852 million for the half year, up 32% as we saw strong demand continue for services, particularly in the energy and iron ore sectors. Since the beginning of the financial year, the division has secured approximately $640 million in new contracts and contract extensions. A significant volume of work was delivered for our energy customers, including shutdown and other major works for INPEX with over 1,000 people mobilized across offshore and onshore facilities over the period. We continue to provide ongoing maintenance and turnaround services for Woodside's onshore and offshore gas production facilities in WA's Northwest. This included preparations for shutdown activity and planning work associated with the hookup and commissioning of Woodside's floating production unit in the Scarborough gas field. We continue to deliver maintenance and minor construction services for Shell at the Prelude FLNG facility and at QGC's Curtis Island LNG operations in Gladstone, Queensland. As previously mentioned, we expanded our customer base in the energy sector by securing a 4-year contract with BW Offshore. WA's iron ore sector continued to drive strong demand, and we provided fixed plant maintenance services and sustaining capital projects to Rio Tinto, fixed plant services to Fortescue and general maintenance services to BHP. For Rio Tinto, we secured a 12-month extension to provide marine infrastructure maintenance and minor projects at Rio's Cape Lambert and Dampier ports. We're also awarded a contract for modifications to the existing process plant at Rio Tinto's Hope Downs 2 project. In addition, we continue to deliver fabrication supply, installation and commissioning services at the Tom Price mine as well as nonprocess infrastructure services at Brockman 4. Under our BHP WAIO asset projects framework agreement, we secured works at Berth C and D at the Finucane Island port facilities in Port Hedland. In South Australia, we continued at BHP's Olympic Dam mine site in Roxby Downs as well as South32's Worsley Alumina Refinery operations in WA. For Newmont's gold operations, we secured a 5-year extension to our existing contract delivering general maintenance services in Boddington WA and Tanami Northern Territory and provided sustaining capital projects and maintenance at Lihir Island in Papua New Guinea. Also in PNG, we continued work for Santos in the Southern Highlands region, where we secured the contract for the demolition of the Hegigio Pipeline Bridge. We'll now move to Slide 10, and I'll hand over to Phil, who will provide you more detail on our financial performance. Philip Trueman: Thank you, Zoran, and good morning, everyone. So this slide, Slide 10, compares our financial performance for the half year ended 31 December 2025 to that of the previous corresponding period. And as you can see, it's been a very strong 6 months from a financial perspective. Revenue from contracts with customers is $1.53 billion, which is up around 46% from last year. And earnings before interest, tax, depreciation and amortization was $116.2 million, an increase of 46% on the prior corresponding period and results in an EBITDA margin of 7.59%. And as Zoran mentioned, our strong operational performance delivered net profit after tax of almost $65 million, up 52.6% on last year, resulting in earnings per share of $0.652. And the Board declared an interim dividend of $0.49 per share fully franked with the Monadelphous dividend reinvestment plan to apply to the interim dividend. We ended the half year with a very strong cash balance of $322 million, which was boosted by a number of material advances received during the period. The cash balance included about $20 million from the acquisition of Kerman Contracting, which was owed to the vendors under the terms of the acquisition. Increased activity levels within the business in the months leading up to 30 June 2025, so the end of the last financial year, resulted in a significant increase in receivables at that date. The collection of these debtors balances during the 6 months contributed to a very strong cash flow from operations of $171 million. And as a result, our cash flow conversion rate for the half year was a very pleasing 186%. And our strong balance sheet remains a key enabler of our markets and growth strategy and supports us in building a more diverse and resilient business. So I'll now hand you back to Zoran, who will provide you with an overview of the outlook for our company. Zoran Bebic: Thanks, Phil. Slide 11 shows relevant current and forecast Australian market conditions for our business. Pleasingly, as you can see, the sectors in which we operate continue to provide a positive outlook for both capital investment and operating expenditure over the next few years. Turning to Slide 12, Energy Transition. Australia is undergoing a major energy transition moving towards a decarbonized economy. At the same time, demand for energy is growing rapidly, partly impacted by the rise of artificial intelligence and the expansion of data centers. This represents a long-term opportunity that will play out over decades to come and which will require a significant level of investment. Monadelphous is well positioned to play a key role in this transition by leveraging our core and acquired capabilities and further developing new services across the sectors shown on the slide. Our recent acquisition of APIP expands our capability and supports our positioning in the HP transmission and distribution sector. You'll hear more about progress, outlook or the progress/outlook column on the next slide. We see this as the early phase of what is expected to be a strong long-term pipeline of opportunities. Moving now to the outlook on Slide 13. Long-term demand in the resources and energy sectors is expected to remain strong, supported by an improved global economic growth outlook, albeit against the backdrop of trade tariffs, geopolitical tensions and ongoing conflicts. High production levels across most commodities continue to drive demand for sustaining capital works and maintenance services. Iron ore prices remain firm, supporting current production rates and underpinning ongoing investment in both new projects and existing operations across Western Australia's iron ore sector with a continued focus on productivity to maintain competitiveness. The outlook for energy transition metals continues to strengthen with battery metal prices recovering. Over the medium to long term, development in the mining and mineral processing sector, particularly for copper, other base metals and critical minerals is expected to accelerate to meet growing demand, driving significant investment. The energy sector continues to offer substantial opportunities, supported by gas construction projects and sustained demand for maintenance services. We remain well positioned to support customers across the full asset life cycle, including late-life operations and decommissioning. Australia's Net Zero emissions objective continues to drive long-term investment in energy generation, storage and transmission infrastructure despite some constraints arising from planning approvals and network access. Monadelphous is well positioned to capitalize on the energy transition opportunities by leveraging our broad service capability and expanding our high-voltage service offering, while Zenviron is well placed to secure further wind farm and [indiscernible] projects. We will continue to support the resources and energy sectors decarbonization projects programs, working collaboratively with customers and third-party energy providers to deliver a growing pipeline of opportunities. Pleasingly, our committed pipeline remains strong with more than $1.4 billion in new contracts secured since the beginning of the financial year. Following record first half revenue, full year revenue for FY '26 is currently forecast to be approximately 30% higher than the prior year, with first half operating margins maintained. We remain committed to delivering quality earnings through a selective approach to new work, collaborative customer relationships, high standards of execution and a disciplined approach to the allocation of risk. Supported by a strong balance sheet, we will continue to build and leverage our enhanced delivery capability while maintaining the flexibility to pursue strategic opportunities that support long-term sustainable growth. In closing, I'd like to thank the entire Monadelphous team for their dedication and commitment, which are fundamental to our continued growth and success. I also extend my gratitude to our customers, shareholders and many other stakeholders for their ongoing trust and support. Thank you. I'll now hand over to the operator for any questions. Operator: [Operator Instructions] We will now take our first question from the line of William Park from Citi. William Park: Perhaps the first question I had was just around how you're thinking about balancing Monadelphous' pursuit of revenue and earnings growth beyond FY '26 and balancing that out with sort of [indiscernible] and productivity management? Just noted that your workforce have sort of stepped down in the last 6 months or so. But are you confident that there's sufficient headroom in your current workforce to perhaps deliver on another, I guess, strong growth into FY '27? Zoran Bebic: Yes. I think that's a fair point, Will. I guess the way we're thinking about it is with the top line or the revenue guidance we provided 30% growth on the previous financial year. And if you look at the growth profile over the last 2 years, it will be in excess of 50%. So I think that will prove challenging to deliver growth next year. I think recognizing also that in the maintenance revenue result was a very strong result and there is a component of work in there that's in the sustaining capital category that won't replicate in following periods. And in the EC numbers, very strong result. That will be more a function of timing of project awards and the timing of customer commitments to projects going forward. So I guess that's a challenge we've got to balance all of that. But certainly, we're seeing -- I mean, if you think about it another way, the way I think about it, 50% growth over the last 2 years, that's essentially 4 or 5 years' worth of growth in a 2-year period. William Park: And then one last -- my second question is around the -- how you're thinking about the margin profile beyond this year? I appreciate that you're expecting sort of that 7.6% margin to continue through to second half. But are you expecting that to be sustainable as you move beyond FY '26? I appreciate that a lot of this has to do with the business mix, but just wondering whether that 7.6% is sustainable going forward? Zoran Bebic: Well, we're going to work as hard as we can to try and deliver on that. A couple of further comments. I mean, we've seen a significant volume and clearly, volumes helped with the amortization of some of our fixed semi-fixed costs. But the other point I'd make, which I said last year as well and probably supports this trend that we've seen in terms of margin enhancement or improvement over the last couple of years, we've got through this 6-month period. And aside from levels of activity being strong, our operational performance has been exceptional across the business. And that clearly supports a position on margin. William Park: So in comparison to prior periods, has there been improvement in productivity or less of a cost pressure than what you've seen in the past? Because I might be reading too much into it, but just looking at your outlook slide, there's not a single point expressing sort of headwinds or any headwinds for that matter. Just wondering if you're seeing higher productivity now versus 6 to 12 months ago or less of a cost pressure? Zoran Bebic: I think it's a combination of factors. I don't think it's -- I don't think I could attribute a significant component of the margin uplift to one element. And if I was to, I'd go back to the point that I made just a little earlier around our performance in terms of execution of work has been not just strong but consistent across the business, and that's always a significant driver of margin outcomes. Operator: We will now take our next question from Jakob Cakarnis from Jarden Australia. Jakob Cakarnis: Congrats on a strong result. Can I just still stay on Will's focus on the EBITDA margins, please? It seems like there's a little bit of a change to how you guide us. I think this is the first time that I can remember that you've given us explicit EBITDA margin guidance. What's giving you the confidence at the moment to provide that, please, Zoran? Is it a matter of the work that you can see in front of you immediately? And then, I guess, to dovetail into your answer just before the productivity is still washing through the business? Zoran Bebic: Yes. I think it's a function of -- I mean, we talked about in the outlook statement, the record level of work that we secured last financial year. So going into FY '26, we weren't just in a strong position, but we have a little more clarity. And as work is progressing, we've got -- so we've got greater visibility than we've had. So we've got a high level of confidence in marking a position around expectations around margin. Jakob Cakarnis: Understood. And then just one for Phil, if I could, please. Just on the CapEx intensity, obviously, it's been bouncing around a little bit with some of the capital works that you guys have been doing from year-to-year. I note that the first half, you were around $23 million of CapEx versus $14 million for the full year of '25. How do we think about that one moving forward, please, Phil? Are we just investing for the growth that you see in the business at the moment? Or is there any fundamental step change there, please? Philip Trueman: No, there's no fundamental step change at all. I mean, I think you have to look at it over a longer period of time, Jakob, rather than just a 6-month period. I actually think it was a bit higher than the number that you quoted there, it's probably about 35% or something. But if you the 30% growth on last year takes you to just short of $3 billion, I would expect our CapEx would be around that long-term 2% of revenue where it has been over many, many, many years. So it takes you to 60, 65. So sort of take the first half and double it. I wouldn't expect it to be any different from where it has been on the long-term running rate. Jakob Cakarnis: And then I guess, accompanying that, are we expecting a few extra million of depreciation in the second half just as that capital investment washes through, please? Philip Trueman: I think comparing between the halves, there was probably a 5% or 6% increase in depreciation, and I would expect that number to be similar for the full year as well. Operator: We will now take our next question from Branko Skocic from E&P. Branko Skocic: Congratulations on a really strong result. Obviously, iron ore sustainment work remains a key focus for the business and listening to the majors, it does sound like there's still got a lot of work to come, thinking projects like Ministers North, the multiyear Car Dumper Renewal at Port Hedland and so forth. So just keen to understand, I guess, if you think we could sustain current iron ore revenue run rate for, I guess, a 3- to 5-year period. Zoran Bebic: Yes. I think you did a good job of articulating the opportunities. I think thematically, yes, I think we'll continue to see a program of larger sustaining capital projects in the portfolios of the majors as well as a couple of greenfields projects in the sustaining capital space, port upgrades, you talked about car dumpers, balance machines, mines, more dewatering programs and initiatives. And then if you're talking about specific mine developments in the Rio. With Rio, it probably looks like Rhode Valley, Gudai-Darri, Rhodes Ridge a little further out. And with BHP, you touched on Ministers North opportunity are probably the key opportunities. But it does look like -- at this stage, it looks like a pretty strong portfolio of opportunities. Branko Skocic: No, that makes sense. And I guess the second question, just on the topic of labor, I'd just be interested in any areas that you're seeing specific tightness at the moment, obviously, noting that the broader commodity complex has rebounded over the past 6 to 12 months as well. I think there’ is something I want to order. Philip Trueman: You’ve raised that there, Branko. Do you want to ask that one again? Branko Skocic: Yes, sorry about that. Just on the topic of labor, I'd be interested in any areas that you're seeing specific tightness, just noting, I guess, the broader rebound in the commodity complex. Zoran Bebic: I think the labor market is still pretty tight. The way I'd frame it is we've seen a slight moderation, but it's still generally tight. The depth of the labor pool, whilst there might be a few more people in the market, the depth of labor pool and the quality hasn't necessarily improved materially. And there are certainly still quite a number of classifications and disciplines that are really, really tight. For example, electrical trades continue to be very tight, but they're not an exception. Operator: We will now take our next question from Nicholas Rawlinson from Morgans. Nicholas Rawlinson: Congrats on the result. Just a couple from me. How should we think about the profile of maintenance revenue in the first half into the second half? Like usually, there's a skew to the first half, but it sounds like you had a few one-off jobs. So just wondering how that will impact the profile? Zoran Bebic: I think the profile for the second half won't necessarily -- I mean, it won't be dissimilar in the sense that some of this one-off nonrepeatable work will continue for part of the period and turnaround activity looks pretty reasonable in the second half. So the thematic for me is more around FY '27 in terms of a step down of revenue for maintenance. Nicholas Rawlinson: Okay. That's helpful. And just on awards, like it sort of feels like you've gone through quite a heavy recontracting cycle in maintenance, and you've also won a lot of work in E&C. The book-to-burn is still above 1. What does the award environment look like going forward over, say, the next 6 to 12 months? Zoran Bebic: Well, I think in the -- certainly in the shorter term, I'd expect to see some more contract updates in terms of announcements in the maintenance space as well as the awards in or construction-related awards as well. It's probably a more steady flow of awards than you saw in that. You saw in the lead up to that Christmas and early New Year period, we had a significant level of contract awards. I think it was $850 million of contract awards in a 3-week period. You won't see that again, but it will be more consistent, steady. Operator: We will now take our next question from John Purtell from Macquarie. John Purtell: Well done on the result. I have a couple of questions. Maybe just a follow-on from Nick's question there. I mean just in terms of the bidding pipeline, any sector shifts to call out? Energy transition sort of again features prominently in the presentation there. So we're seeing a bit of a migration maybe into that area and maybe away from that traditional iron ore, oil and gas area? Zoran Bebic: I think the opportunities are strong in that market, but you need to appreciate that we're building in our capability and our service offering in that market. So it will take some time to build the revenue profile for us to build a significant revenue profile in that market. John Purtell: And an add on to that, I mean, Zoran, in the past, you've talked around some element of project delays, and that's always inherent, but you're seeing sort of clients more readily move forward with projects now than, say, 6 to 12 months ago? Zoran Bebic: I think if I went back 6 months ago, there was certainly a burst of activity in terms of project approvals and proceeding. It will be a timing issue. It's still taking time. And I'd probably make the comment that it feels -- as a general observation, it's early, but it does feel like a few of these opportunities are drifting a little. John Purtell: And just the last question, if I may. Just a question on margins. I know a couple of questions have been asked on this already, but I suppose the broad question is, do you still see an opportunity to improve margins in the medium to longer term? Obviously, there's a few moving parts within that, but how do you see that profile? Zoran Bebic: Yes. So the question was asked earlier around factors contributing to margin and I responded with we've got a little more visibility at the moment. There's some economies of scale. There's the mix of business in terms of the EC revenue growth. And we've certainly had -- and I've said this twice already, we've certainly had really pleasingly consistent and strong performance execution delivery across the business. So I mean, absolutely, we've got aspirations I'd like to grow the margins, but we've got to work hard to maintain the margin we delivered in the half year. Operator: [Operator Instructions] We will now take our next question from the line of Daniel Kang from CLSA. Daniel Kang: Zoran, you mentioned earlier that we've probably seen 50% of growth in the past -- that's worth about 4 to 5 years in the past 2 years. Just trying to reconcile that comment with what you've got on Slide 11, which looks like industry charts out to 2030 look pretty steady to growth. Should we sort of take that as your revenue side of things looking quite stable over the next few years? Zoran Bebic: I mean that's -- I mean, we're projecting -- we're trying to project out a long way. I think the reality is that, that slide in terms of the outlook suggests that levels of activity across the different market sectors to look pretty strong, but a small increase in CapEx and spend. And the point that you made at the start of this, we've seen a tremendous amount of growth over the last 2-year period. We've got to make sure that we can stabilize the business and continue to build off that and ensure we're not putting too much stress into the business. Daniel Kang: Yes, makes sense. And can you talk a little bit about your recent acquisitions, how they've performed, how they've integrated into the core business? And looking forward, any potential gaps in your portfolio at the moment that you'd be looking at in terms of M&A? Zoran Bebic: Yes. So if you look at the high Energy service business, it's been within the Mono business for a 6-month period. The integration is at the back end. It's tracking consistent with what we expected or the acquisition business case. In relation to APIP and Kerman, essentially, they're businesses that we've only acquired and completed in the last couple of months. So we're working through a process to integrate them and to start understanding how we can leverage the capability that those businesses have. So their contribution has been very modest in the last couple of months. In terms of the other part of your question, I think there are some areas more broadly we're looking at, but I talked about the energy transition market and the size of the opportunities there. And we're slowly building capability and services in that market. So I think there are potentially some opportunities in that market going forward in terms of potential acquisition opportunities. Daniel Kang: Just last one maybe for Phil. Phil, in terms of cash flow conversion, obviously, very strong in the period. Is there an element of seasonality? What's the sort of normalized level that we should be looking at? Philip Trueman: No, there's no seasonality in it. I mean if you look over a long period of time and average it out, we have 100% cash flow conversion rate, but it can swing quite a lot between halves. If you take this last half that we're reporting on now, I think the conversion rate was 186%. If you took the calendar year of 2025, the conversion rate is about 112%, I think it was. It really just depends on your level of advances that you may be able to negotiate on jobs, how and when they unwind, how you close jobs out. And then quite honestly, the biggest factor, and it is the most simple factor is how your customers pay you around the reporting period end. If you get a big bill that is paid on the 30th of June as opposed to the 1st of July, it can make a big difference to the cash flow conversion rates in those periods. So there is very little seasonality in it at all. And the conversion rate always ends up being around that 100%, which is exactly where we want it to be. Zoran Bebic: One of the great things about being in contracting, you've got to allocate a lot of effort to manage it and very hard to forecast. Operator: We will now take our next question from Nathan Reilly from UBS. Nathan Reilly: James, can you just help me explain what happened with the headcount, just the reduction in staff numbers you saw over the last 6 months? I appreciate it's a point in time on both staff points, but just what's going on there? Zoran Bebic: Yes, there are probably 2 elements to it, Nathan. One is, I don't like to use the term seasonality, but there is an element of that in terms of a component of the workforce is casual, the Christmas and New Year period, they're not necessarily paid. So your numbers look a little wider. So it makes more sense to compare December periods to December periods. But having said that, in the last couple of months in the lead up to December, we did have a couple of projects that are coming to the back end. So numbers were coming off on a couple of significant projects. Nathan Reilly: Got you. Okay. So I presume they ramped up again if we're looking at today's number. William Park: Probably holding at similar levels, maybe up a little. Nathan Reilly: Okay. Final question, just is there something we need to sort of consider in relation to maintenance margins? And I know you don't disclose those margins. But I'm just curious to get a sense on what's happening maybe under the bet in terms of the mix within your maintenance revenues at this point in the cycle. Are you taking -- is there something going on there in terms of the way you price risk? Or is there a shift there just in terms of the nature of some of the maintenance projects, smaller sustaining capital projects that you... Zoran Bebic: Yes, I think that's an important point. When we talk about maintenance business and we talk about maintenance work, there's a spectrum there in terms of types of jobs ranging from pure maintenance through to smaller sustaining capital projects and some of those will be fixed price projects. So you've got a real mix within the maintenance business as well. And depending upon what the profile of that looks like has a little bit of an influence on the margin outcome. Operator: I'm showing no further questions. Thank you all very much for your questions. I'll now turn the conference back to Kristy Glasgow for closing remarks. Kristy Glasgow: Thank you all for your participation today. That now concludes our briefing. Zoran Bebic: Thanks everyone. Operator: Thank you for your participation today's conference. This does conclude the program. You may now disconnect your lines.
Stefan Borgas: Okay. Good morning. Thank you for joining us today in London for RHI Magnesita's 2025 Full Year Results Presentation. As usual, Ian Botha, our CFO, and myself will do this together and lead you through the events of 2025 and, of course, look at the incredible forecast of 2026 and maybe a little bit beyond even. Before we get started, let me just send our thoughts to our colleagues and our customers and our suppliers and our business partners in the Middle East who woke up yesterday in a different world than they would like to be in. So our thoughts are with them, our support is with them, and we hope that things normalize very quickly there and that people are not hurt as much as possible. 2025 was a challenging year, actually quite a challenging year. But ultimately, with a good ending at least for RHI Magnesita. Before moving into the presentation, let me highlight 3 key takeaways from 2025. First highlight, we delivered our self-help mostly cost-based initiatives, as we had planned them already starting very early in 2024. And therefore, we could meet our profit guidance. This is important because we're improving the business structurally and sustainably. These are not short-term measures. These are structural improvements by focusing on what we can control and not relying on the outside world. Second, this momentum of self-help will continue into 2026. New measures that will start this year are already well advanced, and they will then support that velocity also into 2027. Third message, there is currently no visible market recovery. We know our view is not shared by all, but we retain substantial operating leverage ourselves that could benefit from this one day when demand improves, but we do not expect any improved demand before 2027. We're not relying on this. If we are wrong with our forecast and you are all right, then we will all have a happy drink at the end of this year. Before I go into the results, let me start, like always, with health and safety. Safety remains the core value at RHI Magnesita. In 2025, triggered by fatalities in the year before, we made significant progress in our group-wide safety culture transformation program. This is not just a corporate initiative. It is a fundamental shift towards embedding a deeply rooted safety mindset across the organization. In 2024, we recognized that we need a different approach here, greater depth and greater accuracy in our health and safety reporting. Therefore, last year, in 2025, we added more than 200 sites to our safety reporting, mostly on our customer sites, but also, of course, sites from acquisitions that we didn't have before. They often have a lower safety maturity because they come into the group, but also because we didn't focus on them enough before. And this maturity now that we can measure, we can also address. And therefore, you see a different number in 2025 that looks shockingly increased, but it comes from a complete re-reporting. This increase results in a big increase in transparency. And this improved visibility allows us now to address risks much more systematically and holistically. We are focusing with greater discipline on controlling the company's critical risks to prevent serious injuries and fatalities. Our key initiatives center now on visible felt leadership, how do people perceive their own supervisors on site. We have introduced 7 life-saving rules and strengthened standard operating procedures, and these practical measures is very practical on the ground, influence behaviors, improve accountability and raise the standards across every site. We remain fully focused and committed to have a zero harm, no injury environment. That's the only acceptable objective. Let me now turn to the results. We delivered against the continued challenging market backdrop. While the Steel business saw a slight downward trend across most regions in 2025, the fall in the industrial project in 2025 was unprecedented, never seen before. This industrial projects business is a high-margin segment for RHI Magnesita that contributes disproportionately to earnings normally. In addition to that fall, foreign exchange headwinds further pressured profitability, mostly the U.S. dollar, but not only the U.S. dollar. Despite these challenges, we achieved our full year guidance, delivering EUR 373 million of EBITA and a margin of 11.1%. The earnings recovery was accompanied by strong operating cash flow of EUR 391 million. In these days, this is at least as important as profit. This is a cash conversion of more than 100% and driven, of course, by a quite meaningful reduction in working capital, which shows you the financial discipline that we have in the meantime everywhere in all operations. We finished the year with a leverage of 2.9x net debt to EBITA, a little bit better actually than we guided, driven by that really good cash flow performance. Based on this performance, the Board is recommending a final dividend of EUR 1.20 per share, bringing the full year dividend to EUR 1.80, in line with 2024. But that's not the whole thing about the story of 2025. It was a story of 2 completely different halves. The first half of 2025 was one of the weakest semesters on record of the company. Even if we include major economic shocks, it was one of the weakest. In anticipation of this because we saw this coming already in 2024 and to be able to respond to such a development, management implemented targeted self-help measures that had an effect then starting in the second quarter, but especially in the second half. These actions underpinned a strong recovery then in H2 with adjusted EBITA rising to EUR 232 million just in the second half, actually starting in August, not even in July. This was 65% higher than in the first half and also 7% higher than in the comparable period in the year before. Nothing changed on the market. It's just purely 100% driven by self-help. We delivered, therefore, a step change of the EBITA margin, which was at 8.4% in the first half to 13.7% in the second half. It was achieved despite continuous market weakness, no demand increase. The Steel business, if we now look at these 2 different sectors, declined slightly, reflecting either weak demand in many regions. And in those regions in which we had good demand, we had weak pricing. This demand weakness was primarily caused by record levels of Chinese steel exports, which are displacing local production, and therefore, we cannot supply into the local steel plants. And that is a problem, of course, because the local steel demand is not growing. As a result, gross margins came under pressure, driven by an unfavorable volume mix, fixed cost under absorption but also nervous competitors who made price concessions and elevated Chinese refractory exports into several markets, mostly attainable to China. India remains the main engine of global steel production growth, delivering approximately 10% steel growth. Our revenues, however, did not increase at the same pace as we had to make price concessions and there with except margin reductions in India. This is the market with the most undisciplined competitive behavior. North America delivered a very strong performance, not solely due to the acquisition of Resco, which happened, I think, at the perfect time. Excluding Resco, revenues increased still by 6% against broadly flat steel production in North America. We are benefiting from the green steel transition outside of North America mostly, but there also actually because of the strength of our 4PRO offering, our total solution offering and our very solid market position wherever these green steel transformations happen. In contrast, revenues in Latin America, in Europe, in China and in East Asia declined in the Steel business as weak domestic steel demand coincided with record Chinese steel export volumes, which continue to displace local production and reduce local refractory purchases as a consequence, of course. The Middle East, Turkey, Africa region, the META region, experienced a revenue decline, primarily -- mostly because of 2 issues with 2 key customers in the first half of the year. So they just bought a lot less. So it's a onetime thing. We're not so worried about it, but also in this region with significant margin pressure due to Chinese refractory imports. Steel production growth elsewhere in this region was insufficient to offset this impact of these 2 very big customers that had a weak year. We focus on restoring that performance in the Middle East region now in 2026. At least that's what we thought until yesterday. We have to see how this unfolds now. Looking forward, we do not see in our order book any green shoots of improved steel demand. We do not see an order increase in no region. Let's turn to the Industrial business. 2025 was an exceptionally weak year for our industrial project business. The impact was particularly visible in the first half of the year. Our Cement business, which is not the industrial projects, it's a different business unit, was remarkably resilient, but the number of industrial projects declined by 40%, 4-0. Our Glass business remains at a historic low level. There's no sign of recovery anywhere. The nonferrous part of the industrial projects is a little bit more resilient. We are not yet seeing a big turnaround here either, but there, the forecast is a little bit better. As a result of this industrial project downturn, revenues declined by 9%. This is the first top line contraction in this business since 2020. More significant, however, was an impact on gross margin here. Industrial project business, particularly in glass and nonferrous, typically generates above-average margins because this is a very technical and supply chain complex business. We are the clear market leader worldwide in these high complexity projects. The sharp reduction in project volumes, therefore, has a disproportionate impact on our margin mix because these projects are done in very expensive complex plants. And if they're not utilized, the fixed cost there is very high that we are stuck with. To support this business globally, we operate these specialized plants with structurally high fixed cost basis. The exceptionally weak order intake leads then to these material fixed cost under absorptions, which we can only partially compensate with reduction short-term reduction of cost, which actually we don't want to do either because then we're not ready for the recovery. Looking forward, we expect a gradual improvement now in the Industrial business. Project activity could particularly improve in the second half of this year, although it will remain way below historic levels. Why are we so sure? Because the delivery time for these projects is somewhere between 9 and 18 months. So whatever we don't see in the order book now will not happen in 2026. Let me update you a little bit on our strategy. We sharpened our strategy at the end of 2025, together with our Board to adapt to these new geopolitical and also technological challenges and opportunities. We are reviewing our portfolio. We are innovating with new products, but also with new business models. Both of them should create greater value, of course, for existing and future customers. We are boosting productivity through scaled and optimized footprint through smarter operations and through a digital transformation. We lead in sustainability by pioneering technologies that set the path for green transformation of our industry. Our main objective continues to focus on the consolidation of the global refractory industry in order to get scale for all of these things. In 2025, the acquisition of Resco, of course, transformed our North America footprint for the better. Leveraging our scale remains the only structural avenue to be able to continue to pay for innovation and for improved customer services, which they expect. We will go into more detail in a couple of minutes together with you. We continue to evaluate these opportunities, these acquisition opportunities in many markets. We don't expect a meaningful cash out in 2026 because these negotiations take time. When we look at the broader steel and refractory industries, it becomes evident that global demand no longer moves in a synchronized demand-driven cycle as it once did. Instead, we see more and more diverging regional trajectories, also influenced by the growing scale and impact of Chinese exports and protectionist reactions that are very different from one region to another. In the past, regional demand for metals and industrial goods drove local capacity development and then trade flows. Together, however, global and particularly Chinese industrial capacity is sufficient to supply demand growth almost everywhere in the world because of the overcapacities there. This structural overcapacity in China places sustained pressure on local industries in many markets. As a result, global trade is gradually shifting from a free trade model towards a more protectionist environment with countries and regional trade blocks increasingly managing supplies differently depending on their capabilities. Given their strategic importance, refractory consuming industries are at the center of this transition and of that protectionist. The only large exception to this is the cement industry because it operates anyway under a fundamentally different dynamic. Unlike steel, cement is not broadly exported around the world, never has been, due to technical and commercial reasons. As a result, the cement sector is less exposed to global overcapacity and to rerouted trade flows. This more regional market, which always was a regional market, allows our Cement business to perform resiliently. Mature markets such as Europe and North America, but also South America in a way, are leading the implementation of trade protection measures. Markets like India and META are less protected. And therefore, they absorb much more of the rerouted Chinese exports that don't make it into the protected markets anymore. This adds margin pressure there. And as you have heard, we saw this already last year. It, therefore, also limits at least profit growth opportunities for us in these markets because volume growth gets compensated by margin pressure. RHI Magnesita began this regionalization focus in 2021. And we're so happy that we did this because we continue to steer the company now strategically by regions. We believe this regionalization is a key response to this ongoing reorganization of global trade. The creation of the META region, Middle East, Turkey and Africa, is the last step -- the latest step in this approach, probably not the last. Many of these markets still import the majority of their refractory demand and are, therefore, also particularly exposed to this global trade dynamics and of course, imports from places like China. Under the right conditions, trade barriers can create a more supportive local environment, under the right conditions, but only locally, not globally. In the United States, for example, tariffs on certain Chinese refractories used in steelmaking support more sustainable pricing levels for us to keep local production running. That has been a political decision actually since many, many years. In Europe, measures to limit steel imports could eventually help to put a floor under domestic production, which in turn then can support local refractory demand also. We expect this to potentially have an effect in 2027, potentially. In Brazil, investigations into tariffs on Chinese refractories could restore pricing a little bit there to more sustainable levels, but also they are not for a while. It's still under investigation. Why we have not observed any tangible impact on our order books globally, there remains a possibility that pricing and demand dynamics could gradually improve across certain regions over time, but it could also then go at the detriment of other regions. At present, however, ladies and gentlemen, there is no direct benefit from this for our forecast in 2026, not on cash and not on profit. At the same time, while this is all happening, China recognizes that globally deployed excess capacity is straining their trade relationships and maybe more than trade relationships. Therefore, capacity reforms and potential export limitations in China could benefit other regions in the years to come and support the development of a more sustainable value-creating refractory industry within China also because capacity reduction there has to happen. It is recognized. But again, this will take years until this will take effect. At present, we see no benefit from these announced measures, not in our order book, nor in our forecast, nor in our performance for 2026. I want to spend a couple of minutes on North America and particularly the U.S. This is our most attractive refractory market globally at this moment in the cycle. It doesn't have to stay like this. The U.S. market is characterized by balanced supply and demand structures. Maybe that's the most valuable part here, which enables disciplined pricing and mature capital allocation among suppliers and between customers and suppliers. At the same time, U.S. steel producers operate at very healthy margin levels, supporting continuous investment in low-carbon steelmaking. Despite the noise you hear the U.S. is the leader in low-carbon steelmaking. And this is important for us because it creates strong demand for our market-leading 4PRO and electric arc furnace offerings. While the U.S. currently offers attractive margins, it also presents challenges, particularly around tariff volatility, where should we supply from next month and the U.S. dollar devaluation because we account in other currencies. The recent acquisition of Resco significantly strengthens this local-for-local strategy and thus reduce the tariff risks and gives us some more natural hedges. We have launched a network optimization Americas program to increase our local-for-local share in the U.S. to approximately 80% from -- which we will attain in 2028 from about 50% that we had until 2024. This will allow us to deliver best-in-class services with lower working capital intensity and reduced tariff exposure while also delivering further margin upside through synergy realization and self-help measures also in the U.S. Let's talk about sustainability. In 2019, we set ambitious sustainability targets that many believed were unachievable. There are and they continue to be a cornerstone for developing our business model for the next decade because the emission problem doesn't go away. In 2025, we delivered the first key milestone on this sustainability agenda, including a meaningful reduction in CO2 intensity. This is really significant for a heavy industry here, more than 15%. On the back of this progress, we remain committed, fully committed to our decarbonization road map and now the next set of targets that we have set. First, our recycling rate now stands just under 16%, up from 3.5% in 2018 despite the dilution from acquired businesses who had a much, much lower percentage. They now all operate at much -- they did operate at much lower recycling levels, and we are bringing them up step by step. So you see there's still potential here, quite a bit of potential here. With continued investments and now technological advancements in recycling and sorting, we will further increase this recycling content and scale also the commercialization of secondary raw material businesses globally. Second, our carbon capture and utilization technology developed together with MCI Carbon in Australia is currently undergoing industrial scale testing. This green mineral technology could become a key lever in addressing geogenic emissions, which are unavoidably technically, especially in our raw material operations. We are targeting the first international large-scale industrial development in 2030. Third, we continue to test hydrogen where it is economically and technically viable. A specialized furnace in Germany is central to advancing these trials where we have technically everything in place across different refractory products because hydrogen burns differently. The technical feasibility of using hydrogen as a fuel is very much possible. We know this now, and we know how to do it. But commercially, hydrogen is not a viable fuel alternative for the time being. So we will not continue any more activities here at least in the short term. Recycling already contributes meaningfully to earnings via our joint ventures in Europe and in the U.S. on top of the raw material cost savings that it brings. Our recycling capabilities in particularly are a clear differentiator now also in our 4PRO offering for our customers because we can present to them a true 100% circular economy solution for refractories. We are seeing strong interest from the new green steel mills overall around the world, actually in every region, that are looking to integrate these circular solutions into their operations. They don't want any landfills anymore. In 2025, we signed 4 green steel contracts, some including recycling components, and we expect further progress in the years ahead. Let's go to the financial review that you've all been waiting for so long, and I would like to ask Ian to lead you through the numbers, and then I'll come back at the end. Ian Botha: Thank you, Stefan. Good morning, ladies and gentlemen. I'll walk you through our 2025 financial performance and our expectations for '26. 2025 was a challenging year externally. However, internally, we responded with discipline and with speed. And the second half performance clearly demonstrates the impact of our managerial actions. Adjusted EBITA declined from EUR 407 million in 2024 to EUR 373 million in '25. The primary drivers were market related. In Industrial, EBITA declined by EUR 74 million. This as the number of high-margin projects in glass and nonferrous metals fell by 40% as customers postponed rebuilds and delayed maintenance. This also led to under-absorption of fixed costs in our specialized plants. In Steel, EBITA declined by EUR 41 million. This as demand remained weak in Europe, in Latin America and in the first half in META. High levels of Chinese steel and refractory exports intensified pricing pressure across multiple markets. Currency reduced our earnings by EUR 13 million, mainly driven by the weakness in the U.S. dollar and the Indian rupee. These were significant external headwinds. Offsetting this, management-led self-help measures delivered EUR 70 million in 2025. This included pricing discipline, operational cost improvements and SG&A reduction. In addition, Resco contributed EUR 25 million, including synergy benefits. The important point is that the earnings recovery in the second half was execution driven, not market-driven. '25 was clearly a year of 2 halves. The first half was one of the weakest since the merger with EBITA of EUR 141 million. This reflected the full force of the industrial downturn, weak steel demand, pricing pressure and fixed cost under absorption. In the second half, the benefits of our self-help measures came through strongly, increasing EBITA to EUR 232 million, 65% higher than the first half and 7% above the second half of '24. This improvement was delivered despite continued market weakness and a EUR 19 million currency headwind in the second half. Against our guidance, steel outperformed. The industrial recovery was delayed with projects moving into 2026. Pricing delivered at the top end of our expectations. SG&A savings were more than double what we guided, and the plant measures were delivered as planned. All of our cost actions are structural and will continue into 2026 and beyond. They do not rely on temporary reductions or borrowing from the future. Even in this challenging environment, we defended our margins. Since the 2017 merger, our adjusted EBITA margin has remained above 11% every year. That consistency reflects our diversification across regions and end markets, but more fundamentally, it reflects disciplined execution and active management. The refractory margin remained robust at 10%, supported by synergies, pricing discipline and operational excellence. The backward integration margin, however, remained at cyclical lows at 1.1%, contributing EBITA of EUR 37 million. This was primarily due to continued weak Chinese magnesite pricing, reflecting industry overcapacity and high levels of above-ground inventory of ore as well as lower fixed cost absorption at our own raw material plants. Importantly, our backward integration margin remains positive, demonstrating the competitiveness of our cost base. To improve returns from our raw material assets, we've implemented targeted self-help measures to reduce costs and expand sales into non-refractory markets, and we expect these actions to support a gradual recovery in profitability from '26 onwards. Moving to working capital. Working capital intensity improved strongly to 21.7%, marking the third consecutive year of improvement. This reflects disciplined credit management with our accounts receivable as well as inventory reduction driven by continued progress on our local-for-local strategy and the rollout of new supply chain technological solutions to strengthen our inventory control. The acquisitions of Resco and BPI added EUR 51 million of working capital. At the same time, we reduced our working capital by EUR 143 million, with roughly half of that driven by management actions and half by currency movements. In total, this translated into an EUR 84 million release of cash flow from working capital reduction. Cash generation remains a core strength of our business. In '25, adjusted operating cash flow was EUR 391 million, resulting in a cash conversion of 105% and free cash flow of EUR 214 million. Net debt increased to EUR 1.5 billion, primarily reflecting the acquisition of Resco. Leverage closed at 2.9x net debt to adjusted EBITA, and this was slightly stronger than our guidance. Our liquidity remains strong and approximately 70% of our debt is fixed with an attractive weighted average cost of borrowing of 3.3%. We are comfortable operating temporarily at elevated levels of leverage to fund compelling value-accretive M&A, particularly in high-margin segments, such as in '25 in North America. Our strong cash generation provides a clear path to deleveraging, and we expect leverage to reduce to around 2.6x, about EUR 1.4 billion by the end of this year. This level of cash generation gives us flexibility to invest in growth, to reduce net debt and to maintain disciplined shareholder returns. We are, therefore, recommending a final dividend of EUR 1.20 per share, bringing the full year dividend to EUR 1.80, in line with our dividend policy. Finally, looking ahead, we expect the market environment to remain challenging as ongoing global uncertainty continues to dampen customer demand and investment. Steel end markets remain at cyclical lows globally with no near-term recovery in demand apparent in our order books. At the same time, magnesite-based raw material pricing is likely to remain subdued, keeping our backward integration margin around current levels. In addition, currency is becoming a much more material headwind this year, both from the U.S. dollar and from the Indian rupee with an expected negative impact of around EUR 35 million at current exchange rates. Against this backdrop, our performance improvement will once again be driven by what we control. We are, therefore, guiding to EUR 435 million adjusted EBITA on a constant currency basis, representing a 17% increase versus 2025. After reflecting anticipated currency headwinds, this translates to approximately EUR 400 million of reported adjusted EBITA, implying a margin of around 11.5%. The earnings improvement is underpinned by 4 structural measures, each contributing approximately EUR 15 million on a like-for-like basis. First, we expect a gradual improvement in the Industrial business. Project activity should improve, particularly towards the second half, although it will remain well below historic levels. We do not expect a demand improvement in our steel business overall. Second, we continue to drive pricing discipline and expand our 4PRO offering, increasing the share of higher-value solution-based revenues. Third, our network optimization programs in Europe and the Americas will deliver further benefits with the Americas now contributing around EUR 5 million of the EUR 15 million total impact this year. And finally, we achieved further structured SG&A reductions through administrative efficiencies, supported by the investments that we've been making in digital transformation, in process standardization and leveraging our shared services model. These measures have already proven effective in driving the second half turnaround, and we will continue to build on them to deliver further improvements in 2027. We are not relying on market recovery to achieve this guidance. So to conclude, 2025 demonstrated the resilience of our model. We acted early. We defended margins. We generated strong cash flow and completed a transformative acquisition in North America. 2026 is now about continuing our disciplined execution and delivering in a still challenging demand environment. Thank you. Now back to Stefan. Stefan Borgas: Thanks, Ian. Let me summarize for you. First, in 2025, we delivered significant self-help cost initiative as we had planned to meet our profit guidance. We are improving our business structurally and sustainably by focusing on what we can control. Second, the momentum of self-help continues into 2026 and new measures get added to improve 2026, but that already will prepare the next improvement for 2027. And third, there is no visible market recovery that will benefit our business in 2026. We retain great operational leverage, which will enhance our performance if and when such a demand recovery will come. We don't expect this before 2027, even if we want to be optimistic. On that basis, Ian has outlined the guidance, so I don't need to do it again. Our gearing will go down more. Our cash generation will become -- we will stay disciplined and our expenditure control will provide the actual improvements. And it will build strategic opportunities for the future. Let me summarize our investment case. Before we move -- in 2025, we made very good progress towards this investment case. We have significant opportunities to grow the business and improve our margins. We do have these opportunities. We demonstrated in 2025, how disciplined self-help measured can deliver stable performance even in a weak market environment, and that's what we continue to focus on. Second, we continue to consolidate the refractory industry, unlocking on average around 35% synergies per acquisition, 35% of the acquired company's EBITA in a structurally stagnant global market. The acquisition of Resco marks an important milestone in the U.S. because we had this gap there. It's just one of the examples. At the same time, we're building a highly efficient digitalized corporate platform. We're in the middle of this transformation that will enable us to integrate future acquisitions dramatically much faster, within weeks, and drive cost leadership. It will also make us AI ready. And we're not 5 years away, we're 12 to 18 months away from this. Our strong cash flow supports an attractive dividend while also giving us strategic flexibility that many competitors do not have. Already today, we generate FTSE 100 level cash flows and EBITA with a market capitalization of the FTSE 250 company. Taken together, this underpins a value-accretive strategy and a long-term compelling investment case. Thank you, Ian, for being at my side here, like all the time and like we've done in so many years. And let's take your questions now. Please. Yes. Please wait for the microphone, so that in the phone call, we can also hear about it. Vanessa Jeffriess: I'm vanessa Jeffriess from Jefferies. Just first on the points about the Chinese export problem in India. Just given the weakness that we saw in China production last week and what you're saying about the help you'll get, I'm just wondering why you're not factoring in any benefit from that for this year? And then secondly, just on M&A, given how tough things are and the fact that you don't expect demand to recover this year, I would have thought there'd be a few more consolidation opportunities than there are. So just wondering about that point as well. And then third, just a reporting question. Just wondering, last year, you switched to reporting EBITA for the divisions, and now you stopped doing that. So just wondering why you did that. Stefan Borgas: All right. On Chinese exports to India, this is unfortunately not a major problem in India. There are Chinese refractory exports to India, of course, always have been because in some raw materials, India is not self-sufficient. But the biggest problem in India is local competition. International refractory companies and local promoters have overbuilt. And the biggest problem in India is dramatic overcapacity that we have in the country there, and that leads to the margin decline. And we need competitors to understand this finally instead of continuing to build, which they are still doing. So I don't see any short-term hope, unfortunately, in India. The avenue for us also here is not so much on cost cutting because the cost levels in India are very low. But the approach here is on technology improvement. So it's the solution approach to the customer that will help us to decommoditize. And that cannot be done by everybody because it takes global scale in order to bring robotic solutions, sensor technology, circular economy setups and things like that, that are not being able to match. That's the avenue in India. On M&A, you're totally right. The opportunities will be there. They are there. It's just a matter of negotiation cycle. It takes an average of 2 years from when we engage with somebody who is willing to talk about merging with us until we close the deal. And that's the reason why 2026, we have no cash up or no big one. On the reporting question.... Ian Botha: Vanessa, on EBITA, we actually got some very helpful feedback from the investment community last year around the merits in trying to thin down our material, reduce the complexity, and that's what we sought to do. So we have continued to provide gross profit. If there are certain specific metrics, EBITA as an example, that you find particularly helpful, please reach out to us, and we can certainly help. Jonathan Hurn: It's Jonathan Hurn from Barclays. Just a couple of questions. Firstly, just topically, Middle East. Could you just talk a little bit about your exposure there in terms of size? Also in terms of your guidance for 2026, your overall group guidance, what were you expecting? What was the Middle East contributing? No, just in terms of revenue. So I'm just trying to get a feel for the importance of the Middle East, what part -- what the outlook for that business was in terms of 2026 for your guidance and also sort of what actions you can take there? And then the second one is just in terms of coming back to those regulatory tailwinds or potentially regulatory tailwinds. Can you just give us a feel for what the impact of those could be in terms of monetary value, EBITA, both for Europe and potentially what regulations in Brazil could bring through as well? And then maybe just lastly, if I can squeeze another one in. Just in terms of that backwards integration margin. I mean, look, you've given us some steps about what you're going to do there to improve it. Can you just give us a little feel for how you think the profile of that margin should develop going forward, please? Stefan Borgas: Maybe, Ian, you can talk about the META guidance. Let me pick up the other 2 pieces. The regulatory tailwinds, well, in Brazil, this is an investigation. But Brazil is very connected with China. So there's a basic hesitancy to put big trade barriers for Chinese imports in Brazil. Why? Because it goes both ways. So it's a -- in principle, it's a free trade spirit between the 2 countries, which in principle is good news because we -- I think, in general, long term, we need less protectionism and more free trade again. Therefore, nothing will happen this year. This is all under discussion. This is under investigation. It's done in a friendly way. We are sitting on the fence and watching this. I think if at all, there could be a bit of a margin stabilization effect for our Brazilian business for 2027. And this can come from a stabilization of the steel production. Steel production in Brazil has been reducing 1%, 2%, 3% per year, mostly because of Chinese imports. And on the refractories is the same thing. It has been reducing because customers have started to commoditize. And that trend could be turned back and then bring a couple of percentages of margin improvement for us, more on the margin side than on the volume side. In Europe, it's an investigation as well. There could be a floor on imports, but actual Chinese imports into Europe are very small. It is not a very large issue. If you had hoped for some of this to happen already, I advise you to look at January world Steel numbers that have just come out a couple of days ago. Europe steel production is down by 2.5% compared to January 2025, which wasn't exactly a bombastic January either. So we're not seeing any of this now. So please don't put any hope in it. And should this happen, again, this is maybe putting a floor on European steel production and therewith on refractory consumption as well. So nothing happened this year. On the backward integration, look, there's 2 components here. There's a cost improvement, mostly on mining optimization and energy consumption and processing for us. And then there is a portfolio aspect. We've always looked at our raw material backward integration as a raw material backward integration. How many refractory raw materials can we make, at which cost so we don't need to buy it and have an advantage out of this. If we look at our raw material assets from a perspective of a raw material asset, then we have started to ask the question last year. What profit can we generate or what revenue and profit can we generate out of these raw material assets, of course, for refractory purposes, but also for maybe other markets. And so there's a bit of a market expansion opportunity here because we have some minerals there that are not suited for refractories, but maybe for other applications, and we're looking at this. This is a benefit from maybe EUR 2 million, EUR 3 million, EUR 4 million, EUR 5 million this year, but it will be one of the elements that gives us velocity for next year because we need self-help for '27 as well, right? We cannot rely on the market to give us a bonanza. We have to create that ourselves. Ian on On META? Ian Botha: On Middle East, Turkey and Africa. So we had EUR 350 million of revenue last year, almost EUR 80 million of gross profit. Our forecasts anticipate around a 10% step-up in that gross profit really as you see the benefits of the slightly stronger second half '25 industrial volumes coming through and slightly stronger pricing that we realized in '25. And then very importantly, with the benefits of the lower plant costs, both because we import a lot of finished goods out of Europe into that region. And as the Europe cost structure improves, including with the footprint rationalization, META is one of the regions to benefit. And then also from the measures that Stefan has just touched on around raw materials in our Turkey plants. One of the areas that I think we'll be watching carefully is obviously the impact of the increase in oil prices that we've seen during the course of the last 25 days -- last 24 hours. Our energy cost last year was about EUR 225 million, half of that went into gas, 20% into electricity, 30% into diesel. And typically, we would expect to pass on any increase in the diesel price to our customers. We do have somewhat of a hedging for part of this year. So that's an area that we will continue to focus on this year. Clearly, our guidance is based on an expectation that there is no net negative from the oil price increase. Stefan Borgas: And I think that with what happened now, the volume recovery, at least in the Middle East, I would argue is at risk. It's early days because we are only 2 days into this new war, but I don't see customers as a first priority now looking at volume increases. Their first priority is to protect themselves. And hopefully, industrial infrastructure doesn't get hit. So it's anything but good news. Harry? Harry Philips: It's Harry Philips from Peel Hunt. A couple of questions, please. Just thinking about the working capital number, which has been very impressive. And just noted thankfully that the factoring element was very stable as well. So it's a clean number rather than a variable number. Just thinking that how much -- if we look to the medium term and think about recovery, thinking around working capital intensity into that, how much might that change, if at all? And sort of if you like to sort of reline to step into recovery, how much do you need to put back in? And then the second is sort of more thinking about the sort of margin profile of the business again into the medium term, where the sort of picture of, say, a 14% to 15% margin, 300, 350 basis points from vertical integration, balance from refractories. Given the extent of the self-help that you're currently conducting and the network optimization post the M&A and the sort of market issues around vertical integration, does that sort of change that mix in any way? Or is this just a sort of transitionary process that will work its way back to norms in the future? Stefan Borgas: Okay. Let me try to take a stab at this and then Ian, please, you should add a couple of thoughts here. On the margin profile, in the second half of this year, we were at 13.7%. So of course, there are some good positive effects here. This is not 13.7% sustainably, but the refractory part of the business can run between 12% and 13%. That's clearly possible. And this is not very far away. And then the backward integration between 2% and 3%. So we are between 15% and 16% as a margin potential. In a normalized way and when the market recovers during the recovery phase, when we have operational leverage, then it could be even higher. But that's a short-term phase. But now we are lower in a short-term phase. Well, it's a pretty long short-term phase, but we have that potential. On the net working capital, this is also a long journey. Actually, one of the major focus areas of our digital transformation is net working capital. Because we have buffers in our inventories everywhere. We have buffers at the supplier. We have buffers on the boats. We have buffers in the warehouses. We have buffers at the customers. We have buffers in our plants. And why? Because our planning accuracy capability are not where they could eventually be. And this big digital transformation in which we are spending a triple-digit million amount of money, which will be completed in the middle of 2027 will give us then the machine to drive working capital down. If you look at world-class, very complex industrial businesses from a working capital perspective, world-class, they should -- we should run at about 20%, 21%, 22% working capital. So that's massive. I'm not yet saying we'll get there because we first need the machine to use, but that's the ambition level here. Ian, would you say I'm too optimistic here? Ian Botha: No, no. I think that over the next couple of years, delivering a 2% reduction in our working capital intensity must be our North Star. I think that the focus for '26 is very much on operating in a stable fashion at this 21.7% that we've achieved. We achieved that at the end of last year. That was a good performance. But during the course of the year, we weren't consistently at that level. And if we can use our new o9 technology, if we can use the local for local to drive that consistency, then we also get a very important finance charge benefit. And that's the focus, particularly for this year. I'm not sure that we would expect to be in a very different place at the end of '26. But going forward, another 2%... Stefan Borgas: So when I'm saying 20%, 21%, this is without financial measurement. So this is a 4, 5 percentage point improvement. That's the long-term potential. Mark Fielding: Mark Fielding from RBC. Actually, I just want to follow up on your answer to Harry's question and talking about, obviously, the second half margin was 13.7% and your comment was not near-term sustainable. I suppose my question is why isn't that margin sustainable this year in the context of -- I know there's a second half bias in the Industrial business, but it was much less pronounced last year than is normal, and you're looking for it to be a bit better this year. There's a number of other self-help factors. Why aren't we taking the second half profit and doubling it, ignoring I am very cognizant of the Middle East stuff and how that then feeds in. Ian Botha: Yes. So Mark, you're absolutely right in your initial premise. You can't double our second half because of the industrial on the cement side, also the fact that we have slightly higher steel production. And obviously, there is a significant currency headwind that has built up during the course of the second half of last year. If you look at the EUR 15 million, those 4 drivers, if you look at pricing, we delivered EUR 27 million in the second half of last year. Now we're guiding to EUR 15 million. Why? Because we can see an increasing headwind around certain of the raw material prices coming down and the threat that, that imposed. On our plant measures, actually a very good message. We're going from EUR 10 million second half of last year, and we're adding EUR 15 million now. On SG&A, we did EUR 21 million in the second half of last year. Now we're guiding to EUR 15 million. But remember, there's still a significant labor cost inflation headwind that we hit. So that's around just short of EUR 10 million for us. So to achieve that EUR 15 million, as we've outlined, we need to do more around our processes, our shared services, our Europe footprint. And then from an Industrial perspective, we delivered EUR 23 million second half last year. Now we're guiding to EUR 15 million, and that's because of this impact of industrial projects just moving. And it's not that we've lost the projects that were supposed to be delivered in November and December last year. They've moved now into the first quarter, but that drift carries on. Stefan Borgas: There is a normal seasonality in our business. The second half is always stronger because of the projects delivery focus in the fourth quarter. CapEx projects are always back-end loaded in every company. And of course, we're in the CapEx cycle here, but also because of the cement season. So you can never double the profitability of the second half to the first half. Usually, we have -- last year, we had a 65-35 split between first half and second half. But normally, we still have 45-55 split. Therefore, you've got to take the second half down a little bit on the margin side. Ian Botha: And then just the last component of that waterfall, on steel, clearly, we're adding 0 because here, we believe any modest low-margin growth that we get out of India is offset by weakness in Brazil, in Mexico, in Canada and in Europe. So that's how you get to our numbers. Mark Fielding: And could we just follow up slightly more on the big currency headwind? Because it feels like a lot of that should have started to be there in the second half when I think it feels like currency was about a 5% headwind, but the guidance on profit, the guide is more like an 8% for this year. So maybe just talk a little bit more about the moving parts there, where there's also some hedging factors and things too or anything like that. Ian Botha: So there is no hedging disadvantage that we have this year. We have put in place some protection to avoid significant further weakness in the basket. If you look last year, the first half, we had a currency advantage of EUR 7 million. And in the second half of last year, we had a weakness of EUR 20 million because of the weakness in the Canadian dollar, the Indian rupee, the Brazilian real and particularly the U.S. dollar. So that EUR 35 million impact for this year, that's the impact of going from about $1.18 now from $1.12 and every one movement is EUR 4.2 million. You've got that detail in the appendix. That's EUR 25 million just on the impact of the U.S. dollar. And then the Indian rupee, again, you'll see it in the appendix. Currently, it's about INR 107 versus INR 90. That's another EUR 13 million impact coming through. So it's a very significant headwind for us. Stefan Borgas: Actually, the Indian rupee devaluation is such a big effect that it has destroyed profitability totally for some of our competitors in India who are importing. So because they pushed on pricing and then they got the rupee on top of it. So some competitors really look terrible. Ian Botha: Mark, at a macro level, really what's happened during the course of last year is we started to benefit from weakness in our producer currencies, which is a good thing for us. And then in the second half, it moved to weakness in particularly in our high revenue geographies, and that's now what's continuing in '26. Stefan Borgas: Shall we go? Any questions in the conference? No, no questions in the phone conference. Sure. Jonathan Hurn: Could I just ask just one follow-up question. Just in terms of your sort of sea freight and obviously, the rates there. I mean, if we do see a spike, how are you priced for that in terms of obviously, you move stuff by that method. Are you sort of locked in, in terms of your forward rates for that? Or do you buy it at spot? Just any idea there, please? Stefan Borgas: No, we have a structurally actually really good setup on freight. So it's super predictable. It's very well contracted. It's variable enough that we're not stuck with any freight. And by and large, it's a pass-through item. So we don't have any downside because we are really well integrated now with some of the very big companies around the world. It took us 2.5 hours yesterday after the attack in the Middle East and the close of the Strait of Hormuz to understand which containers were 2.5 hours. So that's outstanding. We really learned our lesson from the post-COVID mess that we had. So we react really, really fast, and we can keep customers supplied because as sea freight gets redirected now, we have some of the boats that were going through the Suez Canal now that's completely closed. So now this is going around the horn of Africa, which means some customers will be delayed, but we see this coming, and we already started production elsewhere to supply those customers who would have been affected, including some in the Middle East, actually. So that is good, and therefore, we can pass on sea freight costs quickly because customers see a real, really, real service upside. Well, thank you very much for dialing in this morning. Just to summarize, we delivered our self-help measures, which saved the 2025 year and improved our business structurally. Second, that momentum continues into 2026. And with new measures that are already under full implementation, that momentum will also continue into 2027. Third message, no help from the market. So those companies who can help themselves should bring the focus of your investors and those who hope on the market not. Thank you very much for dialing in this morning and for being here this morning. Goodbye from London.
Stefan Borgas: Okay. Good morning. Thank you for joining us today in London for RHI Magnesita's 2025 Full Year Results Presentation. As usual, Ian Botha, our CFO, and myself will do this together and lead you through the events of 2025 and, of course, look at the incredible forecast of 2026 and maybe a little bit beyond even. Before we get started, let me just send our thoughts to our colleagues and our customers and our suppliers and our business partners in the Middle East who woke up yesterday in a different world than they would like to be in. So our thoughts are with them, our support is with them, and we hope that things normalize very quickly there and that people are not hurt as much as possible. 2025 was a challenging year, actually quite a challenging year. But ultimately, with a good ending at least for RHI Magnesita. Before moving into the presentation, let me highlight 3 key takeaways from 2025. First highlight, we delivered our self-help mostly cost-based initiatives, as we had planned them already starting very early in 2024. And therefore, we could meet our profit guidance. This is important because we're improving the business structurally and sustainably. These are not short-term measures. These are structural improvements by focusing on what we can control and not relying on the outside world. Second, this momentum of self-help will continue into 2026. New measures that will start this year are already well advanced, and they will then support that velocity also into 2027. Third message, there is currently no visible market recovery. We know our view is not shared by all, but we retain substantial operating leverage ourselves that could benefit from this one day when demand improves, but we do not expect any improved demand before 2027. We're not relying on this. If we are wrong with our forecast and you are all right, then we will all have a happy drink at the end of this year. Before I go into the results, let me start, like always, with health and safety. Safety remains the core value at RHI Magnesita. In 2025, triggered by fatalities in the year before, we made significant progress in our group-wide safety culture transformation program. This is not just a corporate initiative. It is a fundamental shift towards embedding a deeply rooted safety mindset across the organization. In 2024, we recognized that we need a different approach here, greater depth and greater accuracy in our health and safety reporting. Therefore, last year, in 2025, we added more than 200 sites to our safety reporting, mostly on our customer sites, but also, of course, sites from acquisitions that we didn't have before. They often have a lower safety maturity because they come into the group, but also because we didn't focus on them enough before. And this maturity now that we can measure, we can also address. And therefore, you see a different number in 2025 that looks shockingly increased, but it comes from a complete re-reporting. This increase results in a big increase in transparency. And this improved visibility allows us now to address risks much more systematically and holistically. We are focusing with greater discipline on controlling the company's critical risks to prevent serious injuries and fatalities. Our key initiatives center now on visible felt leadership, how do people perceive their own supervisors on site. We have introduced 7 life-saving rules and strengthened standard operating procedures, and these practical measures is very practical on the ground, influence behaviors, improve accountability and raise the standards across every site. We remain fully focused and committed to have a zero harm, no injury environment. That's the only acceptable objective. Let me now turn to the results. We delivered against the continued challenging market backdrop. While the Steel business saw a slight downward trend across most regions in 2025, the fall in the industrial project in 2025 was unprecedented, never seen before. This industrial projects business is a high-margin segment for RHI Magnesita that contributes disproportionately to earnings normally. In addition to that fall, foreign exchange headwinds further pressured profitability, mostly the U.S. dollar, but not only the U.S. dollar. Despite these challenges, we achieved our full year guidance, delivering EUR 373 million of EBITA and a margin of 11.1%. The earnings recovery was accompanied by strong operating cash flow of EUR 391 million. In these days, this is at least as important as profit. This is a cash conversion of more than 100% and driven, of course, by a quite meaningful reduction in working capital, which shows you the financial discipline that we have in the meantime everywhere in all operations. We finished the year with a leverage of 2.9x net debt to EBITA, a little bit better actually than we guided, driven by that really good cash flow performance. Based on this performance, the Board is recommending a final dividend of EUR 1.20 per share, bringing the full year dividend to EUR 1.80, in line with 2024. But that's not the whole thing about the story of 2025. It was a story of 2 completely different halves. The first half of 2025 was one of the weakest semesters on record of the company. Even if we include major economic shocks, it was one of the weakest. In anticipation of this because we saw this coming already in 2024 and to be able to respond to such a development, management implemented targeted self-help measures that had an effect then starting in the second quarter, but especially in the second half. These actions underpinned a strong recovery then in H2 with adjusted EBITA rising to EUR 232 million just in the second half, actually starting in August, not even in July. This was 65% higher than in the first half and also 7% higher than in the comparable period in the year before. Nothing changed on the market. It's just purely 100% driven by self-help. We delivered, therefore, a step change of the EBITA margin, which was at 8.4% in the first half to 13.7% in the second half. It was achieved despite continuous market weakness, no demand increase. The Steel business, if we now look at these 2 different sectors, declined slightly, reflecting either weak demand in many regions. And in those regions in which we had good demand, we had weak pricing. This demand weakness was primarily caused by record levels of Chinese steel exports, which are displacing local production, and therefore, we cannot supply into the local steel plants. And that is a problem, of course, because the local steel demand is not growing. As a result, gross margins came under pressure, driven by an unfavorable volume mix, fixed cost under absorption but also nervous competitors who made price concessions and elevated Chinese refractory exports into several markets, mostly attainable to China. India remains the main engine of global steel production growth, delivering approximately 10% steel growth. Our revenues, however, did not increase at the same pace as we had to make price concessions and there with except margin reductions in India. This is the market with the most undisciplined competitive behavior. North America delivered a very strong performance, not solely due to the acquisition of Resco, which happened, I think, at the perfect time. Excluding Resco, revenues increased still by 6% against broadly flat steel production in North America. We are benefiting from the green steel transition outside of North America mostly, but there also actually because of the strength of our 4PRO offering, our total solution offering and our very solid market position wherever these green steel transformations happen. In contrast, revenues in Latin America, in Europe, in China and in East Asia declined in the Steel business as weak domestic steel demand coincided with record Chinese steel export volumes, which continue to displace local production and reduce local refractory purchases as a consequence, of course. The Middle East, Turkey, Africa region, the META region, experienced a revenue decline, primarily -- mostly because of 2 issues with 2 key customers in the first half of the year. So they just bought a lot less. So it's a onetime thing. We're not so worried about it, but also in this region with significant margin pressure due to Chinese refractory imports. Steel production growth elsewhere in this region was insufficient to offset this impact of these 2 very big customers that had a weak year. We focus on restoring that performance in the Middle East region now in 2026. At least that's what we thought until yesterday. We have to see how this unfolds now. Looking forward, we do not see in our order book any green shoots of improved steel demand. We do not see an order increase in no region. Let's turn to the Industrial business. 2025 was an exceptionally weak year for our industrial project business. The impact was particularly visible in the first half of the year. Our Cement business, which is not the industrial projects, it's a different business unit, was remarkably resilient, but the number of industrial projects declined by 40%, 4-0. Our Glass business remains at a historic low level. There's no sign of recovery anywhere. The nonferrous part of the industrial projects is a little bit more resilient. We are not yet seeing a big turnaround here either, but there, the forecast is a little bit better. As a result of this industrial project downturn, revenues declined by 9%. This is the first top line contraction in this business since 2020. More significant, however, was an impact on gross margin here. Industrial project business, particularly in glass and nonferrous, typically generates above-average margins because this is a very technical and supply chain complex business. We are the clear market leader worldwide in these high complexity projects. The sharp reduction in project volumes, therefore, has a disproportionate impact on our margin mix because these projects are done in very expensive complex plants. And if they're not utilized, the fixed cost there is very high that we are stuck with. To support this business globally, we operate these specialized plants with structurally high fixed cost basis. The exceptionally weak order intake leads then to these material fixed cost under absorptions, which we can only partially compensate with reduction short-term reduction of cost, which actually we don't want to do either because then we're not ready for the recovery. Looking forward, we expect a gradual improvement now in the Industrial business. Project activity could particularly improve in the second half of this year, although it will remain way below historic levels. Why are we so sure? Because the delivery time for these projects is somewhere between 9 and 18 months. So whatever we don't see in the order book now will not happen in 2026. Let me update you a little bit on our strategy. We sharpened our strategy at the end of 2025, together with our Board to adapt to these new geopolitical and also technological challenges and opportunities. We are reviewing our portfolio. We are innovating with new products, but also with new business models. Both of them should create greater value, of course, for existing and future customers. We are boosting productivity through scaled and optimized footprint through smarter operations and through a digital transformation. We lead in sustainability by pioneering technologies that set the path for green transformation of our industry. Our main objective continues to focus on the consolidation of the global refractory industry in order to get scale for all of these things. In 2025, the acquisition of Resco, of course, transformed our North America footprint for the better. Leveraging our scale remains the only structural avenue to be able to continue to pay for innovation and for improved customer services, which they expect. We will go into more detail in a couple of minutes together with you. We continue to evaluate these opportunities, these acquisition opportunities in many markets. We don't expect a meaningful cash out in 2026 because these negotiations take time. When we look at the broader steel and refractory industries, it becomes evident that global demand no longer moves in a synchronized demand-driven cycle as it once did. Instead, we see more and more diverging regional trajectories, also influenced by the growing scale and impact of Chinese exports and protectionist reactions that are very different from one region to another. In the past, regional demand for metals and industrial goods drove local capacity development and then trade flows. Together, however, global and particularly Chinese industrial capacity is sufficient to supply demand growth almost everywhere in the world because of the overcapacities there. This structural overcapacity in China places sustained pressure on local industries in many markets. As a result, global trade is gradually shifting from a free trade model towards a more protectionist environment with countries and regional trade blocks increasingly managing supplies differently depending on their capabilities. Given their strategic importance, refractory consuming industries are at the center of this transition and of that protectionist. The only large exception to this is the cement industry because it operates anyway under a fundamentally different dynamic. Unlike steel, cement is not broadly exported around the world, never has been, due to technical and commercial reasons. As a result, the cement sector is less exposed to global overcapacity and to rerouted trade flows. This more regional market, which always was a regional market, allows our Cement business to perform resiliently. Mature markets such as Europe and North America, but also South America in a way, are leading the implementation of trade protection measures. Markets like India and META are less protected. And therefore, they absorb much more of the rerouted Chinese exports that don't make it into the protected markets anymore. This adds margin pressure there. And as you have heard, we saw this already last year. It, therefore, also limits at least profit growth opportunities for us in these markets because volume growth gets compensated by margin pressure. RHI Magnesita began this regionalization focus in 2021. And we're so happy that we did this because we continue to steer the company now strategically by regions. We believe this regionalization is a key response to this ongoing reorganization of global trade. The creation of the META region, Middle East, Turkey and Africa, is the last step -- the latest step in this approach, probably not the last. Many of these markets still import the majority of their refractory demand and are, therefore, also particularly exposed to this global trade dynamics and of course, imports from places like China. Under the right conditions, trade barriers can create a more supportive local environment, under the right conditions, but only locally, not globally. In the United States, for example, tariffs on certain Chinese refractories used in steelmaking support more sustainable pricing levels for us to keep local production running. That has been a political decision actually since many, many years. In Europe, measures to limit steel imports could eventually help to put a floor under domestic production, which in turn then can support local refractory demand also. We expect this to potentially have an effect in 2027, potentially. In Brazil, investigations into tariffs on Chinese refractories could restore pricing a little bit there to more sustainable levels, but also they are not for a while. It's still under investigation. Why we have not observed any tangible impact on our order books globally, there remains a possibility that pricing and demand dynamics could gradually improve across certain regions over time, but it could also then go at the detriment of other regions. At present, however, ladies and gentlemen, there is no direct benefit from this for our forecast in 2026, not on cash and not on profit. At the same time, while this is all happening, China recognizes that globally deployed excess capacity is straining their trade relationships and maybe more than trade relationships. Therefore, capacity reforms and potential export limitations in China could benefit other regions in the years to come and support the development of a more sustainable value-creating refractory industry within China also because capacity reduction there has to happen. It is recognized. But again, this will take years until this will take effect. At present, we see no benefit from these announced measures, not in our order book, nor in our forecast, nor in our performance for 2026. I want to spend a couple of minutes on North America and particularly the U.S. This is our most attractive refractory market globally at this moment in the cycle. It doesn't have to stay like this. The U.S. market is characterized by balanced supply and demand structures. Maybe that's the most valuable part here, which enables disciplined pricing and mature capital allocation among suppliers and between customers and suppliers. At the same time, U.S. steel producers operate at very healthy margin levels, supporting continuous investment in low-carbon steelmaking. Despite the noise you hear the U.S. is the leader in low-carbon steelmaking. And this is important for us because it creates strong demand for our market-leading 4PRO and electric arc furnace offerings. While the U.S. currently offers attractive margins, it also presents challenges, particularly around tariff volatility, where should we supply from next month and the U.S. dollar devaluation because we account in other currencies. The recent acquisition of Resco significantly strengthens this local-for-local strategy and thus reduce the tariff risks and gives us some more natural hedges. We have launched a network optimization Americas program to increase our local-for-local share in the U.S. to approximately 80% from -- which we will attain in 2028 from about 50% that we had until 2024. This will allow us to deliver best-in-class services with lower working capital intensity and reduced tariff exposure while also delivering further margin upside through synergy realization and self-help measures also in the U.S. Let's talk about sustainability. In 2019, we set ambitious sustainability targets that many believed were unachievable. There are and they continue to be a cornerstone for developing our business model for the next decade because the emission problem doesn't go away. In 2025, we delivered the first key milestone on this sustainability agenda, including a meaningful reduction in CO2 intensity. This is really significant for a heavy industry here, more than 15%. On the back of this progress, we remain committed, fully committed to our decarbonization road map and now the next set of targets that we have set. First, our recycling rate now stands just under 16%, up from 3.5% in 2018 despite the dilution from acquired businesses who had a much, much lower percentage. They now all operate at much -- they did operate at much lower recycling levels, and we are bringing them up step by step. So you see there's still potential here, quite a bit of potential here. With continued investments and now technological advancements in recycling and sorting, we will further increase this recycling content and scale also the commercialization of secondary raw material businesses globally. Second, our carbon capture and utilization technology developed together with MCI Carbon in Australia is currently undergoing industrial scale testing. This green mineral technology could become a key lever in addressing geogenic emissions, which are unavoidably technically, especially in our raw material operations. We are targeting the first international large-scale industrial development in 2030. Third, we continue to test hydrogen where it is economically and technically viable. A specialized furnace in Germany is central to advancing these trials where we have technically everything in place across different refractory products because hydrogen burns differently. The technical feasibility of using hydrogen as a fuel is very much possible. We know this now, and we know how to do it. But commercially, hydrogen is not a viable fuel alternative for the time being. So we will not continue any more activities here at least in the short term. Recycling already contributes meaningfully to earnings via our joint ventures in Europe and in the U.S. on top of the raw material cost savings that it brings. Our recycling capabilities in particularly are a clear differentiator now also in our 4PRO offering for our customers because we can present to them a true 100% circular economy solution for refractories. We are seeing strong interest from the new green steel mills overall around the world, actually in every region, that are looking to integrate these circular solutions into their operations. They don't want any landfills anymore. In 2025, we signed 4 green steel contracts, some including recycling components, and we expect further progress in the years ahead. Let's go to the financial review that you've all been waiting for so long, and I would like to ask Ian to lead you through the numbers, and then I'll come back at the end. Ian Botha: Thank you, Stefan. Good morning, ladies and gentlemen. I'll walk you through our 2025 financial performance and our expectations for '26. 2025 was a challenging year externally. However, internally, we responded with discipline and with speed. And the second half performance clearly demonstrates the impact of our managerial actions. Adjusted EBITA declined from EUR 407 million in 2024 to EUR 373 million in '25. The primary drivers were market related. In Industrial, EBITA declined by EUR 74 million. This as the number of high-margin projects in glass and nonferrous metals fell by 40% as customers postponed rebuilds and delayed maintenance. This also led to under-absorption of fixed costs in our specialized plants. In Steel, EBITA declined by EUR 41 million. This as demand remained weak in Europe, in Latin America and in the first half in META. High levels of Chinese steel and refractory exports intensified pricing pressure across multiple markets. Currency reduced our earnings by EUR 13 million, mainly driven by the weakness in the U.S. dollar and the Indian rupee. These were significant external headwinds. Offsetting this, management-led self-help measures delivered EUR 70 million in 2025. This included pricing discipline, operational cost improvements and SG&A reduction. In addition, Resco contributed EUR 25 million, including synergy benefits. The important point is that the earnings recovery in the second half was execution driven, not market-driven. '25 was clearly a year of 2 halves. The first half was one of the weakest since the merger with EBITA of EUR 141 million. This reflected the full force of the industrial downturn, weak steel demand, pricing pressure and fixed cost under absorption. In the second half, the benefits of our self-help measures came through strongly, increasing EBITA to EUR 232 million, 65% higher than the first half and 7% above the second half of '24. This improvement was delivered despite continued market weakness and a EUR 19 million currency headwind in the second half. Against our guidance, steel outperformed. The industrial recovery was delayed with projects moving into 2026. Pricing delivered at the top end of our expectations. SG&A savings were more than double what we guided, and the plant measures were delivered as planned. All of our cost actions are structural and will continue into 2026 and beyond. They do not rely on temporary reductions or borrowing from the future. Even in this challenging environment, we defended our margins. Since the 2017 merger, our adjusted EBITA margin has remained above 11% every year. That consistency reflects our diversification across regions and end markets, but more fundamentally, it reflects disciplined execution and active management. The refractory margin remained robust at 10%, supported by synergies, pricing discipline and operational excellence. The backward integration margin, however, remained at cyclical lows at 1.1%, contributing EBITA of EUR 37 million. This was primarily due to continued weak Chinese magnesite pricing, reflecting industry overcapacity and high levels of above-ground inventory of ore as well as lower fixed cost absorption at our own raw material plants. Importantly, our backward integration margin remains positive, demonstrating the competitiveness of our cost base. To improve returns from our raw material assets, we've implemented targeted self-help measures to reduce costs and expand sales into non-refractory markets, and we expect these actions to support a gradual recovery in profitability from '26 onwards. Moving to working capital. Working capital intensity improved strongly to 21.7%, marking the third consecutive year of improvement. This reflects disciplined credit management with our accounts receivable as well as inventory reduction driven by continued progress on our local-for-local strategy and the rollout of new supply chain technological solutions to strengthen our inventory control. The acquisitions of Resco and BPI added EUR 51 million of working capital. At the same time, we reduced our working capital by EUR 143 million, with roughly half of that driven by management actions and half by currency movements. In total, this translated into an EUR 84 million release of cash flow from working capital reduction. Cash generation remains a core strength of our business. In '25, adjusted operating cash flow was EUR 391 million, resulting in a cash conversion of 105% and free cash flow of EUR 214 million. Net debt increased to EUR 1.5 billion, primarily reflecting the acquisition of Resco. Leverage closed at 2.9x net debt to adjusted EBITA, and this was slightly stronger than our guidance. Our liquidity remains strong and approximately 70% of our debt is fixed with an attractive weighted average cost of borrowing of 3.3%. We are comfortable operating temporarily at elevated levels of leverage to fund compelling value-accretive M&A, particularly in high-margin segments, such as in '25 in North America. Our strong cash generation provides a clear path to deleveraging, and we expect leverage to reduce to around 2.6x, about EUR 1.4 billion by the end of this year. This level of cash generation gives us flexibility to invest in growth, to reduce net debt and to maintain disciplined shareholder returns. We are, therefore, recommending a final dividend of EUR 1.20 per share, bringing the full year dividend to EUR 1.80, in line with our dividend policy. Finally, looking ahead, we expect the market environment to remain challenging as ongoing global uncertainty continues to dampen customer demand and investment. Steel end markets remain at cyclical lows globally with no near-term recovery in demand apparent in our order books. At the same time, magnesite-based raw material pricing is likely to remain subdued, keeping our backward integration margin around current levels. In addition, currency is becoming a much more material headwind this year, both from the U.S. dollar and from the Indian rupee with an expected negative impact of around EUR 35 million at current exchange rates. Against this backdrop, our performance improvement will once again be driven by what we control. We are, therefore, guiding to EUR 435 million adjusted EBITA on a constant currency basis, representing a 17% increase versus 2025. After reflecting anticipated currency headwinds, this translates to approximately EUR 400 million of reported adjusted EBITA, implying a margin of around 11.5%. The earnings improvement is underpinned by 4 structural measures, each contributing approximately EUR 15 million on a like-for-like basis. First, we expect a gradual improvement in the Industrial business. Project activity should improve, particularly towards the second half, although it will remain well below historic levels. We do not expect a demand improvement in our steel business overall. Second, we continue to drive pricing discipline and expand our 4PRO offering, increasing the share of higher-value solution-based revenues. Third, our network optimization programs in Europe and the Americas will deliver further benefits with the Americas now contributing around EUR 5 million of the EUR 15 million total impact this year. And finally, we achieved further structured SG&A reductions through administrative efficiencies, supported by the investments that we've been making in digital transformation, in process standardization and leveraging our shared services model. These measures have already proven effective in driving the second half turnaround, and we will continue to build on them to deliver further improvements in 2027. We are not relying on market recovery to achieve this guidance. So to conclude, 2025 demonstrated the resilience of our model. We acted early. We defended margins. We generated strong cash flow and completed a transformative acquisition in North America. 2026 is now about continuing our disciplined execution and delivering in a still challenging demand environment. Thank you. Now back to Stefan. Stefan Borgas: Thanks, Ian. Let me summarize for you. First, in 2025, we delivered significant self-help cost initiative as we had planned to meet our profit guidance. We are improving our business structurally and sustainably by focusing on what we can control. Second, the momentum of self-help continues into 2026 and new measures get added to improve 2026, but that already will prepare the next improvement for 2027. And third, there is no visible market recovery that will benefit our business in 2026. We retain great operational leverage, which will enhance our performance if and when such a demand recovery will come. We don't expect this before 2027, even if we want to be optimistic. On that basis, Ian has outlined the guidance, so I don't need to do it again. Our gearing will go down more. Our cash generation will become -- we will stay disciplined and our expenditure control will provide the actual improvements. And it will build strategic opportunities for the future. Let me summarize our investment case. Before we move -- in 2025, we made very good progress towards this investment case. We have significant opportunities to grow the business and improve our margins. We do have these opportunities. We demonstrated in 2025, how disciplined self-help measured can deliver stable performance even in a weak market environment, and that's what we continue to focus on. Second, we continue to consolidate the refractory industry, unlocking on average around 35% synergies per acquisition, 35% of the acquired company's EBITA in a structurally stagnant global market. The acquisition of Resco marks an important milestone in the U.S. because we had this gap there. It's just one of the examples. At the same time, we're building a highly efficient digitalized corporate platform. We're in the middle of this transformation that will enable us to integrate future acquisitions dramatically much faster, within weeks, and drive cost leadership. It will also make us AI ready. And we're not 5 years away, we're 12 to 18 months away from this. Our strong cash flow supports an attractive dividend while also giving us strategic flexibility that many competitors do not have. Already today, we generate FTSE 100 level cash flows and EBITA with a market capitalization of the FTSE 250 company. Taken together, this underpins a value-accretive strategy and a long-term compelling investment case. Thank you, Ian, for being at my side here, like all the time and like we've done in so many years. And let's take your questions now. Please. Yes. Please wait for the microphone, so that in the phone call, we can also hear about it. Vanessa Jeffriess: I'm vanessa Jeffriess from Jefferies. Just first on the points about the Chinese export problem in India. Just given the weakness that we saw in China production last week and what you're saying about the help you'll get, I'm just wondering why you're not factoring in any benefit from that for this year? And then secondly, just on M&A, given how tough things are and the fact that you don't expect demand to recover this year, I would have thought there'd be a few more consolidation opportunities than there are. So just wondering about that point as well. And then third, just a reporting question. Just wondering, last year, you switched to reporting EBITA for the divisions, and now you stopped doing that. So just wondering why you did that. Stefan Borgas: All right. On Chinese exports to India, this is unfortunately not a major problem in India. There are Chinese refractory exports to India, of course, always have been because in some raw materials, India is not self-sufficient. But the biggest problem in India is local competition. International refractory companies and local promoters have overbuilt. And the biggest problem in India is dramatic overcapacity that we have in the country there, and that leads to the margin decline. And we need competitors to understand this finally instead of continuing to build, which they are still doing. So I don't see any short-term hope, unfortunately, in India. The avenue for us also here is not so much on cost cutting because the cost levels in India are very low. But the approach here is on technology improvement. So it's the solution approach to the customer that will help us to decommoditize. And that cannot be done by everybody because it takes global scale in order to bring robotic solutions, sensor technology, circular economy setups and things like that, that are not being able to match. That's the avenue in India. On M&A, you're totally right. The opportunities will be there. They are there. It's just a matter of negotiation cycle. It takes an average of 2 years from when we engage with somebody who is willing to talk about merging with us until we close the deal. And that's the reason why 2026, we have no cash up or no big one. On the reporting question.... Ian Botha: Vanessa, on EBITA, we actually got some very helpful feedback from the investment community last year around the merits in trying to thin down our material, reduce the complexity, and that's what we sought to do. So we have continued to provide gross profit. If there are certain specific metrics, EBITA as an example, that you find particularly helpful, please reach out to us, and we can certainly help. Jonathan Hurn: It's Jonathan Hurn from Barclays. Just a couple of questions. Firstly, just topically, Middle East. Could you just talk a little bit about your exposure there in terms of size? Also in terms of your guidance for 2026, your overall group guidance, what were you expecting? What was the Middle East contributing? No, just in terms of revenue. So I'm just trying to get a feel for the importance of the Middle East, what part -- what the outlook for that business was in terms of 2026 for your guidance and also sort of what actions you can take there? And then the second one is just in terms of coming back to those regulatory tailwinds or potentially regulatory tailwinds. Can you just give us a feel for what the impact of those could be in terms of monetary value, EBITA, both for Europe and potentially what regulations in Brazil could bring through as well? And then maybe just lastly, if I can squeeze another one in. Just in terms of that backwards integration margin. I mean, look, you've given us some steps about what you're going to do there to improve it. Can you just give us a little feel for how you think the profile of that margin should develop going forward, please? Stefan Borgas: Maybe, Ian, you can talk about the META guidance. Let me pick up the other 2 pieces. The regulatory tailwinds, well, in Brazil, this is an investigation. But Brazil is very connected with China. So there's a basic hesitancy to put big trade barriers for Chinese imports in Brazil. Why? Because it goes both ways. So it's a -- in principle, it's a free trade spirit between the 2 countries, which in principle is good news because we -- I think, in general, long term, we need less protectionism and more free trade again. Therefore, nothing will happen this year. This is all under discussion. This is under investigation. It's done in a friendly way. We are sitting on the fence and watching this. I think if at all, there could be a bit of a margin stabilization effect for our Brazilian business for 2027. And this can come from a stabilization of the steel production. Steel production in Brazil has been reducing 1%, 2%, 3% per year, mostly because of Chinese imports. And on the refractories is the same thing. It has been reducing because customers have started to commoditize. And that trend could be turned back and then bring a couple of percentages of margin improvement for us, more on the margin side than on the volume side. In Europe, it's an investigation as well. There could be a floor on imports, but actual Chinese imports into Europe are very small. It is not a very large issue. If you had hoped for some of this to happen already, I advise you to look at January world Steel numbers that have just come out a couple of days ago. Europe steel production is down by 2.5% compared to January 2025, which wasn't exactly a bombastic January either. So we're not seeing any of this now. So please don't put any hope in it. And should this happen, again, this is maybe putting a floor on European steel production and therewith on refractory consumption as well. So nothing happened this year. On the backward integration, look, there's 2 components here. There's a cost improvement, mostly on mining optimization and energy consumption and processing for us. And then there is a portfolio aspect. We've always looked at our raw material backward integration as a raw material backward integration. How many refractory raw materials can we make, at which cost so we don't need to buy it and have an advantage out of this. If we look at our raw material assets from a perspective of a raw material asset, then we have started to ask the question last year. What profit can we generate or what revenue and profit can we generate out of these raw material assets, of course, for refractory purposes, but also for maybe other markets. And so there's a bit of a market expansion opportunity here because we have some minerals there that are not suited for refractories, but maybe for other applications, and we're looking at this. This is a benefit from maybe EUR 2 million, EUR 3 million, EUR 4 million, EUR 5 million this year, but it will be one of the elements that gives us velocity for next year because we need self-help for '27 as well, right? We cannot rely on the market to give us a bonanza. We have to create that ourselves. Ian on On META? Ian Botha: On Middle East, Turkey and Africa. So we had EUR 350 million of revenue last year, almost EUR 80 million of gross profit. Our forecasts anticipate around a 10% step-up in that gross profit really as you see the benefits of the slightly stronger second half '25 industrial volumes coming through and slightly stronger pricing that we realized in '25. And then very importantly, with the benefits of the lower plant costs, both because we import a lot of finished goods out of Europe into that region. And as the Europe cost structure improves, including with the footprint rationalization, META is one of the regions to benefit. And then also from the measures that Stefan has just touched on around raw materials in our Turkey plants. One of the areas that I think we'll be watching carefully is obviously the impact of the increase in oil prices that we've seen during the course of the last 25 days -- last 24 hours. Our energy cost last year was about EUR 225 million, half of that went into gas, 20% into electricity, 30% into diesel. And typically, we would expect to pass on any increase in the diesel price to our customers. We do have somewhat of a hedging for part of this year. So that's an area that we will continue to focus on this year. Clearly, our guidance is based on an expectation that there is no net negative from the oil price increase. Stefan Borgas: And I think that with what happened now, the volume recovery, at least in the Middle East, I would argue is at risk. It's early days because we are only 2 days into this new war, but I don't see customers as a first priority now looking at volume increases. Their first priority is to protect themselves. And hopefully, industrial infrastructure doesn't get hit. So it's anything but good news. Harry? Harry Philips: It's Harry Philips from Peel Hunt. A couple of questions, please. Just thinking about the working capital number, which has been very impressive. And just noted thankfully that the factoring element was very stable as well. So it's a clean number rather than a variable number. Just thinking that how much -- if we look to the medium term and think about recovery, thinking around working capital intensity into that, how much might that change, if at all? And sort of if you like to sort of reline to step into recovery, how much do you need to put back in? And then the second is sort of more thinking about the sort of margin profile of the business again into the medium term, where the sort of picture of, say, a 14% to 15% margin, 300, 350 basis points from vertical integration, balance from refractories. Given the extent of the self-help that you're currently conducting and the network optimization post the M&A and the sort of market issues around vertical integration, does that sort of change that mix in any way? Or is this just a sort of transitionary process that will work its way back to norms in the future? Stefan Borgas: Okay. Let me try to take a stab at this and then Ian, please, you should add a couple of thoughts here. On the margin profile, in the second half of this year, we were at 13.7%. So of course, there are some good positive effects here. This is not 13.7% sustainably, but the refractory part of the business can run between 12% and 13%. That's clearly possible. And this is not very far away. And then the backward integration between 2% and 3%. So we are between 15% and 16% as a margin potential. In a normalized way and when the market recovers during the recovery phase, when we have operational leverage, then it could be even higher. But that's a short-term phase. But now we are lower in a short-term phase. Well, it's a pretty long short-term phase, but we have that potential. On the net working capital, this is also a long journey. Actually, one of the major focus areas of our digital transformation is net working capital. Because we have buffers in our inventories everywhere. We have buffers at the supplier. We have buffers on the boats. We have buffers in the warehouses. We have buffers at the customers. We have buffers in our plants. And why? Because our planning accuracy capability are not where they could eventually be. And this big digital transformation in which we are spending a triple-digit million amount of money, which will be completed in the middle of 2027 will give us then the machine to drive working capital down. If you look at world-class, very complex industrial businesses from a working capital perspective, world-class, they should -- we should run at about 20%, 21%, 22% working capital. So that's massive. I'm not yet saying we'll get there because we first need the machine to use, but that's the ambition level here. Ian, would you say I'm too optimistic here? Ian Botha: No, no. I think that over the next couple of years, delivering a 2% reduction in our working capital intensity must be our North Star. I think that the focus for '26 is very much on operating in a stable fashion at this 21.7% that we've achieved. We achieved that at the end of last year. That was a good performance. But during the course of the year, we weren't consistently at that level. And if we can use our new o9 technology, if we can use the local for local to drive that consistency, then we also get a very important finance charge benefit. And that's the focus, particularly for this year. I'm not sure that we would expect to be in a very different place at the end of '26. But going forward, another 2%... Stefan Borgas: So when I'm saying 20%, 21%, this is without financial measurement. So this is a 4, 5 percentage point improvement. That's the long-term potential. Mark Fielding: Mark Fielding from RBC. Actually, I just want to follow up on your answer to Harry's question and talking about, obviously, the second half margin was 13.7% and your comment was not near-term sustainable. I suppose my question is why isn't that margin sustainable this year in the context of -- I know there's a second half bias in the Industrial business, but it was much less pronounced last year than is normal, and you're looking for it to be a bit better this year. There's a number of other self-help factors. Why aren't we taking the second half profit and doubling it, ignoring I am very cognizant of the Middle East stuff and how that then feeds in. Ian Botha: Yes. So Mark, you're absolutely right in your initial premise. You can't double our second half because of the industrial on the cement side, also the fact that we have slightly higher steel production. And obviously, there is a significant currency headwind that has built up during the course of the second half of last year. If you look at the EUR 15 million, those 4 drivers, if you look at pricing, we delivered EUR 27 million in the second half of last year. Now we're guiding to EUR 15 million. Why? Because we can see an increasing headwind around certain of the raw material prices coming down and the threat that, that imposed. On our plant measures, actually a very good message. We're going from EUR 10 million second half of last year, and we're adding EUR 15 million now. On SG&A, we did EUR 21 million in the second half of last year. Now we're guiding to EUR 15 million. But remember, there's still a significant labor cost inflation headwind that we hit. So that's around just short of EUR 10 million for us. So to achieve that EUR 15 million, as we've outlined, we need to do more around our processes, our shared services, our Europe footprint. And then from an Industrial perspective, we delivered EUR 23 million second half last year. Now we're guiding to EUR 15 million, and that's because of this impact of industrial projects just moving. And it's not that we've lost the projects that were supposed to be delivered in November and December last year. They've moved now into the first quarter, but that drift carries on. Stefan Borgas: There is a normal seasonality in our business. The second half is always stronger because of the projects delivery focus in the fourth quarter. CapEx projects are always back-end loaded in every company. And of course, we're in the CapEx cycle here, but also because of the cement season. So you can never double the profitability of the second half to the first half. Usually, we have -- last year, we had a 65-35 split between first half and second half. But normally, we still have 45-55 split. Therefore, you've got to take the second half down a little bit on the margin side. Ian Botha: And then just the last component of that waterfall, on steel, clearly, we're adding 0 because here, we believe any modest low-margin growth that we get out of India is offset by weakness in Brazil, in Mexico, in Canada and in Europe. So that's how you get to our numbers. Mark Fielding: And could we just follow up slightly more on the big currency headwind? Because it feels like a lot of that should have started to be there in the second half when I think it feels like currency was about a 5% headwind, but the guidance on profit, the guide is more like an 8% for this year. So maybe just talk a little bit more about the moving parts there, where there's also some hedging factors and things too or anything like that. Ian Botha: So there is no hedging disadvantage that we have this year. We have put in place some protection to avoid significant further weakness in the basket. If you look last year, the first half, we had a currency advantage of EUR 7 million. And in the second half of last year, we had a weakness of EUR 20 million because of the weakness in the Canadian dollar, the Indian rupee, the Brazilian real and particularly the U.S. dollar. So that EUR 35 million impact for this year, that's the impact of going from about $1.18 now from $1.12 and every one movement is EUR 4.2 million. You've got that detail in the appendix. That's EUR 25 million just on the impact of the U.S. dollar. And then the Indian rupee, again, you'll see it in the appendix. Currently, it's about INR 107 versus INR 90. That's another EUR 13 million impact coming through. So it's a very significant headwind for us. Stefan Borgas: Actually, the Indian rupee devaluation is such a big effect that it has destroyed profitability totally for some of our competitors in India who are importing. So because they pushed on pricing and then they got the rupee on top of it. So some competitors really look terrible. Ian Botha: Mark, at a macro level, really what's happened during the course of last year is we started to benefit from weakness in our producer currencies, which is a good thing for us. And then in the second half, it moved to weakness in particularly in our high revenue geographies, and that's now what's continuing in '26. Stefan Borgas: Shall we go? Any questions in the conference? No, no questions in the phone conference. Sure. Jonathan Hurn: Could I just ask just one follow-up question. Just in terms of your sort of sea freight and obviously, the rates there. I mean, if we do see a spike, how are you priced for that in terms of obviously, you move stuff by that method. Are you sort of locked in, in terms of your forward rates for that? Or do you buy it at spot? Just any idea there, please? Stefan Borgas: No, we have a structurally actually really good setup on freight. So it's super predictable. It's very well contracted. It's variable enough that we're not stuck with any freight. And by and large, it's a pass-through item. So we don't have any downside because we are really well integrated now with some of the very big companies around the world. It took us 2.5 hours yesterday after the attack in the Middle East and the close of the Strait of Hormuz to understand which containers were 2.5 hours. So that's outstanding. We really learned our lesson from the post-COVID mess that we had. So we react really, really fast, and we can keep customers supplied because as sea freight gets redirected now, we have some of the boats that were going through the Suez Canal now that's completely closed. So now this is going around the horn of Africa, which means some customers will be delayed, but we see this coming, and we already started production elsewhere to supply those customers who would have been affected, including some in the Middle East, actually. So that is good, and therefore, we can pass on sea freight costs quickly because customers see a real, really, real service upside. Well, thank you very much for dialing in this morning. Just to summarize, we delivered our self-help measures, which saved the 2025 year and improved our business structurally. Second, that momentum continues into 2026. And with new measures that are already under full implementation, that momentum will also continue into 2027. Third message, no help from the market. So those companies who can help themselves should bring the focus of your investors and those who hope on the market not. Thank you very much for dialing in this morning and for being here this morning. Goodbye from London.
Operator: Good morning, ladies and gentlemen, and welcome to Galp's Fourth Quarter and Full Year 2025 Results Presentation. I will now pass the floor to Joao Goncalves Pereira, Head of Investor Relations. Joao Pereira: Good morning, everyone, and welcome to Galp's Fourth Quarter and Full Year 2025 Q&A session. In the room with me, I have both our co-CEOs, Maria Joao Carioca and Joao Marques da Silva as well as the full executive team. But before passing the mic for some quick opening remarks, let me start with our usual disclaimer. During today's session, we will be making forward-looking statements that are based on our current estimates. Actual results could differ due to the factors outlined in our cautionary statement within the published materials. With this, Joao, would you like to say a few words? Joao Diogo da Silva: Thank you. Thank you, Joao, and good morning, everyone. Let me start by acknowledging the rapidly evolving and deeply concerning conflict in the Middle East, which is increasing geopolitical risk across the globe. The escalation, including strikes on critical infrastructure and threats to vital shipping routes has materially increased uncertainty in global energy markets and the broader macro environment, reinforcing the need for resilience and discipline. Despite this increased volatility and looking back at 2025, it was a remarkable year for Galp, marked by consistent strong operational performance and disciplined project execution. Allow me to highlight a couple of key points. Starting with Brazil, where production reached in average 111,000 barrels per day, above 2024 levels with high fleet availabilities and strong resiliency of our main reservoirs. On top of that, Bacalhau reached first oil and is showing high productivities as we ramp up the unit throughout the year. In Sines, our low-carbon projects are advancing as planned, and we expect to start commissioning the plants by the end of the year. Midstream and commercial had very supportive strong performances in 2025, resulting in a robust group operational cash flow of EUR 2.2 billion higher year-on-year, even under a more depressed macro scenario and allowing Galp to maintain a strong financial position. Finally, we've communicated meaningful portfolio evolutions, reinforcing Galp investment case. Earlier this year, we've announced our intentions to merge our downstream activities with Moeve. We see this as an opportunity to unlock greater scale, resilience and returns in mature and transforming industries, while sharpening Galp's focus and free cash profile. We are working towards the final agreement by mid-2026. Maria Joao, I'll pass it to you. Maria Joao Carioca: Thank you, Joao. Good morning, everyone. Let me just add a few initial remarks on Galp's short-term outlook. Even as the current geopolitical situation evolves and admittedly continues to generate tension and uncertainty certainly for energy markets worldwide. Galp's operations are very much Atlantic centered, and we have been monitoring these developments and already taking action to reroute our equity oil shipments. So therefore, we're not really facing any material direct impact at this point. Nonetheless, and Joao well put it, volatility uncertainty are notably high. And as such, it will be fundamental to sustain our clear focus on operational performance and disciplined financial management. So now looking at Galp's case and also in light of the significant portfolio evolutions that Joao just discussed, which we expect to unfold during the year, we are limiting our guidance only to 2026, and we'll be looking to better update the market on new strategic guidelines once we have more visibility. Overall, we continue to see a strong operational momentum going forward, and our guidance is very much reflective of that. Driven by Bacalhau ramp-up, production is expected to increase at least 15% to a range of 125,000 to 130,000 barrels. Together with sustained industrial and midstream EBITDA contribution of above EUR 700 million and a still strong commercial of above EUR 350 million, we aim to deliver above EUR 2.6 billion EBITDA and an OCF of over EUR 2.0 billion. Now keep in mind that this is, of course, assuming a much weaker macro deck year-on-year. We're assuming Brent at $60 and a dollar-to-year exchange rate of 1.18. If we were to assume 2025 macro, OCF would actually be expected to surpass EUR 2.6 billion, clearly reflective of our portfolio growth. Organic CapEx is expected at around EUR 1 billion with Bacalhau CapEx ramping down, but including activities from Namibia. More precisely, we're expecting one well in 2026 and the possible FID of Venus around midyear. We have strong alignment with Total on the next steps for Mopane and the upcoming exploration appraisal campaign is key to unlock further potential in the Southeast region and ideally to better converge on the development concept for the asset. Finally, we are maintaining our distribution guidelines intact for 2026. So on top of the EUR 0.64 dividend per share that we will be submitting to the AGM in May, we will launch tomorrow a EUR 250 million share buyback to be executed throughout the year. This is sustained year-on-year even under a clearly more challenging macro context that we have been planning for. Operator, we may now take questions. Thank you. Operator: [Operator Instructions] We will now go to the first question, and the question comes from the line of Matt Smith from Bank of America. Matthew Smith: And the first one would be around the potential Mopane development. I mean Total talked to some quite impressive numbers in terms of production rates, recovery rates for potential FPSO there. I guess my specific question was, would it be right to presume that, that would be a development which extracts from both the Northwest and Southeast regions? Or is this potentially just focused on one of those regions, please? That would be the first. And then the second was following up on comments that were in your video transcript talking about adding further depth to the upstream funnel. Just wondered if I could dig into those comments a bit more. Does that expand beyond Namibia, I suppose Mopane and Venus are already in the upstream funnel. Any further color you could give there would be interesting. Maria Joao Carioca: Thank you, Matt. So on the comments on Namibia, I think we've been very clear and try to guide on where we see Namibia standing and the work that remains to be done. So Total's comments are very much aligned with our expectations. I believe you have registered 800 about 1.1 million barrels. So that is what we are looking to now go in and narrow. Now we did see first the Northwest and then we spoke about the more Southeast regions of Mopane as 2 potential regions. The work we have now to be done is very much in trying to narrow down what could be a concept and get full alignment on what can be the wells' locations, the drilling plan, the full complex. So it's still too soon to discuss the development concept. We understand that Total is very much aligned with us and has a vision for the region, which is a very positive one. they've actually put out there the number that we are aligned with, which is approximately 200,000 barrels FPSO, which is a sizable one. But it's clearly something to be developed on how to best articulate these regions and how to best make sure that the development concept is the one that is most value accretive for the region. No specific guidance any further than this at this stage. On the upstream funnel, so indeed -- and again, I think we've been talking very much about there is indeed some CapEx cushion in our numbers. We've always guided for net CapEx precisely because over the past few years, we have been using our CapEx flexibility as a way to manage the portfolio and as a way to make sure that our financial discipline is put in place and that we drive value out of that. On upstream, we are indeed looking to -- it is our growth engine. We are indeed looking to -- even though we now have a much clearer line of sight into growth going forward, we are obviously very focused on maintaining that line of sight into growth and into maintaining that ability of upstream to deliver steady growth at an adequately derisked profile. We are very much aware of our core preferences. So we remain Atlantic Basin. We remain focused in circumstances where we can have a presence with a partner that provides us a solid back into whichever geography we're in. We have had very good experiences with deepwater. So again, the notion is looking into those preferences of ours, but acknowledging that the funnel of available opportunities are out there is always going to have limited options. We will, of course, continue to add to our profile. I'll remind you that we've just added Venus to the profile. That will be a natural follow-up to our Bacalhau. It will also then be in tandem and in sequence with Mopane final delivery. So it's this smooth growth curve that we're looking for and looking for opportunities and that we hope we will be able to bring to the funnel. Matthew Smith: So if I could just follow up on that. Is there a preference to add into the funnel through the drill bit or inorganically? Maria Joao Carioca: I'll just retain the notion of managing the funnel with flexibility, but a very clear idea of the type of assets we would like to deliver or to have options on and certainly, a very clear focus on a growth profile that remains highly visible and very, very transparent. So we would like assets that fit into the portfolio in a way that speaks to the current investment case. Operator: Your next question today comes from the line of Alejandro Vigil from Santander. Alejandro Vigil: Congratulations for the results. One first question will be about the capital intensity of Galp. I know it's difficult, many moving parts, the Moeve transaction. But if this EUR 1 billion of organic CapEx guidance you provided for '26 could be a good reference for future level of CapEx intensity. That will be the first one. And the second one is about the Moeve transaction. Probably you have advanced in terms of discussions with regulators. And just if you can see any obstacles for the transaction or you see a potentially smooth combination of both companies? Maria Joao Carioca: Alejandro, let me start with a bit on CapEx intensity, and then I'll ask Joao to comment on Moeve. So we are guiding for organic CapEx at EUR 1 billion. I think that's what we were alluding to, and that is very much in line with our run rate and what we already saw in 2025. So this, of course, speaks to our continued upstream focus. So upstream continues to be approximately over 40% of where we see our organic CapEx spend. I've already commented to some extent on what we're seeing our net CapEx, and that is, of course, a maintained guidance with a little bit of cushion for flexibility and a bit of headroom. So other than that, it's a very familiar move. So we continue to have relatively light maintenance CapEx. Upstream is still delivering within the framework that this light CapEx provides us. So it's still operating at very low operating costs and with breakevens that in this current circumstances are particularly beneficial. So we're talking about approximately $20 upstream breakevens. So all in all, it's very much focused on light maintenance, both in upstream and also, of course, there's a few remaining elements in downstream, but fundamentally keeping flexibility and making sure that the bulk of our CapEx still addresses growth opportunities. Joao Diogo da Silva: Alejandro, thanks for the question. So it's -- well, it's an ongoing process. We didn't reach yet the authorization moment. So we are expecting to have a final agreement mid-2026. Both parties agreed on preliminary deal guidelines, and we are still discussing further in-depth details and structure. So for now, no authorization process has started, and we are expecting authorizations from the standard authorities. For instance, foreign investment and competition approvals should be required, but not at this stage, only later on. Thank you. Operator: Our next question today comes from the line of Josh Stone from UBS. Joshua Eliot Stone: A question on the renewables business, the guide you've given is quite like cautious, the capacity buildup perhaps happening a bit slower than you might have first expected. You've been quite creative or you're looking like quite creative on the downstream business by merging assets and taking them off the balance sheet. So might you consider something similar for your renewables business? Does it still make sense for these assets to be fully consolidated? So that's the first one. Second one, on the Moeve merger, and I appreciate some insight on the timing. How soon after finalizing an agreement could a deal be completed, do you think? Joao Diogo da Silva: So on the renewables guidance, as we've been telling you guys, renewables keeps us in a position that will allow us to have the optionality. And in terms of strategic positioning, it's -- we like those assets and decarbonization angle that they allow us. So today, as per today, of course, we are looking into the market. We are active and open to partnerships and portfolio optimization. But still, we are very much focused also on optimizing our portfolio. So we are looking into the hybridization and storage projects. We're aiming to reduce risk and increase the return from our assets. So that's where we stand today. On the consolidation, can you repeat your question because I understood it was on the Moeve side. We -- can you repeat that one? Joshua Eliot Stone: Just if the renewables business should still be fully consolidated, if actually there could be an opportunity to maybe partially sell it or take it and treat it more like an associate business if that might make more sense? I'm just curious as your thoughts there. Joao Diogo da Silva: So we will be continuing to assess if we should be the only and only owners of the assets, but no more considerations at this point. Thank you. Operator: Your next question comes from the line of Guilherme Levy from Morgan Stanley. Guilherme Levy: The first one, just going back to the Moeve discussions. Could you perhaps just provide us with some color around synergies, even if from a qualitative macro standpoint without providing numbers, that would be great. And then secondly, going back to exploration, Shell earlier this year drilled an unsuccessful well in Sao Tome. And I was keen to pick your brain in terms of the structures that you are planning to target in the well that is scheduled to be drilled next year there. Joao Diogo da Silva: Thank you, Guilherme. Allow me just to go back to Josh because I thought I skipped one. Josh was asking about the final decision, it should be mid-2026. That's when we are expecting to reach a final agreement. On your question, Guilherme, and namely on the synergy side. So clearly, that's a point that we need to focus to unlock. We see our assets, both Galp and Moeve together as very complementary. If we look at on the logistics, supply chains, overall, the assets that we are combining on the industrial side, we see a lot of efficiencies and complementary on those. Also on the retail side, of course, we are building a larger scale retail network. And by doing that, we will be benefiting from both strong brands on both territories, and that for sure will allow us to increase the value that we can extract from the assets. We will have, for sure, higher trading firepower. We will have, for sure, turnaround efficiencies. So altogether, we should be ready to materialize on the first year of closing. And if you look at overall studies, you should see that at least 10% combined synergies should be a target for the deal. Thank you. Maria Joao Carioca: Let me address the Sao Tome question. So Guilherme, we are indeed looking at what's happening in the basin. As you know, it's indeed a very, very young basin. We are taking in some of the information that we're sharing with the other operators and you mentioned Shell. But we are incorporating all of that into our models and into our thinking about a lot. We have in mind a well for 2027, but that is the topic in our time line. So if you recall back when drilled Falcao was a well that confirmed the existence of a petroleum system. So now it is particularly relevant that we take on the next steps to make sure that the information we gather adds and gives consistency to that petroleum system as we see it. But for now, what we're looking at is a well in 2027, and that gives us some time to incorporate the information we're gathering from other players in the basin. Operator: Your next question today comes from the line of Matt Lofting from JPMorgan. Matthew Lofting: I'll ask 2. Just on Namibia, if you zoom out a bit relative to earlier comments, there's probably a sense that Galp's new partner in the country and the industry as a whole is sort of gaining greater confidence in the basin and the confidence of positively trending above the ground as well as what you're seeing below the ground. I just wonder how Galp sort of sees that in terms of next steps and moving forward, not sort of 2026 solely, but beyond that as well on a medium-term basis? And then secondly, I just wanted to ask you about Brazil and life after Bacalhau to a certain extent, sort of seems like that asset is ramping up very well. How do you see sort of next steps in Brazil on a medium-term basis for Galp when you think about things like enhancing recovery factors and future exploration opportunities in the presold? Maria Joao Carioca: Thank you, Matt. So let me start with Namibia. So indeed, I think we've been consistently vocal about the fact that this is an asset that we'd like. We retained 40% precisely because we wanted to make sure that we got a solution for the asset that enabled a development at pace that spoke to what we saw in the asset. It required significant derisking as we were addressing it back in '24, '25. But the perspective was always one of derisking and finding a way forward. So I think that's what we certainly got with the partnership with Total. We commented on the fact that the partner we were looking for would precisely be a partner with an aligned vision on the asset, the expertise, the experience in Total's case, the presence in the basin to complement the information. So it is now particularly rewarding to start seeing some of the appraisals to come along the same lines as we had foreseen them, and we were putting them to consideration by potential partners. So moving forward, yes, we're clearly very much focused on next steps. So we are expecting completion of the deal with Total by midyear. Of course, if there's any advancement to that, we will be delivering on that. And I think the conversations with local authorities have continued, have been -- there's progress being made. I think interests are very well aligned, and this is very, very relevant. So I think towards that good pace of completion, there's also the element that the preemption rights that were the normal ones within the existing assets. Those were not exercised. So the deadline is over, and that's one of the elements that is -- if you like, there's a tick box or a box that's been ticked, and we can move forward on that aspect. Other than that, you know that the terms of the deal included additional E&A, and this is very much to address the point that I spoke of earlier to make sure that the development concept is matured and is the one that best addresses the specific characteristics of the asset. So it's a 3-well campaign, as you well know. And we are expecting to have the first well of that campaign by the second half of 2026. It's ongoing work. We're assessing currently rig opportunities, and we're also linking this back to one of the elements of the deal that we found we had a particularly good fit with our portfolio, the Venus asset. So there as well, progress is being made. The FEED works have been finalized. We're expecting FID. So I think all in all, what we're seeing is that Namibia is indeed a rather promising basin. I think we're now in a good spot to work together with Namibian authorities and with our partner to push and to drive that growth forward. Short-term next steps are very clear. We're working on completion, but we're also already moving ahead with making sure that we can engage in an E&A and that we drive that at a pace as we would like to. So rather good feeling both in terms of the ability to move forward and also the ability to do so in a way that is collaborative with local authorities and that grants us the conditions and the best possible approach towards the asset. On Bacalhau, and I think it's -- these 2 are actually a segue, a natural segue. Our experience in Brazil has also been one of being together with partners that can push forward the development of relevant assets. So Bacalhau is the latest of that string of assets that we've had access to and that we've been working together with the respective operators to push forward. A lot of the work we're doing in Brazil other than the ramping up of Bacalhau has indeed to do with making sure that we sustain what we consider to be reference practices in terms of being able to continue to deliver and continue to sustain production in those assets. So I think the hallmark of that type of work right now is the 2P Myvalor set of initiatives. It's approximately -- I believe it's in the neighborhood of 40 initiatives. And I think those have been pushing our assets to continue to deliver at what have been already performances that are very solid in the market in terms of Sundown's performances. We're working very closely with Petrobras. This is all about making sure that value is delivered in those fields. The fields themselves continue to demonstrate amazing resilience and amazing ability to sustain solid output. So it's all about making sure that asset integrity, that maintenance schedules that this set of initiatives is put together to sustain this growth, not just in the very short term, but also well into the near-term production and elongate our plateaus in these assets. Brazil also has additional resources. You've heard us talk about the Pulatos. This is a very different stage basin. This is one still to be derisked. But again, it speaks to our upstream portfolio having a sequence of assets in different stages of derisking and in different stages of maturity, but one where we continue to elongate the time line to deliver steady production and to continue to develop the growth element of our portfolio. Operator: [Operator Instructions] And our next question today comes from the line of Nash Cui from Barclays. Naisheng Cui: Can I ask 2 questions, please, on downstream. The first one is on refining margin. I wonder if you can give a bit of color on the short-term refining margin, please? And what is your quarter-to-date and spot refining margin, if you don't mind disclosing. And the second question is more on your low carbon portfolio. You are spending 35% of your CapEx on low carbon projects. I wonder, given some of the recent debate on carbon on ETS and some of your peers have cut their low carbon ambition. Does that change any of your kind of medium- to long-term view on low carbon and some of the assumptions there? Joao Diogo da Silva: So on your first question on refining margins, what we can tell you is that currently, we are trading on the double-digit mark. So that's where we are at this point, very focused on efficiency and asset reliability, overcoming a couple of weeks harsh in terms of weather conditions. So that's where we are focusing ourselves. On the CapEx spending, so that's your second question. We are clearly focused on delivering the 2 main projects in Sines. We should be ending 2026 with the commissioning. So both on the green hydrogen project, 100 megawatts. Basically, we have all the stacks inside at this point, very committed to deliver, but also on the HVO, around 60% to 65% of the CapEx is already committed, and it fits really well within our portfolio. So we are not expecting any further decisions. We spend around 35% of our CapEx in low-carbon projects. And let me add that on the longer term, we need to -- when we will be able to close if we close the transaction with Moeve, of course, we need to see it as a whole asset base together the 3 refineries with the petrochemicals, with the green molecules. That's where we need to be looking at after mid-2026. Operator: Your next question comes from the line of Mark Wilson from Jefferies. Mark Wilson: I'd like to ask my first question on Mopane and PEL83. Excellent to see the FPSO development scenario there. I was just wondering, your slides show the potential field extension ending at the southern limit of the license. So my question is that the drilling in the Southeast obviously looks to confirm or even add to volumes. But is there a secondary reason for drilling down there to appraise in case there's a unitization discussion needed with the licenses to the South. So that would be my first question. And the second one then, your outlook on refining based on a $5.5 margin, you just spoke to double digits. Could I ask on your view to the impact of the current conflict specific to Galp's refining outlook? Maria Joao Carioca: Thank you, Mark. So you're well ahead into eventual unitization issues. We do not see those at this moment as being sufficiently -- as being relevant or being a topic. Our concern right now is very much about making sure that we got a development concept that best encompasses the characteristics that we see in the assets. So you saw us looking first into the Northwest, and we got into the Southeast, and we saw really good characteristics there. And I think overall, it's an oilier setup and everything else, permeabilities, porosities, pressures, all of those made us look further into the Southeast region. But I would remind you that we had -- we drilled one well there, right? So it's really small data sets to really drive forward a concept definition, and that's very much what we're looking into. And at this stage, that is clearly the drive, and we don't really see an issue with a Rhino, Azule block being a topic for unitization at this stage. Joao Diogo da Silva: And Mark, on your second question, indeed, the double digits I've just made reference, that's a short-term today impact from a number of events. We see ourselves as prudent and plans, and we need to look to what can be a medium and long-term scenario. That's why we will be sticking to the $5 to $6 refining margin. That's where we believe the market will be, and that's our guidance. Operator: Your next question today comes from the line of Ignacio Domenech from JB Capital. Ignacio Doménech: The first one is on the EUR 155 million tax refund in Spain that the Spanish court recently ruled in favor on Galp side. Just wanted to understand when and how are you planning to account this refund. This is entirely for Galp or if there is any part that should be served with consumers? And then on the -- my second question is on the LNG trading outlook. I just wanted to understand your view for 2026, you're expecting a bit more challenging conditions. And if I may related with the LNG trading and the arbitration with Venture Global, if you have any visibility of the time line and if the recent result with one of your peers in Iberia changes your view on the potential outcome? Joao Diogo da Silva: So on your first question about [Foreign Language], you know that's, I would say, a special hydrocarbon tax supply in Spain from May 2013 to December 2014. And as you know, it was applied, I would say, unevenly across different regions and autonomous regions. The court decision that you are mentioning should lead Galp to collect these reimbursements and -- well, together with the interest, but still too early to guide you on the exact amount. We surely need to understand the timings, the notional considering the accrued interest, but also the methods to be reimbursed. These taxes for sure, they were paid at the same time. So nothing was provisioned. But indeed, we need to take our time to better understand this decision. On the -- on your second question on the LNG outlook in 2026, we are very much focused on the delivery cargoes from the Venture contract. So everything has been accomplished since the first cargoes delivered. For this year 2026, we are expecting to get full volumes, which means 15 terawatts, about 15 cargoes. And the only thing we can tell you is that we are assuming and expecting narrower gas price spreads. So that's the -- that's the guidance that we should be giving you at this point. We will be very actively on the risk management side, and that's what I can say by today. We will not comment on the legal courts or decisions or other companies that are having the same as well, at least cases with Venture Global. Thank you. Operator: Our next question today comes from the line of Fernando Abril-Martorell from Alantra. Fernando Abril-Martorell: A couple of questions, please. First, there is a slight improvement in the EBITDA to operating cash flow conversion. I understand partly driven by a more advantageous tax profile of Bacalhau. So could you clarify how long this more efficient tax structure is expected to last? And additionally, how do you plan to manage the 10% withholding tax on dividends in Brazil? It seems to have a limited impact on your guidance. And second on Moeve more strategically, if this transaction proceeds, you would effectively sell control of your industrial business and also controlling retail. So could you elaborate on a little bit on the strategic rationale behind this shift, I would say. And more broadly, would also selling control of renewables be a potential option over time for you? Maria Joao Carioca: Thank you, Fernando. The taxation circumstances overall for Galp, and then I'll go into your question on the withholding tax in Brazil. So overall, we did see our cash taxes in '25 and our expectation for '26 is also a more beneficial one. I think this is the combined effect of a number of aspects. You touched upon one which is obviously, a core one, which is the fact that Bacalhau is -- first oil has occurred. So the taxation will be adjusted accordingly. We are still ramping up. But in any case, that gives us already some room to reap the fiscal benefits that are within the Brazilian law, and we will be accounting for those correspondingly. So if you combine that, and I'd say that, that is a dominating factor. If you combine that with our macro deck on exchange rates and if you take into consideration the relative weight of upstream, I think that gives you the full picture on what we're expecting in terms of cash taxes for 2026. The withholding tax for '26 in particular, we don't expect distributions to be significant. We had a good view, a good vision of the expected development of this tax. We'll see whether it is sustained and how the Brazilian authorities look through it. But for 2026, we were able to somehow anticipate in as much as possible what we could see in terms of impact and the minorities that we are expecting to -- the payment to minorities we're expecting in '26 is a relatively small one, I'd say, in the circa EUR 50 million. So with very limited impact in terms of our overall figures. Joao Diogo da Silva: Fernando, about your second question on Moeve. So the governance is still -- is part of the negotiation process ongoing, as I told you, and we will be resuming by mid-2026. As you've mentioned, we are expecting -- well, we are expecting to have 2 independent companies in the retailco with call control, as you mentioned, but also in industrial with a significant minority stake. Of course, these 2 companies were -- well, at least thought as something that would strengthen our resilience in a precious sector with 2 completely different pure plays in each of the companies and fully funded and tailored capital allocation. So that's how we see it. It's still early to have final decision, and that's where we stand. On your question on renewables, as I've mentioned earlier in the call, we see renewables as an important part of our portfolio. For sure, we will be challenging ourselves if we are the best owners of these assets all the time, and we will not exclude opportunities to enhance this portfolio, making it more lean for a future movement. But that's something that we should be considering all the time. So naturally, we can consider partnerships in renewables as well, but no decisions have been taken at this point. Operator: We will now take our final question for today. And the final question comes from the line of Biraj Borkhataria from RBC. Biraj Borkhataria: Two, please. The first one is on Mozambique. There's a comment in your slides around not including that payment in your net CapEx guidance. And I know there's a dispute around capital gains tax there. So could you just help me understand the steps to resolve that issue as well as the timing around that? And then the second question is on the inorganic activity that you've budgeted around EUR 0.5 billion for inorganics. Based on your comments from the previous questions, it sounds like you're more focused on upstream deals. If I look at your portfolio, you're basically all oil projects at the moment and you've sold the LNG one. So is it safe to assume that you're focused on oil only? Or would you seek to diversify into gas? Maria Joao Carioca: Thank you. So let me start with Mozambique. And if I understood correctly, but let me know if I didn't get it right. So you're going into the capital gains taxes as an update on where we stand with that conversation with Mozambican authorities. So it is an ongoing conversation. We are still very confident about the way we address the issue and that our claims will, in the end, be understood by local authorities. So all legal internal and both internal and external assessments continue to confirm that understanding. So in that sense, we see that this is a tax contingency that we don't consider necessary as all assessments continue to confirm our view. Now having said that, we're going to continue to engage with the government of Mozambique. We understand they have questions. We are addressing them. As you well know, there are steps that have been taken towards arbitration precisely to support this stage of sharing information and building a mutual understanding, and we hope that this will be resolved satisfactorily. I'll remind you that we remain in Mozambique. This is a geography that we've been present for decades, a geography that even though the gas project could not meet our requirements within the portfolio. still has a downstream presence that we would, of course, like to continue to see operate successfully. So on Mozambique, I would say that, that is the circumstances other than the fact that on the remaining part of that sale, so Area 4, the onshore component, we did not indeed include that in our CapEx guidance. For prudency, what we're hearing from the operator is still positioning towards making this happen towards the end of 2026. So Exxon continues to position that as their expectation. Still -- and given the relative size of our portfolio for prudency's sake, we did not consider that cash inflow. So if it does come, it will be an upside. And I guess that follows through. It's quite a segue into the second part of your question, right? So in terms of our inorganic CapEx, in the guidance that we've put out there, there is indeed -- I mean, if you just run the math quickly, that does give us kind of a EUR 500 million buffer, so to say, is -- and the way I stick our preference is fundamentally, we're trying to make sure that our portfolio stays as clear as possible towards our investment case. So right now, should there be available upstream assets, that would be our preference. And right now, our upstream portfolio is very much focused on oil. So gas is not an area where we are actively looking into opportunities. It's not -- I think you framed it as a preference. It's not in our preference at all right now. We will look should there anything particular come in the funnel, but it's not where we're directing our teams to, and it's not where we see our portfolio heading at this stage. So fundamentally, that's, I guess, what we would see in terms of direction in terms of inorganic CapEx. Should there be any other opportunities, we will always look at them with the same type of discipline and respect for what we've been trying to deliver in terms of the hurdle rates we consider and the ability to actually deliver value that we've seen in the past. But right now, where we see that being more consistent with our investment case is indeed in oil upstream. Operator: This concludes the Q&A for today and today's conference call. Thank you for participating. You may now disconnect.
Operator: Greetings, and welcome to the BigBear.ai Holdings, Inc. fourth quarter 2025 and full year earnings call and webcast. Please note this conference is being recorded. I will now turn the conference over to Sean Ricker, CFO. Thank you. You may begin. Good afternoon. Sean Ricker: Thank you all for joining us today for our fourth quarter 2025 earnings call. I am Sean Ricker, CFO of BigBear.ai Holdings, Inc., and I am joined today by our CEO, Kevin McAleenan. Statements made in today's call that are not historical facts are considered forward-looking statements that are made pursuant to the safe harbor provisions of the federal securities laws. Actual results may differ materially from those projected in the forward-looking statements. Please see today's press release and our SEC filings for a description of some of the factors that may cause actual results to differ materially from those in the forward-looking statements. We have posted charts on our website today that we plan to address during the call to supplement our comments. These charts also include information regarding non-GAAP measures that may be used in today's call. Please access our website at www.bigbear.ai and click on the Investor Relations link to view and follow the charts. With that, I would like to turn the call over to Kevin. Kevin McAleenan: Good afternoon. Before we begin, I would like to express our appreciation and gratitude to all our servicemen and women and their leaders who are currently engaged here and overseas in the conflict with Iran. You will continue to have BigBear.ai Holdings, Inc.'s full support as you carry out your challenging missions. We also want to send well wishes to our allies and partners in the region who are in harm's way and our BigBear.ai Holdings, Inc. employees. 01/15/2026 marked one year since I stepped into the CEO role. It was a dynamic year on all fronts for BigBear.ai Holdings, Inc. I would like to thank our shareholders for their trust and support, our customers for their partnership, and the outstanding BigBear.ai Holdings, Inc. team for their hard work. Our first objective for 2025 was to strengthen the foundations and fundamentals of the business, starting with rebuilding our financial position. To address the growing and rapidly evolving needs of our government and commercial customers, we needed to strengthen our balance sheet and establish financial flexibility that would allow us to invest in technology, retain and attract top talent, and take advantage of emerging opportunities in a dynamic marketplace. We knew we needed to do this to enable BigBear.ai Holdings, Inc. to move quickly and decisively, and we made remarkable progress. As of year-end 2025, BigBear.ai Holdings, Inc. is in the strongest financial position in the company's history. As Sean will speak to in more detail, we have significantly reduced our debt, and we have record liquidity. This is a big achievement by the team, and it is a clear signal to our shareholders that BigBear.ai Holdings, Inc. is building momentum, is positioned to move fast, and is laying the tracks for lasting returns. I would also like to highlight here that despite the longest government shutdown in history, we closed 2025 within our revenue forecast and within single digits of analyst consensus estimates. My thanks to Sean and our growth team for improving the rigor of our forecasting, which we will continue to enhance in the quarters ahead. In addition to strengthening our financial foundations, we also set out to achieve two other objectives. Given the dynamics of the geopolitical and technology landscape, our second objective was to expand our international footprint. At the beginning of last year, relationships between the U.S. and its allies and partners globally were evolving. In January 2025, we were already in the process of establishing a lasting presence in the United Arab Emirates and the wider region, which I know well from my time with the Department of Homeland Security where I collaborated on security initiatives and travel and trade partnerships like Preclearance. In March, during a diplomatic visit to Washington, the UAE's national security adviser pledged a landmark $1,400,000,000,000 investment framework over ten years. AI infrastructure is one of its three pillars. And in June, BigBear.ai Holdings, Inc. announced a strategic partnership with two UAE companies, Vigilix and EZlease, a subsidiary of the International Holding Company. We are now working together to deliver mission-critical capabilities that enhance safety, mobility, and operational effectiveness across the region, including a partnership with Abu Dhabi Ports to collaborate on advanced AI-enabled capabilities for government and critical infrastructure customers. By December, we had announced the formation of a new wholly owned subsidiary and our first office in the World Trade Center in Abu Dhabi, committed to not only pursue business in the region but also to hire and develop local talent. We are now established in the UAE, and our relationships will only get stronger. Our third objective was to make a catalytic strategic acquisition. We executed on this and completed the acquisition of Asage on December 31. Assage is a model-agnostic platform for secure distribution of generative AI models and agentic capabilities tailored for defense and security agencies and other highly regulated sectors. The changing needs of the intelligence and defense community make Assage a critical platform-level AI technology. It is proven in the most secure and demanding environments and is an important signal of BigBear.ai Holdings, Inc.'s focus on delivering mission impact with maximum flexibility. Most importantly, AsSage does not lock customers into any particular frontier model. It is highly flexible, allows customers to integrate their data once, and assays can optimize models and agents across the platform for their use cases. We are well on our way to integrating Essage fully into BigBear.ai Holdings, Inc. since closing just nine weeks ago, and we will now accelerate that work to deliver the highest levels of customer impact in the coming months. As you will have seen, we recently shared that Nicholas Shalon transitioned from his role as CTO for personal reasons. The outstanding Assage team and the Assage platform continue to be an essential part of the BigBear.ai Holdings, Inc. serving our mission customers, warfighters, and national security interests. Nick will provide technical advice to ensure continuity for our customers using the platform, and we wish him all the best in his future endeavors. Shortly after completing the Assage acquisition, we announced that we had acquired the technology platform Carglosere. Globally, customs administrations, aviation security agencies, port operators, and security teams are all seeking better ways to rapidly identify mission risk in the global movement of cargo and goods. Governments have invested billions in deploying scanning equipment. Trade risks, contraband, dangerous and potent narcotics are all moving through high-volume supply chains. CargoSphere's AI shipment inspection platform is designed to address exactly those mission needs, reducing costs and increasing speed and accuracy. The core technology supports nonintrusive inspection for cargo by combining automated image analysis, computer vision, and machine learning coupled with trade and cargo data. This helps customs operators and security professionals rapidly identify high-risk shipments, detect threats, and improve inspection efficiency across ports of entry. The benefits of this technology are manifold. Governments are losing billions to fraud, undervaluation, and other customs and tax violations. This lost revenue affects the services governments can provide their citizens and allows companies that are willing to break the rules to benefit. More broadly, the global supply chain is used by bad actors to smuggle all manner of contraband, narcotics and precursors, counterfeit products, agricultural pests and diseases. It also provides evidence for human trafficking. CargoSphere makes it easier and more efficient for border officials to fight smuggling by giving them tools to properly identify illicit cargo and quickly intercept it, allowing them to focus on high-impact operational activities with immediate revenue and security benefits. Another positive result of combining these capabilities is the facilitation of trade and reduction of wait times at ports and borders. These two acquisitions are clear indicators of where BigBear.ai Holdings, Inc. is heading. As Sage is squarely aligned with our national security core market, has momentum and significant potential with commercial customers, and cargo SEER is centered on our trade and travel market with applications for both government and commercial customers all over the world. They also reinforce our strong mission-first culture centered on delivering enduring strategic advantage for the U.S., our allies and partners, and critical commercial sectors. I would like to turn now to how our operating context has changed since our quarter three earnings call. Three significant developments play to our market positioning and strengths. First, in December, the U.S. government published its national security strategy, calling for closer collaboration between the U.S. government and the American private sector. The strategy also called out clearly the need to protect the U.S. from cross-border threats such as terrorism, drugs, espionage, and human trafficking. BigBear.ai Holdings, Inc. is built to meet these mission needs. Our longstanding trust with the Department of Homeland Security and the defense intelligence communities, combined with the new solutions we are acquiring and building and our ability to move fast, make us an ideal partner. The administration recently indicated they intend to increase their request to budget dramatically, potentially to $1,500,000,000,000. If this request is supported by Congress, it will represent an increase for the Pentagon of $500,000,000,000 from this year's budget on top of the generational increase in funding at DHS, the one big beautiful bill. Even if funding remains closer to current levels, we believe that these critical resources will be substantially directed to cutting-edge technologies like ours. The second major development was the acceleration of frontier AI capabilities. In late Q4, we saw generational leaps in chain-of-thought reasoning, model distillation, and agentic autonomy that outpaced the prior eighteen months of progress combined. These advances further underscore the differentiated value of BigBear.ai Holdings, Inc.'s capabilities. Every new model release, every improvement in small model performance, and every advance in orchestration makes our rapid and secure deployment infrastructure more essential. Our platforms are deliberately model-agnostic, giving operators maximum flexibility to adopt the best available capabilities without vendor lock-in. And because our teams understand the realities of operators, we are able to translate these new technologies into real mission solutions that fit the nuanced workflows, constraints, and unique challenges of our customers. The third development followed rapidly in January: the publication of the U.S. Department of War's AI acceleration strategy. Seven pace-setting plans organized under warfighting, intelligence, and enterprise align with where BigBear.ai Holdings, Inc. is the strongest. The overarching goal of the strategy is to match the commercial clock speed of AI development, shifting from multiyear acquisition cycles to far shorter timelines. The strategy places significant focus on AgenTeq network architectures and a shift to the tactical edge, all centered on speed of adoption and mission integration. This is not only a huge gear shift for the Department of War to increasing investment in the cognitive layer of warfighting capabilities; the pace is also likely to shorten the procurement cycle, and that helps us because of our size and speed. One example: the AI acceleration strategy directs that the latest commercial models be deployable to U.S. government partners within thirty days of public release. This is now the standard, and we are well prepared to support it. Astage is architected to seamlessly and rapidly integrate new frontier model releases into secure enclaves, without customers needing to rearchitect or reaccredit their environments. That speed-to-deployment advantage becomes more valuable with every new model release, and the pace of releases is accelerating. I will close this section on our operating context with one note regarding the recent focus on SaaS businesses. Our work is built around mission-critical workflows for specialized operators. That requires deep domain integration, not generic horizontal software. Our value scales with mission impact. Pagentic AI and autonomous workflow support our growth thesis and investments, and we are already delivering these AgenTik AI capabilities today into the most highly regulated environments in the world. And our development teams are leveraging these capabilities to build and ship tailored mission-critical solutions at increasing pace. Looking forward, BigBear.ai Holdings, Inc. is stepping into our strengths as a specialized defense technology company in developing and delivering mission-ready AI. In our third quarter earnings call, I stated that we are focused on two core markets: national security, and travel and trade. Each area is highly specialized and requires deep domain expertise. They are also interdependent. Strengthening national security enables commerce and provides a baseline of trust necessary for nations to build prosperity. In turn, enhanced national security depends on the ability to move people and goods through the global economy and across borders with speed and efficiency, which facilitates tens of trillions of dollars of annual trade. BigBear.ai Holdings, Inc. operates where these vectors converge. Our thesis is clear: build on our strength in defense and apply it with discipline to highly specialized use cases for advanced technologies. To execute on that thesis, we are prioritizing the following four things. First, deliver top-line growth. With strong financial foundations, we will enhance our go-to-market rhythm and drive rapid customer adoption of BigBear.ai Holdings, Inc. solutions. The funding environment is strong, the demand signal is clear, and the window for us to capture share is now. We see significant near-term revenue opportunities. In national security, we are aggressively pursuing significant government programs in a robust funding environment, largely driven by the one big beautiful bill, and running disciplined, high-touch capture campaigns to win programs that map directly to our core strengths. In travel and trade, we are leveraging our established foothold in the UAE to expand our international business, particularly around our ports and borders offerings. Additionally, we also see our partnership with the UAE having the potential to address the needs of customers in Africa and Southeast Asia. Coming across both markets, our AI platform capabilities, accelerated by the Assayed acquisition, are proving to be a powerful differentiator, and we are focused on accelerating the delivery of frontier AI capabilities in highly secure environments, both by optimizing the best commercial products for secure use and tailoring solutions to mission-specific needs leveraging the deep operational expertise of forward-deployed engineers. Over the midterm, we see a clear path to extend this platform beyond its Department of War roots. Second, focus on the operator. We will keep the needs of our customers, the operators who need the best technology now, front and center. The weekend's events put this into stark relief. Initiatives across the business will put intense focus on their shifting needs to ensure we operate with precision, speed, and the mission front of mind. Third, operate with execution rigor. This is critical, and it means allocating resources dynamically and capital surgically. The world is moving quickly, and our operating model has to keep up. We believe the future belongs to companies that get the intersection of technology and people right. This is not an either-or. Fourth, capitalize on catalytic M&A. As we integrate assays and CargoSphere and advance these capabilities for our customers and within the company, we will continue to consider catalytic technologies that enhance our ability to serve our national security and travel and trade markets. We are well positioned to deploy our capital to acquire both market position and capability when the right opportunities arise in our areas of focus. We already have momentum. Let me now turn to how we are translating that into growth. As Sage has continued to scale across the U.S. government, adoption metrics have remained strong, and utilization continues to grow month over month. We are actively cross-selling the platform into BigBear.ai Holdings, Inc.'s existing customer base beyond the Department of War. We are also accelerating the development of Ascage's edge offering, a turnkey solution that delivers the Asage platform on a ruggedized, portable hardware system the size of a carry-on suitcase. The solution brings assays into denied, degraded, intermittent, and limited bandwidth environments, like forward operating bases and naval vessels, enabling operators to leverage As Sage anywhere without reaching back to the cloud. And as the market moves toward AgenTic frameworks, we are already running at an accelerated pace. Not only do we have the agent builder available natively within AsSage, we intend to stay on the cutting edge and deliver purpose-built agents and workflows to support mission along with the technology we make available through the assays platform. Beyond Ask Sage, capture campaigns aligned to the one big beautiful bill are well underway, expanding our pipeline across DHS and defense, positioning us to compete for generational funding. And within our depart of war business, we launched a strategic partnership with Seaspead, a leader in advanced software-defined radar. This partnership will extend our capabilities to deliver real-time intelligence and operational support in contested environments, further strengthening our value proposition for defense and intelligence customers. Additionally, we are actively collaborating with Fincantier, one of the world's largest shipbuilding groups, demonstrating strong progress. This is one example of how our Shipyard AI solutions will drive innovation and operational efficiency against the major funding stream in the one big beautiful bill. These achievements underscore our ability to deliver cutting-edge solutions that meet the evolving needs of customers, and we are excited to see good traction. Turning to our second core market, travel and trade. Our international expansion and recent acquisition activity are generating momentum. BigBear.ai Holdings, Inc. announced a partnership with Abu Dhabi Ports Group in January. Abu Dhabi Ports is one of the region's premier trade and logistics platforms. It will play a substantial role in BigBear.ai Holdings, Inc.'s efforts to drive secure global trade and economic growth through its integrated portfolio of world-class ports, industrial zones, and logistics services. Together, we are focused on developing next-generation AI-powered customs management systems for ports and borders. By leveraging advanced analytics and AI image analysis, we intend to enhance operational efficiency, streamline customs processes, and improve trade facilitation across the region. This collaboration highlights the growing demand for innovative AI solutions in critical infrastructure and offers strong long-term potential. In North America, our Veriscan platform continues to expand. We are now live at Chicago O'Hare, Seattle-Tacoma International Airport, Nashville, and Calgary International Airport in support of biometrically enabled enhanced passenger processing programs. These deployments are improving security, accelerating processing times, and enhancing the traveler experience in some of the busiest airports. And finally, CargoSphere's platform for combining AI automated image analysis and trade data is needed by customs administrations and aviation security authorities. We see actionable targets in Central America, the Middle East, and within the United States, where the platform's predictive cargo risk scoring capabilities are directly relevant to government and commercial operators seeking to strengthen the efficiency of their customs duty collection and supply chain operations. In short, we see lots of positive developments to drive growth across our portfolio. Now I will turn it over to Sean to walk through the financials and our FY 2026 guidance. Sean Ricker: Thanks, Kevin. I will start by highlighting key accomplishments from 2025, and we will then move to our results for the fourth quarter. This year, we raised $693,000,000 in proceeds from our ATM facilities and warrant exercises, and we were able to close on the acquisition of Essage. The momentum has not stopped in 2026. In the first quarter, we closed on the acquisition of CarveSeer and fully settled the 2029 notes by exercising our right to force conversion of the notes into common stock, which will save almost $9,000,000 of annualized interest expense through 2029. We intend to settle the remaining $17,000,000 on our 2026 notes when those mature at the end of this year. These milestones have not only strengthened our balance sheet but have also put us on a trajectory for sustainable growth. We have also made meaningful progress strengthening our internal controls. Earlier this year, we transitioned out of emerging growth company status, which brought with it the added rigor of SOX 404(b) compliance, including an independent auditor attestation on our internal controls. I am pleased to report that our auditor has issued a clean, unqualified opinion, reflecting well on the work our team has put into building a more mature control environment. As you will see in today's 10-K filing, we are also pleased to report that the material weakness that we disclosed in last year's filing has been fully remediated as of 12/31/2025. Now let us turn to our operating results for the fourth quarter. Fourth quarter revenue was $27,300,000, a decrease of $16,500,000 year over year, which was primarily driven by lower volume on Army programs, which we referenced on previous earnings calls and which was accounted for in our RISE guidance, which we provided in our second quarter earnings call. Gross margins decreased year over year. Gross margin for 2025 was 20.4% versus 37.4% for the comparable period, primarily due to certain one-time items, including high-margin license deliveries and an infringement overhead true-up, both of which occurred in 2024 and were not repeated in 2025. SG&A expenses in 2025 were $25,700,000 versus $22,200,000 in the comparable period. The increase in SG&A was primarily related to certain new growth and marketing investments as we committed to in the second quarter and third quarter of this year. R&D expenses increased from $2,300,000 in 2024 to $4,800,000 in 2025, as we continue to invest in new capabilities and technologies across the domains of national security and travel and trade. Our net loss for the fourth quarter was $5,800,000 versus a net loss of $138,200,000 in the comparable period. The decrease in net loss was primarily due to a noncash gain on the fair value of derivatives of $143,400,000, a loss on extinguishment of debt of $31,300,000 in 2024 not repeated in 2025, an income tax benefit of $21,800,000 in the fourth quarter of 2025 related to the Assage acquisition, and an increase of interest income of $6,200,000 related to our investments. These were partially offset by a noncash impairment of long-lived assets of $53,400,000 recorded in 2025. Adjusted EBITDA for the fourth quarter was negative $10,300,000 versus positive $2,000,000 in the comparable period. The decrease in adjusted EBITDA was primarily driven by lower revenue and gross margins as well as increased spend on SG&A and R&D, as previously mentioned. Now let us turn to our outlook for 2026. We are projecting full-year 2026 revenue of between $135,000,000 and $165,000,000. Our 2026 outlook includes the results of our recent acquisitions of Astage and CargoSear and represents about 17% growth from our full-year 2025 revenue. Given the pace of play in the AI markets and investments we will undertake to integrate recent acquisitions and expand our international presence and growth team, we will not be giving adjusted EBITDA guidance at this time. Lastly, I would like to mention our solicitation to amend our certificate of incorporation to authorize 500,000,000 shares of common stock that can be used in the future. It is good housekeeping for a company at our stage of growth to have authorized shares in reserve to allow us to respond quickly in a dynamic market. That is why it is common practice for businesses looking to accelerate. The two largest proxy advisory firms, Glass Lewis and ISS, recommended a “for” vote, and our board of directors unanimously supports the proposal. More than eight in ten shareholders have voted for this amendment, and as of today's call, we are more than 97% of the way to securing the votes needed to pass the proposal. We have learned that reaching and mobilizing everyone, particularly smaller shareholders, takes time. We would like to thank our shareholders for the support they have shown us. As I close this section, I would underscore again that BigBear.ai Holdings, Inc. is in the strongest financial position in our history, and we intend to make it even stronger so that we can invest in our technology and R&D, invest in attracting and retaining top talent, and make further strategic acquisitions. Just as we established greater financial flexibility in the last twelve months, we intend to enhance our freedom to move quickly in the future. I will now turn it back to Kevin to give a few closing remarks. Kevin McAleenan: Thanks, Sean. I would like to close on a note that highlights why I am excited about the year ahead and our ability to support our customers in this intense strategic moment globally. And that is the fact that as a company, we have a huge core of former operators. We deeply understand our customers' missions. We have augmented that expertise with cutting-edge technologies that we can apply understanding the reality of the use cases that our customers deal with every day. Mission-ready technology by operators for operators. That is distinct from companies who primarily integrate others' capabilities and from startups who do not understand the operational context. What our national security customers and global partners need is the ability to apply emerging tech securely, to move rapidly and with greater flexibility than ever before to address emerging threats and challenges, and that is what we intend to do for them this year. Thank you very much for your time today and your continuing support of BigBear.ai Holdings, Inc. Operator: Thank you, ladies and gentlemen. And with that, this does conclude today's teleconference. Thank you for your participation. You may now disconnect, and have a wonderful day.
Duncan Tatton-Brown: Good morning, everyone, and thank you for joining us today. Before we move into the 2025 results presentation, I'd like to begin by marking an important moment in the evolution of Oxford Nanopore. As previously announced, today, Gordon Sanghera steps down as Chief Executive Officer after more than 2 decades leading the company he co-founded in 2005. Under Gordon's leadership, Oxford Nanopore has grown from a bold scientific idea into a global platform technology company, serving customers in more than 125 countries across research, clinical, biopharma and applied industrial markets. On behalf of the Board, I would like to thank Gordon for his incredible vision, determination and commitment in building the foundations that position the company strongly for its next phase of development. He will remain with the company in an advisory capacity through to early 2027 to support a smooth and orderly transition. Today, also marks the first day of Francis Van Parys as CEO of Oxford Nanopore. Francis joins formally the company this morning. He's spending today in Oxford, meeting the team and therefore, will not be with us today. We look forward to introducing him to many of you in due course once he's had the opportunity to engage more deeply with the business. The Board is pleased to welcome Francis at this important stage of the company's evolution. His experience in scaling innovation-driven life sciences businesses, particularly within regulated and commercial environments will support Oxford Nanopore's continued development. The Board remains focused on maintaining our support for leading-edge science, driving strong growth across our priority end markets through disciplined execution and delivering sustainable profits as the business continues to scale. With that, I will hand over to Gordon and Nick, who will take you through the financial and operational highlights for 2025. Thank you. Gordon Sanghera: Good morning, everybody. It's been a 21-year journey for me. Spring of 2004, I started looking at Hagan Bayley single molecule stochastic sensing. I had to go and check in the dictionary what stochastic meant, but I got the hang of it. The more I looked, the more excited I became that we could potentially deliver a new method of measurement. That doesn't happen very often for chemical and biological single molecules. So we were spun out in 2005 with GBP 0.5 million from IP Group, at that time, Dave Norwood, over a pie and a pint. It was just stunning that somebody would put that much money in -- on an idea, a concept. The company's vision from the outset was to enable the analysis of anything by anyone, anywhere. And I would say that is a work in progress. I think the proudest thing I've seen and the coolest thing I've seen in this technology is NASA taking it up into space, slated to go on the Artemis mission as well, very proud, but also Project NEEMO, which is NASA, going down into the depths of Mariana trench, and finding over 7,500 new species in extreme conditions, which kind of tells us there is life out there somewhere, which is exciting. So our first application area is DNA RNA. We're now extending that to proteomics and you'll hear more from Lakmal at London calling. I will be there as well. But we also have the potential to measure small molecules, chemicals, metabolites, volatile organic compounds as well. So this platform has a lot more to give over the coming years. So I want to show some slides, I guess. That is our vision. You've seen that plenty of times. And as I say, we're just at the beginning of this journey, lots more to come. We launched our DNA products 10 years ago. And our direct RNA product approximately 5 years ago. As Duncan has just said, we are today in over 125 countries. We have over 1,300 employees and we opened our factory because we had a bold ambition from the outset that we would deliver a tech company in the U.K. that would manufacture in the U.K. So our consumables, flow cells and revenues are manufactured in our factory, which we built with an ambitious growth trajectory, which means over the next 3 to 5 years, as we grow, we will be able to meet those demands for our consumables. The key metric on this slide is the fact that in 10 years since we launched our first products, we have 20,000 publications. That is a phenomenal beat rate. And that decade of innovation underpins the unique value proposition and what this single molecule measurement platform delivers. There is no other company in this space, in our competitive space that sequences direct DNA, RNA. This body of work is a foundation for our growth. And since IPO, I'm proud to say we have grown 28% CAGR. And that is a testament to the unique things and a multiomic direct sequencing of DNA, RNA that can only be enabled by Oxford Nanopore. Again, 2025 was a great growth year for us. We grew 24% on a constant currency basis, which is 1% above our top end of our guide, 23%. We have, across all regions, in a tough market where the competitors in the last 3 or 4 years have seen low growth, no growth or negative growth. We delivered 20% growth across all of our regions. 70% of our revenues come from our flow cells and kits, which are manufactured in [ Didcot ]. And we've been financially disciplined this year. We have just over GBP 300 million in cash and cash equivalents, leaving us well poised to build on our ambitious growth trajectory. And as we set out in capital markets a couple of years ago, we would be transitioning from revenues entirely from life science research tools to our applied end markets. In 2025, life science research tools, which accounts for 66% of our revenues today, grew 15%. Again, to reiterate that is outperforming competitors significantly. Our strongest growing applied end market was clinical at 59%. BioPharma, came in at 30%, and applied industrial 27%. Year-on-year, that grew from 30% to 34% and is broadly in line with what we thought we would hit at capital markets a couple of years ago and is a testament to the maturing of the platform for our applied end markets. Why are we growing substantially? It's not a fluke. We didn't get lucky. 20 years ago, we realized that single molecule electronic detection of biological polymers could be transformative. And what we deliver with this platform, and we are the only company in the world who does this, including the other Nanopore people, we read direct DNA, and we can read short hundreds of bases, long tens of thousands to hundred thousand bases to millions of bases ultra-long. No other tech does that. We are not just a long-read company. It's that native DNA that makes us highly differentiated. We do this in real time, live streaming because the sample preps take hours, not days. All other sequencing platforms take days to prep their samples. We do not have to batch, which means we can get rapid insights in point of care in distributed affordable, accessible platforms. It is 1, 2 or all 3 of these attributes that are driving that strong growth, both continuing to, in our life science research tools market for translational and discovery work, which is a foundation then for the applied markets. So I want you to remember that this technology is driving adoption, and we are very early in this journey. And I'll talk a little bit about Francis at the end, but I'm excited to be handing the baton on to him. And I will now pass over to Nick, who will get into details and talk about outlook for 2026. Nicholas Keher: Thank you, Gordon. So good morning, everyone. My name is Nick Keher, I'm the CFO of Oxford Nanopore. Today, I'll be updating on our FY '25 financials, outlook and operational performance. So FY '25 was a year of both delivery and further transformation in a year of volatility. We delivered revenue growth of 24.2% at constant currency, marginally ahead of guidance of 20% to 23% set in March 2025. With over 20% growth in all regions on a constant currency basis and a return to growth across the MinION range as previously guided to also. Reported gross margins finished broadly in line with guidance and in spite of numerous headwinds, some of which that should not repeat, and with a see-through gross margin of closer to 61%. Adjusted OpEx growth of only 1% reflects strong cost control of the period and 2 restructuring events. One in January previously discussed to allow for the reallocation of capital to higher growth opportunities. And another in November that related to a strategic realignment exercise to align the business to these high-priority end markets. As a result, we improved our adjusted EBITDA loss by GBP 31.2 million or 26%, which is a material step forward in our path to profitability. We finished the year with GBP 302.8 million of cash with no debt, demonstrating a material improvement in cash conversion as we made improvements to our business model and focus on working capital. and continue to see minimum cash of at least GBP 100 million as we pass through adjusted EBITDA breakeven in '27 and cash flow breakeven in '28. Turning to gross margins, the year reflects a solid improvement overall and in line with our original guidance of 59%. From a base of 57.5% in FY '24, we delivered underlying improvements of 460 bps, driven by the new CapEx-first pricing model; and two, yield improvements, particularly on the PromethION flow cell. Whilst we saw benefits from improving recycling on the PromethION flow cell, these were largely offset in the year by lower levels of recycling overall at MinION flow cell. From this position, we then saw headwinds of FX of 70 bps, the previously discussed one-off items related to obsolete inventory of 150 bps are not set to be repeated and product and customer mix headwinds of 130 bps. This provided a reported gross margin of 58.6% overall. Within this, we also took the charge related to restructuring in the year, related almost entirely to the ElysION product line of GBP 1.8 million or 80 bps. Absent this, the margin was 59.4%, and absent the one-off items taken in half 1, the margin would have been 60.9%. We think this is the right figure for investors and analysts to look at as we enter FY '26, noting we still have a number of upsides to improve margin further in FY '26 and '27, namely on PromethION flow cell recycling, as we also continue to see further benefits from the change of the pricing model. The strong top-line growth and improvement in gross margin has been matched by discipline on the cost base, which saw an increase of only 1% to adjusted OpEx year-on-year. This meant we delivered a 26% improvement year-on-year to EBITDA, a total of GBP 31.2 million, with GBP 18 million of that coming in the second half, which itself showed a 32% improvement. Stepping back, we have now delivered an adjusted EBITDA improvement each half since the beginning of FY '24, and we believe we have a solid path to achieving breakeven in '27. It is also worth putting this into the context of the top line and gross margin headwinds we have seen from a currency perspective, which have now reduced our adjusted EBITDA figure by GBP 9 million since January '24. We will deliver breakeven through continued above-market revenue growth, consistent with what we've delivered historically and are set to in FY '26, but with continued cost control of the cost base. In particular, we see opportunities to improve efficiencies we scale through IT, logistics and internal working practices with non-headcount related expenditures. Turning to cash. The strong operational execution delivered in the year, coupled with the transformation to our business model completed have transferred -- had translated to improved cash conversion. Our operating loss before restructuring costs came to GBP 79.1 million, largely mirroring our EBITDA performance. Restructuring costs of GBP 13.8 million in the year are split GBP 5.2 million in the first half and GBP 8.6 million in the second half from the strategic realignment exercise in November. Working capital was an inflow of GBP 13.4 million, reflecting a meaningful improvement in inventory management with total inventory levels down GBP 18 million in the period. We continue to see more opportunities for improvements as we look forward on this area. Assets at customers came in at GBP 10.1 million, down GBP 10.5 million from the prior year, thanks to adoption of the new pricing model. The second half increase of GBP 4.6 million relates primarily to devices for the U.K. Biobank contract and a small number of evaluation devices provided to customers. CapEx and capitalized development costs of GBP 45.5 million are split GBP 41.5 million on capitalized development and GBP 4 million on CapEx across the business. This low level of CapEx in '25 reflects -- largely reflects timing of investments and significant projects such as the Spectrum Building are now complete. It is unlikely that this level of -- this low level will be repeated again in '26. Tax income of GBP 18.9 million reflects the receipt of 2 R&D tax credits in the year, again, unlikely to be repeated in FY '25. Finally, other investing and financing inflow of GBP 15.3 million reflects the income from our bond portfolio in the year. As such, our net cash outflow finished the year at GBP 101 million, leaving us with GBP 302.8 million in the bank with reducing losses and improving cash conversion from both focus on working capital and the adoption of the CapEx first approach, we continue to see cash reserves of at least GBP 100 million as we pass through breakeven. Turning now to the commercial strategy. In '25, we completed a strategic review to ensure we maximize the broad opportunities in front of us. This process incorporated a variety of perspectives from the inside -- from both inside and outside the group, ensuring we can prioritize the opportunities that best leverage our differentiated technology to create value for all of our stakeholders. As part of this strategic review, we looked at where we have the clearest right to win and where we can scale with discipline. Across research, clinical, biopharma manufacturing QC and other markets, we identified roughly $13 billion to $14 billion of higher priority segments where our richer data, speed and accessibility provide meaningful competitive advantage over peer technologies. We then categorize segments into higher, medium and lower priority, not based purely on size, but on ease of access, differentiation and scalability. This prioritization is now shaping everything internally. Commercial resource allocation, product road map decisions, capital deployment and organizational focus. The result is a more focused, more disciplined company concentrating investment behind the segments that drive sustainable growth and margin expansion. With that context, let me turn to how we action these insights in '25. In terms of our commercial performance, we delivered GBP 223.9 million of revenue of 24% at constant currency, with growth across all regions and all customer types despite challenging end markets. But the quality of growth is what matters here with clinical up close to 60%, biopharma up 30%, applied industrial 27% and research up 15% despite ongoing NIH pressures. That mix shift towards applied end markets reflects the natural pull of our technology to these sectors, supported by our existing investments to support that growth. With our focus now enhanced on these end market segments as a corporation with our operational structures also aligned to enable a strategy, we expect to see further improvements in our commercial performance over time. In Clinical, we saw broader adoption across rare disease and oncology across strategic collaborations such as Cepheid and BioMerieux. In BioPharma and industrial, we supported QC deployment, plasma sequencing expansion and increased PromethION utilization. We also saw strengthened pricing discipline and contracting structures, improving both margin profile and cash dynamics. Growth is increasingly weighted towards higher priority segments identified in the strategic review, and that gives us confidence in both durability and operational leverage as we move forward. Turning to innovation. Gordon has already covered the technical performance improvements in detail at the JPM in January, including advances in output, accuracy and workflow maturity and these improvements will continue at pace. But the key stories of '25 are of prioritization and alignment. Following the strategic review we did last year, we refined the portfolio to concentrate investment behind platforms that best serve our priority end markets. That meant the discontinuation of sales of P2 Solo from June this year and the focused efforts internally on the P2i, pausing further internal development of the ElysION platform and discontinuing direct commercial efforts on the product. Hard decisions, but once taken. Focusing on the core platform and integrated systems such as the P2i and P24, advancing Q-line product lines more broadly across GridION and PromethION. For GridION, we are set to launch a version 2 of the Q-Line product in 2026 that benefits a broader requirement set from our BioPharma customers, whilst on the Prom, revaluation of the time line leads to an updated launch date for late 2027. To ensure our innovation efforts drive greater returns, we are also improving our ways of working internally, formalizing process improvements to ensure greater success. This simplification reduces operational complexity, improves capital allocated discipline and ensures R&D is directed where returns are strongest. So innovation in 2025 became more focused, more commercially aligned and more scalable. On operational excellence. Operationally, 2025 was about discipline and leverage. We delivered continued improvements to gross margin, reflecting pricing improvements, flow cell efficiency and operational scale. During the year, we completed 2 restructuring events to realign the organization, simplify the portfolio and refocus R&D behind our higher ROI opportunities. Operationally, we also advanced automation, expanded manufacturing capability and initiated ERP and CRM transformation to support scalable growth. The result is a structurally more focused business with improving operational leverage. Looking forward, I would anticipate further additions to the executive team to strengthen our capabilities and to support our continued expansion into these target higher priority end markets. Turning to guidance. For FY '26, we are setting revenue guidance of between 21% and 25% at constant currency. This guidance is materially above what we see as end market growth with peers guiding for largely for low to mid-single-digit growth overall. This growth is being driven by growing interest in demand for Oxford Nanopore Technologies products and their desire to see more and do more against conventional legacy sequencing technologies. The low end of the range is driven by the expectation for a continued subdued research environment in the U.S. and specific market dynamics, particularly in China. Alongside this, we have factored in some risk from the discontinuation of the P2 Solo. As always, we attempt to risk adjust our guidance to both set estimates in a place for the year ahead that derisk external expectations. As we look to the top end, it largely mirrors the opposite of these factors and we note the potential to exceed this guidance, should we succeed in converting more customers to P2i, which we believe is a superior product and delivers better results for customers. Regionally, we see growth being strongest in the Americas, driven by continued expansion into the applied markets. EMEAI has delivered consistent, significant growth. But in FY '26, we note the timing of large research end market contracts rolling off and new contracts ramping up that lead us to expect a more cautious growth rate at this point of the year and hence for growth to be lower than in '25. Similarly, across APAC, we continue to see -- to expect above end market growth, but note the expected headwind from the PRECISE II contract ending and specific factors in China, that means this could be a slower growth rate overall. Against our guidance, it is APAC, which could be the surprise factor to the upside. For FY '26, we would like to see how the year progresses from here. By end market, we continue to see growth strongest across the applied end markets driven by clinical and BioPharma again. This guidance has been taken into account -- has not taken into account any of the potential risks to recent events in the Middle East over the weekend. Our current efforts are to keep our own people safe, and our thoughts are with everyone impacted by the events over the weekend as this risk remains an evolving situation. Our total revenues in the region represent around 3% of group revenues but the region also acts as a central point in the global supply chain. So the full impact from these events are arguably unknown at this time. On gross margins, we are setting guidance of 62% this year, 340 bps above FY '25 reported margins, but 110 bps above the see-through margin talked through earlier. We are confident that there are further benefits to margin from the adoption of the CapEx first pricing model alongside improving recycling rates at the PromethION flow cell that looks set to drive further improvements overall and offsetting expected headwinds in terms of product mix and currency. And adjusted OpEx growth, we have set guidance at 0% to 5%, which reflects the expected benefits of the strategic realignment exercise in November and continued focus on improving efficiencies in the business overall. The range itself also reflects the timing of expected hiring across the business. Over the course of '26 and '27 we see opportunities to improve operational efficiency again and through non-headcount-related activities, particularly across logistics and IT. Turning to my final slide on financial outlook and summary. Noting that we are reiterating our medium-term adjusted EBITDA and cash flow guidance targets at '27 and '28, respectively, but with amended constituent drivers of how we will get there. We expect to see this strong above-market broad-based revenue growth in '26 to continue in '27 and at a broadly similar rate. This growth is below the previously set medium-term CAGR of over 30%, reflect a mix of weaker end market backdrop than guidance was originally set and partly on execution, which we will look to improve going forward. We delivered a 26% improvement in adjusted EBITDA in '25 and we continue to see further operational leverage in '26 and '27 to deliver adjusted EBITDA breakeven in line with our medium-term guidance. Given the improving gross margin profile that has accelerated ahead of initial expectations, alongside the restructuring exercise completed in '27 -- completed in -- sorry, and given the improving gross margin profile that's accelerated ahead of initial expectations alongside the restructuring exercises with further operational efficiencies, we continue to see breakeven EBITDA in '27 as reinforced even with a lower top line growth rate. Lastly, as demonstrated today, we have continued to translate our operational performance into real improvements in cash. Our cash burn was down GBP 50 million in the year. With this profile set to continue in '26 and '27, driven by improved losses, the adoption of the CapEx model and supported further by benefits in working capital to come, we continue to see cash flow breakeven in '28 with a minimum amount of cash of over GBP 100 million. With that, and before passing back to Gordon for final remarks, I also want to provide my own personal thanks to Gordon and congratulations on a truly remarkable achievement in building a great company like Oxford Nanopore. Gordon Sanghera: Thanks, Nick. So last slide now we've got that up. I just wanted to say a few words after 21 years being at this -- at the helm. I've always felt this was a deep tech company. People talk about that a lot. It actually took us 10 years to deliver our first products. We've been in market place 10 years, and we've raised a lot of money and people look at that, and they think the return on the investment is low, but this company will be around in 100 years' time. Already today, T2T genomes are the new gold standard. And you can't get any better than that because it's the whole genome completely mapped. And Craig Venter who is the founder of the original -- driver of the original human genome is out there building that gold standard. So as I reflect on this 20-year journey, it will never work. you'll never make a circuit, you can't stabilize a soap bubble, you can't raise money in London, you can't float in London, you will never be profitable, all these things just made us more determined and this is the right moment to hand over. I've always known this moment will come. This company will be far bigger than any of the individuals. Yet it is each and every individual who in the last 21 years has really believed that we could do something special and different and we have. And it's a really exciting moment. And I'm really excited about Francis' coming in and taking the baton and really helping build this company, taking us to the next level. I would like to thank you all. It's been a blast and the journey, and I'd like to thank the Board, in particular for putting up with me for 5 years. And I'll leave you with this. I'm not retiring. And as David Bowie said on his 50th birthday, I don't know what I'll be doing next, but I can guarantee it will be interesting. Thank you very much. Nicholas Keher: Questions? Zain? Do you want to say your name and company. Zain Ebrahim: Zain Ebrahim, JPMorgan. Firstly, just to extend my congratulations to Gordon as well for your legacy and everything that you built here. First question is on the '26 guidance just in terms of the moving parts you talked about it in terms of the revenue guide somewhat, but just to elaborate further in terms of what gets you to the upper end of the guide versus the lower end of the guide. It sounds like P2i Solo is a key driver in terms of conversion, but also geographically, what gives you confidence in Americas outgrowing or accelerating in growth versus 2025? That will be the first question. The second question is on the adjusted EBITDA path to breakeven. You mentioned operational leverage that you can drive, but just potentially more color on where you see gross margin. Consensus is adjusted EBITDA loss of GBP 14 million for next year. So what do you think we as consensus are underappreciating? Nicholas Keher: So just on the '26 guidance for revenue. So geographically, what gives confidence in the Americas, they've got momentum. And so when we go through our exercise of guidance setting, there's a lot of things that kind of we look at. And in particular, in the non-research markets, when I look at the pipeline coverage, when I look at the sheer number of customers, that those high profile ones in either clinical or biopharma, they're evaluating, but also there in the hopper to take product on. Yes, I think we've got confidence in the Americas market and that we've turned that corner now. It's always been difficult to kind of penetrate the research market in the U.S. for us, and that could be a whole host of reasons why. But the applied markets now has kind of got there quicker. We've talked about the fact that over 50% of the revenue in the Americas is now coming from those applied markets and that looks set to continue. So it's a different type of customer buying the product, they're getting to scale and they're driving the growth. On EMEA, we talked about this in the statement, but if I look at even the 5-year historic CAGR for EMEA, it's been a hell of a performance, and the team have done a great job in terms of like how they've delivered that growth consistently year-on-year. When I look to this year, we have a couple of contracts that are rolling off that we talked about, like NIHR, like GL 2.0. We have the U.K. Biobank contract that's coming in to help to offset it, but that means a proportion of revenue is essentially static for the year. And so there's kind of a piece there that we've just got to kind of factor in. And so it might just be -- we're expecting it to be a lower growth year overall. As always, we try and set guidance prudently as well. And now for APAC, this is probably where there's a bit more of a wildcard factor at play. And we are seeing conversion, particularly in specific markets to clinical that is actually quite encouraging. So adaptive sampling is making material inroads with certain large customers, particularly in Australia. And there is a healthy pipeline of activity that we're going up. But there is just a timing aspect here for how things ramp up. And we've seen that it can take time for these things to kind of get to the scale we want them to. At the same time, we have precise II that's ended and is coming off. So there's -- those non-China markets, we can see these dynamics at play. In China itself, I think there are a few things happening. So first of all, the export control restrictions haven't got easier. And we have a backlog now of potential revenue to go into that market because of the restrictions in place. We also could recognize that there are -- well, there is increased Nanopore competitors in the China market as well. We've evaluated those technology against our own. We believe our technology is superior, and that's demonstrated by the fact that even the price differential being what it is in that market, you still see high underlying demand for our technology overall, but it is something that is kind of -- has grown over the recent years. And then finally, we think we can do better from an execution standpoint. And China is a substantial part of APAC overall. So we're setting guidance cautiously. That's why I talk about it being potentially surprise to the upside. And hopefully, as we progress through the year, as we improve upon that, and we get greater confidence, maybe we can look again. In terms of product level as well because you asked about the P2i -- P2S piece, so we're setting guidance of 21% to 25% growth. We're putting some risk in there that the discontinuation of the P2 Solo should we not see that conversion to the P2i like we believe it will happen. So when we've done this commercial realignment exercise, we've taken the 47 end market segments we're targeting, the high priority segments overall. We then evaluated the customer demands from requirements, table stakes, like for those high priority segments we're looking at. And what we found is that the P2i is a better fit. The P2 Solo is a very good product, but the P2i is a better fit for the customers overall. And we are going to push the P2i stronger and harder than we have done before because we think our customers are going to get a better experience overall as well. So we've taken a tough decision. We're focusing efforts from a commercial market -- and that's the big C of commercial -- sorry sales, marketing, all of the efforts, application development, workflow development, all of that on the P2i or the P24, so that we essentially get a better return overall for the company and drive faster, more profitable growth. Now there is a risk, though, in the interim that this essentially drives a little bit of a weaker performance as we execute on that. And so my job is to make sure that we've kind of factored that into the guidance overall, and that's hopefully what we've done. Now on adjusted EBITDA breakeven, what's the market missing? If I look at consensus as today and it's updating, previously, the market, I believe, had a question over that top line growth rate. And to be clear, when we set medium-term guidance, it was always breakeven adjusted EBITDA in '27, cash flow in '28 and we gave constituent drivers for the market to kind of model how they would get there. And we also said if the top line growth wasn't achieving what we wanted to, we would actually modulate the cost base accordingly. We've done exactly that. And we've got 2 examples of that in the year just gone. And now through those exercises, actually, we don't need to achieve over 30% CAGR to achieve that breakeven in '27. So hopefully, the market comes away from this going actually, with the new guidance that is out today. Actually, sorry, medium-term is reiterated, but with the updated constituent parts, it's actually a more realistic outlook to achieve adjusted EBITDA breakeven in '27. And hopefully, investors and analysts can start to model that in as well. Veronika Dubajova: Veronika Dubajova from Citi. 2 questions for me, please. The first one is actually going back to the EBITDA breakeven pathway, Nick. And if you can maybe talk a little bit about the gross margin picture in particular, sort of on my math, you'd need to hit something that's better than 62% that we talked about previously to get to that breakeven. Maybe just give us some color on how we get there in 2027 and what gives you the increased confidence that it's achievable? And then my second question is kind of bigger picture, both for you, Gordon, and for Nick, now that we've had the sort of strategic realignment, you've bedded it down for a number of months now within the organization following the restructuring. Just kind of talk about what are the bits that you're most excited about? How is the organization handling that change and sort of anything that has gone maybe better or worse than you expected? And then finally, congratulations, Gordon, from me as well. We look forward to hearing more from you in your new advisory role, but amazing accomplishment, and I hope you enjoy a little bit of downtime. Nicholas Keher: Thank you, Veronika. So just on the EBITDA breakeven piece, and focusing specifically on gross margin. So absolutely. What we guided to do today is to a 62% gross margin for FY '26. That's bringing forward the original constituent guidance point of -- greater than 62% in '27. So we're bringing that forward a year. And in the statement, we believe that we'll see continued improvements as going into '27. I think it's fair to assume that, that means for the market to start thinking around 64% for '27 as being an achievable gross margin or perhaps around that level. The reason why we're confident on that is that when we set the original guidance in '24, we did state to the market that -- sorry, we haven't updated the pricing model. The pricing model changes and going CapEx first has clearly had a benefit on the gross margin overall. And so we're updating for that. The piece that's still to deliver a true tailwind, and it will because we're seeing it, is in PromethION flow cell recycling. So in the year just gone, the drop in MinION recycling essentially canceled out the benefit we saw in PromethION. For this year going forward, MinION recycling rate is now at a level actually that will step over that. But with PromethION increasing, it's going to deliver a meaningful improvement to overall gross margins. We've talked about it before, but if the MinION level, if we achieved the levels that we did with the Prom to the Min, then essentially, it could be a 10 percentage improvement -- point improvement on PromethION gross margins overall. We still got some way to go there. So that's how we get there. On the bigger picture piece, would you like to go first, Gordon? Gordon Sanghera: No, go ahead. Nicholas Keher: So the strategic realignment piece and parts of that excite. From myself, my opinion on it, I think prioritization of activities will always lead to better outcomes. And so the team, we've got an incredible capability in the business. And because the technology is so good, there's almost so much we can work on. And I think that's genuinely what I mean I've seen since I've been here is just there is so much opportunity for the technology to go on, 47 end market segments, it could arguably go with all of them. I think actually having this kind of focus prioritized exercise completed and saying, well, we're going to have to put down tools here because we're going to focus there is a good thing for the business. And actually, it's going to drive increased efficiency overall because we can have more people working on those bigger projects that are going to move the dial as well. So that's the part I'm excited about. Clearly, going through change as a business, it's difficult, actually. And so I don't want to -- I think it's been hard, actually. And these things take time to work through. But even since the start of the year, people are starting to kind of find their feet again and kind of realign to what that is. Not everybody is there yet as always, but we're working through it. And, I think, we're going to get there. Gordon Sanghera: I think success can be painful with infinite possibilities, which is what happens when the impossible is made possible. And finite resource, it's a challenge. And the company has quite rightly and is evolving to be much more focused on what are the 5 or 10 big things. We are redesigning the PromethION chip for reuse, which has radical transformative revenue and margin gains rather than, "oh, we can reuse it even though it wasn't designed for reuse." So we are very confident about that trajectory. Adaptive sampling is going to be groundbreaking and changing. This is where the DNA in the first seconds, is red and the sequencer is intelligent enough to decide whether that's a region of interest on target or off target. That means 2 days, $300 to $500 of target enrichment disappears. But in addition, because you are looking at the native DNA, you end up seeing methylation. 2026 will be the year of the methanone, the UK Biobank and the Office of Life Sciences with Nanopore are sequencing 50,000 patient samples. That will deliver the first and most comprehensive 5-base genome. That fifth base is scientifically incredibly important. Now I could go on. The list is endless, but what we've done is targeted 3 to 5 major things, direct RNA with mods, direct DNA with mods, adaptive sampling reuse by design. And all of these major drivers mean that we cannot do all of the things we want to. And that is just a natural transition from being a heavy R company with some D to becoming an appropriate R company but with very much D because of the applied, regulated end markets, which gives us recurring sticky revenues over multiple years and radically change the way people use NGS, these are workflows that only we can enable. All of those are the things that I'm excited about and will drive change and will be important in our growth trajectory. Samuel England: It's Sam England from Berenberg. And first one, just around the 2026 revenue guide. Can you give us a sense for the cadence of growth in margins during 2026? I suppose, in particular, is there anything from a revenue or cost perspective that we should be aware of in terms of phasing this year? And then bigger picture, can you give us an update on your progress in biopharma QC? I suppose, are you seeing more interest from potential clients here at the moment? And is there anything you can say around the scope for large contract wins during 2026? I know it's something you talked about sort of over the course of '25. And then lastly, just to echo everyone else's comments, Congratulations, Gordon, and best of luck for the future. Nicholas Keher: Tom, so on 2026 revenue cadence, margins and costs. So as like previous years, we're expecting revenues to be broadly 45-55 weighted in terms of first half, second half as we've seen consistently. So it's good to get -- make sure everybody gets the numbers in the right place for that. And then on margins, I think there's a few moving parts to this overall. But actually, we might see it broadly consistent half-on-half in terms of gross. So very much 62% level, I think, we're kind of aiming for, for both first half and second half. In terms of cost phasing, we have just had the benefit of the restructuring event in November. So you're going to see some benefit in the first half of that as well. So -- but in terms of adjusted EBITDA loss, it will kind of mirror that revenue performance as well. I'm expecting us to show meaningful year-on-year adjusted EBITDA improvement. And well, if people plug through those numbers that we kind of put our guidance today, the market should work out at circa a negative GBP 45 million to GBP 55 million loss for the year as well as adjusted EBITDA, which is, I think, an improvement -- quite meaningful improvement on the year just gone and good against where consensus is at the moment as well. Sorry, on the second one on biopharma QC, Gordon and I have been extremely frustrated with our inability from a commercial perspective to name companies in the space that are working on the technology, but rest assured, things are happening. So in the mRNA vaccine production space, we have signed a contract in that space. We have another one that we're hoping to sign this year. In the sterility space, we have another one that we've talked about previously and in the statement today, which is a large European biopharma that is using our technology and centrally for several sites that it manages. And over time, it should expand out to those several sites as well. So -- and we have a pipeline of companies that are evaluating the technology as well. So in terms of confidence levels, biopharma QC is an area where, over time, we're going to see greater penetration of and there's a big market opportunity for us to win there. It's extremely frustrating that we can't kind of talk about the companies directly who they are. But I'm sure those eagle-eyed analysts out there will be able to go work it out over time. Gordon? Gordon Sanghera: I think we put out a fee-for-service contract with Eurofins, who they put our contract, doing sequencing in biopharma QC and looking at sterility. In the first 3 weeks, they picked up a customer contamination that saved several millions and that's just an indication of what is going to happen here. They didn't say who it was. But so just -- you can see the glimpses and is frustrating that we've got a great list of partners that we can't talk about. Charles Weston: Charles Weston from RBC. Two questions, please. First of all, on the guide. You mentioned in the release that 2027 revenue expectations for growth would be sort of similar to 2026. You've mentioned a number of 2026 headwinds that are quite specific to 2026 and in 2027, of course, you'll have a higher base of the nonresearch markets, which are growing faster. So why shouldn't we expect an acceleration in growth in 2027? And the second question, just on a couple of product-specific points. First of all, what is the timing of the Q line GridION version 2? You said 2026, but when should we expect that? And the PromethION 2 genome flow cell or chemistry, when should we see that? Nicholas Keher: Perfect. So on the guide, so 2027 could be higher than 2026. So it could be. In terms of what we're guiding to today, we're saying that it's going to be a broadly similar rate to what we see in 2026. And for the market, that's all it needs to achieve adjusted EBITDA breakeven in 2027. So that what we're trying to kind of get here is a prudent set of like market expectations that are out in the market as well. You're not wrong that we may see the -- sorry, with the growth in the applied markets and the weighting that it has, I can't -- do we see there being something wrong that's going to slow this growth down over time? No, not necessarily, but we're here to kind of give '26 guidance and how people can get to '27 breakeven and keep that in place. We'll update on '27 guidance explicitly when we get to 2027. On the timing of the GridION version 2, so the second half of this year. And then on the PromethION 2 genomes per flow cell. So actually, in -- with beta testing with customers, we can already demonstrate this. We're just thinking about how we roll this out from a product perspective effectively to our customers, and that's the key piece there. So because it's not just having a flow cell that can do it, it's actually having all of the constituent parts to make it a full product for companies as well. And we've got to be careful here. I don't want people running away and thinking that all of our business will be able to achieve this because for the PromethION flow cell and that focus in particular, there will be certain customer segments that this is appropriate for. So what's the sample type, what's the read length, what is the customer doing with the product. And that's where this will be used in the first instance, and then we need to do further development work to mean that all customers can benefit from this as well. Do you want to add anything to that, Gordon? Gordon Sanghera: No, I think it's really important that there's this terrible thing going on with all the other competitors in a race to the bottom for whole genomes. This is not what this is about. We have applications in biopharma and clinical and other application, applied market applications -- of applications in there, where that throughput will be competitive with the incumbents, and that's where we will deploy it. Everybody does not need that overcapacity. So this is a really good example of how we are becoming much more mature as a business and thinking about target customers and how we can stratify them appropriately. Somebody else somewhere else wants a much lower throughput, but a much higher accuracy. So it's just starting to really segment the markets, and we're at the beginning of that journey and then targeting the right products in our portfolio to meet that. Charles Weston: Congratulations, Gordon. Best of luck in your new endeavors. Unknown Analyst: And a couple of sort of more specific ones. Just wondering in terms of the MinION recycling decline. Just wondering what was behind that? Nicholas Keher: So nothing untoward, I think is the key piece. So for the MinION essentially, what we've noticed is that with the customers that use the MinION product because there's a lot of MinION devices out there and they are usually a lower-volume customer. And actually getting those flow cells back from the customer is more difficult than it is with the PromethION. So we kind of have the stockpiles kind of ebb and flow essentially in terms of the amount of recycling that we do. It is also about what we are focused on internally in terms of manufacturing as well. So we can turn it up and down. So this is in our control. So we can kind of look to increase or decrease recycling rates as appropriate to ensure other factors as well, not just margin, but yes, there's nothing untoward. And we could increase it again. We can decrease it. It just really depends on where we are. Unknown Analyst: Lovely. And then just as far as inventory is concerned, just wondering about how much more reduction there's a possibility of there? Nicholas Keher: Yes. So it's a big focus from the Board all the way down to essentially manage our inventory levels. I think it's fair to say that we can still work through. So we reported an GBP 80 million number, but there is clearly provisions on that as well. So the gross number is actually higher. And there is an ability to work through this inventory position over the coming years, particularly with a focus on the MinION flow cell range, whilst maintaining the PromethION where it is. And there are varying things that go into this. One is yield improvements. The better our yields go up, the less product that we're going to need, it means we can work through the inventory level. The other one is recycling rate, which actually hurts the inventory level. Because the more you can recycle, the less we chew through on an inventory perspective as well. But as we look forward, there is absolutely scope to further improve and reduce that inventory level by tens of millions over time on a gross level. And as I think we've talked to you before, we've got cash stored up there. We should unlock it. Unknown Analyst: Absolutely. Well done, Gordon. It's a long time since our first IP to IPO investment. Miles Dixon: Miles Dixon from Peel Hunt. Three quick questions, if I can. Firstly, on the restructuring programs. Nick, you already talked about the focus, but forgive me, I don't have the numbers in front of me. It looked like the headcount and the cost was broadly the same in R&D. So does this mean what's really changed? Are we seeing more go towards pre-existing chemistries and products? And is it about less going into proper blue sky research? And relatedly, we saw a really passionate presentation about the proteomics product at the London calling event. What really are you thinking about in terms of the time line to offering from a product like that? And if you can give us a clue on what kind of spend in R&D might go towards something like that, that would be great. And then finally, on the clinical definition. You clearly have seen a 60% increase in sales into clinical, but what really constitutes clinical because a very significant chunk of that revenue might actually be a clinical research application. I just want to get a bit of a better understanding about that. Nicholas Keher: Okay. Probably the third one is easiest if I just take that one first, which is, well, how we define clinical and the customer base that's in there, is anybody that's using the technology to provide a diagnosis to patient. Now clearly, we don't have like complete understanding of what everybody is doing with all of our technology at any one time. We're working on that. And once we get that, I think that will be quite interesting for us to be able to segment our marketing approach as well. So what we have to do is just look at how the customer is paid. So essentially, when we're selling these products to customers that are essentially in the clinical space who make their money from essentially providing diagnosis to patients as well. That's how we have to define it. So there could be a mix at times with like translational work that's in here because there's always going to be a bit of grayness about how they overlap. You're never going to have perfect reporting on this, unfortunately. Gordon Sanghera: Just on that, Nick, because there's diagnosis, but there's also a screening. So just to be very clear, right? The bulk of the revenues come from LDT clear-waved where the physician signs off on the test, not Oxford Nanopore providing a diagnostic tool and workflow. Nicholas Keher: Sorry. Yes, very good just catch from a legal perspective. And then on the first piece for restructuring. So the -- if you look at the R&D headcount, there's a bit of a mix thing going on here as well as Gordon has talked to. So we've made quite significant investments in things like tech transfer and later-stage development opportunities. Also -- but have to -- the average headcount, bear in mind that we made a restructuring at the beginning of the year and reinvested in higher activities and things like late-stage development, quality manufacturing, which some of which sometimes fall in the R&D piece. And then towards the end of the year, in November and the head count reductions that happened there, you still see the average benefit come through. So actually, you will see a reduction in head count in R&D next year from an average perspective, but we are reinvesting. So we are going to -- we're not -- it's very important that you guys and the investors take away as well that we're not stopping innovation. We are absolutely investing in the technology to drive future revenue growth as well. What we're trying to do is just drive that prioritization. So actually, we get better return. And then proteomics? Gordon Sanghera: So proteomics, I mean, we're very excited about the fact that we can map peptides. So true protein sequencing to come. But right now, we have what we call our early open access program request for information, and we've had some really exciting potential applications. So how much of that we can talk about because a lot of them are biopharma customers. But there's a lot of excitement. I mean, all GLP ones are like a bunch of peptides, right? And we can now read them directly at the single molecule level. Nobody else can do that. That's quite transformative. And we're just finding our feet through that early, early open access program where and who can do some interesting things to start to show where the potential market is for this novel method of leucine protein peptides. Nicholas Keher: In terms of just on the cost piece as well. So single-digit millions today. But the thing is with all -- this is a platform technology. And so whilst it might be directly single million pounds essentially on this is because the broader technology is already there to essentially build on the back of. Miles Dixon: I guess what I was asking is are we really thinking about a 2- to 4-year application? Or is it a 5- to 10-year application for those type of offerings on the platform, if you like? Gordon Sanghera: Pure-play protein sequencing is medium term, so 3 to 5 years. But peptide mapping, there are some revenue opportunities sooner rather than later. We just don't know what they are because we're creating a whole new market space and a whole new sensing element. We've just got to work through that. But we're not getting -- we're getting some brilliant lone wolf academic applications, but we're also getting some big corporate interest -- a lot of corporate interest. So it will go faster than I think DNA burn down was, but hard to predict right now. Miles Dixon: And just reiterating like everybody else, congratulations Gordon. Andrew Whitney: It's Andrew Whitney from Investec. If I could just follow up on Miles' question. Just thinking about the philosophy of the business as a whole. I think does the slight tweak to near-term spending, does that mean you are staying focused on nuclear basis for longer before you go off into sort of proteins and metabolites, right? Should we be thinking about you into the midterm as a nuclear-based business more than we were before? Or are the time lines on some of those things unchanged? They're not really dependent on near-term spending, right? They're dependent on market opportunity or whatever it is. So should we be thinking nuclear basis for the foreseeable future and put all of our thinking into that? Or is there something else there? And then my other one was just I think you mentioned some senior recruitment and maybe it's for thinking about when Francis has arrived, but where do you think you need to put people? Gordon Sanghera: I'll answer that one first. As manager this season and not here next season, I'm not about to start telling Francis who he should recruit. That's called Tottenham Hotspur. We can see what a mess that is, right? But in regard to I mentioned volatile organic compounds and small metabolites, we made a decision strategically to do biology or chemistry. We chose biology. So we've done DNA and 5 years later, we did RNA. Now we've got some really great opportunities in peptide mapping. So that's the beginning of proteomics in a very different way to everybody else, which is mostly mass spectrometry, and then protein sequencing will come. So we haven't made a conscious effort to go after chemistry right now. So we're not distracted by or inhibited by not doing chemistry. We are focused on multiomics and biology. And that's very much been the strategic rationale from day 1. Nicholas Keher: Can I just add to that as well on that because it speaks to Miles' question. We are doing a lot of thinking in the space about actually what the right product would be for the protein at the end markets we're going at. So we're getting very focused in terms of even what does the features and benefits of this specifically need to do to win. So essentially, we're really -- because again, there's loads of applications you could take this into. So if the peptide sequencing piece or a whole protein sequencing, so the peptide piece that Gordon just spoken to, we're looking now at the applications, what does it need to do to win, make sure the product can do that, make sure it's ready for launch and get a better launch profile when we actually go for it as well. And it's probably Duncan's best place to answer. Duncan Tatton-Brown: Perhaps as the coach, the departing coach can't comment, maybe I'll say a few words. I mean as a Board, I think it's very clear in this business that the quality of talent, the capabilities, particularly in research and development has been obvious to the Board for some time, a real credit to Gordon and others for building that up. I think real progress over the last couple of years of building out strength in the commercial team, again, my credit to Gordon to bringing real talent into the business. I think the executive team now has a few gaps. So I think Francis has an opportunity to bring in some more talent to grow the business over the next few years. But I think there's a lot of talent in the business, and it's just some gaps at the senior level. So it's quite encouraging, the opportunities ahead. Andrew Whitney: Congratulations, Gordon. Nicholas Keher: We've got a couple of analysts who've dialed in. So I think we've got about another 5 minutes if we could take 1 or 2 of those please, Sergei. Operator: Sure. The first question is from Kyle Mikson from Canaccord. Kyle Mikson: Congratulations, Gordon, and look forward to speaking with -- meeting with Francis soon. So I have 2 questions. I'll lump into 1 here. First is on device revenue in '26. Just curious if you could kind of parse out shipment expectations for the year as you go through this P2S to P2i conversion and other things and also the pricing tailwinds maybe from the CapEx model that I would have thought have rolled off at this point, but maybe that's providing more of a benefit this year as well? And the second question I have is about the clinical end market that grew nearly 60% in '25, You're obviously taking steps to continue your strong execution there, but is that becoming a more competitive space with long-read competitors, short-read competitors doing more in that market that maybe got more challenging to grow at that level going forward? Nicholas Keher: So I'll just take the first one on device revenue in '26 and what we're expecting there. I think you're right that actually, we are going to see continued benefits from the pricing model. It is an important piece to call out that when we changed the pricing model at the beginning of '25, actually in January, if people remember, and it went live in February, we did obviously take our customers a bit off guard here in terms of moving from placing the device for free to essentially charging for the device instead. And that meant that we actually had a bit of a slowdown in device placements during the entire '25 that from the data we're seeing, it looks if it should reverse in '26. So we may -- I think we will see higher overall device revenue growth again in '26 than consumable pull-through. No doubt we'll get that wrong. But in terms of how we look at it today, that's exactly what we should expect. And again, from a pricing tailwind benefit, we're still going to see a bit more on the margin here. There's some real fun stuff in deep accounting that I'll take people off-line on in terms of why that could be and why it will benefit margin, but particularly on the larger devices that we should see improving gross margins overall. On the second piece in clinical end market growth and competition that's kind of coming in there. Clearly, there are new competitors entering the market. I know Gordon will definitely have a view on this as well. But I think it's important to recognize why we are growing even against the legacy conventional technologies that are out there, be them short read or long read. It's the richness of information that you get from Nanopore sequencing, the direct data that you get from looking -- direct DNA, RNA, the methylation, the long read, the structural variations you get all rolled into one that essentially is meaning that we can win today as well as the turnaround time. So those don't change from the evolving landscape that we can see in front of us today. So no reason why we should necessarily slow down. And again, when I look at the Americas growth rate and I look at the customers that are evaluating or underpinning that growth, there are some big names in the clinical space that are looking at this. Gordon Sanghera: Kyle, I think the competitive landscape is a real positive for Oxford Nanopore. The fact that Illumina has finally agreed long reads are important and they've launched a synthetic long-read play. This is the fourth one, I think. So good luck with that. We have native long, ultra-long, super long, short. So we can give you any relength you want on native DNA. The fact that methylation has also come to the fore and they are launching a methylation profiler as well, again, is recognition that, that 20,000 publications and the foundational work that we have laid down on multiomics is important. So from our perspective, bring it on, native, direct, all in one read and one price will outperform the market. So we look forward to that landscape, that competitive landscape and how we are superior as a tech. Operator: Thank you. Unfortunately, that's all the time we have for questions today. With this, I'd like to hand the call back over to Gordon for closing remarks. Gordon Sanghera: I think just thank you, everybody, for your time today and over the last couple of years and see you all in 6 months with Francis and Nick leading the charge. Thank you, everyone.
Jin Xin: Ladies and gentlemen, a very good morning to everyone joining both in-person and on the web. Welcome to Sembcorp Industries Full Year 2025 Results Presentation. My name is Xin Jin from Group Strategic Communications and Portfolio Management. Before we begin, may I request that all mobile phones be switched off or set to silent mode. And if you feel unwell, please approach our staff for assistance. Joining us on the panel today are our Group CEO, Mr. Wong Kim Yin; and our Group CFO, Mr. Eugene Cheng. There will be a question-and-answer session following the presentation. Without further delay, I will now hand over to Kim Yin to begin the presentation. Kim Yin, please. Kim Yin Wong: Thanks, Jin. Good morning. A very happy Lunar New Year to everyone. Let me now quickly get into the results of 2025. Now before I begin, I want to also set the stage. Compared to 2024, we have had -- those of you who have been following us would know that we have a significant headwind in 2025, right? The margins in Singapore has been under a lot of pressure with the increase in the supply in the Singapore market. That's the first one. In our U.K., margins as well as volume also come under pressure. China renewables continue to face heavy curtailment as well as pricing pressure. So despite those headwinds, we were able to offset the impact from those and came out in a resilient outcome, which is you can call it flex, but it is not without effort that we can get to the $1 billion mark. So for consecutive years, we stay at that level. And that has given us the confidence to come out and say, hey, look, the underlying cash flow and the business is strong and resilient and actually, the cash flow is growing. And because of that, we convinced the Board to allow us to increase the dividend. It's just an indication. It's not much of an increase $0.02 out of $0.25. It is still -- we recognize that we lack our peer group in terms of dividend payout, right? But now that, again, we are operating at this $1 billion platform, this normal -- new normal that may not be new, it has been 3 years, but I think everybody is convinced that we have that underlying capability to increase our dividend to close the gap between ourselves and our peer group, right? So the idea is that in terms of returns, one can look forward to dividend. And then the second thing is that in terms of growth, we show you that in the year, we are pending the completion of a major acquisition in Australia, opening up a new market for growth, a new platform for growth that is of scale, right? So returns and growth, that's the message. If I want you to take away 2 messages, please, those will be the 2 messages. So then now let me then go through some of the details in 2025 performance. The turnover was $5.8 billion, adjusted EBITDA, $2 billion, underlying net profit, $1 billion. So easy to remember, 6-2-1, that's how I remember, the minus around numbers. Underlying earnings per share, $0.564. ROE, 18.2%, right? So as I mentioned just now, we proposed a final dividend of $0.16, bringing the total of the year to $0.25. This is compared to 2024, the $0.23 is a 9% increase. And again, like I say, we recognize the gap in terms of payout ratio and dividend yield from our peer group. And the idea, the intent is that over time, we are very comfortable and confident that we can close that gap. Then into the business segments under Gas and Related Services. Earnings of the group continued to be anchored by Gas and Related. Within the segment, the Singapore portfolio contributed $538 million in net profit or 77% of the GRS segment's net profit. A combination of long-term contracted portfolio as well as the incremental contribution from Senoko Energy provided the anchor for the earnings in 2025. During the year, in the last year, we secured 370 megawatts of long-term contracts, of which 150 megawatts was from Micron, which we announced in January this year. So we continue to execute this strategy to capture demand from data centers and high-tech manufacturing customers. As of February 2026, right now, close to 80% of Sembcorp's portfolio is contracted for 5 years and above, while the Senoko Energy's portfolio contracts are short term. So in 2026, just to go a bit further, 5% of the Sembcorp portfolio will have to be recontracted, while about 50% of Senoko Energy's portfolio must be recontracted. So we expect that, of course, lower blended spark spread for the new contracted volumes, right, so 50% of Senoko, 5% of the Sembcorp portfolio. So this impact will be partially offset by operational and financial synergies from both portfolios. Then in the fourth quarter of this year, 2026, the commissioning of the 600-megawatt hydrogen-ready power plant is expected to take place. It is highly efficient, and that will enhance our fuel and cost efficiency of the entire fleet. During the year 2025, we've also secured long-term PPA for Sembcorp Salalah Independent Water and Power Plant. This 10-year contract will commence from April 2027. The previous contract, which is currently running is a 15-year contract and will expire in April. So we secured another 10 years, and that will provide the stability coming in from the contribution of Oman. So the Middle East is entering a new phase of rising energy demand driven by industrial and digital hubs that require reliable, uninterrupted power. We have extensive experience operating critical power and water infrastructure in the region, and we will selectively pursue growth opportunities in the Middle East. Moving on to Renewables. During the year, we maintained the pace of growth in the selected geographies, adding 3.6 gigawatts of new capacity to our portfolio compared to the end of 2024. The earnings from the Renewables segment increased 5% year-on-year. This is despite the contribution from China renewables declining to $74 million from $89 million in 2024. In India, we have seen improved contribution from the existing fleets as well as from newly commissioned megawatts. During the year, the pipeline continues to grow in Renewables. We acquired 300 megawatts of solar capacity and secured 1.5 gigawatts of greenfield wins comprising hybrid projects, round-the-clock projects, firm and dispatchable renewable energy projects. We are actively exploring capital recycling options in India. In the Middle East, we successfully entered the wind market in Oman with 125-megawatt greenfield development project underpinned by a 20-year PPA. In Singapore, we were awarded solar projects totaling 236 megawatt peak, including 2 floating solar projects, reinforcing our position as the country's leading floating solar energy player. In Southeast Asia, we completed the acquisition of a 49-megawatt hydro project in Vietnam and a 280-megawatt solar and energy storage portfolio in Indonesia, which is currently under construction. So our total group renewable capacity is now 20.4 gigawatts, of which 5.4 gigawatts are secured either under construction or under advanced development. This 5.4 gigawatts of new capacity will progressively come online between '26 and 2030. Integrated Urban Solutions. The net profit for the IUS segment was stable. Earnings from our water segment was stable, while contribution from the other divisions were lower due to the absence of contribution from SembWaste or SembEnviro. Obviously, we closed the deal to divest SembWaste in, was it, February, March 2025. So it's been some time. So compared to 2024, the contribution from SembWaste is, of course, no longer. The Urban business continued to secure new industrial projects, bringing our total gross development land area to over 16,000 hectares. In Vietnam, we secured 4 new investment licenses, and this brings the total number of projects in Vietnam to 22. In Indonesia, we are developing the 500-hectare Kendal Industrial Park Phase 2. Remember that Phase 1 is almost -- is mature and most of the land has been sold. So now we're moving on to Phase 2 with 500 hectare. And we are also progressing on the development of the 100-hectare Tembesi Innovation District in Batam. We have also doubled our leasable gross floor area to 1.1 million square meters from 0.5 million square meters in 2024. So this -- and the occupancy rate of our operational industrial properties increased to 96% from 76% as of the end of 2024. So the -- in terms of both growth in square meters and also in terms of occupancy rate, the IUS team has done well to improve the performance. So this will -- particularly this area will further strengthen our recurring income coming up from IUS. So we will continue to review and sharpen our portfolio as we did through the sale of SembWaste and the divestment of municipal water business in China during the year. The long-term fundamentals of Sembcorp is very strong. We are in the right places. We have got secured cash flow through contracts with high-quality customers. And later, Eugene will show you the underlying cash flow coming from the Singapore portfolio. And then post completion, the Alinta portfolio is actually very, very robust. But in the near term, we are facing some headwinds, which shouldn't be new. These are the things that we experienced in 2024. But in 2025 -- or rather in 2025 and in 2026, we will want to flag that in front of you and give you a little bit more color what we would do about them. In Singapore, with the new supply coming on stream, we can naturally expect lower spark spreads. And since 2023, you know that we have been transforming our portfolio by leveraging our position as an integrated gas and power player as well as the largest renewable player in Singapore to secure long-term contracts. So what was previously a very merchant-heavy portfolio is now a largely contracted one. Of course, I'm speaking about the Sembcorp portfolio, not the Senoko Energy portfolio. Now Senoko Energy, we will go in there and try to add value as we did with our own portfolio. But the good thing is that we got it at a price at an investment level that is very comfortable, notwithstanding the merchant nature of the business, right? But as a portfolio, there are significant synergies in terms of financing, in terms of operations, in terms of how we run the plant. For instance, we can sign a hedging contract with Senoko and to provide insurance so that then we can aggressively contract our baseload high-efficiency units in the Sembcorp portfolio. So there are significant synergies. We bought Senoko at a very attractive valuation. And in combination, we are now the largest fleet of gas-fired power stations in Singapore. And together with our integrated gas portfolio as well as our position as the largest renewable player, we are very well positioned. We think that we are highly competitive and the diversified portfolio will position us to capture the growing AI demand in Singapore, particularly from data centers and high-tech manufacturing sectors. Let me go off script a little bit. When we say today, there's a lot of hype about AI, share price of some of these companies, tech companies are very high. We're not in that game. But by the time the AI demand translates into energy demand and it translates into a contract with Sembcorp, that is a solid demand because that demand for energy is coming from Micron, is coming from data centers that are hyperscalers with good credit profile, right? So we are sort of on the receiving end of it. I'm not saying that we are AI company now. But by the time we receive the demand translated from all the noise in the market, it is actually a very, very solid demand that we are capturing, right? So the important thing is that we are ready to capture it. And what we are saying here is that we are very well positioned to capture that demand. If I move on to China, of course, we will continue to face curtailment and tariff pressures alongside with the recent cancellation of value-added tax refunds for onshore wind projects. So these are developments that will affect the entire sector, not just us. Now we will remain very disciplined in managing our portfolio exposure in China in terms of thinking through project additions or even divestments. We will allow time for expansion of transmission network and also pursue contracts to try to stabilize earnings. Having said all that, to put things into perspective by now, if you look through the numbers, China is a relatively small contributor to the entire picture, right? And as I mentioned just now, notwithstanding the headwinds and the lower contribution and the reducing contribution in the last couple of years, we were able to plug the gap through other means. The last one is the U.K. The closure of our key customers' operations, particularly SABIC, is driven largely by weak economics, of course, in the industrial sector as well as in the U.K. in general. We are driving active cost management and repositioning the business to capture data center opportunities. We'll talk a little bit more about why we think we can capture that in the next slide. So I mentioned just now that we are -- we believe we are well positioned to support the region's accelerating AI-driven energy demand. So allow me to take a little bit of time to elaborate. Our gas and related services provides reliable baseload energy. We are well positioned to capture more demand from new data centers as well as the semiconductor sector. As we have shown you, we now supply almost 700 megawatts to the high-tech manufacturing sector, which includes also the recent 150-megawatt contract with Micron. Our renewable business delivers tailored green PPA solutions and long-term renewable energy supply for high-demand industries to meet their clean energy targets. Contracts secured include the supply of power-backed renewable energy certificates to day 1, 20-megawatt data centers under 10-year PPA. So data center, day 1, 20 megawatts through a 10-year contract. That sets the tone of what we can expect moving forward as more new data centers gets planted in the region and particularly in Singapore. We have also signed a 25-year renewable energy purchase agreement with Meta Platforms, and this is to build own and operate 150-megawatt floating solar farm in Kranji. And finally, under the IUS business, we provide low-carbon infrastructure to customers. And we are able to develop sustainable data center infrastructure with partners to supply land and power along with other green services. So within the Tembesi Innovation District in Batam, Indonesia, we can accommodate up to 100 megawatts of data center capacity. For those of you who are familiar, Batam, of course, is really seeing the connection of fiber coming in from companies such as Singtel. So it is not whether there will be data centers, it is when and of what size, right? And what we have there in Tembesi is ready 100 hectares of land ready to connect up to all this data center demand. And in the U.K., Wilton offers 138 hectares of ready land with immediate grid connection and supporting infrastructure. And that is naturally attractive for potential data center developments, right? Because as you know, for data centers, one of the biggest constraints is the power supply, right? And if you -- in a place like U.K. or for that matter, Singapore, Australia, places like this, to bring a new substation and high-voltage cable to supply a newly increased demand from data center that will take time. So the existing infrastructure, existing land will provide that opportunity. So together, in GRS, in renewables as well as in IUS, Sembcorp is actually a very attractive comprehensive energy and infrastructure partner for the AI players. By integrating reliable baseload, scalable renewables and sustainable urban solutions, we want to capture the region's growth while enabling our customers to accelerate their decarbonization and digital transformation ambitions. I shall not go through this in the script that Jin has given me. I think what I want to emphasize before I hand over to Eugene for the detailed numbers is, again, first, in terms of returns, you can -- we are expecting that we will be able to improve our dividend payout ratio and dividend yield steadily over the coming years. And this year, the $0.02 increase compared to 2024 is just an indication, and we have deliberately been quite prudent given that we are pending the closing of a major transaction in Australia, right? So to close the gap in terms of dividend yield and payout ratio compared to our peer group. So that is the first thing. And the underlying cash flow, I have explained where our balance sheet and cash flow positions when we discussed the Alinta acquisitions a month ago. But if we need to provide elaboration again, I'm happy to do that later. But suffice to say, we're very comfortable with our balance sheet position. We have very strong cash flows coming in. In fact, we struggle to find the type of growth opportunities like Alinta, where we can deploy that cash flow. So naturally, either you grow or you reward shareholders and return it to them in the form of dividends. So that's the first thing. And the second thing is that in terms of growth, we have immediately in front of us, Alinta, which we will hopefully complete sooner than later, but certainly, we expect within this year, if not the first half. And Alinta will provide, at least for the next few years, a significant scale market and a significant growth capabilities. We have a very strong management team now under to help us grow the entire energy portfolio. The least of it is a 10-gigawatt renewable pipeline that they have already identified, right? And in addition to a very energy-staffed, high demand growth Australia energy market. So certainly, in the next few years in terms of returns and in terms of growth, we are quite set up for that. So that's the picture that I want to leave with you before I hand over to Eugene. So Eugene, please. Chee Mun Cheng: Thank you, Kim Yin. So I'm glad, as Kim Yin has highly -- has pointed out earlier on, I think 2025 was a year in the half year earnings announcement that we are seeing some headwinds, but we were quite pleased that as we close 2025, we were still able to close the year strong, right, keeping to the $1 billion underlying net profit earnings relative to 2024. Now on this slide is basically the group level statistics, and I will talk through them. I will use one particular slide, which talks about the net profit of the different segments, right, to elaborate more in terms of the specific performance. Now if we look a headline from a turnover and EBITDA standpoint, we did see a commensurate 10% decline across both of them. I think from a -- we already know the key reasons for that, right? In general, in Singapore, we did see, in general, lower spark spreads for the renewed contracts that took place towards the latter part of Q2 that also carried through for the rest of the year. And also, in addition to that, we also saw a high-cost power import contract that continued to weigh us down. And also, we did see some compression of gas margins and also the absence of roughly $10 million to $15 million of a gas upstream curtailment gain that we had in 2024 that was not present in 2025. Now in addition to that, we also saw weaker price and customer demand across U.K. in the U.K. Wilton gas business. For 2025, we were hedged on contracted forward prices at the end of 2024, which was weaker relative to what was hedged for 2024 at the end of 2023. In addition, we also saw the petrochemical sector, which is a significant part of the current customer base in Wilton that has seen weakening. So in general, customer demand has been weak as well. So we did see a weaker demand from the U.K. Now of course, we also were impacted by the loss of contribution, right, from SembWaste after we have divested that in March of 2025. Now this is partially offset by new capacity that has been commissioned in renewables, right, across India, the Middle East as well as Southeast Asia, where we completed the acquisition of the 49 megawatts of hydro project in Vietnam. Of course, that is offset by some curtailment issues that take place -- that continue, particularly in the Guangxi province of our control portfolio. So the effect across the turnover and EBITDA. Now our share of results of associates and JV increased markedly by 57% or $180 million. Of course, this is driven by Senoko's full year contribution of 30% and an incremental 20% for half year. Now from a Senoko standpoint, this is -- this contribution is also offset by renewals of roughly 15% to 20% of its contracted portfolio in the latter half of 2025. Now just to give you a sense, in those rounds of contracting, we essentially saw the recontracted spark spreads come off quite markedly, right? We were contracting between $30 to $35 spark spread for that renewal and which essentially came off highs of $70 to $80, which were contracted more at the '23 period for them. Now of course, I will touch on later on because there continues to be a recontracting taking place, as Kim Yin highlighted through 2026. We also saw -- in the VSIP portfolio, we saw a higher contribution, right? Part of it is as a result of fair value gains for the completed RBF projects within the VSIP parks that we own. But this is offset by some land sales weakness in the Central Vietnam. The fair value contribution was $27 million, but I'll talk about it later on later. And it's also offset by continued China curtailment in the SDIC portfolio. All in all, adjusted EBITDA, it's about 2% lower compared to FY 2024, $2,016 million compared to $2,050 million. And our net profit before exceptional items and the DPN FX is $1,003 million relative to $1,014 million. Now we did realize a noncash FX loss for the deferred payment note in 2025 of $154 million, right? This is roughly about -- coming simply from a roughly 10% to 11% depreciation of the India rupees relative to strengthening Sing dollars when we compare the rate in which we mark-to-market or rather translate the DPN balance from Indian rupee to Sing dollars. The rate used in -- as of 31st December 2024 was -- compared to the rate used at the 31st December 2025, the rate declined roughly 10% to 11%. Of course, this does not indicate any cash flow impact, but it's really a mark-to-market. Now as highlighted previously, hedging the balance of the deferred payment note, it's dependent on 2 factors. Number one, the visibility of fixed cash flows. Now the deferred payment note is largely on an availability of cash sweep model, right? And as a result, putting in place hard forward cash flow hedges effectively from an accounting standpoint will not result in an effective hedge, right? I think the second element also throughout 2025, when we look at what is the forward cost of hedging, the forward cash flow cost of hedging is -- will result in a worse outcome than the mark-to-market. And if we do put on those hedges, there will be real cash outflows. So as a result of that, we did not put in any form of forward contracts as a counterbalance against the rupee swings here. Nevertheless, $154 million is really a onetime mark-to-market. It does not indicate any cash flow impact in the current cash flow generation capabilities of the portfolio. We have an exceptional items gain of $135 million. So that comes largely from the sale of SembWaste. Also included in the sale of SembWaste in this -- sorry, exceptional items was a positive goodwill or bargain purchase option gain as a result of the second tranche completion of the Senoko transaction. This is offset by roughly $28 million to $30 million of some asset impairments that we took across the Southeast Asia, where we made the broader decision that we will not continue with the rooftop solar business, which generally is a very small part of Southeast Asia currently. Now -- so all that results in a net profit from continuing operations, taking into account the DPN FX loss and the exceptional items of $984 million, right, a lot of which is driven by the DPN FX impact. Now our ROE from a more underlying basis, right, before exceptional items and our DPN FX loss, is 18.2% relative to 20% last year. Now there are some capital drawdowns that were not -- that took place in 2025, particularly in relation to CCP4 and also continued capital deployment for our pipeline and also certain projects that came online, but were not contributing on a full year. I will illustrate what the effects are those from a normalized basis on a slide later. Now, I won't touch so much on the broad group turnover because the reasons are largely about -- what I've highlighted earlier on, but I want to move on to the next slide, which illustrates the group net profit by segment. Now for the Gas and Related Services, we turned in $701 million, which is a 4% decline relative to $728 in FY 2024. Now as Kim Yin has shared in the earlier slide, the effects can be broken largely into 2, right? So for the Singapore Gas and Related Services portfolio, FY 2025 turned in $538 million relative to $546 million in FY 2024. These numbers are there. It is just in Kim Yin's earlier slides, okay? So that is approximately an $8 million decline. Now there are basically 2 effects here, right? One contribution from Senoko and the other one, which is the continued margin pressures that we see in our Singapore-only portfolio. I think throughout 2025, as highlighted in the first half results, we did see roughly a 10% of our portfolio recontracting, 90 to 100 megawatts from the Sembcorp portfolio that took place at that point in time. We did see spark spreads coming off down to the $30 range, which was coming down from the high of the $80 to $100 range that was previously contracted. So that carried through the full year and the impact from the declining spark spread was about $60 million to $70 million on a full year basis. Now we also saw the high-cost power import contract that we signed and disclosed at the end of December 2024. The run rate impact in the first half carried through for the full year as well. So in the first half, we highlighted it was about $20 million or so. So that continued to weigh down on the portfolio. We also saw some declining gas margins. And also, in addition to that, there was a one-off curtailment compensation gain in 2024, about $15 million to $20 million that wasn't there in 2025. So these are the impacts on the ex Senoko portfolio. I think from the Senoko compensation, largely across the Gas and Related Services adjusted EBITDA disclosure, you will be able to largely look at that number. But again, as highlighted earlier on, we do have to bear in mind that in Senoko's 2025 numbers, particularly in the second half, it has been impacted by roughly 20% of the portfolio that has been recontracted. Now they have been recontracted at $30 to $35 spark spreads as well, right? And that has come off similar high levels of about $70 to $80 spark spread that was contracted before. And as Kim Yin has highlighted in the pie chart earlier on, we expect to see close to 50%, roughly 47% of the Senoko portfolio that we will be recontracting from the second half onwards. So all in all, we do have -- we believe based on our visibility right now, those recontracting levels will largely be at a $30 to $35 level as well, coming off similar highs as highlighted. So that's the visibility that we have on the Senoko earnings. Now on the rest of the world earnings, we turned in $163 million, right, relative to $182 million for the Gas and Related Services segment. So that's about $20 million -- $19 million to $20 million decline. Now the rest of the world gas earnings were historically largely very stable. But I think this year, we saw a $20 million decline largely as a result of U.K., right? Now as highlighted earlier on, U.K. did see 2 effects come through. Number one, basically lower power prices, right? And secondly, lower customer demand as well, particularly the petrochemical customers in the U.K. One of them, SABIC did not return, right, for its olefins plant. And we do expect the weak customer demand potentially to carry through into 2026. So that's for the Gas and Related Services segment. Now for the Renewables segment, from a net profit standpoint, right, we turned in $192 million, which is 5% higher than $183 million, which we closed FY 2024 with. Now again, earlier on, we have broken out this segment into China as well as others. Let's talk a little bit about China. So for China itself in FY 2025, we turned in a $74 million net profit versus $89 million in 2024. So it's a $15 million decline. So there are 2 key effects that are the change in net income. So firstly, it is continued curtailment that affect the China portfolio, particularly in the northwestern side of the portfolio. I mean, to give you a sense on the average China curtailment that we have across our portfolio, in FY 2025, our average curtailment for the wind portion of the China portfolio was 14% versus 8% in 2024. So it's a very significant increase in the curtailment. And for the solar portfolio, it was 16% average of curtailment in 2025 relative to 9% in 2024. So also commensurate increase in the level of curtailment. So the impact of curtailment on the China portfolio in FY 2025 was approximately $30 million in net income, okay? But we did see a capacity increase in 2025, right, by -- from project pipelines that were coming through. Gross capacity, we added about 900 megawatts, right? So the increase -- the capacity increase plus also some stronger generation that we see, right, in our Hainan portfolio on the wind generation did result in a $15 million positive net income on a year-on-year basis. So the net effect of both, right, curtailment, negative 30, but we did have some 900 megawatts of capacity increase and stronger wind generation in the Hainan wind portfolio that resulted in a net $15 million downside in our China renewables earnings. Now in the others portfolio, which comprises of India, Middle East as well as Southeast Asia, we saw -- in 2025, we did $118 million relative to $94 million in FY 2024. That's a $24 million increase. This is largely driven by 2 things, right? We did see a new capacity commissioning across India, Middle East. And also we completed a couple of acquisitions, right? One, which is the 300-megawatt renewal portfolio and also the 49 megawatts Vietnam hydro portfolio, those were later in the year and did not contribute on a full year basis. So all in all, that contributed to that increase. I think in addition, also, we did see a slightly better wind resource performance across India as well. So that contributed to the renewables portfolio outside of China that saw a $24 million increase. So if we move to the Integrated Urban Solutions, right, it is flattish across both from 2025 compared to 2024, $178 million compared to $173 million. But when we break across the 3 segments in Kim Yin's earlier slide, right, the urban business turned in $114 million relative to $101 million in 2026. So it's about a $13 million increase, okay? So the increase was really driven by about $27 million of fair value gains as a result of the ready-built factories and warehouses that are being commissioned. But this is offset by some land sale weakness in Central Vietnam. And as you will recall, one of the areas that we have been very vigilant since the Liberation day tariffs were announced was Central Vietnam, where the manufacturing activities of our customers tend to be of lower value-add variety, right? And we all know that Central Vietnam in Vietnam itself, basically, from a labor perspective, they are of a lower level. So we did see a weakness in that segment as well. But across the northern as well as the southern part of Vietnam, we continue to see land sales to be strong, but -- and also across Indonesia. I think Kim Yin brought up an important point. The coming through of the ready-built factories and ready-built warehouses did also increase our recurring income contribution in the urban business. Now in 2025, our recurring income contribution across infrastructure charges in the parks as well as the ready-built factories is approximately 20%, right, net profit contribution from recurring income. This has increased markedly compared to about 10% to 12%, which 3 to 4 years ago. So the coming through of the ready-built factories has improved the recurring income quality within the urban portfolio. As highlighted also by Kim Yin, going into '26 and '27 going into '28, we will have a significant amount of ready-built factory and ready-built warehouses to be constructed, right? And once that is done, we would see even stronger recurring income contribution to urban. Now in the water business, we turned in $52 million relative to $50 million in '26, so fairly stable, right? We did see cost optimization efforts in 2025 that turned into fruition, approximately $2 million of cost optimization gains that hopefully would stay as run rate going forward. But one point to note also in 2025, we did receive a one-off $10 million receivable settlement for a past receivable in relation to one of our not so well performing municipal asset, Qinzhou. In 2024, we also had similar levels of one-off gains, right? But that was across Fuzhou and another water plant compensation collection recoveries of past receivables as well as certain provision reversals. The last element to talk about in IUS is really our waste and waste to energy business. We did see a decline of $10 million, and this is largely contributed from the divestment of the SembWaste business, which took place in March of 2025. Now if we move on further down the line into the Decarbonization Solutions segment. So while we turned in a negative $23 million relative to negative $20 million in FY 2024, one of the key elements of that $3 million increase in terms of our losses is a result of a write-off of -- a write-down of our RECs inventory value in GoNetZero. I think in 2025, we have seen a marked decline in the value of the RECs. So we took off a meaningful write-off and that contributed to the increase in the losses. Now in Other Businesses, we turned in $45 million relative to $38 million in FY 2024. Now Other Businesses, it largely comprises our Sembcorp specialized construction as well as the maint business. The maint business continues to contribute $1 million to $2 million of net profit. So it remains flat. But our Sembcorp Construction business continued to accelerate in net income realization simply because of a growing order book. Order book for the Sembcorp Construction business is in excess of $1 billion currently. So going further down the line from a corporate cost perspective. Now for interest cost, we were able to optimize that by about $10 million, largely -- and this is a corporate-level interest cost. Now we were able to do that because we did take efforts to optimize our cash usage to minimize negative carry. I think in addition to that, also, we benefited from refinancing activities that were at a lower interest cost. We were also quite active in looking to really rework some of our commitment fees, for example, with our banking partners, and this resulted in a reduction in our interest cost. Now our other corporate costs reduced by $25 million. So to give a greater clarity of that, $11 million of that on a year-on-year basis came as a result of past tax provision reversals. That is in relation to a withholding tax provision that we made against a China dividend that was paid out, right? So the withholding tax provisions has gone past time bat, right -- the time bar, and hence, it was okay for us to release the provisions. But $14 million of that $25 million came through discretionary cost savings. So we were managing costs across professional fees, across travel, across manpower costs throughout the year, and that allows us to realize the cost. Now going forward, because these are cost management efforts against discretionary costs, we will continue those efforts in 2026, but we may not be able to realize the same magnitude of cost savings, but we will continue to be driving cost savings at the corporate level in those areas. Now for the DPN income, that has come off $25 million, $159 million, down to $119 million. Now I think that simply is a result of continued paydown of the debt balance in Indian rupee terms of the deferred payment note. I think one of the key things to highlight is the cash flows as well as the earnings performance of the underlying asset, which is SEIL, the coal plant continues to be very strong. right? People, I may not have highlighted this enough. But from -- since the transaction incepted in January 2023, right, until today, total cash collected across both income as well as principal paydown in Sing dollar terms is in excess of $1 billion, right, it's about $1.05 billion, right? So looking into 2026, we do expect continued similar strong cash flows return and paydown of the deferred payment note income as a result of SEIL's underlying performance. But of course, that will also mean that our DPN income will continue to decline as we see a faster recovery of the principal. So I think essentially, that largely highlights the differential performance across all the segments. And the DPN FX gain loss and the exceptional items I've touched on earlier on, so I won't go into more detail. If you move on to the next slide. This is basically a bridge that highlights what I was talking about, so I won't talk through this slide again. Now in terms of the group ROE, as highlighted earlier on, we did see a decline in the group ROE. Gas and Related Services was 32.1% in FY 2024, down to 26.4%. Now in the ROEs itself, there are 2 effects. I think firstly, it is the declining spreads as we are talking about. But the second element also is we are incurring CapEx and drawing on capital, particularly for CCP4, right? So 2025 was the year where we incurred the larger amount of CapEx coming into 2026, where we expect CCP4 commissioning to take place towards the end of the year. So normalizing for that, the ROEs would have been better. Now for Renewables, it's 7.4% relative to 8%. Two effects. One of the elements is we continue to see curtailment elements weigh down the China portfolio. Also, we have projects that are commissioned that have not contributed on a full year. I would show the normalization of that effect on the next slide. And the Integrated Urban Solutions continue to be at 8.4%. Now if we move to the next slide, now if we look at the ROEs, as I highlighted, we do want to call out what are the capital draw that has potentially weighed down the ROE versus what it would have been on a normalized basis across the renewables as well as the group. For Renewables, we did have a 0.7% that comes from a combination of projects that were commissioned in 2025 that did not contribute on a full year basis, right? So if those projects contributed on a full year basis, it would have been an additional 0.7%. Now we also have certain projects in the pipeline that are under development and have drawn down on CapEx, right, and have not COD-ed yet. So the impact of that is about -- is another 0.2% on ROE. So the normalized Renewables ROE would have been about 8.3%. From a group perspective, on a similar basis, the contribution from projects that were commissioned in 2025 that if they contributed on a full year basis, that would have been a 0.3% impact and projects that are under development would have been 1.8%. Now that looks a lot larger relative to Renewables because the biggest part of that is the CapEx that is drawn for CCP4 construction, which is expected to be commissioned in the later part of the year. So if we move on to the next slide, this is to highlight the impact, the translation impact of the strong Sing dollar across the different currencies had on our earnings. As you will recall, I highlighted this in the first half because from the first half, we have seen an almost systemic strengthening of the Sing dollar against all our key functional currency exposure. Now just for us to note, this translation impact is simply for each of our overseas operations, the accounts are kept in local functional currencies. And when we translate back into Sing dollars, we would have to use an average translation rate and that translation rate have a decline, right? Operationally, in the respective markets, certainly, it is not an indication of the operational earning capabilities in those markets. So cumulatively, across 2025 compared to 2024, right, the estimated impact of the translation impact on our earnings has been about $32 million. So it's fairly significant, right, almost 3% to 3.2% of underlying earnings. So this continued heightened currency volatility, we will monitor the situation. But given that this is a translation impact, traditional hedging activities may not be that effective. Now if we move on to the next slide, this is really our CapEx and equity investments for FY 2025. In short, total investments that we have made in ' 25 total about $1.2 billion, right, relative to close to $2 billion in 2024. And if we move to the next slide, our cash flow generation continues to be strong, right? In 2025, our cash flow -- operational cash flows is about $1.2 billion, slightly down from $1.4 billion the year before. Now taking into account cash flows from essentially interest income as well as dividends and the DPN receipts and our free cash flow before deployment for expansion CapEx as well as equity investments is about $2.1 billion relative to $1.8 billion last year. Now of course, in the $2.1 billion, we have the benefit of $383 million, which is the net cash proceeds realized from the SembWaste sale, okay? Now -- but even if you take that out from the free cash flow of $2.1 billion, our free cash flow available for debt service as well as growth on an annual basis still remains approximately $1.7 billion, which is similar to FY '24 the year before. So highlighting our confidence that we can service any outlook in relation to our dividends going forward. So in terms of our group borrowings, from a gross debt perspective, we saw roughly about $200 million plus, $300 million increase that result as a continued drawdown of the completion of our pipeline and also CCP4. But also because of our overall net -- stronger net cash flow generation, our net debt remains fairly similar to last year at roughly $7.8 billion with our cash and cash equivalents increasing from $871 million to $1.1 billion. Our key leverage metric, which we always focus on our net debt to adjusted EBITDA, right, stands at 3.9x, which is not very different from where we were 1 year ago. Moving on to the next slide. From a group debt profile perspective, we improved it slightly this year, right, in some of our refinancing activities where we were able to benefit from lower base rates, tighter margins and also an extension in terms of tenor. We were able to refinance some of our, for example, 5- to 7-year bank revolving credit facilities towards the 8-year mark. And also, we were able to issue a 20.5-year bond at 3.55% in October of last year. So all this resulted in our weighted average cost of debt declining slightly from 4.6% in 2024 to 4.5% in 2025, while being able to extend our weighted average debt maturity to 5.2 years. In terms of our fixed versus floating profile, 76% of our portfolio remains fixed, which means that on a floating perspective, every 1% change in the base rate will be about $15 million to $16 million impact. Of course, we are mindful that given the current interest rate environment, it's on average, more towards a downward bias. So we will also be monitoring our fixed and floating rate mix, taking that into account as we go through the year. So from our available liquidity, we remain strong, right? The key thing that we always focus on in what is our on-demand liquidity, so which is really a combination of our cash and cash equivalents and our unutilized committed facilities. So as of today, our cash and cash equivalents stands at $1.1 billion and our unutilized committed facilities is at $2.5 billion. So total about $3.6 billion of on-demand liquidity that will allow us to take advantage of any growth opportunities that come through. So the next slide is just to highlight the outlook, right? Essentially, we have delivered resilient financial results, right, reflecting the strength of our diversified portfolio and cost management, right? Now we do have long-term contracts across our portfolio and increasing the proposed dividend in 2025 reflects our belief in the strength of our underlying earnings and also cash flow visibility. Now when we go through the different segments, I think in 2026, as highlighted before, right, the Gas and Related Services segment is still expected to be affected by a gliding down of our spark spreads, right, and margins because we do, as guided before, roughly 3% to 5% of our own portfolio would be subjected to some recontracting in 2026 and approximately 47% or 50%, right, approximately half of our -- of Senoko's portfolio will be recontracted. So coming into 2026, you will -- especially for Senoko, you would expect to see a full year impact of the recontracting that took place in the second half of 2026, roughly 20% of the portfolio and 50% of Senoko Energy's portfolio that will be recontracted starting from the second -- from the middle of the year onwards. So that is something to take note. Now of course, we would expect that effect to be partially offset by operational and financial synergies across the 2 portfolios and also the -- when the H-Class is commissioned, we do expect to see a greater fuel and operational cost efficiency as a result of running that hard against the portfolio first. And this highly competitive portfolio will position us well to continue to capture incremental contracts because of the growing power demand driven by data centers and high-tech manufacturing sectors as we have demonstrated since 2023, having a leading track record in being able to do that consistently again and again. For our renewables portfolio, we do expect our platforms across India... Jin Xin: Excuse me. Please come back on the... Chee Mun Cheng: Wow, okay. I didn't know I hope I didn't say something that was that nerve shattering. But what I was about -- what I meant to say was that in renewables, our expanding platforms across India, Middle East and Singapore will continue to grow, right? That's a good thing. And with the new capacity progressively coming in 2026 across to 2030. Now having said that, for China, we continue to be very watchful. We do expect curtailment to persist, right? And there's one other regulatory development that we want to highlight. Now China has come up with a policy where they said that value-added tax refunds for onshore power wind projects, they're going to stop it, right? So that applies retroactively as well to projects that have already been commissioned. So that policy change will see a $12 million impact -- further impact on the China portfolio in 2026. Now for the IUS business, the urban business, I think one point to highlight is that we are going into a phase in 2026 and going into 2027, right, where we will be developing close to 800,000 square meters of ready-built factories. So of course, these ready-built factories across '26 and '27, they are not -- will not be generating incremental recurring income, but we would expect to see some pre-operating as well as a financing cost for them. And -- but once they are TOP towards the end of 2027 and going into 2028, there will be a meaningful increase in contribution of recurring income to the urban portfolio. So all of this put us in a good state to navigate our near-term headwinds. And we expect the Alinta acquisition to be completed in the first half of 2026. And that acquisition -- completion of the acquisition will further strengthen our earnings base, our recurring cash flow and our ability to sustain and potentially grow our dividends over time, okay? So a couple more developments to note. When we complete Alinta, we have already highlighted this in the circular to shareholders as well as in our briefings, right, we do expect a one-off transaction cost of close to AUD 208 million. This will be called out in exceptional items, right? The bulk of that -- more than 50% of the $208 million are really in relation to stamp duties for the ownership transfer, okay? And in U.K., we have a 4-week maintenance at Wilton 10, right, towards the middle of 2026. It will not be a very material earnings impact, $5 million to $10 million, okay? So that ends my presentation, and we can open up for Q&A. Jin Xin: Thank you, Kim Yin and Eugene. We'll now proceed to the Q&A session. For those in the room, you can raise your hand and a mic will be you. Please state your name and the organization that you represent. [Operator Instructions] Yes, we'll start with those on the floor, maybe Zhiwei first. Zhiwei Foo: Zhiwei From Macquarie. I have -- let's start with 2 questions first. First, China renewables, right? It's been 3 years and the curtailment issue has not improved. I think about a year ago, you said that the curtailment issue would maybe hit about 1% of your earnings, but it seems like if I didn't hear correct -- if I heard correctly, about $30 million delta for this year. So it's coming up to almost 3%. So how are you thinking about the entire business if things do not continue to deteriorate, right? And what are sort of your thinking around how to mitigate this risk further? Then from your point of view, where do you see us sitting in this entire down cycle for China renewables? Are we at the bottom or near the bottom? And can we -- roughly just your sense, when do you things will -- see things will improve? Then the second question is on the Gas and Related Services for Singapore. You mentioned a decline in your gas margin. Can you run us through a bit more color on what changed, right? Because this is a pretty significant contributor to your bottom line profit. How big was the year-on-year decline in the gas trading business? And how do you see the margins change going forward? Because if I remember correctly, this used to be a high single-digit business and -- gross margin business and then you moved it into a mid-teens? And where do you see it go now? Kim Yin Wong: Can I ask Alex to deal with the China question? Renewable East CEO and President is here. Alex Tan: Can you hear me? Thanks, Zhiwei for the question. I cannot say for sure whether China has reached the bottom in terms of the curtailment. But let me offer some insights directionally where the government is going. So what's really caused the curtailment, as we all know, is the surge in renewable installed capacity, right, a lot of new projects. So just to give people some perspective, when we first started the journey in 2021, the renewable solar and wind, onshore wind was growing roughly about 120 gigawatts a year. 2021, 2022 was roughly about 120 gigawatts. And what happened was in 2023, we saw a surge in the renewable capacity to roughly about 300. And just to give you some perspective, 300 gigawatts a year, 2023, 2024, right? And in 2025, because of a change in policy, everybody was rushing to get their projects online by the middle of 2025 to make sure that they enjoy the existing policies. And because of that, there was a mad rush and the capacity actually surged and increased to roughly about 400 gigawatts a year, just to give you some perspective. So what's going to happen is this? I think we have to look at this from 3 perspectives. One is demand, second supply and then what is the government doing in terms of making the grid more resilient so that the grid is able to absorb all that additional capacity. So in terms of demand, as we all know, China continues to have -- see a very strong power demand, roughly about 5% to 6% a year, driven by electrification, EVs and AI, right? So that's one. Demand continues to be very strong. On the supply side, there is a new government policy that states the -- by 2035, renewables is going to get to 3,600 gigawatts, which basically translates into every year from now until 2035, renewables will slow down to roughly about 180 gigawatts a year. which I think will give the industry a bit of relief, right, from the 300 to 400 gigawatts a year of growth today to roughly about 180 gigawatts. So 180 gigawatts is still a big number. But in -- if you look at it, China has a big base right now. So I think 180 gigawatts is not a bad number in terms of where the government is taking this directionally. Then the third is what is the government doing in terms of making the grid infrastructure more resilient, which is essentially one of the issues to move the electrons from the west to the east. And the government is going to pour in RMB 4 trillion, which is roughly about SGD 700 billion over the next 5 years. So that's a lot of money, right, to grow the -- and that investment would include things like transmission lines, which is important because they got to move the electrons from the west to the east, which is essentially one of the biggest problems that China is facing today. The second thing is they will also put money in transformers and all kinds of nuts and bolts to make the grid infrastructure more resilient. And the last but not least is there is also another new -- we are catching up, right? And there's also another new policy in November 2025 that encourages data centers to be built in the northwest, right? So I think that's also important because that additional power demand in the west is going to absorb the additional power supply. And so again, just to get everybody on the same page, demand is going to continue to be strong, 5% to 6%, driven by electrification and AI. Supply will slow down based on new policy to roughly about 180 gigawatts a year until 2035. And then the third is the government is going to pour in roughly about SGD 700 billion on the grid infrastructure. And the last one is the latest news in November, which is an encouragement of data centers to be built in the west. Kim Yin Wong: So Zhiwei, the -- to first put into perspective, of course, the $30 million, a good part of it, Eugene was just telling me between 1/4 to 1/3 is actually new. It's coming from Guangxi. And that one is because they've got a lot of hydro heavy rainfall. So that might not repeat, right? Then the rest of it is coming from the northwest largely, yes. So the northwest, that's the part that subject to the transmission, subject to the new demand coming, anybody's guess, right? So if you ask me whether it has hit the bottom, maybe. How much longer it will last? I -- for our planning purposes, we are saying that for 2026, we are not counting on it to flip around, right? So hopefully, for the near term, that puts additional color to it. Now if you take another step back, for us, it has gotten to this point where it is earlier, China portfolio is supposed to be contributing with $120 million, $130 million just from the renewables. Now it's at $80. It could get worse. It's always possible, but it is quite beaten down already. So for us, we are planning -- we are not counting on it recovering in the coming year, right? So we'll have to see. Then in the meantime, your other part of the question, what are we doing, right? Of course, cut costs, we are looking at other forms of managing exposure. For instance, growth has also been very, very calibrated, disciplined, selective. Those are the words. You don't see the type of growth anymore coming. We are also thinking about whether or not we could manage exposure through perhaps bringing partners, looking at the capital structure, that type of thing, right? But I'm not promising anything. We're saying that we -- with the outlook, as I described just now, we're not expecting anything to change for at least another 12, 18, 24 months, then you should be doing things in the meantime, right? So that's what I want to suggest to you without having anything concrete to show you yet, but the plowing with that type of outlook, naturally, the management action must come in. So that's on the renewables. The gas, maybe Eugene... Chee Mun Cheng: I think the gas margin, Zhiwei, very astute of you to point that out. I think for 2025, when we look across the gas, number one, we have the onetime upstream curtailment gain. That was about $10 million to $15 million. But outside of that, from a gas margin standpoint, we probably saw a $25 million to $30 million downside impact, okay? Now so what has changed? I think the periods where you saw high double digits, actually higher than double digits gas margins, if you are looking at the Sing dollar financials, which I know you always do, right? Thank you for spending the money to do that. Then those periods, obviously, are periods where there is volatility in the index, right? So when there's a volatility in the index, it gives our gas, I don't want to use the word trading, but our gas business, the opportunity to -- I think arbitrage is the right word to basically look at opportunities to diverse gas and optimize gas cargo, right, and to have a larger amount of gas optimization earnings on top of what is contracted. Now of course, when you see that going through 2024, 2024 is still fairly volatile. And then when you come back into 2025, we will -- we are essentially seeing more stability between the JKM index and also across the Brent index of which our long-term prices were. So because of there is a lack of volatility, so our ability to drive the same level of gas optimization or arbitrage gains, right, is less, right? Now the good news is that I think across 2025, we have been monitoring the gas margins in the first half, second half, it has been stable. So going forward, we don't expect the gas margins to be similarly impacted because it is trending more towards our base contracted level of gas margins. And we are not at single-digit gas margins. We are actually still at the low double-digit gas margins. Yes. Kim Yin Wong: Is Zhiwei asking about spot spread in the power side or he is talking about gas? Chee Mun Cheng: You're talking about -- exactly what I'm saying, right? Zhiwei Foo: Yes. Just one follow-up. Coming back to China Renewables, right? If your curtailment stays at this low teens number for the next 1, 2 years, and let's say, things do not deteriorate further, do I have to worry about impairment of the China renewable asset base? If not, at what point do I start to sit up and pay attention? Kim Yin Wong: Okay. So I think in relation to our China asset base, we have -- always do very detailed impairment analysis, right? I think where we stand right now, right, we do not see the need for any impairment because from a policy standpoint, right, the -- and Alex, you can help me to elaborate more, that the Chinese government have made a very strong stance that they will build the northwest interconnection lines across to the eastern side of things. Now the exposure for us for the very high curtailment, like I pointed out earlier on, it is really across the SDIC portfolio, okay, because that has a significant exposure to the northwestern side of things and then also some of our Guangxi assets. Now of course, with that, we are confident that within a certain level of visibility, the curtailment situation will abate as these interconnector lines are built out. Then the question is really about how long. Of course, we do stress test the outcome of our assets. So the curtailment situation will have to persist for rather long. And I'm talking about many, many, many years kind of long, right, before you even worry about a curtailment. More specifically on the SDIC portfolio, if you recall, our -- that is essentially one of our higher returning portfolio, right, where we entered in at 1.8 gigawatts. Organically, it grew to more than double in terms of capacity. So when we look at our cost of investment for the SDIC portfolio, based on our analysis right now, it is very unlikely that it will hit any form of impairment simply because our cost of investment is low. So just to isolate, those are the 2 key curtailment. I don't know, Alex, do you want -- do you highlighted on the lines? Okay. Gentleman in front. Jin Xin: Nikhil, please. Nikhil Bhandari: This is Nikhil Bhandari from Goldman Sachs. So just sticking to renewables, but shifting from China to India renewable. When we look at the overall over 5 gigawatt under construction or secured portfolio, India is a big chunk of that. It appears that there isn't a lot of completion of projects happening in calendar 2026. It seems to be more heavy on '27, '28, 2030. Out of all of that portfolio in India, what percentage has already the PPAs signed? What percentage already has the exit connectivity already secured, if you can help provide some color on that? That's the first question. Kim Yin Wong: Okay. Renewable President and CEO, West. Use this, use this. Yes. Vipul is in the best position to answer this. Vipul Tuli: Thanks for the question. I think maybe to start with the second part of your question first. Of the roughly 2.5 gigs of PPAs that are signed -- I'm sorry, of 2.5 gigs of pipeline, about half have PPAs signed, about 1.2 and about half are at the LOA stage where we are discussing with the various REIAs and the DISCOMs. As you might be aware, I'm sure, a few months ago, there was a push by the central government to try and clear that backlog. That has had the effect because the PPAs -- all the REIAs then went around and said, okay, let's take a closer look at each of these LOAs. There are active discussions going on typically between generators like us, REIAs like SECI or SJVN and the DISCOMs who would be the off-takers. Fortunately, the -- with declines in equipment prices since the time that these PPAs were entered into, most generators, including us, are in a position to offer more tailored offerings within the same tariff range to the DISCOMs. So those discussions are proceeding. And of course, we'll -- as and when we sign the PPAs, we'll make the necessary disclosures. So about half and half on the first one. Your observation on the pipeline is absolutely right. The way we look at it is that there is -- there will likely be -- some of our projects that are at advanced stage of construction will get completed in 2026. The bulk of the pipeline will indeed be '27, '28 thereafter, largely constrained by grid capacity availability or connectivity availability. But these estimates that we do are after we take into account whatever grid delays and happy to have a deeper discussion on that. But what we are seeing is considerable all of government effort across the central government, the state governments, the local governments to try and debottleneck the grids. In fact, if you look at the Electricity Act amendments that are now proposed, which are widely circulated in the public domain, special powers to governments to acquire land and get grid done have also been included there. But I think coming back to the effect on us, the way we look at it is it actually gives us a little bit of that respite to make sure that land acquisition, which is usually one of the bottlenecks for any renewable power development, we actually get much more time to do our land acquisition and be very true to our intent, which is to have 100% land acquired before we break ground. And so that is now what we are seeing in the projects that are coming forward. So actually, what ends up happening is, say, for a solar project, even a large one, let's say, 400, 500 megawatts, the actual construction time is rarely more than a year or at most 1.5 years, whereas the total elapse time may be 3 years, maybe even sometimes a bit more. So actually, what we get is good enough time to get the land done, get the engineering done perfectly, get the EPC done perfectly and then move on from there. Nikhil Bhandari: Is it fair to say the projects we have until 2028 commissioning estimate has most of the land and the connectivity already, secured or... Vipul Tuli: Connectivity is 100% secured. We don't -- in fact, we have connectivity available for which we are yet to conclude PPAs. So that part is clear. Land, very, very advanced. So we are now, I would say, very vast majority of land already done, and the rest is -- will be done before we break ground. Nikhil Bhandari: Another question just sticking to India renewable business. We heard a lot of news flow around some renewable power curtailment in India last year, especially concentrated in Rajasthan, Gujarat area. And we also started hearing some of the newer PPAs being signed have some curtailment clauses in it up to 100 or 170 hours in one of the PPA, which is in the public domain signed. I'm asking this question because coincidentally, maybe, India has also hit nearly 50% of the power capacity mix as renewables and hydro, which China hit that number probably 3 to 4 years ago, and there was a beginning of a curtailment phase in China. How do we think about the risk of grid absorption, curtailment risk in India given the system is so heavy now on renewable and some of the weather-related power generation? Vipul Tuli: No, thanks. That's also a very germane issue. For us in India, it works a little bit differently. The curtailment that has been talked about in the press and is part of a lot of concern for many people is basically when projects connect to the grid on a temporary connectivity. We call it TGNA. When you have temporary connectivity, then the grid's obligation is to give these projects connectivity on a best effort basis. But then there -- all bets are off as far as curtailment is concerned. So the moment there is any sort of congestion, those get back down. Our projects are all on permanent connectivity. The moment you have permanent connectivity, any commercial backdown due to congestion or due to commercial reasons like demand is recoverable by the generator. The only reason that grid curtailment can happen as per the PPAs, once you have permanent connectivity is when there is a specific grid security issue, which typically will not occur for more than a very, very short period, typically a few hours here or an hour there. So the numbers that are being floated around in the press have nothing to do with our portfolio. If I look at our Rajasthan portfolio, I don't think we've actually disclosed these numbers, but I think it's fair to say our curtailment on that, including what we -- including what we will recover back, part of which we'll recover back is below 1% at the moment. And that, too, a large part will come back. Nikhil Bhandari: Just combining previous China-related questions and the questions related to India. Given China, we still expect some more deceleration in the earnings this year and given there are more limited new project completions in calendar '26, should we assume any growth in the renewable business earnings in calendar '26? And also, while we don't assess any impairment risk right now, but can we quantify like what percentage of our receivables, for example, are related to the China renewable business? Or any quantification, if you can help us provide on the China exposure in the overall balance sheet? Kim Yin Wong: I will ask Eugene to address that. But before we move off the topic of the development pipeline in India, hopefully, what Vipul has described to you is that when we come out and tell you that there's X gigawatts that's under development, relative to maybe what other people might be talking about as pipeline, the quality and the certainty that is behind it, you have to form your own judgment from what Vipul is telling you, right? So I think Nikhil's question is actually very straightforward. He's saying that, look, you tell me this pipeline, how much is it going to come? When is it really going to come later, are you going to say that look, there's no connectivity, there's no land, there's no PPA and so on. So without giving you a straight number, we are giving you the conditions under which we are the way we develop projects and then the risk that we're taking or not taking. So hopefully, I'd like to think that we are actually relatively -- when we say there's a pipeline, our pipeline is relatively of a much higher quality in terms of certainty and deliverable, right? So on the -- is there any guidance Nikhil was asking for the renewables earnings growth? Chee Mun Cheng: I think going into 2026, renewables as a portfolio, we think from an earnings perspective, it will likely be flattish to slight upside, okay? Now because there will have been better growth, but I think the reality is that we have hit with another SGD 12 million downside because of the VAT policy change, which came through, unfortunately, towards the later part of Q4 of last year. So as a result, we think renewables flattish to slightly positive. I think for China, I just want to characterize the issue. I think from a renewables book value standpoint, it stands roughly from a Sing dollars perspective, SGD 1.8 billion to SGD 2 billion, right, of invested capital from an equity standpoint. Now from a receivables, right, the receivables that are exposed, which is largely in our Hyme portfolio that has not really cleared -- that has not been given a green quote in the subsidy audit is around SGD 350 million, right? The total subsidy receivables on our books, really, it's approximately SGD 370 million, but those pending subsidy audit is about SGD 340 million to SGD 350 million. Of course, we have made provisions against them, right? The provisions to date is about SGD 43 million against the gross amount. Now I think in relation to that, we continue to press respective authorities on being able to release those projects sooner rather than later. But I think what we have noticed is that for projects that have cleared the subsidy audit, they are actually paying down their receivables fast. And this is empirical, right? Because in our own portfolio and our own Hyme portfolio, the amount of subsidies receivables collections in 2025 was about 1.7x that of 2024. We see it accelerating, no doubt. In our JV portfolios, we also see the subsidy receivables collections in 2025, roughly double that of the year before. So I think there is a clear effort from the Chinese government to clear the subsidy receivables. And we are certainly hopeful, while we have continued to provision against it, the subsidy receivables that has not yet cleared the audit. Kim Yin Wong: Yes, so immediate 12 months renewables, we won't be seeing a lot of growth, but we're very comfortable because the pipeline is strong, and we have got new markets. Middle East, in addition to India, is actually very active, if I have to use that word, as you would know. And also now in Australia is coming in. So we think -- I'm not too worried about the 2028 target, if that's a follow-on question. So... Alex Tan: Maybe also just to add, what we are seeing, particularly in India, but also in other markets is many competitors have overextended themselves, and there are now assets available, which makes sense for us. We are now in a position to be able to acquire at attractive prices. Add value through refurbishment and operations as we find the opportunities. So that's the other one. These are all the way from relatively small to relatively meaningful opportunities. Operator: Can we have Siew Khee at the back please. Kim Yin Wong: No, no but the lady there. She's staying up for a long, sorry. Operator: Rachel first. Rachael Tan: Hi, this is Rachel from UBS. I'm very sorry Siew Khee for hijacking you. I have 2 questions. The first one is that on SCI's ex-Senoko power plant contracting profile, does this include the new 600-megawatt plant? Because in H1 '25, only 13% of the portfolio had expiry profile of 0 to 5 years, and now it's 21%. So I'm trying to reconcile that. So that's my first question. My second question is what's the principal payment for the DPN versus the interest payment? Chee Mun Cheng: When we say 80% contracted 5 years or more, it's 80% of what -- did it include the 600-megawatt plant. Kim Yin Wong: Yes. Maybe if you bring up the slide, Eugene. Chee Mun Cheng: Okay. So you are referring to the Sembcorp only contracts contracting where 0 to 5 years has gone up to 21%. I think there are a couple of effects there, right? #1, mainly it is due to hype. Basically, we are also contracting a little more in terms of volume, right? Because we have secured more contracts that are of a shorter-term nature as well. So essentially, from a contracted perspective, historically, when you saw that 13%, that was of a contracted capacity of about 960 megawatts or so. But I think we have also increased contract levels at a shorter-term level. It has gone up to about close to 1,200 megawatts already. That's on the Singapore side. Kim Yin Wong: So the base is 1,200 megawatts. Today, our existing portfolio is less than 1,000 megawatts. Chee Mun Cheng: No. So when we showed the guidance earlier on at half year, right, where it was 13%, right? So at that point in time, the contracted capacity, right, for generation was about 960 megawatts, right? So we did say that it's one of our intent to sign more contracts. So even over our Singapore portfolio, we have contracted up to 1,200 megawatts already. And some of these are shorter-term contracts because we do want to increase the contract levels. And hence, you see the 0 to 5 years increase to 21%. So essentially, this 21%, but the total base of this is no longer 960 megawatts. It is now about 1,200 megawatts. So in a way, it has included the 600 megawatts. In a way, it hasn't. You see what's going on because what we're saying is that we want to sell 1,200 megawatts, of which some are long contracts, some are shorter contracts. And what happens is that when the new plant comes in, because it is much more efficient, what we will do is that we back out some of the older ones. So we can't -- I would guide you to not say that, look, when the new plant comes in, then suddenly our revenue -- our megawatts will go up by 600 megawatts and our revenue will go up 600 megawatts. It doesn't work that way, right? It's a portfolio, right? So what Eugene is saying is that, yes, it is in there. So because part of the 10-year contract and the 5-year contract will be served using the new plant, right? No, it is not in there. We didn't add it up in blocks like that. So hopefully, that clarifies it. Kim Yin Wong: Okay. So I think, Mun Cheng, you heard me talk about this because you stumped me a little bit because we don't think in -- because we don't think in terms of, oh, this plant and I contract for this plant, right? We think it is, okay, so our capacity [ 1,200 ] megawatts, potentially going up to [ 1,800 ] megawatts. But today, if we see opportunities to contract or over contract with a forward start, then we will just increase our contract... Chee Mun Cheng: I think maybe the first time we told them is 1,200 megawatts. Kim Yin Wong: So maybe, Eugene, we know to put a footnote on something. Alex Tan: A question on the DPN. Kim Yin Wong: Okay. So for DPN, for the principal and interest payment, I think, Rachel, in general, we don't -- there is no fixed principal payment, right? So essentially, if you look at the mechanism, how it works is that whatever equity cash flows is generated at the plant level, right, it will be a full sweep of the cash, leaving 6.75% of the equity cash flows to the owners, right? So I think in general, that is the basis. So we have not -- there is no fixed principal repayment. But I think what we can look at is over the -- from a principal paydown standpoint, over the last 3 years, we have collected $1 billion, right, of which the principal has ran down from roughly $2 billion at the start of the period to about $1.3 billion currently, right? So which means that on average, the principal paydown is about $300 million a year. So I think going forward, we do expect the SEIL equity cash flows to be similar simply because they are covered by long-term contracts. So that would roughly be the paydown. Interest cost is still around 8.75% to 8.9%... Alex Tan: Sorry, Siew Khee. Lim Siew Khee: Siew Khee from CGSI. I have 2 questions. On gradual increase in the dividend to benchmark against yourself with peers, who are the peer group that you're looking at? Are you looking at yield payout? And given that your earnings base is potentially stable at $1 billion, would you target to increase your yield to about 5%? That's my first question. Second question is, thanks for guiding us on the Spark Spreads. With much more power coming into the market, would you be able to have a guess on what would be the Spark Spreads into 2027? And I remember previously, we were hoping to actually get more long-term contracts or convert some of the short-term contracts from Senoko to long term. How realistic is that? Kim Yin Wong: I think in terms of the dividend benchmarking, Siew Khee, we look at the benchmarking in 2 sets. One is across more broadly STI comps. Of course, then within the STI comps, we look at both payout ratios as well as dividend yield. So excluding REITs, we do notice that average dividend yield is around 5%, right? So our yield is about 4% or so. But I was hesitant to say that we are targeting a yield Siew Khee because my payout ratio is kind of low, right? So we are at a 40-ish percent right now. Though we do note that, #1, the average STI broader comps, the payout ratios are 60% or more, right? And then if we compare to a closer TLC industrial companies, right, you know who they are, just to name a few, includes Keppel, includes ST Engineering, they are payout ratios in the longer term are in excess of 70% or so. So these are some of the guidelines that we are looking at. Now we also benchmark payout ratios as well as the dividend yields to a broader Gencos, right, both Asia Pacific as well as European players. So in those situations, we do see average dividend yields also in close to a 5% range and average payout ratios for those are in the 60% to 70% range as well. So I guess this is to guide you in terms of how we think in terms of the payout. Now I just want to caution a little bit about the yield perspective because at the end of the day, while those are guidelines for ourselves, we are still focusing more on the absolute dividend and sustainable and growing over time. So I guess the key point to note is that where the dividend is going forward, we will have the ability to grow it both from an earnings perspective and also looking at where our payout ratio stand relative to those benchmarks that I mentioned. And in the Singapore gas market -- gas-fired power market, what will be the spreads into 2027? I don't have a crystal ball at the moment, if you got there to contract, you're getting mid-30s, right? So that's you could see that still okay, right? So the part that I described just now that are going into new contracting, we will be contracting in that range. So the 40-some percent in Senoko will be contracting into that range. The 5% from the Sembcorp portfolio will be contracting into that range. What's the outlook for longer-term contracts? Actually, Singapore market is very small, right? So the -- it is quite binary. If you secure the customer like in our case, Micron, Singtel, then suddenly, there will be one big chunk that will come in, right? So there is a group of customers that will be prepared to sign long-term contracts and that group of customers is a finite universe today, even as the new data centers coming in to increase that puddle. So what we're seeing is that, as I mentioned at the beginning of my delivery, we are very well positioned to chase after the -- both the existing ones as well as the newcomers. So what is really specifically to Senoko, you will see -- I'm very confident to say that we will be able to increase Senoko's pie chart to look a lot more longer term than what it is shown today. But I hesitate to tell you exactly how much because it depends on the lumpy big customers that will come in. And if you think about it, and they are indeed lumpy, right? Because when a data center comes along, it's 30 megawatts, 50 megawatts and so on. So it will suddenly shift the profile of that donut over there. Operator: Next question from Sumedh. Sumedh Samant: Sumedh from JPMorgan here. Just have a couple of questions maybe on capital allocation. So do you think currently you have any non-core assets that may be up for disposals, the other businesses, even the U.K. plants. Any thoughts on that? And also, you did mention that actively looking at capital recycling in India. May I ask what's the progress there and any time line you have in mind? And perhaps my second and more housekeeping question. I think in one of the slides, you mentioned that 1/3 of DCs being catered by gas and related segment. Is that your own business? Or are you talking about the broader Singapore market? Kim Yin Wong: The first question was non-core assets for disposal. I was trying to look at Eugene and he was trying to look at me. Now the portfolio in Singapore, I think we manage the entire portfolio for value, okay? I just want to reassure everybody. That's the first thing. And over the last 5 years, we have made several changes to the port -- [indiscernible] you got questions, we can follow-up later. So I think we already reorganized ourselves into the 3 big business segments, right? So gas-related services, renewables as well as IUS, most of the contributors are actually squarely slot into them, right? So in the long run, we do not have -- I don't want to -- the smaller businesses, even if there is a non-core disposal, I wouldn't -- I don't think it will be something that should bother you. So let's put it that way. Now each of the lines of businesses, they are all growing up. And as they grow up, as you rightly pointed out, the India IPO possibility, that itself is actually something that is much more symbolic and then significant to the portfolio, if it happens. So in terms of -- but to us, the India renewal portfolio is a core asset, right? So that's not a non-core. So I wouldn't put that in the category of the first question, right? So maybe the short answer to it having stopped very loudly in front of you, the short answer is no, right? And the second one is in terms of capital recycling, we are thinking about it actually for the rest of the portfolio as well, including China, if the opportunity arises, right? And 5 years ago, I would tell everyone that, look, we're too small in most of the pieces, right? So now India has grown up and China is in a certain state. So when things are ready, we would definitely be managing them for value, right? So I just want to reassure you that in terms of actual timing, I am warned many times to not say that because we have a plan right? And there are typical time lines in India, how quickly you can do certain things. So -- and of course, there's no certainty until the moment the button is pressed, right? There are people who build the book and then decided that this book doesn't look good enough, I don't want to do it, right? So you can -- I don't think we would have the ability to do things much faster than the next guy who is filing. Let's put it that way. So if you apply the usual time line, that's a good way to think about if it happens. So I'm sorry, I'm not answering your question. I'm struggling a little bit, but I have got strict rules tying my hands behind me. So Sumedh, do you have any other... Sumedh Samant: I just had that quick follow-up. I think the data center slide, I think the slide that you mentioned where you have AI opportunities and I think in gas and related segment, you showed that 1/3 of data center -- yes, this one and that first bullet, I just want to understand what it represents. Is it like for Singapore data centers, is it 1/3 of demand being catered to by your own plants? Is that what you're asking? Kim Yin Wong: Sorry, I forgot about that. No, just to be clear, this one is -- we have highlighted that before maybe we were not so clear in this bullet. We are supplying power to 1/3 of the current data center in Singapore, right? So Singapore, 1,400 megawatts of IT capacity. PUE is probably 1.25, 1.3. I think it's 1.3, right? And then so you multiply that, that is the quantity that we are supplying to. So it's very strong, right? And I think it's also instructive to note that the 1/3 of our capacity that we capture for these data center companies, they are of longer-term PPAs, right? So our understanding is that the other 2/3, they are not really covered by long-term PPAs of our... Operator: We'll take questions from the web first. There's a question from Mayank from Morgan Stanley. He's asking about the U.K. impact on earnings and outlook in 2026 as the also the ability to put DC capacity in the U.K. In terms of China, any plans on adding battery investments into China for 2026? And then lastly, if we can share any performance highlights from Alinta in the second half of 2025. Kim Yin Wong: Do you want to take that? Performance highlights from Alinta in the second half of 2025. Chee Mun Cheng: Okay. I think, Mayank, in relation to performance for Alinta, we certainly have not completed yet. But I think we will be in a position to speak more about Alinta once we have completed the acquisition. You will imagine that we can't, okay? We just can't. Now of course, you could draw broader market performance from the listed guys, right? You've got Origin, you've got AGL, may not be directly comparable. You will just have to bear in mind that if there's any earnings volatility as a result of cost of supply, that is not an issue for Alinta. So you can take guidance from where the other 2 guys are how they are doing. But of course, pressured if there's any volatility caused by cost of supply of electricity, we will be a lot more insulated because we are very long. Kim Yin Wong: Yes. And when we talked about the Alinta acquisition, we showed the historical earnings profile, right? Chee Mun Cheng: Yes, that's right. Kim Yin Wong: So 2024, -- we also showed the pro forma. Chee Mun Cheng: Yes. So in 2024 from an underlying earnings standpoint, they are doing about 400-plus megawatts... Kim Yin Wong: 400 plus megawatts, right? So if there is -- they're not going to suddenly go to 600 megawatts, they're also not going to suddenly drop to 300 -- so that's so you can apply 6 months, you overlay with the amount of debt that we're putting on top of it, which we have also disclosed, right? Chee Mun Cheng: Yes. So the level -- we do expect the level of accretion in the second half of 2025 to be similar to what was disclosed. Kim Yin Wong: Yes. But to also point to the fact that because their first half is the winter, so typically, the first half is stronger than the second half, sort of 60% to 70% -- 60% in the first half, 40% in the second half, right? So hopefully, that helps Mayank. Any battery investment in China, even if there is, it will not move the needle, right? But he is being very kind. Thanks, Nikhil. He's being very kind saying that looking [indiscernible], maybe you should win some batteries so you don't waste the power. So thank you for that. U.K. impact on earnings, Mr. Cheng. Chee Mun Cheng: I think as highlighted earlier on, the U.K. gas business, right, in the 2025, we saw a $20 million impact, right, for the U.K. gas business. Now of course, when we look into 2026, there are headwinds and also the possible and also positives. The headwinds, of course, the customer demand continue to be under pressure simply and power prices as well. Simply because the key -- some of the key customers in Wilton, they are petrochemical players, and we all know that the petrochemical sector is under pressure right now. So that is the headwinds that we expect going into 2026. Now of course, we did -- we are excited because the value of powered land, particularly for data centers is important and Wilton is powered land, right? So we do at a very initial stages of engagement, have seen DC players' interest, right, in our U.K. Wilton site. So we hope to be able to see more developments there. But of course, barring positive developments on the DC capacity, we do expect U.K. continue to be under pressure as we go into 2026. Operator: Okay. I'll take another question from the web. This is from Luis, Citi. He's asking about the run rate for the Gas and Related Services segment. So should we look at the second half GRS level to be roughly the 2026 run rate? And will the Alinta expenses be booked in the first half if the transaction closes by end of first half of 2026? Or will it be booked at the year-end? Kim Yin Wong: Okay. So Luis, to answer your question on the first point, I think from the second half 2025 going into FY 2026, I wouldn't say that we could use that level because a couple of things would have to -- you have to bear in mind. #1, into 2026, roughly 3% to 5% of the Singapore portfolio will be up for renewals. So those renewals would be at roughly $30, $35 type of a Spark Spreads. So that will be coming off historical high short-term contracting Spark Spreads of $70 or so, right, $70 to $80. So that's one impact. Second impact is for Senoko. We did highlight that coming into 2026, you have a full year impact of roughly 20% of the portfolio that was renewed in the second half of 2025, right? Also $30, $35 Spark Spreads. And in '26 itself, we would have about 47%, close to 50% of the Senoko portfolio that will be up for renewals. Indications clearly show that our Spark Spreads will be around $30 to $35. So you do have to factor that into your outlook for 2026. Now for the exceptional expense of $208 million, it will be reflected whenever the transaction close, right? So if the transaction closed in the first half, that $208 million, the bulk of it will be booked as exceptional items by half year. If it does -- if it close beyond 30th June, then it will be -- it will show up in the second half. So it's really timing related. Bulk of that is driven by stamp duties. So it's really linked to the timing of the completion of the transaction. Operator: Okay. Question from [indiscernible] Business Times. Unknown Analyst: I'd like to ask a bit more about the data center strategy in terms of supplying energy. For DC-CFA2, there is a requirement. I think it's at least 50% has to be like clean power. So for yourselves, like what sources of clean power do you see yourselves providing in terms of fulfilling this demand from DC-CFA2? And also, I think for other markets in the region where you hope to power data centers, do you see it mainly being gas or more of renewables? Kim Yin Wong: The specific requirements or rather the requirements of the DC-CFA2, my understanding is it is actually quite specific. It will have to be new sources, right? So it is not existing. So my solar panel doesn't count. So we are working with our customers, who are interested to win the DC-CFA 2 to provide them with new sources. That includes green power from biofuel, that includes fuel cells, right? So the array of potential solutions that can qualify for this new green source, we actually have them as part of our toolkit to supply them. The question really is for each one of them, because difference in size, difference in technology, different in their customer base, their appetite type to absorb the cost from some of these new sources is different. You can imagine some of these new sources is at a higher cost than your solar, right? So that's why what I'm trying to say is that we have those solutions, and we are working with each one of them to tailor it for their specific requirements based on the affordability, right? So that's on that. Now the other one I want to say is that for -- generically, like you say, whether it is in the region or even in Singapore, at the end of the day, data centers, they need very stable, reliable power, highly reliable, in fact. They don't want interruption. So the new sources generally, on the one hand, will put cost pressure. On the other hand, very often, it may not be as reliable, right? And certainly, even if you -- they are reasonably reliable, you still need to backup from existing sources, be it from batteries, be it from gas, be it from the grid, right? So this is where Sembcorp believes we are actually very well positioned because we have the entire array. In Singapore, we have got the gas-fired power plants. We have our solar panels. We have the largest battery in the region. And then on top of that, we have got these new sources, biofuel, fuel cells, so on and so forth. So we are able to say that, hey, look, even as you take the new source, we can supplement it and support it and provide insurance and reliability by giving you everything else, right? So that is where we are -- we have that strength. In the region, it is the same, right? So when we go to Batam, this is something that we can offer. And our experience doing this is also giving them confidence, right? If you're getting this from Sembcorp, that's one story. You're getting this from only a solar player, you might actually have to think twice because hey, how good are they even if they offer you batteries, right? But I've got gas, I've got other sources. And I have shown that I am able to keep reliability very, very high [ as a ] portfolio. So that's where even in places like India and not just Indonesia, we are seeing some of these demands coming. And we are -- on the slide that we show here, we are signing up -- actually beginning to sign up some of them, right? So coming back, I also want to make that point, I want to reiterate the point that by the time we see the demand from the AI side, we are seeing the real thing. This is the solid demand. This is not the fluff. So because I'm very worried that people say, oh, this Sembcorp turn around and want to enter into the AI space. Are they going to catch the froth and then get caught up? No, no, no. By the time it comes to us, it is a solid energy side of the demand, not the AI demand. We don't take that risk. We are selling power. We are selling reliable power and we demand and expect that our customer is a reliable pay master. Unknown Analyst: I understand you have import licenses from EME, right, for like Sarawak and also from Vietnam. Would the new sources that you supply to DCs also include like green power that you are importing? Kim Yin Wong: My understanding is that imported green power doesn't count. Unknown Analyst: It doesn't. Kim Yin Wong: And we can confirm that after the meeting. My understanding is that they don't count. So -- but if they count that, we also have that, right? So in fact, last year, we imported some and then that contributed to some of my losses in the previous year. It was a good about $40 million. So yes, the Malaysia one. So I'm glad that it's almost over. So it will not weigh so heavily on to 2026 anymore. Any other queries? Operator: There are no further questions. If not that marks the end of today's briefing. Thank you very much for attending the briefing, everyone. Kim Yin Wong: Right. And again, two things to take away, if I may. In terms of returns, can expect dividend to steadily sustain and grow. And we recognize that we are behind the curve compared to our peer group in terms of payout, in terms of yield. So -- and we -- because of our strong balance sheet, strong cash flow, we are very confident increasing the dividend along that path to cover that gap. That's the first thing. Then in terms of growth, at least for the next few years, we've got new markets that we are venturing into, and we are seeing success. In the case of Australia, there's Alinta, very skilled, very committed to decarbonization and also very energy short, right? And in terms of other greenfield opportunities other than a very hot India market where we have strong establishment, there's also Middle East that is giving us the pipeline. So there is returns, there's growth. 2026, we will have headwinds, but we are very confident selling into '26 and beyond. So thank you very much. Operator: Thank you. Kim Yin Wong: Is there food outside? Operator: There is lunch. Kim Yin Wong: Okay. So sorry to hold you. There's food outside, and please feel free to help us consume it.
Operator: Good day, everyone, and welcome to SQM's Earnings Conference Call for the Fourth Quarter and Full Year 2025. [Operator Instructions]. Please note, this conference is being recorded. Now it's my pleasure to turn the call over to Megan Suitor with Investor Relations. Please proceed. Megan Suitor: Good day, and thank you for joining SQM's earnings conference Call for the Fourth Quarter and Full Year of 2025. This call is being recorded and webcast live. Our earnings press release and accompanying results presentation are available on our website where you can also find the link to the webcast. Today's participants include Mr. Ricardo Ramos, Chief Executive Officer; Mr. Gerardo Illanes, Chief Financial Officer; Mr. Carlos Diaz, CEO of Nova Andino Litio; Mr. Pablo Altimiras, CEO of the Iodine and Plant Nutrition division; and Mr. Mark Fones, CEO of the International Lithium Division. Also joining us today are members of the Commercial and Business intelligence teams, Mr. Felipe Smith, Commercial Vice President of Nova Andino Litio; Mr. Pablo Hernandez, Vice President of Strategy and Development of Nova Andino Litio; Mr. Juan Pablo Bellolio, Commercial Vice President of Plant Nutrition and Specialty Products; Mr. Alvaro Araya, CFO of the International Lithium Division; Mr. Andres Fontannaz, Commercial Vice President of the International Lithium Division; and Mr. Max Fial, Head of Studies of the International Lithium Division. Before we begin, please note that statements made during this call regarding our business outlook, future economic performance, anticipated profitability, revenues, expenses and other financial items, along with expected cost synergies and product or service line growth are considered forward-looking statements under U.S. federal securities laws. These statements are not historical facts and are subject to risks and uncertainties that could cause actual results to differ materially. We assume no obligation to update these statements, except as required by law. For a full discussion of forward-looking statements, please refer to our earnings press release and presentation. With that, I will now turn the call over to Chief Executive Officer, Mr. Ricardo Ramos. Ricardo Ramos: Good morning, everyone, and thank you for joining us today. 2025 was an important year for SQM. We finished the year by signing our association agreement with Codelco, creating Nova Andino Litio, which enables long-term lithium production from the Salar de Aacama. At the same time, we delivered solid financial results, strengthened our operational performance across our key businesses and continue advancing our long-term growth strategy. For the full year 2025, we reported revenues of $44.6 billion, slightly higher than the previous year, with net income of $588 million. These results reflect improved market conditions, strong operational execution and the resilience of our diversified portfolio. During the fourth quarter, we saw particularly strong performance in lithium and iodine, 2 of our most strategic businesses. In Lithium, we achieved record quarterly sales volumes across both our Chilean and international operations. At Nova Andino Litio, sales volumes exceed 66,000 metric tons in the fourth quarter, more than 50% higher year-over-year, reflecting the expansion efforts we have implemented over the past several years. On the market side, we began to observe an important shift toward the end of the year. As we mentioned in our previous conference call in November, we saw the inflection point in lithium prices, driven by stronger-than-expected demand from energy storage system, together with some supply disruptions. This contributed to a tighter market environment and improving pricing trends. As a result, our average realized lithium price increased nearly 14% quarter-over-quarter, reaching close to $10 per kilogram in the fourth quarter. Given the demand momentum we have seen in recent months and limited new supply entering the market, we expect the pricing environment in the first quarter to be significantly stronger. Looking ahead, we continue to see strong long-term fundamentals for lithium, driven primarily by electric vehicles and energy storage systems. Operationally, we are currently running at full capacity at Nova Andino Litio while continue to advance expansion plans in the Salar de Atacama. In our International Lithium division, the Mount Holland mine and concentrator performed well and the Kwinana refinery continues progressing through the ramp-up phase. Early this year, we also celebrated the first shipment of lithium hydroxide from the Kwinana refinery in Australia, a milestone that highlights the progress of our international lithium strategy. Moving to iodine. The business delivered a strong contribution, representing approximately 42% of SQM's total gross margin during the year. By the end of 2025, we observed record iodine prices, supported by a tight supply conditions and a strong demand, particularly in the x-ray contrast media market. Looking ahead, we estimate the iodine market could grow by around 3% in 2026, and our sales volumes are expected to remain stable or increase slightly depending on market conditions. We expect to be able to finish our seawater pipeline project in the Tarapaca region, which will provide additional operational flexibility and should allow us to unlock incremental production capacity. In Specialty Plant Nutrition, we saw 3% volume growth during the year, driven by specialty blends and value-added products. For 2026, we expect moderate volume growth of between 2% and 4% within a stable pricing environment. Before concluding, I would also like to highlight our continued progress in sustainability. During 2025, SQM strengthened its ESG performance and received important international recognition, including inclusion in the SP Global Sustainability Yearbook 2026 and strong ratings from Dow Jones Sustainability Index, MSCI and EcoVadis. To conclude, we're entering 2026 with a strong operational momentum, improving lithium market conditions and continued strength in Iodine and Specialty Plant Nutrition. Our teams remain focused on delivering reliable supply to our customers, executing our growth projects and creating long-term value for our shareholders. Thank you for joining us today. I will now turn the call over to the operator for the Q&A session. Operator: [Operator Instructions]. One moment for our first question and it comes from the line of Lucas Ferreira with JPMorgan. Lucas Ferreira: I have 2 questions regarding lithium. The first one is your expectation of sales in 2026 of an increase of 10% from the Chile operations. If you can briefly discuss the product mix from the production side, if the company would be willing to put a bit more focus on sulfate in 2026, eventually as a way to quickly expand production. If you're fully utilizing your plant in China, if you have been able to toll more capacity there. So pretty much what's the outlook for production mix. And if you can share some production numbers for the JV? And the second question is regarding the cost of production in the fourth quarter, which was up significantly from the last quarter. I would assume that has to do with the lease payments given the higher average prices. But just wanted to confirm if there's anything else impacting the cost of production eventually these sulfate operations could a bit more expensive. Anyways, any color on the cost of production side would be appreciated. Felipe Smith: Lucas, this is Felipe Smith. Regarding the first part of your question, the sales volume 2026. We are targeting a strong sales volume in Q1. We hope to surpass the sales volume of Q1 '25 by more than 15%, which would also be a record for the first calendar quarter. As we have consistently done over the years, our strategy remains unchanged, which is to operate at full capacity and expanded in line with anticipated market growth, ensuring we are always prepared to meet our customers' needs. So aligning with that strategy, we feel confident that we will successfully allocate in the market the additional production that we expect to achieve this year, which is close to 260,000 tons. There is an appetite for lithium units in the market, especially in Asia Pacific. I will give you -- Carlos will comment about the product mix. Carlos Diaz Ortiz: Lucas, this is Carlos Diaz, CEO of Nova Andino. With respect to the production, first during the year 2025, our production went according to the schedule, reaching 234,000 LCE. Out of 50 of those were produced in China coming from our lithium sulfate producing in the Salar de Atacama. And for this year, our expectation for production have been increased, and we target to produce close to 260,000 as a lithium carbonate equivalent, increasingly even from both our production in Chile and in China. And it has been the case during the past year in '25, we expect to continue to increase our productivity driven by the efficiency improvement, the use of new technology at the same time, reducing the traction according to our sustainability strategy. And this year, we will continue to have full flexibility in terms of lithium carbonate and lithium hydroxide, both in Chile and China. I understand you're asking for machine. We are now operating at full capacity as well. Mark Fones: Lucas, this is Mark Fones from SQM International Lithium division. In our case, we also expect sales to be increasing in around 10% on an LCE basis. As we have completed the ramp-up of the concentrator, we will continue and expect to be producing at capacity at the concentrator in Mount Holland. So our sales will be heavily directed by our production. And in terms of the mix between spodumene concentrate and lithium hydroxide, they will be heavily leaned and skewed into spodumene concentrate as we continue to ramp up the lithium hydroxide plant in Kwinana. Gerardo Illanes: Lucas, regarding your question about cost, I think there may be a mistake in those numbers because if you look at the total cost per ton of the Lithium and Derivatives division, third quarter versus fourth quarter, it's quite similar. But you would see that the average price of lithium in the fourth quarter was higher. And consequently, within the cost line, we have a higher portion of lease payments to CORFO. Bear in mind that within the cost of goods sold, we have the cost of our Nova Andino Litio division and also the International Lithium division that is becoming more relevant in terms of total volumes within the business line. Lucas Ferreira: That was exactly my question, Gerardo, if there was any effect other than the lease payments in the quarter. It was very clear. Operator: One moment for our next question and it comes from Andres Castanos-Mollor with Berenberg. Andres Castanos-Mollor: Congratulations on the strong results. So your EPS shows an impact from higher minority interest, but we don't see yet a dividend paid to Codelco in the cash flow statement. So 2 questions about this. First, can you provide some guidance on how to calculate the minority interest going forward? And can you please provide also some guidance on when will we start seeing dividend payments to Codelco and how these dividends will relate to the minority interest? Ricardo Ramos: Andres, Ricardo Ramos speaking. The detail of the agreement with Codelco is public and it's a shareholders' agreement, how we calculate the dividend to Codelco every year. But in very simple terms, you have the net income of Nova Andino and from the portion, most of the Nova Andino net income is related to lithium business. And nowadays, [ 33,500 ] metric tons of lithium are allocated to Codelco and the rest allocated to SQM. Using this proportion, we allocate the net income for both companies. That's a simple way to do it. It's just a little bit more complicated, but it's public and you can review in the shareholders' agreement we have both parties. We expect to pay the dividends during April, I think during April, May, but I think April is going to be the month. We are going to release every quarter our best estimates and assumptions of the portion of the dividend to Codelco that is going to be paid at the end of the year. Andres Castanos-Mollor: So a follow-up, if I may. The earnings that we see the minority interest reflects a proportion to the 33.5 kilotons or reflects a proportion of the 50% that Codelco controls? Ricardo Ramos: The minority interest, we put the dividend to Codelco and this dividend is related with the 33,500 metric tons of lithium and the net income allocated to this 33,500 metric tons. Operator: Our next question is from Ben Isaacson with Scotiabank. Ben Isaacson: I have 3 questions, and I'd like to ask them one by one. The first question is on iodine. You sold much more than I think the Street was expecting in Q4, but you're also looking for stable volume in '26, especially given that you have the seawater pipeline coming on. I'm just curious, why did you sell more than expected in Q4, but you're going to be flat on volume in '26, even though you have the pipeline coming on? Pablo Altimiras: Ben, Pablo Altimiras speaking. I would say that the main reason is what we didn't see some capacity from third parties that was expected to come. So that's the reason why finally, we sell more in Q4. Also, we are seeing good signals in terms of the demand. Actually, demand of last year in iodine growth more than expected. According to our numbers, finally, the demand growth 0.6%, where the expectation was to grow almost 0. So that was a good sign. So we have the product to deliver. In the case of this year, we are expecting some capacity. Actually, we are expecting the new projects in Chile are coming. Our first estimation was the first semester. Right now, maybe it will happen in the second semester. So we -- that's the reason why finally, we pretend to sell much more or less the same amount. Having said that, you know that SQM strategy, you are always putting more capacity and our idea with the new project is to have a capacity to respond to the market needs. Ben Isaacson: My second question is on Tianqi. They are -- they have filed that they are now an active seller of, I think, maybe 3 million shares or so and potentially that could grow. Given that you see significantly higher lithium prices, iodine is doing well, potash and the SPN business seems fine. Have you been in discussions to potentially buy back some of those shares and keep them out of the market? And if you haven't, is that something that you would be willing to consider? Ricardo Ramos: We are not under any kind of discussion about this point, first. And second, there's no -- from a legal point of view, you cannot buy back shares in Chile. Ben Isaacson: Okay. That's easy. Let me go to my third question. And we're starting to see sodium-ion batteries really inflect this year and improve on key metrics like energy density, cost, et cetera. I was hoping you could talk about what the risks are to lithium demand growth for both EVs and for energy storage from sodium ion? And how are you managing those risks? Pablo Hernandez: Ben, Pablo Hernandez speaking here. So we have indeed heard a lot of sodium-ion batteries in the market, as you have mentioned. But we still strongly believe that lithium is the best placed item to be used in these batteries in our conversations with the market and understanding of the market. There is -- we see a small potential market space for the sodium-ion batteries, but we feel very strongly that lithium will be a dominant technology for the future. Operator: Our next question comes from Corinne Blanchard with Deutsche Bank. Corinne Blanchard: Could you -- I want to go back on the lithium expectation for the year. So you mentioned a pretty strong 1Q, 15% up year-over-year. Can you talk about the expectation of the cadence 2Q through 4Q? And then maybe if you can share as well what you hear from Chinese customer, like trying to get a sentiment on what people are seeing there on the market. Felipe Smith: Yes, Corinne, Felipe here. Yes. Well, as I said before, 15% for the first quarter compared to the Q1 '25. And we expect an increasing volume quarter-by-quarter, ending up with, hopefully, the largest volume in Q4, okay? As I said also in the previous question, we are planning to sell more or less in line with the increase in production. But if we have opportunities to sell a bit more, of course, we will try to take them. Just for your information, we have today about more than 80% of our volume is already contracted. So we are leaving some space for spot sales, trying to maximize our opportunities and margins. And your question about the Chinese customers. Well, as I said also, there is a strong appetite for lithium units, especially in Asia Pacific, and China is not an exception. On the contrary, we have been getting a lot of inquiries for trying to increase our volumes, but we want to have a very diversified customer portfolio. So we manage that carefully. Corinne Blanchard: And maybe another question. So can you talk about like the pricing expectation? You mentioned having about 80% under contract. So I'm assuming that's looking at the current pricing or like what we have seen in the last 3 months. Can you just remind us how you look at it for the contract? And then just overall, what's your pricing view for the year for the market? Felipe Smith: Yes. This is the best question, of course, which nobody can answer, but I will try. After reaching the lowest point over the last 4 years in the second quarter of 2025, our average sales price reached around $10 in Q4 '25, aligned with market indices, which is good news. Our realized prices remain, as always, mainly linked to those price indices. Consequently, our sales price in Q1, I can say now that will be substantially higher than Q4 2025. That is one very good news. And however, if you ask me to go further beyond that, it's more difficult. I can only say that prices will remain volatile this year. It is very difficult to predict what will happen in the other quarters. But what I can say without my boss being upset with me, is that prices should be closer to current price levels than the levels we saw last year. I hope this is good for you, Corinne. Operator: Our next question comes from the line of Marcio Farid with Goldman Sachs. Marcio Farid Filho: Follow-up on my side. Looking at your presentation, you have Chile capacity increasing to 240,000 tons by 2028 and the earlier presentation pointed to 2026. So just trying to understand what led to that change? And it seems like that you guys are privileging China over Chile capacity. I'm not sure it's because of CapEx per ton is more efficient. And just trying to understand how should we think about production growth and the mix between Chile and China in the next couple of years would be great. And secondly, on the iodine side, you just mentioned 3% expectations in terms of demand growth, lot pricing. Obviously, profitability has been quite strong for the last few years. And it's always surprising to see that the supply response has been relatively slow. And you suggested that seems like growth that was expected in the later part of last year has failed to materialize as well. So just trying to understand your level of conviction on the iodine market that we can continue to see this level of profitability and if there is any risk in terms of supply response to the elevated prices. Carlos Diaz Ortiz: Marcio, Carlos Diaz speaking. Regarding your question of lithium expansion, the 240,000 expansion of our chemical plant Antofagasta been delayed into 2028 as a consequence of optimization and efficiency project we have been developing in Salar de Atacama, allowing us to increase the lithium sulfate production. But it's important to mention that the total production we have forecast hasn't been affected. And actually, our total production expected for this year is increasing compared to the previous announcement. So finally, it's an optimization of the CapEx and going to produce more every year. Pablo Altimiras: Pablo Atimiras speaking. Regarding to your question about iodine, the perspective that we have for this market is quite positive. As we already said, our expectation for this year is that the demand will grow 3%, which is a big jump compared to the growth that we saw last year. And also in the long term, our view about the demand also is positive. That's the reason why we have been investing material resources in expansion. Remember that some years ago, we opened Pampa Blanca. Right now, we are opening Maria Elena. And also, we are close to finish our project of the seawater pipeline in order to be able to continue to grow and to have more capacity and flexibility. Our strategy is to be there to deliver the iodine that the market needs. And actually, with the new investment, we intend to produce more than 15,000 metric tons this year. And also after the water -- seawater pipeline project, we pretend to reach a capacity that will surpass the 17,000 metric tons of per year. Operator: One moment for our next question. And it comes from the line of Cesar Perez Novoa with BTG Pactual. Cesar Perez-Novoa: The first one, could you please provide an update on the ramp-up trajectory of the Kwinana refinery? And if you could provide a volume forecast for Mt Holland throughout 2026. Additionally, if you could detail the current status of the engineering studies and regulatory permits for the proposed expansion of the mine and concentrator. If this expansion would be able to proceed, what capital expenditure range would we be looking at? And my second question relates to your exploration activity within Australia and other international jurisdictions. If you could provide an update on that, that would be extremely helpful. Mark Fones: Thank you, Cesar, for your questions. I will try to go one by one over them. This is Mark Fones. So regarding your question on the expansion of the mine and concentrator, remember that the final investment decision that we're supposed to take this year refers only to the mine and concentrator. We expect that to be brought to the Board's respective Boards, so both Wesfarmers and SQM by mid this year. And its output is still subject, of course, as you well mentioned, to the environmental approvals and the engineering studies. Both have progressed well. So we expect ahead of the decision to have a relevant milestone on the approvals, which is progressing well. And the engineering studies has also been progressing well. As you all know and as was usual on our previous investment decision, we take our capital investment decisions with above 30% advance in engineering. We expect to have that advanced by mid this year. And relevantly in the concentrator, we expect to have around 50% engineering progress. So that has been moving well. And regarding your question on CapEx, on the expansion, we haven't yet defined a number on investment CapEx, but I can tell you that we have allocated within our 2025 and 2027 CapEx projection, we have allocated around $200 million for the expansion on the concentrator for Mt. Holland in 2027. Your next question was on Kwinana refinery and having production outputs and projections. I can tell you, first, on the mine and concentrator, as I explained briefly before, we are already producing at capacity. We expect to have such capacity production within 2026. That should be a range for SQMs 50% of between 170,000 and 180,000 tonnes of sodium concentrate, 6%. That's our portion along this year. The more tough and difficult question has to do with the projection and guidance on production on Kwinana. As you well known, we've been under ramp-up lately. It's difficult to come up with precise numbers in such scenario. However, I can tell you that the ramp-up has been affected by intermittent other issues as has been briefed by our partners, Wesfarmers before. But it has already been tackled with the studies and engineering development. So we expect to have that solution by mid this year, completed solution. It's important to note there that our emissions have been within approved limits anyway. So because of this, we are now expecting ramp-up to move into 2027. Therefore, as I mentioned before, that volumes of sales will be heavily leaned into spodumene concentrate also this 2026, which provides us the flexibility of selling profitable spodumene concentrate in the meantime. Regarding your exploration question, we are focused today in 3 main areas. So Australia, Namibia and Canada. So let me go probably a little bit over each one of those briefly. In Australia, we have 4 earning agreements or partners, if you may. Those 4 early exploration agreements are distributed across Western Australia and the Northern Territories. Each one of those are in different early stages, if you may. A couple of them are on the surface exploration and a couple of them are already undergoing drilling programs. And we expect to have progress and developments during this year, 2026. The 2 drilling programs, if you're interested, are planned at Mount Roberts and at the Northern Territories areas where pegmatites are already been identified. Regarding our exploration activities outside Australia, still early days in Namibia. We are conducting our Stage 1 drilling program with our partner, Andrada Mining there. And in addition to have confirmed some very good grades at surface, we have also confirmed several bodies of pegmatite, in this case, spodumene at depth. But it's still to be seen how well spread, how big they are. So it's still early days, and we expect to have a second stage of exploration during this year as well. And finally, regarding Canada, as you well know, we established SQM Canada for exploration purposes last year, and we are currently exploring our own [ land ] in Canada as we speak. Operator: Our last question comes from Juraj Domic with LarrainVial. Juraj Domic: So in the press release, you mentioned some certain supply disruptions in the lithium market. And just to confirm if this is related to the news we've been hearing in Zimbabwe or if you have seen disruptions in other countries or areas? And my second question is regarding the permit process for Salar Futuro. If you have any timing or schedule when we can have any news from that? Pablo Hernandez: Juraj, on the disruptions on the lithium market, I believe what you're asking is related to when we talked about the supply, and that was mainly related to some lepidolite producers in the second half of last year who had some government restrictions in China that actually ended up in some of them stopping their production. Carlos Diaz Ortiz: Carlos speaking again. With respect to the Salar Futuro project, we continue working on that, and we expect to apply the environmental approval in the middle of this year. Operator: Thank you so much. And this concludes today's conference call and Q&A session. Thank you all for participating. You may now disconnect.
Eamonn Hughes: Good morning, everyone. I'm Eamonn Hughes, Investor Relations Officer, and you're all very welcome to Bank of Ireland's 2025 Results and Strategy Update. Myles will shortly take you through an overview of our business and how it performed over the last cycle. Mark will then go through the key points from our 2025 financial results. And then we'll turn to our strategy update covering our plans for the next 3 years to 2028. We'll then wrap up with the investment case for the group and open to the floor for your questions. Over to you, Myles. Myles O'Grady: Good morning, everyone, for those with us in person in London and those on the call. You're very welcome to our 2025 results and strategy update. I'd like to start by giving you an overview of the unique shape and deep reach of Bank of Ireland's franchise. Put simply, we have an unrivaled position in Ireland with complementary international businesses. And what you see on the first slide is that unrivaled position across Mortgages, Everyday Banking, Corporate & Commercial Lending and Wealth and Insurance. Our position is underpinned by 4 long-established respected brands, Bank of Ireland, Davy, New Ireland and Bank of Ireland U.K. This embeds the group into every community in Ireland, its economy and indeed its society. This is key to our growth over the coming years, complemented by supportive businesses outside of Ireland. Being embedded in Ireland means being embedded in one of Europe's fastest-growing economies. This is a highly attractive market driving balance sheet growth. Ireland's average annual GDP growth is forecast to be 3% out to 2028 and as demographics are also highly supportive. These include a population expected to increase by 17% by 2040. A structural growth story in wealth management, sustained credit formation. And at this point, private sector credit grew 6% last year and Ireland's national development plan. This plan aims to drive Ireland forward with a EUR 275 billion public investment in infrastructure, unlocking economic and balance sheet growth. We're also mindful of the risks presented by the geopolitical uncertainty. Ireland is navigating these risks well with a resilient and growing economy. Healthy public finances can help to shield against volatility and Bank of Ireland's strong balance sheet is well positioned to manage potential future challenges, underpinning a bright future for the group. Bank of Ireland's unrivaled position in Ireland and the strength of the Irish economy come together on Slide 8. This combination is driving outstanding business performance. Over the past 3 years, new to bank customers increased by 18%. We have significantly improved customer satisfaction. And this has been supported the balance sheet momentum you see here. Our Irish loan and deposit book grew 6% in 2025, while wealth assets under management increased by 9% to an all-time high. Capital generation was 270 basis points last year, bringing the total over the cycle to 920 points. That's EUR 5 billion of capital generation. On Slide 9, we recap on the returns profile since 2022. In early '23, we committed to a range of financial targets, which have been delivered. That's ROTE, cost income ratio, a progressive dividend and returning surplus capital. This performance has supported strong distributions, totaling EUR 3.6 billion over the last cycle, equivalent to 37% of our starting market capitalization. And for 2025, this includes EUR 1.2 billion of distributions, which equates to 100% total payout of earnings, comprising a progressive dividend per share of EUR 0.70 and the EUR 530 million approved share buyback we are announcing today. We enter 2026 and our new cycle to '28 with real momentum and strong capital generation. And I'll share more on this with you shortly. For now, I'll pass over to Mark, who will take you through last year's financial performance. Mark Spain: Thanks, Myles, and good morning, everyone. We've had a strong financial performance in 2025. Slide 12 sets out the key highlights, including continued momentum in Irish loans and deposits, both up 6%, growing fee income led by our Wealth and Insurance franchise, ongoing cost discipline and robust asset quality. All of these contributed to capital generation of 270 basis points and support total shareholder distributions of EUR 1.2 billion. Subject to shareholder approval, the ordinary dividend will be EUR 0.70 per share, up 11% compared to last year, reflecting our confidence in the bank's prospects. We've had a good NII performance in 2025 with balance sheet growth, bond purchases and our structural hedging helping to counter the impact of lower interest rates and planned deleveraging. We expect NII to grow from 2025 levels to around EUR 3.4 billion in 2026, above our expectation of the high 3.3s. The key dynamics here are business momentum and hedging, playing remaining interest rate and deleveraging impacts, including our recently announced intention to run down our U.S. acquisition finance book. We expect stronger growth in 2027, where we are upgrading our prior guidance of the mid 3.5s with NII of greater than EUR 3.6 billion now expected. As part of our strategy update, we have published new guidance for 2028 today with NII of greater than EUR 3.85 billion expected with the potential for further upside beyond. The supportive Irish macro backdrop that Myles spoke to earlier and the breadth of our franchise both contributed to the strong growth in Irish loans in 2025. Our Irish Mortgage business had another excellent year with a greater than 40% share of new lending for the third year running, while retaining our commercial and risk disciplines. International corporate contracted as planned due to the portfolios and runoff and FX was a headwind in 2025. In 2026, we expect to see net lending growth of around 4%, once again led by our Irish books. We saw good growth in customer balances in 2025. This was led by our Irish Everyday Banking propositions, where flow to term dynamics reduced as expected. Retail U.K. balances were higher with a good performance by our Northern Ireland business. For 2026, our expectation is around 3% growth in deposits, led by continued strong growth in Irish Everyday Banking. Slide 16 provides more detail on our structural hedge, which is one of the key drivers of our NII trajectory into 2028 and beyond. Rollovers and additions meant the average yield in the hedge rose 16 basis points to 1.89% in 2025 with an exit yield of 1.98%. And there's more to come this year. Helped by our modest growth in our hedge volumes and the rollover dynamic, we see fixed leg income increasing by 10% in 2026. The group's total fee income increased by 7% last year. Wealth and Insurance, which now accounts for nearly half of total fee income, had a really good performance with fee income up 12%, reflecting the benefits of our strategic execution over the past 3 years. For 2026, we expect to see around 4% growth in fee income, driven by Wealth and Insurance. Operating expenses rose 3% last year, meeting our guidance. Staff and other costs were higher. This reflects a number of factors, including wage inflation in the competitive Irish labor market and ongoing investment in digital capabilities and customer experience. Efficiencies from our restructuring and investment activity were equivalent to around 2% of the cost base. And we'll see more of this over our new strategic horizon. On Slide 18, I'd also note the noncore charge of EUR 430 million. Majority of this relates to U.K. Motor Finance. EUR 153 million of restructuring costs supported the delivery of our efficiency program. One presentational change to call out here is that from 2026 onwards, restructuring costs will be included above the line. We expect to see total costs of around EUR 2.2 billion in 2026. This is comprised of 2 parts. Firstly, underlying operating expense growth of around 2%, reflecting inflation and investment, including targeted higher investment to support strategic delivery, offset by efficiencies. And secondly, restructuring costs that are expected to be in line with the 2025 outturn. Looking further out, we expect total costs to be stable at around EUR 2.2 billion over the strategic cycle. Moving now to Slide 19. The impairment charge in 2025 was EUR 193 million or 23 basis points cost of risk, better than we had anticipated following a strong final quarter. Within that, net loan loss experience and portfolio activity was EUR 65 million, with net writebacks in H2, reflecting the team's execution on the ground. Macroeconomic and model updates account for the balance of the charge with a geopolitical PMA of EUR 40 million, providing protection against potential volatility. The NPE ratio finished 2025 at 2.2%, down 40 basis points in June, reflecting the H2 progress. Looking ahead, we expect the cost of risk to be in the low to mid-20 basis points. Group is a very capital-generative business model. Organic capital generation was 270 basis points last year. Around 1/4 of this was consumed by investment in lending and CRT amortization. IRB model scalers consumed a further 40 basis points with an objective to at least partially mitigate these over time. We've today announced distributions totaling 225 basis points in respect of 2025 performance. Our reported CET1 ratio was 15.1% after EUR 1.2 billion of distributions with 100% total payout ratio, which compares to 80% last year. For 2026, we expect net organic capital generation of around 250 basis points. We've updated our CET1 guidance for the new strategic cycle to around 14.5%, which we believe is an appropriate level to both protect the bank and support the ambitious growth plans we are setting out today. Our objective is to operate at this new CET1 guidance. Slide 21 recaps the building blocks of our 2026 financial guidance that produce around 12.5% statutory ROTE expectation for 2026. On this slide, I would note the changes to the presentation of a number of our key metrics. Having taken on board market feedback and reflecting on peer approaches, from 2026 onwards, we will simplify our reporting by including restructuring costs within our operating expenses and within our cost income ratio and presenting ROTE on a statutory basis. To conclude, as we start 2026, we have real momentum across our franchises, which sets us up very well as we start our new strategic cycle. I'll pass you over to Myles now, who will take us through our new strategy. Myles O'Grady: Thanks, Mark. The strategy we are setting out today is centered on 3 priorities. The first is continued business model momentum in Ireland, driving growth. And earlier, I spoke to the very strong balance sheet growth over the 3-year period to 2025. That growth story continues. We expect lending growth of 4% per year, deposit growth of 3% and AUM growth of 10% and in turn, creating more value from a highly attractive Irish economy. The second is allocating capital to optimize returns. We're allocating more capital to the island of Ireland while capturing the most attractive opportunities in our corporate and U.K. franchises. And the third, investing for the future, improving resilience, customer experience and efficiency. This ambition underpins the financial targets we are setting out today. We see income growing at an annual growth rate of more than 4%. This top line momentum, supported by our investments and cost discipline is transforming operating leverage. This is reflected in our cost income ratio expected to fall to mid-40s by 2028 with an ambition to go beyond. Combined, this sees our return on tangible equity, that's a clean statutory ROTE increasing by more than 500 basis points to greater than 16% by 2028. As set out on Slide 25, the group has a strong portfolio with complementary capabilities across our businesses. These interlinkages between our Retail, Wealth and Insurance and Corporate & Commercial teams offer significant potential. Examples include 2.2 million retail Ireland personal customers, of whom more than 150,000 are affluent, and this offers an important opportunity to Davy Wealth, connecting our corporate customers with New Ireland corporate pension solutions and leveraging our Davy Capital Markets business to offer more complex solutions for our corporate customers. We have the opportunity to serve more than 4 million customers at every step and stage of their financial lives. Our Everyday Banking franchise in Ireland, a core value driver for the group, has very attractive market positions. From a position of strength, we have a growing deposit franchise with EUR 87 billion of customer balances equivalent to around 1/3 of total Irish private sector deposits. And we expect continued growth in our deposit and current account franchise. Our ambition here is threefold: one, to strengthen customer loyalty through improving experience and to protect customers from the ever-increasing surge of fraud; two, to grow our customer and deposit base, supported by product innovation, for example, our Smart Start account for youth customers and our coming to Ireland product for people are returning to Ireland; and three, to drive more efficiency through technology. Delivering our strategy allows Bank of Ireland to command a leading share of new business, to deepen customer relationships and to drive further cross-sell. We are Ireland's #1 Mortgage provider, and our strategic objective is to retain that position. In the last cycle, we captured a growing share of Ireland's growing Mortgage market. Rising housing output underpinned by Ireland's strong demographics represents a clear structural growth opportunity for mortgages, supporting an expected 5% average annual book growth. Over the next cycle, we will maintain our right to win in this market while continuing to maintain pricing discipline. And we continue to enhance our capability, making it easier and faster for customers to secure a Mortgage approval. Our overall ambition is to be the unrivaled leader in Irish home buying. We are Ireland's leading wealth provider. Our Davy and New Ireland insurance businesses have more than 650,000 customers. Total AUM was a record EUR 60 billion at the end of last year. This has grown by more than 50% since we completed the acquisition of Davy in 2022. And supported by favorable dynamics across all segments, high net worth, affluent and corporate pensions, we expect AUM to grow to more than EUR 75 billion by 2028 with an objective to hit EUR 100 billion by 2030. And I expect this business to be the largest source of capital-light fee income growth out to '28 and beyond. This is supported by the strong Irish macroeconomic fundamentals, investment in our digital platforms and further cross-sell into our retail customer base. We have successfully repositioned our retail U.K. business in recent years. Our reshaped loan book and improved funding base are delivering attractive sustainable returns. Our U.K. subsidiary reported an underlying ROTE of 16% last year, continuing the trend of strong returns from this business. And throughout the new cycle, we expect growth through selective lending and mortgage products and strengthening propositions and capabilities in Northern Ireland, complemented by our specialist lending propositions in Great Britain. Slide 30 covers our Corporate & Commercial Banking division. With a very strong market position, including an SME lending share of more than 50%, we are well placed to benefit from increased housebuilding and infrastructure investment in Ireland. We're also deepening our relationships with our corporate customers, growing lending and fee income, leveraging our broader business model, including treasury services and Davy Capital markets. This underpins our strategic objective to retain our leadership position in Ireland. To deliver those business line performances I've just spoken to requires ongoing digital investment. In 2025, we delivered important enhancements. This includes the rollout of a new SME lending platform, SEPA instant payments and a wide range of customer service improvements in our contact centers. We also progressed our new mobile app and Zippay instant payments, both due for launch in the coming months. Over the new strategic horizon, we are making a conscious decision to invest more than previously planned to protect and grow our core Irish franchise and capitalize on our unique position in wealth. Priority areas of investment include operation resilience, including cyber protection, a new commercial digital platform and as referenced earlier, a scaled wealth platform and automated credit decisioning for mortgages. And in -- a new U.K. savings platform to support long-term funding needs. These investments offer a better customer experience and allow the group to deepen and grow our customer base. Earlier, I said the group was embedded physically and online in every community in Ireland. The combined power of this presence is a winning formula for our customers and a source of value creation for the group. We're also embracing AI. My focus is on creating tangible value and setting out an ambition that truly captures the positive and profoundly disruptive benefits of AI. We see emerging tangible value from our deployments to date. Contact center call transfers have reduced by more than 40% as AI connects with the help they need better and faster. AI is also protecting our customers, assessing over 1 billion card transactions last year to help prevent fraud. And we are targeting increased efficiency, reinventing our approach to KYC and customer onboarding. These are just some examples. We see real potential for AI to fundamentally improve a range of areas. These include customer sales and servicing, middle and back-office functions and changes to our technology delivery. Now bringing this together, this strategy builds on our strong momentum, delivering business and revenue growth, combined with a stable operating cost base, which creates significant operating leverage. We expect to see considerable top line growth in the coming years, and I referenced earlier income growing on average by more than 4% per year. And over that period, a continued focus on cost discipline and efficiency. As I said earlier, we are targeting a mid-40s cost to income ratio by 2028 with an ambition to go beyond. And that equates to a circa 6% operating efficiency improvement over the next 3 years. To meet our efficiency objectives, we've identified EUR 250 million of cost reduction. And there are 3 main elements to this. Firstly, our operating model, where we have redesigned and we are simplifying our organization and footprint. Two, redesigning our customer journeys and internal processes. I referenced KYC earlier; and three, rigorously ensuring our third-party providers create maximum value for Bank of Ireland. And related to this, we have radically reduced the number of third parties we work with, focusing on a much deeper, more strategic relationship with a smaller number. And Mark will provide more detail on this objective later. Slide 25 sets out how our strategy will continue to drive significant shareholder value. At its core is a more than 500 basis point increase in statutory ROTE to greater than 16% by 2028. And that equates to compound earnings per share growth in the mid- to high teens. All of which underpins continued attractive distributions to our shareholders. And we are achieving this by driving growth in Ireland from a structurally advanced economy, the strength of our balance sheet, making the best use of our capital, investing for the future in support of customers and shareholders, maintaining a very sharp focus on efficiency and competing hard, always with a focus on price discipline and risk management. Mark will now take you through our financial targets. Mark Spain: Thanks, Myles. Slide 38 sets out the macro context that underpins the balance sheet growth we expect to see over the new strategy. We expect to see CAGRs of around 3% for deposits, around 4% for loans and around 10% for AUM. For deposits and lending, we've been pragmatic in embedding some of a growing market going to new players, an assumption which sees continued growth momentum for Bank of Ireland's balance sheet. This balance sheet growth and structural hedge dynamics will help total income grow at a CAGR of more than 4%, rising to greater than EUR 4.75 billion in 2028. NII is expected to increase from around EUR 3.4 billion this year to more than EUR 3.85 billion in 2028, with the growth rate accelerating as we move through the cycle. Given the strong balance sheet drivers and the multiyear benefits from our structural hedge, which I'll come back to shortly, I see the potential for NII to reach EUR 4 billion after 2028. We expect fee income to grow by around 4% a year over the plan with W&I growing at a faster pace. The structural hedge is an important part of our revenue outlook. We see it providing a gross tailwind of around EUR 0.5 billion over the next 3 years as the yield moves towards the 2.5% level. Hedge volumes will grow over the coming years as customer balances evolve. While other hedging, for example, on our fixed rate mortgages also need to be factored into our NII, the key message here is that the structural hedge is a material positive driver, which should mechanically flow into our NII as hedges roll over. We are guiding for total costs to be stable at around EUR 2.2 billion over the strategic horizon with a CAGR of around 1% from 2025 levels. The key moving parts are inflation and investment with investments higher than prior plans to support our strategic delivery, offset by material efficiencies, driven by investment in our restructuring activity and lower restructuring costs over the period. As part of this, given that around half of our costs are staff related, we expect staff numbers to fall by around 3% each year, largely from natural attrition. As Myles said earlier, operating leverage is a key outcome of our strategic plan with our cost income ratio improving by around 6% from 52% last year to the mid-40s in 2028 and with an ambition to go further beyond that. Slide 42 provides details on our 3 areas of efficiency focus, each of which contribute broadly 1/3 to meeting our total efficiency target of around EUR 250 million that Myles spoke to. Key initiatives include completing our organization redesign, the exit of nonstrategic business lines, material consolidation of third-party suppliers, optimization of KYC and onboarding journeys and transforming our U.K. operations. Slide 43 summarizes the key drivers in our statutory ROTE building to greater than 16% by 2028 from a starting position of 12.8% last year, excluding the Motor Finance impact. Franchise growth predominantly reflects the power of our brilliant Irish Retail business and Wealth franchises. As I noted earlier, the structural hedge benefits are realized as hedges roll over at rates close to 2.5%. And while our TNAV increases, the growth is lower than RWA growth due to DTA utilization over the next couple of years. The momentum in our franchises gives us confidence that ROTE can increase further in 2029 and beyond. We expect organic capital generation to build to more than 270 basis points by 2028, averaging around 260 basis points over the cycle. Of this, around 1/4 is required to support business and lending growth. We also guide to a progressive ordinary dividend per share supported by a payout ratio of around 50%. This will leave us with significant amounts of surplus capital, which will be returned to shareholders unless there are more compelling strategic opportunities. Our objective is to operate at a 14.5% CET1 guidance, subject to customary approvals. Slide 45 recaps on our key financial targets with growth, operating leverage and returns at the heart of our updated strategy. Two items I'd mention here are: firstly, we see net capital generation of around EUR 3.7 billion over the plan, equivalent to around 1/4 of our end 2025 market cap and our expectation for mid- to high teens CAGR in earnings per share growth through this new cycle. I'd note that the EPS guidance does not make allowance for buybacks. Thank you. I'll now pass it back to Myles. Myles O'Grady: Thanks, Mark. Bringing our presentation to a close, let me recap. Today, we're setting out a strategy to create significant shareholder value by driving growth in Ireland, optimizing capital for maximum benefit and investing for the future. The strategy stands on the back of Bank of Ireland's unrivaled embedded position in one of Europe's best-performing economies and is underpinned by our proven track record of strategic delivery, which has built the foundation, enabled the momentum that drives us forward to 2030. Thank you very much for your interest in Bank of Ireland. We'll now open the floor to questions. And Eamonn, over to you. Thanks. Eamonn Hughes: Okay. As Myles said, we're now open to the floor for questions from analysts, actually first taken in the room before moving to those who have joined us online. And actually, for those of you in the room, you'll note that there's actually a microphone, I think, in the front -- just in front of you there. So please raise your hand and we'll take them in turn. So actually, just Andy we will take you first, if that's okay. Unknown Analyst: Well. Yes. Just one for me really. The increase in the CET1 target to 14.5%, I thought there was probably more of a chance that you might reduce that at some point rather than increasing it. So what feedback have you had from your -- maybe your debt holders that I can't imagine that they were unhappy with anything, but what was it that made you increase that number because it probably looked like there was room to reduce that rather than increase. Myles O'Grady: Yes. Thanks, Andy, for that. So as we embark on a new strategic cycle, our updated capital guidance to 14.5% allows the group to protect and safely grow our business. So it supports strong shareholder distributions, balance sheet growth and indeed business model investment. And at this capital level, we see growth coming through in the strong ROTE momentum. So we are with an updated clean ROTE of more than 16% by 2028, underpinned by average capital generation of 260 basis points. So this is the very nice balance between growing our balance sheet safely with a strong capital position and generating very strong capital returns. And of course, we can link that to distributions, the communication of a EUR 1.2 billion distribution for '25, that's distributing 100% of profits. It's a progressive DPS of 11%. It's an increase in payout from 80% last year to 100% this year. So it's in that context we thought about our capital position out over the next 3 years. Thanks, Andy. Eamonn Hughes: Dermot, next? [Audio Gap] Myles O'Grady: Yes. Thanks, Dermot, for that. And the question in the heart, the competition question, I mean, firstly, the -- I called out 3 really important components to our strategy today. So driving growth in Ireland, optimizing capital allocation and investing. And really, that growth in Ireland is the big story here. And so we expect the lending book to grow by, on average 4%, the deposit book by 3% and our wealth assets on average by 10%. Of course, driving top line growth of 4% on income, translating with op lev into ROTE improvement of 500 basis points. So with that as a backdrop, I mean, from a competitive perspective, for sure, Ireland is an attractive market. You heard me say it earlier, but it's also a competitive financial services market across a range of products. There's about 20 market players, including traditional and FinTech providers. And growing our Irish business, part of that strategy, again, very encouraged by the great momentum coming out of the last cycle, growing lending and deposits by 6%, AUM by 9%. So we enter '26 from a position of strength, a very strong franchise. Competition is picking up a little bit for sure. We compete on 3 pillars. One is a footprint that offers a deep business relationship and customer service. Two is an ever-increasing digital capability. I referenced earlier a new mobile app and faster peer-to-peer payments coming out soon. And the third pillar, of course, is always going to be to offer value to our customers while maintaining pricing and risk discipline. And from a guidance perspective, Dermot, I think we've been pragmatic in embedding some of a growing market going to new players. I think that's a reasonable assumption, an assumption with the Bank of Ireland balance sheet and franchise grow. And on the capital point, so certainly, in setting out an updated capital target of 14.5%, I mean 2 observations. One is in moving to a statutory ROTE with a target of greater than 16% is a sign of our conviction to operate in line with this new guidance, meaning if we hold excess capital and clearly, statutory ROTE would be reduced. And on a relative point, looking forward, we expect to operate at 14.5% each year. And given the need to hold about 25% of cap gen for loan growth, 100% payout would not be a constraint looking forward. I think that's it. Thank you. Thanks, Dermot. Eamonn Hughes: We move to Sanjena next. Actually, just if you can press the button on the mic, I think it will help in terms of getting picked up the question. Sanjena Dadawala: Sanjena Dadawala from UBS. I'm trying to better understand the net capital generation number of EUR 3.7 billion, which, as I understand, is the capital available for distributions after growth. So while the P&L to '28 is in line to ahead of consensus, the net cap gen projection is below what consensus currently has in terms of total distributions of EUR 4.2 billion or so. Potentially half of the cap can be explained by higher RWAs, but if you could help reconcile the rest. And then secondly, on fee income. So the growth number of 4% per annum, while still good, is lower than the usual 5% that we've talked about in the past. Are there any specific factors weighing on this? Myles O'Grady: Super. Sanjena, thank you for that. I'll ask Mark to take some of those. So just maybe to frame the capital gen question. So that EUR 3.7 billion underpinned by average capital generation of 260 basis points per year. That's really important to make that point because that momentum continues and again, of course, in support of a ROTE that is growing. And Mark, on some of the moving parts... Mark Spain: Yes, on the -- yes, Sanjena. Yes, on the net cap gen, so maybe a couple of things there. So one, we need about 25% of organic cap to invest in growing the business. So that's certainly one factor. A second factor you might just think about is our DTAs, actually, that benefit we have in '26 and '27. We actually use our DTAs by the middle of 2028. So those are probably 2 things just to bear in mind as you think about that. And on the fee income, the fee income about 4% over the cycle, maybe 2 things I'd call out there. So one is, we had a really, really strong performance in 2025, really pleased with that. We do call out in the detail in the report some modest one-off benefits in our Life business. So I think when you adjust for that. And then the second thing is in our Retail Ireland business, we expect a change in interchange arrangements from the beginning of 2027, which costs about EUR 15 million a year. So [ we've allowed ] for that in the 4% as well. Myles O'Grady: And maybe just as a final point, I spoke earlier about the ability for our Wealth business to really supercharge our fee income. And against the backdrop of AUM growth of 10%, that fee income component that's coming from Wealth is a hugely important part of our capital-light income model growth. Thanks, Sanjena. Sanjena Dadawala: Sorry, can I just follow up on the first one? What -- you mentioned TNAV growing less than RWAs, but would you be happy to put some numbers to that? Mark Spain: Yes, for sure. So with loan growth around 4%, as we say, and Ireland growing faster within that, Sanjena. Then if you think about RWA growth as a second leg on that, a little bit less because of the mix factors, for example, Irish mortgages, U.K. mortgages will carry lower risk weights than corporate. And then TNAV because of the benefit of the DTA in particular, growing at about 1% to 2% a year over the cycle. Eamonn Hughes: I think Guy just had his hand up first, sorry. We move to next. Guy Stebbings: It's Guy Stebbings at BNP Paribas. The first question was on net interest income. Thanks for all the exhaustive guidance today. Beyond '26, just 2 particular points I want to focus on. On the structural hedge, there's some sort of useful color, but maybe just be a bit more specific in terms of maturing yields beyond '26, so where you expect the yield for the total hedge to go to? And then on competitive dynamics, I think you talked a little bit about maybe some share giveaways perhaps. But in terms of any impact on product spreads captured in the guidance, that would be helpful. And then back on capital again. I guess I'm trying to understand, is the 14.5% the number because that's what's practical given the strong starting point, the strong capital generation and what you can realistically distribute or is that the number because that's the right number you think the business should run to even well beyond 2028? Myles O'Grady: Yes. Thanks for that. And Mark, I'll pass it to you on the NII-related questions. On capital, again, it's just that point that we start into a new strategic cycle. And hopefully, you've got a very strong sense that this is a growth story for Bank of Ireland out over the next 3 years. So we want to make sure we grow our balance sheet, grow our business really safely and make sure we've got the right capital to ensure that we can reward shareholders, that we can grow our balance sheet, that we can invest in our business model as well. It's in that context. And again, I'd make the point that linking a 14.5% capital that we can run the business at combined with a target statutory ROTE of 16%, I think is a good balance to think about how we think about our conviction around that level of ROTE performance. And Mark? Mark Spain: Yes. On the NII, I mean, maybe just to stand back for a second, I mean, this is a real story of continuing real momentum here in our NII trajectory. I think we were out with you a year ago. We gave a positive outlook on our NII trajectory to 2027. We've upgraded that outlook several times since, and we're upgrading again today. So again, specifically, we're upgrading 2026 around EUR 3.4 billion, previously high 3.3s, 2027, now greater than EUR 3.6 billion, previously mid 3.5s. And then the new guidance today of greater than EUR 3.85 billion and the key drivers before that balance sheet growth largely in Ireland and the benefit of the structural hedge. And I did note in the presentation that I see the potential for the business to reach EUR 4 billion, but after 2028. And specifically then on the structural hedge maturing yields, actually, we've got some details in the slide materials. But in 2027, 1.16%; and in 2028, 1.06%. So again, when you think about the reinvestment yield, that is quite a delta between the reinvestments and the maturity. Eamonn Hughes: Okay. [ Perlie, ] I think we go to you next. [ Perlie ] can just press the button actually. Unknown Analyst: I am sorry about that. On NII, yes, you've mentioned that you've upgraded guidance a few times. And if I look at the building blocks to '26, based on today's rates and what happened in Q4 implied, I think one could make the case that even EUR 3.4 billion looks like there's some conservatism embedded in that. So what are you -- what are some of the areas that could drive it higher or lower? Competition you've mentioned? And what about deposit migration to term? It looks like it's a little bit slower than expected. So just what are you assuming over there? And then on the cost side, you've mentioned 3% reduction in headcount. Is that in relation to the EUR 250 million AI efficiency saves that you identified? Myles O'Grady: Yes. Thanks, [ Perlie, ] and good to see you this morning. So I'll ask Mark to take the dynamics on interest income and certainly any potential for upside. On the cost piece, maybe if I anchor my response to the question in terms of what we're doing with operating leverage, really important. So in the context of top line growth of income of 4%, but also creating significant operating leverage from efficiencies. I've spoken about a mid-40s CIR, cost income ratio by FY '28. That's a 6 percentage point improvement versus FY '25. And certainly, when we get to that upper end of the mid-40s, we want to do more and do better. The EUR 250 million cost savings that are built into that overall outlook for that mid-40s CIR, I mean, there are 3 components that we called out. Much of the work has been done to get those benefits. So it's the operating model we have deployed. It is our -- going after our customer journeys and our internal processes and also making our third parties work really hard. Within the EUR 250 million, I would say, of those savings in the region, of about 20% are coming from AI. And that's important because when we go beyond 2028 and our objective to create more leverage and take our CIR lower again, AI will play a bigger role in supporting that further improvement in operating leverage. Mark Spain: Yes. So just on the NII, maybe a way to think about this is just year-on-year, and we can look at this in different ways. But if I think about year-on-year, 3 moving parts relative to 2025. So firstly, rates and FX are lower relative to 2025, and ECB rate 25 bps lower on the year. BOE also lower as well. So about EUR 110 million of a headwind there. The deleveraging portfolios, and I think probably -- the market probably hasn't fully taken into account the impact of our U.S. acquisition finance announcement of about EUR 70 million impact over 3 years, about EUR 30 million of that this year. So together, they're almost EUR 200 million of a headwind. But against that, we've got the balance sheet growth, the structural hedge and the full year impact of the bond purchases we've conducted and they're more than offsetting that, that gets us to the circa EUR 3.4 billion. So happy to get into that in more detail, but those are the big moving parts. Eamonn Hughes: Okay. I'll move down to Sheel, you're next. Sheel Shah: Sheel Shah at JPMorgan. I've got 2 questions, please. Firstly, on the capital, again, I'm struggling to understand the point around protecting the bank. You've got RWAs that are growing. You've got a capital base that is also growing, but the capital ratio has now increased on the back of that in terms of the target. Are you holding anything back from maybe M&A or further growth opportunities beyond the organic that you're seeing across the plan? And then secondly, on costs, could I ask around the investments that you're making and the timing of these investments and the timings of the efficiencies? You mentioned that the bulk of the investments have already been made around the org design. Could I just press you as to the shape of these costs? I appreciate the total cost base is looking flattish, but more around the cost investments and the efficiencies. Myles O'Grady: Very happy to, Sheel. Let me take the capital and M&A-related question and Mark, the profile of those cost savings. So Sheel, I mean, this morning, we're presenting an organic strategy for Bank of Ireland out to '28. So everything we've set out today is organic growth in the context of our lending book growth, the deposit book growth and of course, our wealth business as well. So nothing included in today's material for M&A. And of course, we do have the benefit of 2 transformative acquisitions in recent years, Davy, Wealth and of course, the KBC back book as well. And my experience is that M&A can be opportunistic. And certainly, if any opportunities present themselves. I spoke about the importance on driving growth in Ireland. So that will generally be my focus in that regard. We'll always think about an acquisition in the context that it must be aligned to our strategy, hence the Irish story. Two, that we can integrate it to ensure we generate synergies and further that it generates strong attractive returns. So it's not an explicit linkage, but I think we can say that we are keeping a very strong capital position to grow our business and also, of course, be ready to avail of any opportunities should they present themselves. Mark Spain: So EUR 250 million target over the cycle, maybe just give a bit more color on it somewhere between around 12% and 14% of our addressable cost base. That's offsetting inflation and also the material investments we're making and the 3 buckets we spoke about op model, third-party and AI-enabled process excellence. If I think about the phasing of that EUR 250 million, somewhere around 40 -- 40/20 over the 3 years. There are clear initiatives in place, and I'll just come back to those in a second. But just to give you a sense of momentum on that, actually in our disclosures for 2025, you can see we've got EUR 38 million of efficiencies. That's mostly H2 weighted. So about sort of run rate of somewhere between 2% and 3% in the second half of last year. We need to get above about 4% in our cost base. So we're building towards that. And as you note, actually, the members of our exec team are actually all in the room this morning. So I know they'll be really excited afterwards to tell you about what they're working on. But just to give you an example to bring it to life, and we mentioned about material consolidation on our third-party providers. So one of the things we would have worked on last year and would have been incorporated in the restructuring cost of last year was on our change providers, okay, reducing the number of providers there significantly down to around 5. So all the hard work, thinking the RFP process, et cetera, all run during the back part of last year. And now that's actually coming to life. We're getting the benefits in this year. So it's just one example, but there are many examples. Benjamin Toms: Toms from RBC. The first on competition. Can you just give us some color about what kind of competition changes you've got baked into the plan? Have you been relatively conservative the Irish banks have been relatively conservative historically? And does it make any difference do you think that one of your peers potentially might get purchased over the next 6 months to competition in Ireland? And then secondly, on net interest margin, could you just help us a little bit with the shape potentially of net interest margin for this year to kind of give us an idea of the exit rate? Myles O'Grady: Super. Thank you. And on competition, and I won't -- as you expect, I won't comment on the particular transaction in the Irish market. But I think it is interesting in the context of somebody willing to come into the market. From my perspective, maybe on the harder end of it, I referenced earlier on the guidance point, I think we've been pragmatic. We simply say that this is -- the Irish market is going to continue to grow. The loan book is going to grow. The system loans will grow. For example, mortgages as a structural positive fact. I referenced earlier; private sector credit grew 6% last year. Business sentiment is quite strong. I expect that to grow as well. System deposits are also going to grow. And certainly, demographically, wealth assets will also grow, and we're particularly well positioned to get the benefit of that. But we have been pragmatic in assuming that a growing market, some of that will go to an alternative provider, but very focused on ensuring that we continue to compete. I spoke earlier to competing based on our physical footprint plus our ever-increasing digital capabilities. I regard that as a winning formula, and we enter this period of maybe a slightly increasing competition but a very, very strong position. Mark Spain: Yes. Just on the net interest margin. So last year, 2.68%, broadly flat half-on-half, and we expect the net interest margin going forward to track our NII guidance. Aman Rakkar: It's Aman Rakkar from Barclays. I had a follow-up question on capital. And yes, I'll start with that one. So a follow-up question on capital. So you're talking about the 100% payout ratio. Why -- you're talking about not being constrained going forward, but it appears to have been a constraint today. I think you've kind of -- your distribution outturn for the year is coming below market expectations, right? We're all expecting a payout ratio above 100%. So why did you not pay out above 100%, you clearly got the capital to do it. And I guess I'm asking that question in the context of what it feels like pretty negative signaling here around capital, right, in terms of you've increased your target CET1 ratio and you've kind of come in below market expectations for distribution. So can you tell us exactly what's gone on in terms of this print and what it means going forward? And my second question was around AI actually. So it's a clear market concern in the last couple of weeks, the highly disruptive potential impact of AI on actually the revenue streams of banks. And I look at yourself and Irish banks, you've got some of the richest product margins in Europe. Interested in kind of your reflections. I know it's an unfair question given this is kind of an emerging theme in real time. But just given your vantage point, interested in whether you share that view and actually to what extent you see yourself well defended. Myles O'Grady: Super. Thanks, Aman. Let me take both of those. On the capital question, I understand the question. And -- I mean, just to reiterate, I mean today, we're announcing a EUR 1.2 billion distribution. And I call that again because it's 100% of profits, and that's an increase of a payout from 80% last year to 100% this year. So that consistent objective of returning surplus capital back to shareholders through a combination of a progressive DPS that's up 11% on the year, but also surplus capital. And it's always going to be a point-in-time decision. And maybe to anchor it back over the past 3 years, we've returned EUR 3.5 billion to shareholders, representing 37% of our opening market cap in 2023. And again, as a measure of our commitment, of course, to hold capital to invest appropriately in our business, but also to reward shareholders as well is an absolute priority for us. It always has been, and it will continue to be so as well. And on the go-forward piece, again, I would just point to the very strong capital gen momentum that we see. So on average, 260 basis points of capital being generated on average for the next 3 years that's capturing momentum. It's capturing growth, its capturing operating leverage, all of which translates into that ROTE target of greater than 16% and that EPS growth of mid- to high teens. So that's how I think about it. And certainly, that priority on returning capital is unchanged. And I do think there is a dynamic that's worth calling out maybe to the harder part of your question. If I think about looking forward, we expect to operate at 14.5% each year. And I know I'm repeating myself a little bit here, but given the 25% investment in loan growth, that 100% payout would not be a constraint going forward. On AI, I think you're right, Aman. I've spoken to it as a positive disruptor, and that's what it is. But any disruption, of course, comes at risks and not unique to Bank of Ireland, and not unique to banks actually, I mean, for all sectors. I mean some of those risks are sector dislocation, potential employment risks into the longer term and maybe also deflationary pressure as well. Now they're very much into the long term. I don't think they're a clear and present risk. So it's important that we absolutely harness the benefits of AI, but also we've got a keen eye on the risks. And again, if I link that to -- it's a broader response to the question, but I think it's relevant. If I think about Ireland and its position, it's very strong economic growth expected over the next 3 years. That's been driven by very strong sector performance in the domestic economy. The multinational sector where we export, that's holding up well. Employment is up. And really importantly, I think to the heart of your question is that the Irish government's commitment to its national development plan, EUR 275 billion out over the next 10 years, that's going to drive and maintain economic growth in Ireland for some time. I think we can take that as a positive and of course, as we appropriately manage those risks. Eamonn Hughes: At the back here. Unknown Analyst: [indiscernible]. Just coming back on capital again. You buffered your minimum requirements now over 300 basis points. Should we think about that 14.5%, should we link it to your minimum requirements, you run with a 300-bps buffer? If SOFR comes down, it should mechanically come down. And then you just talked about the national development plan. I mean your loan growth targets don't seem that ambitious given what's coming through there. And I guess if growth were to surprise on the upside on loan growth, what gives? Is it the payout ratio? Or should we expect that 14.5% to come down? And then just maybe on NII, Mark, you said going to maybe EUR 4 billion after 2028. Is that 2029 or 2030? And what's driving that? Is it rates staying at 2.25? Is it loan growth? Is it hedge? Is it a mix of everything? Myles O'Grady: Thanks for that. Let me take the first question, and then I'll pass to Mark. Actually, in setting our target to be at 14.5% for a CET1 ratio, we'll always check in as to where we stand against the rest of the market. And when I look across Eurozone banks, that's about 40 banks in total. The average buffer above MDA is, as you say, is about 300 basis points. So we're pretty much comfortably in the pack on that. And certainly, any mechanical change in regulatory requirements, I think, would have an impact on overall requirements as well. I think you can take that as a reasonable assumption. And on the loan book growth, we've got an incredibly strong Irish franchise. We've seen that in the last 3 years. Loan book growth last year, deposit book growth of 6%. We have factored in very strong growth into the future. For example, the mortgage book to grow at 5% per year. That's growing faster than the Irish economy. And certainly, if the economy performs stronger, if some of that 10-year national development plan happens sooner, then we're very much well placed. We've got the balance sheet capability to support that growth. And that growth, I don't believe would come at a cost to getting the balance right with distributions as well. Mark Spain: And just to add on that last point, obviously, we've got EUR 1.7 billion of deleveraging portfolio as well. So that's going to come through a lot of that 2026, a little bit less of a drag, '27, '28. In terms of the NII beyond 2028, obviously given guidance and the targets more into 2028, not going beyond. But my view is I don't think you have to wait for too long. And if I think about the drivers on that, really, you were talking about a pretty stable rate environment at that point. There's still some benefit from the hedge at that point to 2029, but it's really back to the balance sheet growth of those -- that deposit and loan growth, particularly in Ireland. Eamonn Hughes: Okay. There doesn't appear to be any further questions in the room. We can come back to -- sorry. Mic. Jordan Bartlam: It's Jordan Bartlam from Mediobanca. On the loan growth point, I was just gonna ask, it hasn't really been mentioned, but about 10% plus consumer lending growth this year. I wonder what was driving that. Obviously, that's a lot higher margin than on the mortgage or the corporate side. So it's quite an important driver if you continue at that sort of run rate. Yes, that'd be super helpful, a bit of color on that and where you see that piece going in the future. Myles O'Grady: Thanks, Jordan. I mean, the consumer book is a relatively small component of the overall Bank of Ireland balance sheet. But what is encouraging about it, that growth in the book, I see that as a measure of, importantly, of consumer confidence and willing to borrow. That's important because consumer confidence is the starting point for businesses having confidence to invest in their business. Yes, of course, we will support that consumer book. The encouraging element of it is that I referenced earlier private sector credit in Ireland up 6% last year. When I look at our business on the ground, we've seen very strong performance in manufacturing, in engineering, retail, holding up really well. In fact, that book is growing, supported, I think, by consumer confidence, which again, gives us confidence to the growth story for Ireland. Eamonn Hughes: A few hands went up there. Send a mic. Mike Evison: Mike Evison from Autonomous. Just 2 questions, please. So on the fees, thanks for giving more details there. You're obviously guiding for some very strong AUM growth and about EUR 0.1 billion contribution to the income growth through '28. Would just be interesting to understand where you think that growth is coming from? Is it competitive market share? Is it just general new growth? And in that context, how you think about any lost NII on that growth? So obviously, deposits generate strong profits in Ireland. And are you assuming in your cross-sell any movement from the deposit book across the AUM book? And then the second question on the cost guidance. I'm just trying to put together some of the numbers. You've obviously given the mid-40s cost/income ratio target for '28 and then said a lower than -- you're aiming or would expect to do a lower than 45% by FY '30. Should we be implying from that, that the mid-40s in FY '28 is higher mid-40s? Or should we be looking mid-40s there? Myles O'Grady: Okay. Thanks, Mike, for that. Let me take those questions. So I mean, on the fee income, the -- I referenced earlier that our wealth business is a hugely important part of where we expect to grow capital-light fee income. It's been an incredibly strong success story, 2 amazing brands with Davy and New Ireland, Davy in particular, looking after high net worth customers and of course, New Ireland, a life and protection business supporting pensions. So we want those 2 businesses to continue to do what they do so well. But also growing from that, there are areas that we know there are opportunities, in particular, the affluent market. So I referenced earlier, we've got about 2.2 million retail Ireland customers, 2.5 million retail customers if we include Northern Ireland, where Davy is present as well. Within that, it's about 150,000 affluent customers. So we want to target that. And much of our -- I referenced earlier, we're spending a bit more on our investment profile. Part of that investment spend is in digital and CRM capabilities within the wealth business. So that's an area that we want to step into. And that will not only generate short- to medium-term benefits, but also today's affluent customers, many tomorrow down the line become high net worth customers. That's a good thing to go after as well. The other area that we are focused on is in pension. So many private workers in Ireland don't have a pension. So using the new Ireland brand to support corporate pension growth is another area and certainly getting all our different businesses interlink together for those cross-sales. And then stepping back from it a little bit, the demographic piece is really important as well. So we called out a 7% expected growth -- household wealth growth out to 2030. That's a huge part of the story as well. Did I get was there a second question? Or did I answer both? On the cost piece, sorry. Yes, sorry, yes. So again, the uplift piece around getting to mid-40s, I'd say it's about a -- think about the delta, it's a 6% improvement in leverage in part from a top line revenue growth of 4% and keeping our costs a CAGR of about 1% or less than 1%, we call it stable cost mark. Within that, we have EUR 250 million of cost savings. So I'd say it's probably just you can take 6 off the current position. But I think at the heart of your question is that we don't stop in '28. There's real momentum here to go beyond that, and we will push hard for that. Eamonn Hughes: Okay. Sorry, Aman back to you. Aman Rakkar: Let me ask another question. Yes, it's just about the revenue mix. So I think you're around 81% net interest income this year. And I think in terms of your forward-looking guidance, you're effectively indicating increasing shift towards net interest income from here. Is that just a reality of the banking system that you operate in the position that you operate in, the opportunity set that's in front of you? And are you inclined to do anything about that? Do you want to try and address that revenue mix at some point? Can you? Myles O'Grady: Yes. I mean so it's an interesting question because if you know the back story to Irish banks, typically, the fee income has been a smaller component of the total revenue. Now we have the fantastic opportunity to grow our net interest income, which Mark has spoken to. And of course, we want to do that. So that's a good story. But also, of course, we want to increase our wealth fees or fee income. I mean our wealth business accounted for just under 50% of our total fee income, and that's going to grow more. And of course it's not happening, but had net interest income remained static, then fee income would've become a greater component. But it's great from a diversified income perspective, both are growing. Certainly I would say, again, I referenced earlier today is an organic story, but certainly if there's anything, any opportunities that were to present themselves that would offer an ability to positively shift that mix, you know, we'd certainly have a look at that. Mark Spain: I might just comment on it as well because I think, if you think about one of the pieces we outlined in today, which is actually getting behind our wealth position, we've got fantastic positions, getting behind it more, investing a little bit more there. Talked about the impact in the near term and costs. Actually, we see benefits in 2028, but we see benefits, even more benefits into 2029 and 2030. We're making that conscious decision to invest now, recognizing that the medium-term opportunity here is really, really attractive. So I think we'll see further benefits beyond 2028. Eamonn Hughes: We just might give some people online an opportunity now, we can come back to the room. [Operator Instructions] So it looks like our first is from Borja Ramirez from Citi. Borja, you may unmute yourself, turn your video on and ask your question. Borja, if you can hear us. Okay. We'll move on to the next question. We can come back. If Rob Noble is there from Deutsche. Robert Noble: Just on the capital generation point. So I don't understand how 25% of the capital gets consumed by RWA or growth, right? So you're saying 4% loan growth and RWAs grow less than that because of the mix. So if we call it 3%, I don't understand how you'll get anywhere near 25% of the capital being consumed. So is there something in there that I'm missing or doing wrong? I guess linked to that is you'll do 12.5% ROTE, your numbers, 12.5% ROTE this year, generate 250 bps of capital. How come 16% in '28 is only 270 bps. It seems that it should be materially higher than that even if you take off the DTA partially dropping off. And then last one is on the U.K. So there's a lot of spread pressure in the U.K. So what spreads are you writing on mortgages at the moment? And what ROE do you see the U.K. within the mix of the group? And are you still happy with that business adds value overall. Myles O'Grady: Rob, thank you for that. I'll respond to the broader question on our U.K. business and then ask Mark to take some of your detail on capital and the spreads as well. I mean we're very pleased with our U.K. business, Rob. We're -- this is a business we've worked very hard in recent years. I called it out in my script earlier to get that business performing well. It's a combination, I think, of a full service offering in Northern Ireland. That's particularly important because that offers efficient funding to support what I would describe broadly as specialized lending in Great Britain. That's working. So that specialized lending supported by efficient funding, also an efficient operating model. We've taken cost out of that business as well. I mean that's resulted in for last year, if you use our U.K. plc business as a proxy, it's a return on equity of 16%, and that trend has continued. So earlier, I spoke about 3 components to our strategy: driving growth in Ireland, optimizing capital allocation; and three, investing for the future. The U.K. business sits comfortably in that second bucket where we are optimizing our capital allocation, and I'm very comfortable with that business and how we have repositioned it in recent years. Mark? Mark Spain: Yes. On the RWA point, Rob. So again, we're guiding this morning loan growth of around 4% over the cycle, RWA is around 3% I think the other factors probably you need to think about are op-risk RWA. And obviously, given our outlook, we'll have a higher op-risk RWA based on earnings and also CRT movements, which can move in individual periods as well. So when you bring all that together around 25%, we think is appropriate guidance at this point. Obviously, in individual periods, we could do better than that, but I think about 25% overall. On the start ROTE and the organic cap generation, so yes, there's a DTA point. I think the guidance maybe though is greater than 270 bps. So just to note the greater than. And also, obviously, we'll think about the average higher risk weights as our balance sheet grows as well in terms of the denominator. Eamonn Hughes: Okay. Our next question comes from Denis in Goodbody. Denis McGoldrick: Just two, please, if I may. So one is the statement this morning referred to a 40-bps impact from IRB model scalers. Just if you could give us a little bit more detail on that, please, and what areas of the loan book is referring to? And then secondly, maybe just more broadly on the Irish loan growth guidance and the national development plan that you mentioned, Myles, I guess, how do you think about development finance lending in that context? Is it an area you expect to move into more? And is it considered within the guidance? Or are there any constraints which might stop you from leaning in a bit more into that space? Myles O'Grady: Yes. Thank you very much, Denis. I mean the strategy to grow our Irish business within the lending piece of that, absolutely, there are 2 very, very large significant structural opportunities and one we know very well, which is in relation to housing and the supply of homes. Our mortgage book has performed very well. It grew 9% last year as a book, expected to grow further out over the next 3 years. But of course, in support of that infrastructural lending is hugely important to us, and we are an active player in that market. There are different components to it. For example, on the housebuilding side, we hit a target last year to support the development of 25,000 homes. That's really important because we typically support the building of affordable and efficient homes. and that's the right thing to do from a societal perspective but also plays in very nicely to our mortgage business. And beyond that, the infrastructure spend, that EUR 275 billion by 2035, about EUR 105 billion, I think, over the next 5 years or thereabouts. So we're very well poised to support that. And so that spend is going to focus on roads, infrastructure, energy. And I should say we've built up capability in that regard and that team over the last 18 months. And so we're well positioned to support that growing part of the market as well. And on IRB, Mark? Mark Spain: Yes, so that relates to scalers applied pending the approval of certain IRB models, about EUR 2.7 billion of RWA, 40 basis points CET1 net of some capital buffers that we held, primarily U.K. mortgages, expect to at least partially recoup that over time. That is not built into our guidance. So that's actually upside. Eamonn Hughes: We're going to see if we can get Borja in Citi. Borja Ramirez Segura: So I would like to ask 2 questions, please. Firstly, the capital generation target of over EUR 3.75 billion, it seems conservative in my view. So I did a back of the envelope estimate, and I get to like EUR 600 million of higher net profit cumulative over the 3 years. If I use the P&L targets compared to the capital generation. So I think in my view, there's maybe EUR 600 million of upside cumulatively. And then linked to this, I think that -- I mean, there's also upside to your distribution compared to consensus. So I think if we assume like a payout of around 100%, there's still around, I think, 10% upside to consensus distributions for the next 3 years. And I think that's interesting because you -- with your EPS target growth, which does not include the share buybacks, you're already going to be towards the better -- the higher end of the European banks in terms of EPS growth. So I think that's very, very interesting. And then my second question would be on cost of risk. I understand that you are deleveraging in those portfolios that have a higher cost of risk like US Direct Finance, CIB and U.K. corporate book. And also, I guess you -- macro is very supportive with the stimulus. So I understand there's maybe also some potential to surprise positively in the cost of risk in the medium term. That would be my second question. Myles O'Grady: Thanks, Borja, and good that we were able to patch you in. I'll ask Mark to take those questions. I mean, other than to offer an overarching comment, which is that to the extent that there is an ability to outperform any of the targets that we set out today. We'll always push ourselves hard to outperform. And certainly, if we do, that offers opportunities to reward shareholders more to invest in our business model indeed to grow our business. Mark, over to you. Mark Spain: Yes. So maybe a couple of thoughts on the capital generation question or observation, I would say. So one is, I agree, we're upgrading our guidance today over the cycle, particularly for 2028 from the emerging consensus, I can see for 2028. I think we're upgrading by 3% or 4% relative to that. And then if I think about the cap gen specifically, so we do have higher net profit, you're right, over the period. You also have to think about other moving parts in getting from profit to cap gen. So for example, the changes in the expected loss allowance would be one that would be within that as well. And as I mentioned earlier, about 25% of that strong organic capital generation we need to invest in growing our business. So we factored all of that in. We factored in the delta between the 15.1% and the 14.5% and arriving at the EUR 3.7 billion. But as Myles said, absolutely, if we can outperform that, we will absolutely do it. And we think we've, I think, made realistic assumptions overall, but we'll obviously look to outperform those. And then the cost of risk, actually a really good performance in the second half of last year. So our NPE ratio down to 2.2%. That's the lowest level over the last 15 years. So we're in really good shape. That reflects a lot of hard work, I'd say, on the ground in the second half of the year, particularly strong last quarter to the year. So we're really pleased with that. And if I think about the low to mid-20s guidance for 2026 then, and I think it's a similar level beyond, actually, by the way. I think that's an appropriate level. One of the things we've done actually looking back over the last sort of 5 or 6 years is testing the cost of risk over that cycle. And you're right, we have made decisions during that time in terms of strategic reallocation of capital, most recently on U.S. Life. That does support a lower cost of risk. But I'd say that at this point, low to mid-20s is an appropriate level. Eamonn Hughes: Okay, Borja was the last online. So we'll just come back to analysts in the room. Fatima? Fatima Ghaznavi: So your forward-looking guidance that you have for 2028 NII was a lot better than what people were expecting. And a big part of that is you growing the size of your structural hedge. And for that, you assume a swap rate of 2.5%. Is there any risk of the long end of the yield curve coming down? What would the risk be on that NII guidance? I think swap rates today are 10 basis points lower than what you'd guided to. Would that maybe incentivize you to change your hedging behavior so perhaps ramp up a bit more slowly or think about increasing your duration at all? Myles O'Grady: Mark, do you want to take that one. Mark Spain: Yes, absolutely. Fatima, You're right. I mean the structural hedge is a key part of our revenue outlook. And if I think about we've given the details in the presentation, a lot of the benefit is locked in, certainly for 2026, more than 90%, more than 70% next year. While I think the other piece that came up in the question earlier is you think about the maturing yields. So the maturing yields here are closer to 1% over the period. So yes, of course, there's an impact, and you can think about EUR 9 billion a year rolling off. So you can sort of do the math in terms of if there's any delta in terms of the reinvestment rate, but we think getting to 2.5% even on today's curves, is absolutely reasonable and realistic. Eamonn Hughes: Any more questions from analysts in the room. We've one at the back on the phone. Unknown Analyst: It looks like the Irish government are going to introduce sort of tax-free investment wrappers like there are in the U.K. with the ISA type structure. I was just wondering if you've embedded anything in your targets in actual years for that. Myles O'Grady: The backdrop of that, of course, is, if I understand the question correctly, it's a European initiative on savings and investment union, which is about empowering customers with better tools for wealth growth and retirement. And so I would say that it's entirely aligned with Bank of Ireland's strategic objective to grow our wealth business. As Ireland's National Champion Bank, our job is to offer choice, whether that's a simple deposit account, whether that's a passive wealth account or whether it's a more discretionary approach to it. And certainly, I will be very supportive of the introduction of the ISA type product that would be a progressive step, and we'll be very happy to support that. And in many ways, the products that we're developing are, in essence, that for affluent and mass affluent market. So it's aligned with our strategy, and we would support it. Eamonn Hughes: Okay. Any more questions in the room? Okay. Okay, folks. Look, thanks, everybody, for your participation this morning. For those of you here with us in the room, you're welcome to stay for refreshments and to meet the members of the group executive who are here in the front rows. We look forward to also meeting as many of you as possible on our road show. And if you have any follow-up questions, obviously, please reach out to us in Investor Relations as well. So thanks again. Have a great day. Myles O'Grady: It's a busy day in the market, guys, and thank you for being here today. Mark Spain: Thank you so much.
Operator: Good afternoon, and welcome to the Mobile Infrastructure Corporation Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I will now turn the call over to Casey Kotary, Investor Relations representative. Please go ahead. Casey Kotary: Thank you, operator. Good afternoon, everyone, and thank you for joining us to review Mobile's Fourth quarter and full year 2025 performance. With us today from Mobile are Stephanie Hogue, CEO; Paul Gohr, CFO; and Mobile Infrastructure, Executive Chairman. In a moment, we will hear management statements about the company's results of operations as of the fourth quarter and full year 2025. Before we begin, we would like to remind everyone that today's discussion includes forward-looking statements, including projections and estimates of future events, business or industry trends or business or financial results. Actual results may vary significantly from these statements. and may be affected by the risks Mobile has identified in today's press release and those identified in its filings with the SEC, including Mobile's most recent annual report on Form 10-K and its most recent quarterly report on Form 10-Q. Mobile assumes no obligation and does not intend to update or comment on forward-looking statements made on this call. Today's discussion also contains references to non-GAAP financial measures that Mobile believes provide useful information to its investors. These non-GAAP measures should not be considered in isolation from, or as a substitute for, GAAP results. Mobile's earnings release and the most recent quarterly report on Form 10-Q provide a reconciliation of those measures and the most directly comparable GAAP measures and a list of the reasons why Mobile uses these measures. I will now turn the call over to Mobile's CEO, Stephanie Hogue, to discuss fourth quarter and full year 2025 performance. Stephanie? Stephanie Hogue: Thank you, Casey, and good afternoon, everyone. Thank you for joining us today. 2025 was a year in which we strengthened the foundation of our business. And while we did not achieve the growth that we originally expected, we executed on several key strategic priorities, which have positioned the company for future growth and to capitalize on the green shoots we are seeing throughout the portfolio. While consolidated revenue and NOI declined year-over-year, the underlying structure of the company improved meaningfully. We continue to show positive momentum in Contract Parking, improved utilization at several of our assets, completed Phase 1 of our asset rotation strategy, strengthened our balance sheet and our confidence is growing with identifiable catalysts that position us for progress in 2026. Additionally, accelerating return to office momentum across our markets supports our outlook for growth in 2026, along with the reopening of several venues that should increase our transient volumes this year. Taking a closer look at 2025 operations, let me start with Contract Parking because that forms the operational base that supports our broader growth. We ended 2025 with over 6,700 contracts in our baseline assets, representing same-store sales growth of 10% year-over-year and 12% growth when excluding the temporary disruption in Detroit. Contract Parking represents approximately 35% of our management agreement revenue. This recurring revenue creates stability, reduces volatility and builds a platform for pricing leverage as utilization improves. As we have focused on driving utilization across the portfolio, we have done so with a specific tested playbook for success. Volume first, rate second. In some assets, we have accepted lower initial price points per stall per day to ensure we are winning market share volume and stabilizing assets. In other words, our priority in 2025 was occupancy. The result is that while utilization has climbed with contract growth, our overall revenue mix has remained relatively steady at approximately 35%, which is a deliberate sequencing decision. Parking is fundamentally a utilization-driven business with daily perishable inventory. When assets are underutilized, pricing leverage is limited. As assets move towards stabilized occupancy, optionality increases both with rate and parker mix optimization. Cleveland demonstrates this clearly. As utilization approached stabilized levels in that market, we were able to implement approximately 5% rate increases on monthly contracts. We have developed an optimization plan for each of our core assets. In some markets, the near-term priority will remain volume, while in others, where utilization is tightening, the focus will shift toward partner mix optimization and pricing discipline. The opportunity ahead of us is not simply to grow contracts, but to enhance the quality of that revenue as assets continue to mature. So while Contract revenue today represents 35% of the mix. We view that as a baseline off of which we intend to grow over time. As utilization continues to increase and market conditions normalize, we believe there is meaningful opportunity to improve pricing and strengthen the overall revenue composition of the portfolio. We are also seeing tangible signs that demand dynamics are shifting. For several years, return to office was something we expected would eventually translate into parking demand. Over the last several months, that shift has become more measurable. We are seeing an increase in inbound block parking inquiries, something that we have not experienced in nearly 5 years. To be clear, we are not back to pre-pandemic patterns, but corporate in-office attendance policies are beginning to drive incremental demand in a way that will translate to increased utilization in markets where we have exposure to office. Residential parking contracts have been another contributor to our emphasis on building the Mobile recurring revenue platform. Residential contracts increased approximately 60% year-over-year in 2025, reflecting the conversion of downtown office buildings in several of our markets to apartment rentals. That growth diversifies our exposure and transforms assets that were historically weekday centric into 24-hour revenue platforms. Over time, that flexibility enhances our ability to optimize both utilization and pricing. Now turning to transient revenue. Transient volumes declined 6% in 2025, primarily due to temporary disruptions in certain markets that we have discussed in recent earnings calls. These are micro market disruptions tied to physical projects and timing that will ultimately create long-term demand for our assets. Importantly, even during this period, transient rates increased. That rate resilience reinforces our conviction that our assets remain well positioned within these districts. As we move into 2026, many of these temporary disruptions are shifting to positive demand catalysts. The renovated Cincinnati Convention Center has reopened. And construction projects, such as the 16th Street Mall redevelopment in Denver and Nashville 2nd Avenue rebuild have been completed, and we have new contract wins being onboarded. This visibility gives us confidence in sequential improvements as the year progresses. Over the past year, we have pivoted our own data strategy to identify the technology platforms that enhance customer experience, improved revenue management and reduce structural management costs. In certain high-volume assets, we have identified some barriers to revenue management, and those operational initiatives have not yet produced the operational fluidity and throughput we expect. Actions are underway to further improve utilization across our portfolio, which includes reexamining our technology being used across the Mobile portfolio. We look forward to sharing more about these operational initiatives in the future. A key highlight of 2025 was the execution of Phase 1 of our asset rotation strategy. Consistent with the objectives we outlined at this time last year, we have sold or are under contract to sell over $30 million of noncore assets. The aggregate cap rate of sold assets is approximately 2% to date, which supports our ongoing belief that the sum of the Mobile portfolio as expressed through the stock price is materially disconnected from the value of the parts. We are continuing to execute on this 3-year strategy in 2026 when we expect to have sold or be in contract to sell another large portion of our noncore assets. In the third quarter, we completed a $100 million asset-backed securitization with 3 new institutional investors. That transaction extended maturities, enhanced flexibility around asset rotation and validated the quality of our underlying collateral. Finally, and equally importantly, we continue to deleverage the portfolio with approximately a $10 million paydown of the line of credit in the fourth quarter. Paying down the line of credit and reducing the overall cost of capital will continue to be a primary consideration of capital deployment through 2026. This, coupled with our stock repurchase program, and potential asset purchases form the core of our capital allocation strategy to drive long-term value to shareholders. Despite the green shoots in our business and excitement for 2026, I also think it is important to step back and acknowledge the broader environment in which we are operating. We are living through a moment of extraordinary uncertainty around how artificial intelligence will reshape the nature of work, office usage and even human productivity itself. But regardless of how technology evolves, people will continue to gather, transact, attend events, live in cities and move through physical space. Mobile Infrastructure owns hard assets, land and access points and central business districts that are essential to that movement. While near-term NOI may fluctuate as markets normalize, the underlying scarcity and strategic positioning of well-located urban land will not be disrupted by an evolving AI landscape. Over time, we believe the ownership of critical physical infrastructure and vibrant districts only becomes more valuable. With that, I will turn the call over to Paul to address the financial results and earnings guidance for 2026. Paul Gohr: Thank you, Stephanie, and good afternoon, everyone. I will discuss our financial performance for the fourth quarter and full year 2025 and provide additional context around our 2026 financial outlook. Starting with the fourth quarter. Total revenue was $8.8 million compared to $9.2 million in the same period of the prior year. The revenue decline reflects lower transient volumes year-over-year due to fewer events and associated attendance as well as continued construction-related impacts at several of our assets. As Stephanie mentioned, these projects have now largely been completed, which should provide a tailwind for these assets in 2026. Now let's discuss revenue per available stock or RevPAS, a key metric we use to manage the portfolio. This metric is increasingly useful as we convert more assets to management contracts, and a larger portion of our portfolio is included in the calculation. For the fourth quarter, RevPAS was $190 compared to $200 in the prior year quarter, a decrease of 5%. The year-over-year decline reflects rate compression from our volume-first strategy, as well as the transient weakness I mentioned earlier. Adjusting for our Detroit location, which is one of the largest assets in our portfolio, RevPAS was down 3.4% year-over-year. As we have discussed before, for our Detroit location, redevelopment is actively underway. While there are some near-term dislocations, longer term, this asset is extremely well positioned. Turning to expenses. Property taxes were $1.6 million compared to $1.7 million in the prior year quarter. Property operating expenses were flat at $1.9 million for the fourth quarter of 2025 and 2024, this demonstrates the operational discipline we have maintained throughout the quarter. Net operating income was $5.3 million for the fourth quarter compared to $5.5 million in the prior year period. General and administrative expenses were $1.1 million compared to $1.2 million in the fourth quarter of 2024. This excluded noncash compensation of $0.8 million in the fourth quarter of 2025 compared with $1 million of noncash compensation in the prior year. Adjusted EBITDA for the fourth quarter was $3.9 million, flat compared to the prior year. This stability and adjusted EBITDA despite revenue headwinds demonstrates the underlying earnings power of our operations and the benefit of our expense management initiatives. For the full year 2025, total revenue was $35.1 million compared to $37 million in 2024, a decrease of 5.2%, reflecting the temporary transient volume headwinds previously described. For 2025, same-location RevPAS was $199 compared to $209 in 2024, a decrease of 4.7%, consistent with the revenue decline. Property taxes were $7 million compared to $7.3 million in 2024. Property operating expenses were $7.4 million compared to $7.1 million, an increase that is primarily attributable to our migration to management agreements. Net operating income for the full year was $20.7 million compared to $22.6 million. While this represents a meaningful decline, it is important to note that this was driven by the temporary factors Stephanie outlined. As venues reopen and the catalysts we see materialize, we will have a clear line of sight to NOI recovery. General and administrative expenses were $4.8 million compared to $5.1 million in 2024, reflecting cost management trends previously described. This excluded noncash compensation of $3.1 million in the current year compared with $5.7 million of noncash compensation in the prior year. Adjusted EBITDA for the full year was $14.3 million compared to $15.8 million in 2024. Turning to our balance sheet. As of December 31, 2025, we had $15.3 million in cash and restricted cash compared to $15.8 million at December 31, 2024. Total debt outstanding as of December 31, 2025, was $207.7 million, this compares to total debt of $213.2 million at December 31, 2024. As Stephanie mentioned, during the fourth quarter, we paid down approximately $10 million on the line of credit, including both principal and accrued interest. We funded this paydown with proceeds from our fourth quarter asset sales. Additionally, to date, we have repurchased over 1.6 million shares at an average price of $3.25 per share. Given the current share price and the valuation relative to our NAV, our shares continue to be an extremely compelling investment. Accordingly, repurchases will continue to be an area of focus. For 2026, we are providing the following guidance. 2026 revenue is expected to be $35 million to $38 million. At the midpoint, this represents 4% growth over 2025 revenue. On an apples-to-apples basis, adjusted for the assets we sold in 2025, the midpoint represents approximately 8% growth on the same portfolio basis. This 8% adjusted growth rate better reflects the underlying operational momentum we expect from our portfolio. Net operating income is expected to be $21.5 million to $23.0 million. At the midpoint, this represents 7% growth over 2025 actual results. On an adjusted basis, removing sold assets, this represents approximately 10% NOI growth, highlighting the operating leverage inherent in our business model. Adjusted EBITDA is expected to be $15.0 million to $16.5 million. At the midpoint, this represents 10% growth over 2025 actual results. On an adjusted basis, this represents approximately 13% growth. The adjusted EBITDA expansion reflects both NOI margin improvement and continued expense discipline. Our guidance does not include any future asset sales or acquisitions beyond what we have already contracted. If we complete additional dispositions during 2026 as planned, we would expect to update guidance accordingly, though the NOI impact should be relatively modest given we are selling lower contributing assets. There are a few key assumptions underpinning our guidance. First, we expect continued Contract Parking volume growth across our major markets. Building on the 10% growth we achieved in 2025. Second, we expect transient growth in markets where temporary construction disruptions have been resolved. And finally, further progress from the green shoots we see of return to office momentum that we believe will provide uplift to both contract and transient revenue streams. With that, I will turn the call back to Stephanie for closing remarks. Stephanie Hogue: Thank you, Paul. Before we open the line for questions, I want to leave you with a broader perspective on where we see our business heading. Over the last several years, this company has navigated tremendous change. We have operated through a global pandemic, a structural shift in workplace behavior, significant redevelopment around some of our largest assets, rising interest rates and capital markets volatility. We have focused on building the most durable part of our revenue base through contract expansion. We have strengthened our capital structure. We have rotated assets according to our long-term strategy. And we have positioned the portfolio and broader platform to benefit, as temporary disruptions convert into long-term growth catalysts. In choosing to prioritize utilization, we focus on getting closer to a stabilized performance. Ultimately, the occupancy base will create pricing leverage. As utilization increases, optionality increases. As optionality increases, parker mix optimization becomes possible. And as mix improves, pricing power follows. As such, we see embedded opportunities. Our assets are moving towards stabilized occupancy levels, where future pricing adjustments can be implemented thoughtfully and strategically market by market. We continue to believe that the intrinsic value of this portfolio materially exceeds the current trading value of our shares. Our focus remains on closing that gap through disciplined execution and a shareholder-first mindset to capital allocation. As we move through 2026, we will implement targeted operational enhancements with select properties designed to improve transaction flow and reduce friction. Each asset has its own operational optimization roadmap, and we expect that these adjustments will drive incremental revenue over time. Beyond near-term improvements, we are building something larger. Mobile Infrastructure owns points around the center of urban mobility systems. In a world increasingly shaped by digital transformation, we remain a business with ownership of strategically located land and hard assets and central business districts, assets that we believe will compound and value over time. Historically, our revenue model has centered on parking transactions, but our assets generate far more data than payment activity. They capture data on traffic flow, dwell time, ingress and egress behavior and utilization patterns across central business districts. Over time, we believe this portfolio can evolve towards intelligent infrastructure, assets that are not only revenue generating, but increasingly adaptive and data aware. We are in the early stages of building that capability. We are not announcing a specific rollout today that are laying the foundation for infrastructure that enhances long-term value creation. This evolution will not happen overnight, but we believe the future of this company is not simply higher occupancy. It is smarter infrastructure with assets that generate insight along with income and operational systems that allow us to optimize each garage individually rather than manage the portfolio with broader assumptions. As we move through 2026, we see strengthening contract momentum, identifiable recovery catalysts and operational enhancements. Thank you for your continued support. Operator, please open the line for questions. Operator: [Operator Instructions] And our first question is going to come from John Massocca with B. Riley Securities. John Massocca: So maybe just going to the dispositions first. Can you maybe tell me what exactly was kind of closed in the quarter? And what maybe is still yet to close in that $30 million number. Stephanie Hogue: Yes. So we have one asset remaining to close this quarter, anticipating that closing in the next 14 to 20 days. And then anything else in 2026 will be towards the back quarter of the year. John Massocca: Okay. Does that mean there's nothing really kind of in the pipeline for sale today? Or is that just because the assets you're selling are going to take a little time to kind of work through all of the various minutia sales? Stephanie Hogue: Yes, more the latter. There are assets in the pipeline. Certainly, we don't want to rush a process. So it's always sort of balancing speed to close versus the right buyer. So we've got some targeted conversations that really are sort of just given the nature of disposition strategy or back half of this year. John Massocca: Okay. I understand that with the cap rate you're selling these at, it shouldn't be too impactful. But if I think about what was actually closed in the quarter, is there some kind of weighting towards the back or the front of the quarter? Just trying to think if there's kind of a stub impact of NOI that was in 4Q that's not going to roll into 1Q? Stephanie Hogue: Well, it will roll through 1Q because it will sell sort of towards the end of the first quarter. But largely nominal overall. John Massocca: Okay. And maybe can you provide a little color on what you're seeing year-to-date in some of the markets that were kind of most impacted by local disruptions just thinking kind of Cincinnati, Denver, Nashville. Just is there any kind of like tangible uplift you're seeing in comparable rate or utilization in those markets now that some of those projects around the garages have been completed? Stephanie Hogue: Yes. January, as you know, is always our slowest month of the year. You have weather, et cetera. I will say though, Cincinnati, we're seeing the impact as expected. I think we made in the remarks, the comment, that there are 7 events in the first quarter. There were several in January. They were well attended. Contract revenue is up, and we've seen a number of inbounds from the return to office. Not all of those will convert, but we are starting to see that trend. So I think Cincinnati will be the most impactful in the near term. Nashville is opened, back up the 2nd Street corridor. So just in terms of an asset coming back online, like Nashville is. That really should be back half weighted, right, as parkers get reused to going there, prebooking, et cetera. But I anticipate we'll see Cincinnati in the numbers in the first quarter. John Massocca: Okay. And then in terms of the broader portfolio, I'd imagine it's kind of already baked into guidance, but just in terms of like the impacts versus runway -- sorry, run rate how much weather impact has the portfolio kind of seen, if any, in 1Q, just given it's been a slightly colder, more snowier winter than maybe its been in years past? Stephanie Hogue: I would say that the National Storm a couple of weeks ago that shut down Nashville, Cincinnati, turned into a Northeastern and New York was certainly impactful, different places. It was more impactful than others. Midwest, it was a couple of days Nashville, where without power for a week, it was a longer impact. So it's really market by market. Sorry, go ahead. John Massocca: No, I'm just going to think like within the guidance, is that kind of already accounted for, just given in the year-to-date performance. And then I guess, what could have been guidance if not for that weather disruption, roughly? Paul Gohr: It was in the grand scheme of the year, not super impactful. We did see a little bit of a downtick, but I don't think on the balance of the year, that it will be like impactful. Stephanie Hogue: Yes. January is always the slowest month of the first quarter, which is the slowest quarter of the year. So to Paul's point, it was a few days and largely nominal overall. Operator: And the next question is going to come from Kevin Steinke with Barrington Research. Kevin Steinke: I believe you talked about, in your remarks, expecting to see a sequential build in results throughout the year. Obviously, there's seasonal impacts as you move throughout the year. But is there anything based on the green shoots and the momentum you're seeing in contract that would make things very materially versus what you've typically seen in the past? Stephanie Hogue: No, there isn't. The contract parking will compound through the year. So the fluctuation, the seasonality is largely driven by transient. So all the contracts green shoots will do is give us a higher base from which that transient will compound revenue through the year. Kevin Steinke: Okay. Sounds good. And obviously, you discussed the momentum you're seeing in the contract business. Return to office sounds like it's really a nice tailwind right now. Any updates on just the office to residential conversions and what you're seeing, in particular, markets with that in terms of uptake on residential contracts, and I'm thinking about the developments in Cincinnati and anywhere else you might want to highlight. Stephanie Hogue: Yes, absolutely. Residential has been really great. It's still not a large portion of contracts, but it was up about 60% year-over-year. We anticipate that to continue growing, especially with the return to office that we're seeing in downtown. So I think what we're really excited about is that bifurcation in pricing, which hasn't happened yet. But will, ultimately, when you have a 24/7 reserve space versus kind of a Monday through Thursday, 8 to 5 worker. So that's on the come. But the thing with residential is we are bound by how fast units lease. So we can't make great predictions in terms of how fast that builds. But once people are in their apartments and they are leasing, we have pretty good capture there. Kevin Steinke: Okay. That's helpful. You talked about seeing some positive impact from your technology optimization initiatives, but you also talked about maybe improving technology in certain areas or in certain facilities. I mean, can you just walk through that a little bit more and maybe unpack the benefits you've seen from initiatives and other things that you're looking to improve on that front? Stephanie Hogue: Yes. It's been a fairly broad attack on technology and execution. So obviously, we work with our third-party operators and really transition towards those who give us the most operating insight and transaction data in our assets. The thing with parking is it really needs to be a frictionless ecosystem. And so focusing on operators and technology where it's drive in, drive out experience, but also the LPR, the License Plate Recognition captures the data, charges effectively so you don't have leakage is really important. And so we're working with operators on that. And then the second piece is just making sure that we have the right online presence and premarketing for events and also liquidation of excess inventory with online aggregators. So it's a multifaceted approach. Historically, asset owners have relied on operators to do that. A lot of that has been brought in-house over the last year, and we're expecting to see that benefit in 2026. Kevin Steinke: All right. That sounds good. Can you refresh us on where we are in terms of the transition -- ongoing transition from leases to management contracts on your owned assets? And maybe are we expecting any significant movement on that front, flipping to management contracts as we move throughout the year? Stephanie Hogue: I think the balance of them largely are late this year and next year when they transition, and there are only a handful remaining. So it won't be materially impactful. But certainly, as we transition, we'll update. The ones that, Kevin, are on long-term leases. So they're just sort of coming to their lease end over the next 24 months. Kevin Steinke: Great. Understood. That's helpful. Lastly, I want to ask about the ongoing asset optimization strategy. You've had some success with some divestitures. It sounds like maybe over the course of 2026, the focus as you divest assets and I guess, more of those to come later in the year or maybe into 2027. But sounds like initially, it's still going to be a focus on paying down that line of credit. But could you also just update us where you stand with asset acquisition pipeline and when you would potentially look to start acting on that pipeline a little more actively or aggressively. Stephanie Hogue: Yes, absolutely. In the near term, the focus will be the line of credit. But to your point, it's -- every disposition is a capital allocation question. So we'll look at near-term acquisition pipeline versus line of credit pay down and balance accordingly with our Board. Operator: And our next question will come from Michael Diana with Maxim Group. Michael Diana: Stephanie, when you selling some of these properties, are the buyers looking to run them as parking facilities or do something else with. Stephanie Hogue: Sure. Michael. It really depends. We have some owners that are looking to the change of use and others -- some buyers who are looking to the change of use. Others are keeping the asset as parking, but they need it for a particular purpose, i.e., they could be transitioning an office tower to residential or they are buying an office tower and parking becomes necessary for them to lease out their space. So I would say it's not necessarily a fixed outcome. The input, though, that is consistent is they need the space for their own asset that they've just acquired to be worth more. So for us, we're really indifferent as long as we can maximize proceeds for our shareholders. Michael Diana: Yes. Sure, of course. So you've -- it's good to know that with interest rates being where they are, you still finding buyers. Stephanie Hogue: Absolutely. Our approach is very strategic and targeted. So we tend to not put things on a broadly marketed process, but it's identifying asset by asset, who the key stakeholders are and developing a relationship with them, understanding what their needs might be. And in some cases, it's just used for land. In other cases, it's parking specific. And those relationships take time and they're extremely targeted which is how we're able to achieve the proceeds that we do. Michael Diana: And then return to office. Could you give us some idea which cities are the strongest in that? Stephanie Hogue: We've really seen it across the board. The Midwest seems to be, I would say the strongest, but Texas, we're seeing the same. Anywhere where you have large corporations, I think that's where we're really seeing the impact of mandates of back to office. Operator: And our next question is going to come from John Massocca with B. Riley Securities. John Massocca: Just kind of a quick one for me. As I think about the $30 million, in particular, maybe what is still left to close in terms of dispositions in 1Q '26. What kind of net proceeds is that potentially going to generate to pay down the line of credit. I would assume it's maybe collateralizing some other type of debt, but I'm not sure, I just was kind of curious how much cash you think that you can generate for further line of credit paydowns. Stephanie Hogue: We -- yes. So we -- to date, we paid down $10 million. And we'll continue to put excess proceeds towards the line of credit. I think this particular asset, you are correct, will run through its waterfall, it is in a CMBS portfolio. So there's some prepayments, et cetera. So excess proceeds then will go towards the line of credit. John Massocca: Okay. And any kind of rough amount do you think that could be? Or is that just still to be determined given the debt structure in place on that asset? Stephanie Hogue: Yes. I think it will on to come. Operator: I am showing no further questions in the queue. I would like to thank you for participating, and this does conclude today's conference call. Everyone, have a great evening.
Jin Xin: Ladies and gentlemen, a very good morning to everyone joining both in-person and on the web. Welcome to Sembcorp Industries Full Year 2025 Results Presentation. My name is Xin Jin from Group Strategic Communications and Portfolio Management. Before we begin, may I request that all mobile phones be switched off or set to silent mode. And if you feel unwell, please approach our staff for assistance. Joining us on the panel today are our Group CEO, Mr. Wong Kim Yin; and our Group CFO, Mr. Eugene Cheng. There will be a question-and-answer session following the presentation. Without further delay, I will now hand over to Kim Yin to begin the presentation. Kim Yin, please. Kim Yin Wong: Thanks, Jin. Good morning. A very happy Lunar New Year to everyone. Let me now quickly get into the results of 2025. Now before I begin, I want to also set the stage. Compared to 2024, we have had -- those of you who have been following us would know that we have a significant headwind in 2025, right? The margins in Singapore has been under a lot of pressure with the increase in the supply in the Singapore market. That's the first one. In our U.K., margins as well as volume also come under pressure. China renewables continue to face heavy curtailment as well as pricing pressure. So despite those headwinds, we were able to offset the impact from those and came out in a resilient outcome, which is you can call it flex, but it is not without effort that we can get to the $1 billion mark. So for consecutive years, we stay at that level. And that has given us the confidence to come out and say, hey, look, the underlying cash flow and the business is strong and resilient and actually, the cash flow is growing. And because of that, we convinced the Board to allow us to increase the dividend. It's just an indication. It's not much of an increase $0.02 out of $0.25. It is still -- we recognize that we lack our peer group in terms of dividend payout, right? But now that, again, we are operating at this $1 billion platform, this normal -- new normal that may not be new, it has been 3 years, but I think everybody is convinced that we have that underlying capability to increase our dividend to close the gap between ourselves and our peer group, right? So the idea is that in terms of returns, one can look forward to dividend. And then the second thing is that in terms of growth, we show you that in the year, we are pending the completion of a major acquisition in Australia, opening up a new market for growth, a new platform for growth that is of scale, right? So returns and growth, that's the message. If I want you to take away 2 messages, please, those will be the 2 messages. So then now let me then go through some of the details in 2025 performance. The turnover was $5.8 billion, adjusted EBITDA, $2 billion, underlying net profit, $1 billion. So easy to remember, 6-2-1, that's how I remember, the minus around numbers. Underlying earnings per share, $0.564. ROE, 18.2%, right? So as I mentioned just now, we proposed a final dividend of $0.16, bringing the total of the year to $0.25. This is compared to 2024, the $0.23 is a 9% increase. And again, like I say, we recognize the gap in terms of payout ratio and dividend yield from our peer group. And the idea, the intent is that over time, we are very comfortable and confident that we can close that gap. Then into the business segments under Gas and Related Services. Earnings of the group continued to be anchored by Gas and Related. Within the segment, the Singapore portfolio contributed $538 million in net profit or 77% of the GRS segment's net profit. A combination of long-term contracted portfolio as well as the incremental contribution from Senoko Energy provided the anchor for the earnings in 2025. During the year, in the last year, we secured 370 megawatts of long-term contracts, of which 150 megawatts was from Micron, which we announced in January this year. So we continue to execute this strategy to capture demand from data centers and high-tech manufacturing customers. As of February 2026, right now, close to 80% of Sembcorp's portfolio is contracted for 5 years and above, while the Senoko Energy's portfolio contracts are short term. So in 2026, just to go a bit further, 5% of the Sembcorp portfolio will have to be recontracted, while about 50% of Senoko Energy's portfolio must be recontracted. So we expect that, of course, lower blended spark spread for the new contracted volumes, right, so 50% of Senoko, 5% of the Sembcorp portfolio. So this impact will be partially offset by operational and financial synergies from both portfolios. Then in the fourth quarter of this year, 2026, the commissioning of the 600-megawatt hydrogen-ready power plant is expected to take place. It is highly efficient, and that will enhance our fuel and cost efficiency of the entire fleet. During the year 2025, we've also secured long-term PPA for Sembcorp Salalah Independent Water and Power Plant. This 10-year contract will commence from April 2027. The previous contract, which is currently running is a 15-year contract and will expire in April. So we secured another 10 years, and that will provide the stability coming in from the contribution of Oman. So the Middle East is entering a new phase of rising energy demand driven by industrial and digital hubs that require reliable, uninterrupted power. We have extensive experience operating critical power and water infrastructure in the region, and we will selectively pursue growth opportunities in the Middle East. Moving on to Renewables. During the year, we maintained the pace of growth in the selected geographies, adding 3.6 gigawatts of new capacity to our portfolio compared to the end of 2024. The earnings from the Renewables segment increased 5% year-on-year. This is despite the contribution from China renewables declining to $74 million from $89 million in 2024. In India, we have seen improved contribution from the existing fleets as well as from newly commissioned megawatts. During the year, the pipeline continues to grow in Renewables. We acquired 300 megawatts of solar capacity and secured 1.5 gigawatts of greenfield wins comprising hybrid projects, round-the-clock projects, firm and dispatchable renewable energy projects. We are actively exploring capital recycling options in India. In the Middle East, we successfully entered the wind market in Oman with 125-megawatt greenfield development project underpinned by a 20-year PPA. In Singapore, we were awarded solar projects totaling 236 megawatt peak, including 2 floating solar projects, reinforcing our position as the country's leading floating solar energy player. In Southeast Asia, we completed the acquisition of a 49-megawatt hydro project in Vietnam and a 280-megawatt solar and energy storage portfolio in Indonesia, which is currently under construction. So our total group renewable capacity is now 20.4 gigawatts, of which 5.4 gigawatts are secured either under construction or under advanced development. This 5.4 gigawatts of new capacity will progressively come online between '26 and 2030. Integrated Urban Solutions. The net profit for the IUS segment was stable. Earnings from our water segment was stable, while contribution from the other divisions were lower due to the absence of contribution from SembWaste or SembEnviro. Obviously, we closed the deal to divest SembWaste in, was it, February, March 2025. So it's been some time. So compared to 2024, the contribution from SembWaste is, of course, no longer. The Urban business continued to secure new industrial projects, bringing our total gross development land area to over 16,000 hectares. In Vietnam, we secured 4 new investment licenses, and this brings the total number of projects in Vietnam to 22. In Indonesia, we are developing the 500-hectare Kendal Industrial Park Phase 2. Remember that Phase 1 is almost -- is mature and most of the land has been sold. So now we're moving on to Phase 2 with 500 hectare. And we are also progressing on the development of the 100-hectare Tembesi Innovation District in Batam. We have also doubled our leasable gross floor area to 1.1 million square meters from 0.5 million square meters in 2024. So this -- and the occupancy rate of our operational industrial properties increased to 96% from 76% as of the end of 2024. So the -- in terms of both growth in square meters and also in terms of occupancy rate, the IUS team has done well to improve the performance. So this will -- particularly this area will further strengthen our recurring income coming up from IUS. So we will continue to review and sharpen our portfolio as we did through the sale of SembWaste and the divestment of municipal water business in China during the year. The long-term fundamentals of Sembcorp is very strong. We are in the right places. We have got secured cash flow through contracts with high-quality customers. And later, Eugene will show you the underlying cash flow coming from the Singapore portfolio. And then post completion, the Alinta portfolio is actually very, very robust. But in the near term, we are facing some headwinds, which shouldn't be new. These are the things that we experienced in 2024. But in 2025 -- or rather in 2025 and in 2026, we will want to flag that in front of you and give you a little bit more color what we would do about them. In Singapore, with the new supply coming on stream, we can naturally expect lower spark spreads. And since 2023, you know that we have been transforming our portfolio by leveraging our position as an integrated gas and power player as well as the largest renewable player in Singapore to secure long-term contracts. So what was previously a very merchant-heavy portfolio is now a largely contracted one. Of course, I'm speaking about the Sembcorp portfolio, not the Senoko Energy portfolio. Now Senoko Energy, we will go in there and try to add value as we did with our own portfolio. But the good thing is that we got it at a price at an investment level that is very comfortable, notwithstanding the merchant nature of the business, right? But as a portfolio, there are significant synergies in terms of financing, in terms of operations, in terms of how we run the plant. For instance, we can sign a hedging contract with Senoko and to provide insurance so that then we can aggressively contract our baseload high-efficiency units in the Sembcorp portfolio. So there are significant synergies. We bought Senoko at a very attractive valuation. And in combination, we are now the largest fleet of gas-fired power stations in Singapore. And together with our integrated gas portfolio as well as our position as the largest renewable player, we are very well positioned. We think that we are highly competitive and the diversified portfolio will position us to capture the growing AI demand in Singapore, particularly from data centers and high-tech manufacturing sectors. Let me go off script a little bit. When we say today, there's a lot of hype about AI, share price of some of these companies, tech companies are very high. We're not in that game. But by the time the AI demand translates into energy demand and it translates into a contract with Sembcorp, that is a solid demand because that demand for energy is coming from Micron, is coming from data centers that are hyperscalers with good credit profile, right? So we are sort of on the receiving end of it. I'm not saying that we are AI company now. But by the time we receive the demand translated from all the noise in the market, it is actually a very, very solid demand that we are capturing, right? So the important thing is that we are ready to capture it. And what we are saying here is that we are very well positioned to capture that demand. If I move on to China, of course, we will continue to face curtailment and tariff pressures alongside with the recent cancellation of value-added tax refunds for onshore wind projects. So these are developments that will affect the entire sector, not just us. Now we will remain very disciplined in managing our portfolio exposure in China in terms of thinking through project additions or even divestments. We will allow time for expansion of transmission network and also pursue contracts to try to stabilize earnings. Having said all that, to put things into perspective by now, if you look through the numbers, China is a relatively small contributor to the entire picture, right? And as I mentioned just now, notwithstanding the headwinds and the lower contribution and the reducing contribution in the last couple of years, we were able to plug the gap through other means. The last one is the U.K. The closure of our key customers' operations, particularly SABIC, is driven largely by weak economics, of course, in the industrial sector as well as in the U.K. in general. We are driving active cost management and repositioning the business to capture data center opportunities. We'll talk a little bit more about why we think we can capture that in the next slide. So I mentioned just now that we are -- we believe we are well positioned to support the region's accelerating AI-driven energy demand. So allow me to take a little bit of time to elaborate. Our gas and related services provides reliable baseload energy. We are well positioned to capture more demand from new data centers as well as the semiconductor sector. As we have shown you, we now supply almost 700 megawatts to the high-tech manufacturing sector, which includes also the recent 150-megawatt contract with Micron. Our renewable business delivers tailored green PPA solutions and long-term renewable energy supply for high-demand industries to meet their clean energy targets. Contracts secured include the supply of power-backed renewable energy certificates to day 1, 20-megawatt data centers under 10-year PPA. So data center, day 1, 20 megawatts through a 10-year contract. That sets the tone of what we can expect moving forward as more new data centers gets planted in the region and particularly in Singapore. We have also signed a 25-year renewable energy purchase agreement with Meta Platforms, and this is to build own and operate 150-megawatt floating solar farm in Kranji. And finally, under the IUS business, we provide low-carbon infrastructure to customers. And we are able to develop sustainable data center infrastructure with partners to supply land and power along with other green services. So within the Tembesi Innovation District in Batam, Indonesia, we can accommodate up to 100 megawatts of data center capacity. For those of you who are familiar, Batam, of course, is really seeing the connection of fiber coming in from companies such as Singtel. So it is not whether there will be data centers, it is when and of what size, right? And what we have there in Tembesi is ready 100 hectares of land ready to connect up to all this data center demand. And in the U.K., Wilton offers 138 hectares of ready land with immediate grid connection and supporting infrastructure. And that is naturally attractive for potential data center developments, right? Because as you know, for data centers, one of the biggest constraints is the power supply, right? And if you -- in a place like U.K. or for that matter, Singapore, Australia, places like this, to bring a new substation and high-voltage cable to supply a newly increased demand from data center that will take time. So the existing infrastructure, existing land will provide that opportunity. So together, in GRS, in renewables as well as in IUS, Sembcorp is actually a very attractive comprehensive energy and infrastructure partner for the AI players. By integrating reliable baseload, scalable renewables and sustainable urban solutions, we want to capture the region's growth while enabling our customers to accelerate their decarbonization and digital transformation ambitions. I shall not go through this in the script that Jin has given me. I think what I want to emphasize before I hand over to Eugene for the detailed numbers is, again, first, in terms of returns, you can -- we are expecting that we will be able to improve our dividend payout ratio and dividend yield steadily over the coming years. And this year, the $0.02 increase compared to 2024 is just an indication, and we have deliberately been quite prudent given that we are pending the closing of a major transaction in Australia, right? So to close the gap in terms of dividend yield and payout ratio compared to our peer group. So that is the first thing. And the underlying cash flow, I have explained where our balance sheet and cash flow positions when we discussed the Alinta acquisitions a month ago. But if we need to provide elaboration again, I'm happy to do that later. But suffice to say, we're very comfortable with our balance sheet position. We have very strong cash flows coming in. In fact, we struggle to find the type of growth opportunities like Alinta, where we can deploy that cash flow. So naturally, either you grow or you reward shareholders and return it to them in the form of dividends. So that's the first thing. And the second thing is that in terms of growth, we have immediately in front of us, Alinta, which we will hopefully complete sooner than later, but certainly, we expect within this year, if not the first half. And Alinta will provide, at least for the next few years, a significant scale market and a significant growth capabilities. We have a very strong management team now under to help us grow the entire energy portfolio. The least of it is a 10-gigawatt renewable pipeline that they have already identified, right? And in addition to a very energy-staffed, high demand growth Australia energy market. So certainly, in the next few years in terms of returns and in terms of growth, we are quite set up for that. So that's the picture that I want to leave with you before I hand over to Eugene. So Eugene, please. Chee Mun Cheng: Thank you, Kim Yin. So I'm glad, as Kim Yin has highly -- has pointed out earlier on, I think 2025 was a year in the half year earnings announcement that we are seeing some headwinds, but we were quite pleased that as we close 2025, we were still able to close the year strong, right, keeping to the $1 billion underlying net profit earnings relative to 2024. Now on this slide is basically the group level statistics, and I will talk through them. I will use one particular slide, which talks about the net profit of the different segments, right, to elaborate more in terms of the specific performance. Now if we look a headline from a turnover and EBITDA standpoint, we did see a commensurate 10% decline across both of them. I think from a -- we already know the key reasons for that, right? In general, in Singapore, we did see, in general, lower spark spreads for the renewed contracts that took place towards the latter part of Q2 that also carried through for the rest of the year. And also, in addition to that, we also saw a high-cost power import contract that continued to weigh us down. And also, we did see some compression of gas margins and also the absence of roughly $10 million to $15 million of a gas upstream curtailment gain that we had in 2024 that was not present in 2025. Now in addition to that, we also saw weaker price and customer demand across U.K. in the U.K. Wilton gas business. For 2025, we were hedged on contracted forward prices at the end of 2024, which was weaker relative to what was hedged for 2024 at the end of 2023. In addition, we also saw the petrochemical sector, which is a significant part of the current customer base in Wilton that has seen weakening. So in general, customer demand has been weak as well. So we did see a weaker demand from the U.K. Now of course, we also were impacted by the loss of contribution, right, from SembWaste after we have divested that in March of 2025. Now this is partially offset by new capacity that has been commissioned in renewables, right, across India, the Middle East as well as Southeast Asia, where we completed the acquisition of the 49 megawatts of hydro project in Vietnam. Of course, that is offset by some curtailment issues that take place -- that continue, particularly in the Guangxi province of our control portfolio. So the effect across the turnover and EBITDA. Now our share of results of associates and JV increased markedly by 57% or $180 million. Of course, this is driven by Senoko's full year contribution of 30% and an incremental 20% for half year. Now from a Senoko standpoint, this is -- this contribution is also offset by renewals of roughly 15% to 20% of its contracted portfolio in the latter half of 2025. Now just to give you a sense, in those rounds of contracting, we essentially saw the recontracted spark spreads come off quite markedly, right? We were contracting between $30 to $35 spark spread for that renewal and which essentially came off highs of $70 to $80, which were contracted more at the '23 period for them. Now of course, I will touch on later on because there continues to be a recontracting taking place, as Kim Yin highlighted through 2026. We also saw -- in the VSIP portfolio, we saw a higher contribution, right? Part of it is as a result of fair value gains for the completed RBF projects within the VSIP parks that we own. But this is offset by some land sales weakness in the Central Vietnam. The fair value contribution was $27 million, but I'll talk about it later on later. And it's also offset by continued China curtailment in the SDIC portfolio. All in all, adjusted EBITDA, it's about 2% lower compared to FY 2024, $2,016 million compared to $2,050 million. And our net profit before exceptional items and the DPN FX is $1,003 million relative to $1,014 million. Now we did realize a noncash FX loss for the deferred payment note in 2025 of $154 million, right? This is roughly about -- coming simply from a roughly 10% to 11% depreciation of the India rupees relative to strengthening Sing dollars when we compare the rate in which we mark-to-market or rather translate the DPN balance from Indian rupee to Sing dollars. The rate used in -- as of 31st December 2024 was -- compared to the rate used at the 31st December 2025, the rate declined roughly 10% to 11%. Of course, this does not indicate any cash flow impact, but it's really a mark-to-market. Now as highlighted previously, hedging the balance of the deferred payment note, it's dependent on 2 factors. Number one, the visibility of fixed cash flows. Now the deferred payment note is largely on an availability of cash sweep model, right? And as a result, putting in place hard forward cash flow hedges effectively from an accounting standpoint will not result in an effective hedge, right? I think the second element also throughout 2025, when we look at what is the forward cost of hedging, the forward cash flow cost of hedging is -- will result in a worse outcome than the mark-to-market. And if we do put on those hedges, there will be real cash outflows. So as a result of that, we did not put in any form of forward contracts as a counterbalance against the rupee swings here. Nevertheless, $154 million is really a onetime mark-to-market. It does not indicate any cash flow impact in the current cash flow generation capabilities of the portfolio. We have an exceptional items gain of $135 million. So that comes largely from the sale of SembWaste. Also included in the sale of SembWaste in this -- sorry, exceptional items was a positive goodwill or bargain purchase option gain as a result of the second tranche completion of the Senoko transaction. This is offset by roughly $28 million to $30 million of some asset impairments that we took across the Southeast Asia, where we made the broader decision that we will not continue with the rooftop solar business, which generally is a very small part of Southeast Asia currently. Now -- so all that results in a net profit from continuing operations, taking into account the DPN FX loss and the exceptional items of $984 million, right, a lot of which is driven by the DPN FX impact. Now our ROE from a more underlying basis, right, before exceptional items and our DPN FX loss, is 18.2% relative to 20% last year. Now there are some capital drawdowns that were not -- that took place in 2025, particularly in relation to CCP4 and also continued capital deployment for our pipeline and also certain projects that came online, but were not contributing on a full year. I will illustrate what the effects are those from a normalized basis on a slide later. Now, I won't touch so much on the broad group turnover because the reasons are largely about -- what I've highlighted earlier on, but I want to move on to the next slide, which illustrates the group net profit by segment. Now for the Gas and Related Services, we turned in $701 million, which is a 4% decline relative to $728 in FY 2024. Now as Kim Yin has shared in the earlier slide, the effects can be broken largely into 2, right? So for the Singapore Gas and Related Services portfolio, FY 2025 turned in $538 million relative to $546 million in FY 2024. These numbers are there. It is just in Kim Yin's earlier slides, okay? So that is approximately an $8 million decline. Now there are basically 2 effects here, right? One contribution from Senoko and the other one, which is the continued margin pressures that we see in our Singapore-only portfolio. I think throughout 2025, as highlighted in the first half results, we did see roughly a 10% of our portfolio recontracting, 90 to 100 megawatts from the Sembcorp portfolio that took place at that point in time. We did see spark spreads coming off down to the $30 range, which was coming down from the high of the $80 to $100 range that was previously contracted. So that carried through the full year and the impact from the declining spark spread was about $60 million to $70 million on a full year basis. Now we also saw the high-cost power import contract that we signed and disclosed at the end of December 2024. The run rate impact in the first half carried through for the full year as well. So in the first half, we highlighted it was about $20 million or so. So that continued to weigh down on the portfolio. We also saw some declining gas margins. And also, in addition to that, there was a one-off curtailment compensation gain in 2024, about $15 million to $20 million that wasn't there in 2025. So these are the impacts on the ex Senoko portfolio. I think from the Senoko compensation, largely across the Gas and Related Services adjusted EBITDA disclosure, you will be able to largely look at that number. But again, as highlighted earlier on, we do have to bear in mind that in Senoko's 2025 numbers, particularly in the second half, it has been impacted by roughly 20% of the portfolio that has been recontracted. Now they have been recontracted at $30 to $35 spark spreads as well, right? And that has come off similar high levels of about $70 to $80 spark spread that was contracted before. And as Kim Yin has highlighted in the pie chart earlier on, we expect to see close to 50%, roughly 47% of the Senoko portfolio that we will be recontracting from the second half onwards. So all in all, we do have -- we believe based on our visibility right now, those recontracting levels will largely be at a $30 to $35 level as well, coming off similar highs as highlighted. So that's the visibility that we have on the Senoko earnings. Now on the rest of the world earnings, we turned in $163 million, right, relative to $182 million for the Gas and Related Services segment. So that's about $20 million -- $19 million to $20 million decline. Now the rest of the world gas earnings were historically largely very stable. But I think this year, we saw a $20 million decline largely as a result of U.K., right? Now as highlighted earlier on, U.K. did see 2 effects come through. Number one, basically lower power prices, right? And secondly, lower customer demand as well, particularly the petrochemical customers in the U.K. One of them, SABIC did not return, right, for its olefins plant. And we do expect the weak customer demand potentially to carry through into 2026. So that's for the Gas and Related Services segment. Now for the Renewables segment, from a net profit standpoint, right, we turned in $192 million, which is 5% higher than $183 million, which we closed FY 2024 with. Now again, earlier on, we have broken out this segment into China as well as others. Let's talk a little bit about China. So for China itself in FY 2025, we turned in a $74 million net profit versus $89 million in 2024. So it's a $15 million decline. So there are 2 key effects that are the change in net income. So firstly, it is continued curtailment that affect the China portfolio, particularly in the northwestern side of the portfolio. I mean, to give you a sense on the average China curtailment that we have across our portfolio, in FY 2025, our average curtailment for the wind portion of the China portfolio was 14% versus 8% in 2024. So it's a very significant increase in the curtailment. And for the solar portfolio, it was 16% average of curtailment in 2025 relative to 9% in 2024. So also commensurate increase in the level of curtailment. So the impact of curtailment on the China portfolio in FY 2025 was approximately $30 million in net income, okay? But we did see a capacity increase in 2025, right, by -- from project pipelines that were coming through. Gross capacity, we added about 900 megawatts, right? So the increase -- the capacity increase plus also some stronger generation that we see, right, in our Hainan portfolio on the wind generation did result in a $15 million positive net income on a year-on-year basis. So the net effect of both, right, curtailment, negative 30, but we did have some 900 megawatts of capacity increase and stronger wind generation in the Hainan wind portfolio that resulted in a net $15 million downside in our China renewables earnings. Now in the others portfolio, which comprises of India, Middle East as well as Southeast Asia, we saw -- in 2025, we did $118 million relative to $94 million in FY 2024. That's a $24 million increase. This is largely driven by 2 things, right? We did see a new capacity commissioning across India, Middle East. And also we completed a couple of acquisitions, right? One, which is the 300-megawatt renewal portfolio and also the 49 megawatts Vietnam hydro portfolio, those were later in the year and did not contribute on a full year basis. So all in all, that contributed to that increase. I think in addition, also, we did see a slightly better wind resource performance across India as well. So that contributed to the renewables portfolio outside of China that saw a $24 million increase. So if we move to the Integrated Urban Solutions, right, it is flattish across both from 2025 compared to 2024, $178 million compared to $173 million. But when we break across the 3 segments in Kim Yin's earlier slide, right, the urban business turned in $114 million relative to $101 million in 2026. So it's about a $13 million increase, okay? So the increase was really driven by about $27 million of fair value gains as a result of the ready-built factories and warehouses that are being commissioned. But this is offset by some land sale weakness in Central Vietnam. And as you will recall, one of the areas that we have been very vigilant since the Liberation day tariffs were announced was Central Vietnam, where the manufacturing activities of our customers tend to be of lower value-add variety, right? And we all know that Central Vietnam in Vietnam itself, basically, from a labor perspective, they are of a lower level. So we did see a weakness in that segment as well. But across the northern as well as the southern part of Vietnam, we continue to see land sales to be strong, but -- and also across Indonesia. I think Kim Yin brought up an important point. The coming through of the ready-built factories and ready-built warehouses did also increase our recurring income contribution in the urban business. Now in 2025, our recurring income contribution across infrastructure charges in the parks as well as the ready-built factories is approximately 20%, right, net profit contribution from recurring income. This has increased markedly compared to about 10% to 12%, which 3 to 4 years ago. So the coming through of the ready-built factories has improved the recurring income quality within the urban portfolio. As highlighted also by Kim Yin, going into '26 and '27 going into '28, we will have a significant amount of ready-built factory and ready-built warehouses to be constructed, right? And once that is done, we would see even stronger recurring income contribution to urban. Now in the water business, we turned in $52 million relative to $50 million in '26, so fairly stable, right? We did see cost optimization efforts in 2025 that turned into fruition, approximately $2 million of cost optimization gains that hopefully would stay as run rate going forward. But one point to note also in 2025, we did receive a one-off $10 million receivable settlement for a past receivable in relation to one of our not so well performing municipal asset, Qinzhou. In 2024, we also had similar levels of one-off gains, right? But that was across Fuzhou and another water plant compensation collection recoveries of past receivables as well as certain provision reversals. The last element to talk about in IUS is really our waste and waste to energy business. We did see a decline of $10 million, and this is largely contributed from the divestment of the SembWaste business, which took place in March of 2025. Now if we move on further down the line into the Decarbonization Solutions segment. So while we turned in a negative $23 million relative to negative $20 million in FY 2024, one of the key elements of that $3 million increase in terms of our losses is a result of a write-off of -- a write-down of our RECs inventory value in GoNetZero. I think in 2025, we have seen a marked decline in the value of the RECs. So we took off a meaningful write-off and that contributed to the increase in the losses. Now in Other Businesses, we turned in $45 million relative to $38 million in FY 2024. Now Other Businesses, it largely comprises our Sembcorp specialized construction as well as the maint business. The maint business continues to contribute $1 million to $2 million of net profit. So it remains flat. But our Sembcorp Construction business continued to accelerate in net income realization simply because of a growing order book. Order book for the Sembcorp Construction business is in excess of $1 billion currently. So going further down the line from a corporate cost perspective. Now for interest cost, we were able to optimize that by about $10 million, largely -- and this is a corporate-level interest cost. Now we were able to do that because we did take efforts to optimize our cash usage to minimize negative carry. I think in addition to that, also, we benefited from refinancing activities that were at a lower interest cost. We were also quite active in looking to really rework some of our commitment fees, for example, with our banking partners, and this resulted in a reduction in our interest cost. Now our other corporate costs reduced by $25 million. So to give a greater clarity of that, $11 million of that on a year-on-year basis came as a result of past tax provision reversals. That is in relation to a withholding tax provision that we made against a China dividend that was paid out, right? So the withholding tax provisions has gone past time bat, right -- the time bar, and hence, it was okay for us to release the provisions. But $14 million of that $25 million came through discretionary cost savings. So we were managing costs across professional fees, across travel, across manpower costs throughout the year, and that allows us to realize the cost. Now going forward, because these are cost management efforts against discretionary costs, we will continue those efforts in 2026, but we may not be able to realize the same magnitude of cost savings, but we will continue to be driving cost savings at the corporate level in those areas. Now for the DPN income, that has come off $25 million, $159 million, down to $119 million. Now I think that simply is a result of continued paydown of the debt balance in Indian rupee terms of the deferred payment note. I think one of the key things to highlight is the cash flows as well as the earnings performance of the underlying asset, which is SEIL, the coal plant continues to be very strong. right? People, I may not have highlighted this enough. But from -- since the transaction incepted in January 2023, right, until today, total cash collected across both income as well as principal paydown in Sing dollar terms is in excess of $1 billion, right, it's about $1.05 billion, right? So looking into 2026, we do expect continued similar strong cash flows return and paydown of the deferred payment note income as a result of SEIL's underlying performance. But of course, that will also mean that our DPN income will continue to decline as we see a faster recovery of the principal. So I think essentially, that largely highlights the differential performance across all the segments. And the DPN FX gain loss and the exceptional items I've touched on earlier on, so I won't go into more detail. If you move on to the next slide. This is basically a bridge that highlights what I was talking about, so I won't talk through this slide again. Now in terms of the group ROE, as highlighted earlier on, we did see a decline in the group ROE. Gas and Related Services was 32.1% in FY 2024, down to 26.4%. Now in the ROEs itself, there are 2 effects. I think firstly, it is the declining spreads as we are talking about. But the second element also is we are incurring CapEx and drawing on capital, particularly for CCP4, right? So 2025 was the year where we incurred the larger amount of CapEx coming into 2026, where we expect CCP4 commissioning to take place towards the end of the year. So normalizing for that, the ROEs would have been better. Now for Renewables, it's 7.4% relative to 8%. Two effects. One of the elements is we continue to see curtailment elements weigh down the China portfolio. Also, we have projects that are commissioned that have not contributed on a full year. I would show the normalization of that effect on the next slide. And the Integrated Urban Solutions continue to be at 8.4%. Now if we move to the next slide, now if we look at the ROEs, as I highlighted, we do want to call out what are the capital draw that has potentially weighed down the ROE versus what it would have been on a normalized basis across the renewables as well as the group. For Renewables, we did have a 0.7% that comes from a combination of projects that were commissioned in 2025 that did not contribute on a full year basis, right? So if those projects contributed on a full year basis, it would have been an additional 0.7%. Now we also have certain projects in the pipeline that are under development and have drawn down on CapEx, right, and have not COD-ed yet. So the impact of that is about -- is another 0.2% on ROE. So the normalized Renewables ROE would have been about 8.3%. From a group perspective, on a similar basis, the contribution from projects that were commissioned in 2025 that if they contributed on a full year basis, that would have been a 0.3% impact and projects that are under development would have been 1.8%. Now that looks a lot larger relative to Renewables because the biggest part of that is the CapEx that is drawn for CCP4 construction, which is expected to be commissioned in the later part of the year. So if we move on to the next slide, this is to highlight the impact, the translation impact of the strong Sing dollar across the different currencies had on our earnings. As you will recall, I highlighted this in the first half because from the first half, we have seen an almost systemic strengthening of the Sing dollar against all our key functional currency exposure. Now just for us to note, this translation impact is simply for each of our overseas operations, the accounts are kept in local functional currencies. And when we translate back into Sing dollars, we would have to use an average translation rate and that translation rate have a decline, right? Operationally, in the respective markets, certainly, it is not an indication of the operational earning capabilities in those markets. So cumulatively, across 2025 compared to 2024, right, the estimated impact of the translation impact on our earnings has been about $32 million. So it's fairly significant, right, almost 3% to 3.2% of underlying earnings. So this continued heightened currency volatility, we will monitor the situation. But given that this is a translation impact, traditional hedging activities may not be that effective. Now if we move on to the next slide, this is really our CapEx and equity investments for FY 2025. In short, total investments that we have made in ' 25 total about $1.2 billion, right, relative to close to $2 billion in 2024. And if we move to the next slide, our cash flow generation continues to be strong, right? In 2025, our cash flow -- operational cash flows is about $1.2 billion, slightly down from $1.4 billion the year before. Now taking into account cash flows from essentially interest income as well as dividends and the DPN receipts and our free cash flow before deployment for expansion CapEx as well as equity investments is about $2.1 billion relative to $1.8 billion last year. Now of course, in the $2.1 billion, we have the benefit of $383 million, which is the net cash proceeds realized from the SembWaste sale, okay? Now -- but even if you take that out from the free cash flow of $2.1 billion, our free cash flow available for debt service as well as growth on an annual basis still remains approximately $1.7 billion, which is similar to FY '24 the year before. So highlighting our confidence that we can service any outlook in relation to our dividends going forward. So in terms of our group borrowings, from a gross debt perspective, we saw roughly about $200 million plus, $300 million increase that result as a continued drawdown of the completion of our pipeline and also CCP4. But also because of our overall net -- stronger net cash flow generation, our net debt remains fairly similar to last year at roughly $7.8 billion with our cash and cash equivalents increasing from $871 million to $1.1 billion. Our key leverage metric, which we always focus on our net debt to adjusted EBITDA, right, stands at 3.9x, which is not very different from where we were 1 year ago. Moving on to the next slide. From a group debt profile perspective, we improved it slightly this year, right, in some of our refinancing activities where we were able to benefit from lower base rates, tighter margins and also an extension in terms of tenor. We were able to refinance some of our, for example, 5- to 7-year bank revolving credit facilities towards the 8-year mark. And also, we were able to issue a 20.5-year bond at 3.55% in October of last year. So all this resulted in our weighted average cost of debt declining slightly from 4.6% in 2024 to 4.5% in 2025, while being able to extend our weighted average debt maturity to 5.2 years. In terms of our fixed versus floating profile, 76% of our portfolio remains fixed, which means that on a floating perspective, every 1% change in the base rate will be about $15 million to $16 million impact. Of course, we are mindful that given the current interest rate environment, it's on average, more towards a downward bias. So we will also be monitoring our fixed and floating rate mix, taking that into account as we go through the year. So from our available liquidity, we remain strong, right? The key thing that we always focus on in what is our on-demand liquidity, so which is really a combination of our cash and cash equivalents and our unutilized committed facilities. So as of today, our cash and cash equivalents stands at $1.1 billion and our unutilized committed facilities is at $2.5 billion. So total about $3.6 billion of on-demand liquidity that will allow us to take advantage of any growth opportunities that come through. So the next slide is just to highlight the outlook, right? Essentially, we have delivered resilient financial results, right, reflecting the strength of our diversified portfolio and cost management, right? Now we do have long-term contracts across our portfolio and increasing the proposed dividend in 2025 reflects our belief in the strength of our underlying earnings and also cash flow visibility. Now when we go through the different segments, I think in 2026, as highlighted before, right, the Gas and Related Services segment is still expected to be affected by a gliding down of our spark spreads, right, and margins because we do, as guided before, roughly 3% to 5% of our own portfolio would be subjected to some recontracting in 2026 and approximately 47% or 50%, right, approximately half of our -- of Senoko's portfolio will be recontracted. So coming into 2026, you will -- especially for Senoko, you would expect to see a full year impact of the recontracting that took place in the second half of 2026, roughly 20% of the portfolio and 50% of Senoko Energy's portfolio that will be recontracted starting from the second -- from the middle of the year onwards. So that is something to take note. Now of course, we would expect that effect to be partially offset by operational and financial synergies across the 2 portfolios and also the -- when the H-Class is commissioned, we do expect to see a greater fuel and operational cost efficiency as a result of running that hard against the portfolio first. And this highly competitive portfolio will position us well to continue to capture incremental contracts because of the growing power demand driven by data centers and high-tech manufacturing sectors as we have demonstrated since 2023, having a leading track record in being able to do that consistently again and again. For our renewables portfolio, we do expect our platforms across India... Jin Xin: Excuse me. Please come back on the... Chee Mun Cheng: Wow, okay. I didn't know I hope I didn't say something that was that nerve shattering. But what I was about -- what I meant to say was that in renewables, our expanding platforms across India, Middle East and Singapore will continue to grow, right? That's a good thing. And with the new capacity progressively coming in 2026 across to 2030. Now having said that, for China, we continue to be very watchful. We do expect curtailment to persist, right? And there's one other regulatory development that we want to highlight. Now China has come up with a policy where they said that value-added tax refunds for onshore power wind projects, they're going to stop it, right? So that applies retroactively as well to projects that have already been commissioned. So that policy change will see a $12 million impact -- further impact on the China portfolio in 2026. Now for the IUS business, the urban business, I think one point to highlight is that we are going into a phase in 2026 and going into 2027, right, where we will be developing close to 800,000 square meters of ready-built factories. So of course, these ready-built factories across '26 and '27, they are not -- will not be generating incremental recurring income, but we would expect to see some pre-operating as well as a financing cost for them. And -- but once they are TOP towards the end of 2027 and going into 2028, there will be a meaningful increase in contribution of recurring income to the urban portfolio. So all of this put us in a good state to navigate our near-term headwinds. And we expect the Alinta acquisition to be completed in the first half of 2026. And that acquisition -- completion of the acquisition will further strengthen our earnings base, our recurring cash flow and our ability to sustain and potentially grow our dividends over time, okay? So a couple more developments to note. When we complete Alinta, we have already highlighted this in the circular to shareholders as well as in our briefings, right, we do expect a one-off transaction cost of close to AUD 208 million. This will be called out in exceptional items, right? The bulk of that -- more than 50% of the $208 million are really in relation to stamp duties for the ownership transfer, okay? And in U.K., we have a 4-week maintenance at Wilton 10, right, towards the middle of 2026. It will not be a very material earnings impact, $5 million to $10 million, okay? So that ends my presentation, and we can open up for Q&A. Jin Xin: Thank you, Kim Yin and Eugene. We'll now proceed to the Q&A session. For those in the room, you can raise your hand and a mic will be you. Please state your name and the organization that you represent. [Operator Instructions] Yes, we'll start with those on the floor, maybe Zhiwei first. Zhiwei Foo: Zhiwei From Macquarie. I have -- let's start with 2 questions first. First, China renewables, right? It's been 3 years and the curtailment issue has not improved. I think about a year ago, you said that the curtailment issue would maybe hit about 1% of your earnings, but it seems like if I didn't hear correct -- if I heard correctly, about $30 million delta for this year. So it's coming up to almost 3%. So how are you thinking about the entire business if things do not continue to deteriorate, right? And what are sort of your thinking around how to mitigate this risk further? Then from your point of view, where do you see us sitting in this entire down cycle for China renewables? Are we at the bottom or near the bottom? And can we -- roughly just your sense, when do you things will -- see things will improve? Then the second question is on the Gas and Related Services for Singapore. You mentioned a decline in your gas margin. Can you run us through a bit more color on what changed, right? Because this is a pretty significant contributor to your bottom line profit. How big was the year-on-year decline in the gas trading business? And how do you see the margins change going forward? Because if I remember correctly, this used to be a high single-digit business and -- gross margin business and then you moved it into a mid-teens? And where do you see it go now? Kim Yin Wong: Can I ask Alex to deal with the China question? Renewable East CEO and President is here. Alex Tan: Can you hear me? Thanks, Zhiwei for the question. I cannot say for sure whether China has reached the bottom in terms of the curtailment. But let me offer some insights directionally where the government is going. So what's really caused the curtailment, as we all know, is the surge in renewable installed capacity, right, a lot of new projects. So just to give people some perspective, when we first started the journey in 2021, the renewable solar and wind, onshore wind was growing roughly about 120 gigawatts a year. 2021, 2022 was roughly about 120 gigawatts. And what happened was in 2023, we saw a surge in the renewable capacity to roughly about 300. And just to give you some perspective, 300 gigawatts a year, 2023, 2024, right? And in 2025, because of a change in policy, everybody was rushing to get their projects online by the middle of 2025 to make sure that they enjoy the existing policies. And because of that, there was a mad rush and the capacity actually surged and increased to roughly about 400 gigawatts a year, just to give you some perspective. So what's going to happen is this? I think we have to look at this from 3 perspectives. One is demand, second supply and then what is the government doing in terms of making the grid more resilient so that the grid is able to absorb all that additional capacity. So in terms of demand, as we all know, China continues to have -- see a very strong power demand, roughly about 5% to 6% a year, driven by electrification, EVs and AI, right? So that's one. Demand continues to be very strong. On the supply side, there is a new government policy that states the -- by 2035, renewables is going to get to 3,600 gigawatts, which basically translates into every year from now until 2035, renewables will slow down to roughly about 180 gigawatts a year. which I think will give the industry a bit of relief, right, from the 300 to 400 gigawatts a year of growth today to roughly about 180 gigawatts. So 180 gigawatts is still a big number. But in -- if you look at it, China has a big base right now. So I think 180 gigawatts is not a bad number in terms of where the government is taking this directionally. Then the third is what is the government doing in terms of making the grid infrastructure more resilient, which is essentially one of the issues to move the electrons from the west to the east. And the government is going to pour in RMB 4 trillion, which is roughly about SGD 700 billion over the next 5 years. So that's a lot of money, right, to grow the -- and that investment would include things like transmission lines, which is important because they got to move the electrons from the west to the east, which is essentially one of the biggest problems that China is facing today. The second thing is they will also put money in transformers and all kinds of nuts and bolts to make the grid infrastructure more resilient. And the last but not least is there is also another new -- we are catching up, right? And there's also another new policy in November 2025 that encourages data centers to be built in the northwest, right? So I think that's also important because that additional power demand in the west is going to absorb the additional power supply. And so again, just to get everybody on the same page, demand is going to continue to be strong, 5% to 6%, driven by electrification and AI. Supply will slow down based on new policy to roughly about 180 gigawatts a year until 2035. And then the third is the government is going to pour in roughly about SGD 700 billion on the grid infrastructure. And the last one is the latest news in November, which is an encouragement of data centers to be built in the west. Kim Yin Wong: So Zhiwei, the -- to first put into perspective, of course, the $30 million, a good part of it, Eugene was just telling me between 1/4 to 1/3 is actually new. It's coming from Guangxi. And that one is because they've got a lot of hydro heavy rainfall. So that might not repeat, right? Then the rest of it is coming from the northwest largely, yes. So the northwest, that's the part that subject to the transmission, subject to the new demand coming, anybody's guess, right? So if you ask me whether it has hit the bottom, maybe. How much longer it will last? I -- for our planning purposes, we are saying that for 2026, we are not counting on it to flip around, right? So hopefully, for the near term, that puts additional color to it. Now if you take another step back, for us, it has gotten to this point where it is earlier, China portfolio is supposed to be contributing with $120 million, $130 million just from the renewables. Now it's at $80. It could get worse. It's always possible, but it is quite beaten down already. So for us, we are planning -- we are not counting on it recovering in the coming year, right? So we'll have to see. Then in the meantime, your other part of the question, what are we doing, right? Of course, cut costs, we are looking at other forms of managing exposure. For instance, growth has also been very, very calibrated, disciplined, selective. Those are the words. You don't see the type of growth anymore coming. We are also thinking about whether or not we could manage exposure through perhaps bringing partners, looking at the capital structure, that type of thing, right? But I'm not promising anything. We're saying that we -- with the outlook, as I described just now, we're not expecting anything to change for at least another 12, 18, 24 months, then you should be doing things in the meantime, right? So that's what I want to suggest to you without having anything concrete to show you yet, but the plowing with that type of outlook, naturally, the management action must come in. So that's on the renewables. The gas, maybe Eugene... Chee Mun Cheng: I think the gas margin, Zhiwei, very astute of you to point that out. I think for 2025, when we look across the gas, number one, we have the onetime upstream curtailment gain. That was about $10 million to $15 million. But outside of that, from a gas margin standpoint, we probably saw a $25 million to $30 million downside impact, okay? Now so what has changed? I think the periods where you saw high double digits, actually higher than double digits gas margins, if you are looking at the Sing dollar financials, which I know you always do, right? Thank you for spending the money to do that. Then those periods, obviously, are periods where there is volatility in the index, right? So when there's a volatility in the index, it gives our gas, I don't want to use the word trading, but our gas business, the opportunity to -- I think arbitrage is the right word to basically look at opportunities to diverse gas and optimize gas cargo, right, and to have a larger amount of gas optimization earnings on top of what is contracted. Now of course, when you see that going through 2024, 2024 is still fairly volatile. And then when you come back into 2025, we will -- we are essentially seeing more stability between the JKM index and also across the Brent index of which our long-term prices were. So because of there is a lack of volatility, so our ability to drive the same level of gas optimization or arbitrage gains, right, is less, right? Now the good news is that I think across 2025, we have been monitoring the gas margins in the first half, second half, it has been stable. So going forward, we don't expect the gas margins to be similarly impacted because it is trending more towards our base contracted level of gas margins. And we are not at single-digit gas margins. We are actually still at the low double-digit gas margins. Yes. Kim Yin Wong: Is Zhiwei asking about spot spread in the power side or he is talking about gas? Chee Mun Cheng: You're talking about -- exactly what I'm saying, right? Zhiwei Foo: Yes. Just one follow-up. Coming back to China Renewables, right? If your curtailment stays at this low teens number for the next 1, 2 years, and let's say, things do not deteriorate further, do I have to worry about impairment of the China renewable asset base? If not, at what point do I start to sit up and pay attention? Kim Yin Wong: Okay. So I think in relation to our China asset base, we have -- always do very detailed impairment analysis, right? I think where we stand right now, right, we do not see the need for any impairment because from a policy standpoint, right, the -- and Alex, you can help me to elaborate more, that the Chinese government have made a very strong stance that they will build the northwest interconnection lines across to the eastern side of things. Now the exposure for us for the very high curtailment, like I pointed out earlier on, it is really across the SDIC portfolio, okay, because that has a significant exposure to the northwestern side of things and then also some of our Guangxi assets. Now of course, with that, we are confident that within a certain level of visibility, the curtailment situation will abate as these interconnector lines are built out. Then the question is really about how long. Of course, we do stress test the outcome of our assets. So the curtailment situation will have to persist for rather long. And I'm talking about many, many, many years kind of long, right, before you even worry about a curtailment. More specifically on the SDIC portfolio, if you recall, our -- that is essentially one of our higher returning portfolio, right, where we entered in at 1.8 gigawatts. Organically, it grew to more than double in terms of capacity. So when we look at our cost of investment for the SDIC portfolio, based on our analysis right now, it is very unlikely that it will hit any form of impairment simply because our cost of investment is low. So just to isolate, those are the 2 key curtailment. I don't know, Alex, do you want -- do you highlighted on the lines? Okay. Gentleman in front. Jin Xin: Nikhil, please. Nikhil Bhandari: This is Nikhil Bhandari from Goldman Sachs. So just sticking to renewables, but shifting from China to India renewable. When we look at the overall over 5 gigawatt under construction or secured portfolio, India is a big chunk of that. It appears that there isn't a lot of completion of projects happening in calendar 2026. It seems to be more heavy on '27, '28, 2030. Out of all of that portfolio in India, what percentage has already the PPAs signed? What percentage already has the exit connectivity already secured, if you can help provide some color on that? That's the first question. Kim Yin Wong: Okay. Renewable President and CEO, West. Use this, use this. Yes. Vipul is in the best position to answer this. Vipul Tuli: Thanks for the question. I think maybe to start with the second part of your question first. Of the roughly 2.5 gigs of PPAs that are signed -- I'm sorry, of 2.5 gigs of pipeline, about half have PPAs signed, about 1.2 and about half are at the LOA stage where we are discussing with the various REIAs and the DISCOMs. As you might be aware, I'm sure, a few months ago, there was a push by the central government to try and clear that backlog. That has had the effect because the PPAs -- all the REIAs then went around and said, okay, let's take a closer look at each of these LOAs. There are active discussions going on typically between generators like us, REIAs like SECI or SJVN and the DISCOMs who would be the off-takers. Fortunately, the -- with declines in equipment prices since the time that these PPAs were entered into, most generators, including us, are in a position to offer more tailored offerings within the same tariff range to the DISCOMs. So those discussions are proceeding. And of course, we'll -- as and when we sign the PPAs, we'll make the necessary disclosures. So about half and half on the first one. Your observation on the pipeline is absolutely right. The way we look at it is that there is -- there will likely be -- some of our projects that are at advanced stage of construction will get completed in 2026. The bulk of the pipeline will indeed be '27, '28 thereafter, largely constrained by grid capacity availability or connectivity availability. But these estimates that we do are after we take into account whatever grid delays and happy to have a deeper discussion on that. But what we are seeing is considerable all of government effort across the central government, the state governments, the local governments to try and debottleneck the grids. In fact, if you look at the Electricity Act amendments that are now proposed, which are widely circulated in the public domain, special powers to governments to acquire land and get grid done have also been included there. But I think coming back to the effect on us, the way we look at it is it actually gives us a little bit of that respite to make sure that land acquisition, which is usually one of the bottlenecks for any renewable power development, we actually get much more time to do our land acquisition and be very true to our intent, which is to have 100% land acquired before we break ground. And so that is now what we are seeing in the projects that are coming forward. So actually, what ends up happening is, say, for a solar project, even a large one, let's say, 400, 500 megawatts, the actual construction time is rarely more than a year or at most 1.5 years, whereas the total elapse time may be 3 years, maybe even sometimes a bit more. So actually, what we get is good enough time to get the land done, get the engineering done perfectly, get the EPC done perfectly and then move on from there. Nikhil Bhandari: Is it fair to say the projects we have until 2028 commissioning estimate has most of the land and the connectivity already, secured or... Vipul Tuli: Connectivity is 100% secured. We don't -- in fact, we have connectivity available for which we are yet to conclude PPAs. So that part is clear. Land, very, very advanced. So we are now, I would say, very vast majority of land already done, and the rest is -- will be done before we break ground. Nikhil Bhandari: Another question just sticking to India renewable business. We heard a lot of news flow around some renewable power curtailment in India last year, especially concentrated in Rajasthan, Gujarat area. And we also started hearing some of the newer PPAs being signed have some curtailment clauses in it up to 100 or 170 hours in one of the PPA, which is in the public domain signed. I'm asking this question because coincidentally, maybe, India has also hit nearly 50% of the power capacity mix as renewables and hydro, which China hit that number probably 3 to 4 years ago, and there was a beginning of a curtailment phase in China. How do we think about the risk of grid absorption, curtailment risk in India given the system is so heavy now on renewable and some of the weather-related power generation? Vipul Tuli: No, thanks. That's also a very germane issue. For us in India, it works a little bit differently. The curtailment that has been talked about in the press and is part of a lot of concern for many people is basically when projects connect to the grid on a temporary connectivity. We call it TGNA. When you have temporary connectivity, then the grid's obligation is to give these projects connectivity on a best effort basis. But then there -- all bets are off as far as curtailment is concerned. So the moment there is any sort of congestion, those get back down. Our projects are all on permanent connectivity. The moment you have permanent connectivity, any commercial backdown due to congestion or due to commercial reasons like demand is recoverable by the generator. The only reason that grid curtailment can happen as per the PPAs, once you have permanent connectivity is when there is a specific grid security issue, which typically will not occur for more than a very, very short period, typically a few hours here or an hour there. So the numbers that are being floated around in the press have nothing to do with our portfolio. If I look at our Rajasthan portfolio, I don't think we've actually disclosed these numbers, but I think it's fair to say our curtailment on that, including what we -- including what we will recover back, part of which we'll recover back is below 1% at the moment. And that, too, a large part will come back. Nikhil Bhandari: Just combining previous China-related questions and the questions related to India. Given China, we still expect some more deceleration in the earnings this year and given there are more limited new project completions in calendar '26, should we assume any growth in the renewable business earnings in calendar '26? And also, while we don't assess any impairment risk right now, but can we quantify like what percentage of our receivables, for example, are related to the China renewable business? Or any quantification, if you can help us provide on the China exposure in the overall balance sheet? Kim Yin Wong: I will ask Eugene to address that. But before we move off the topic of the development pipeline in India, hopefully, what Vipul has described to you is that when we come out and tell you that there's X gigawatts that's under development, relative to maybe what other people might be talking about as pipeline, the quality and the certainty that is behind it, you have to form your own judgment from what Vipul is telling you, right? So I think Nikhil's question is actually very straightforward. He's saying that, look, you tell me this pipeline, how much is it going to come? When is it really going to come later, are you going to say that look, there's no connectivity, there's no land, there's no PPA and so on. So without giving you a straight number, we are giving you the conditions under which we are the way we develop projects and then the risk that we're taking or not taking. So hopefully, I'd like to think that we are actually relatively -- when we say there's a pipeline, our pipeline is relatively of a much higher quality in terms of certainty and deliverable, right? So on the -- is there any guidance Nikhil was asking for the renewables earnings growth? Chee Mun Cheng: I think going into 2026, renewables as a portfolio, we think from an earnings perspective, it will likely be flattish to slight upside, okay? Now because there will have been better growth, but I think the reality is that we have hit with another SGD 12 million downside because of the VAT policy change, which came through, unfortunately, towards the later part of Q4 of last year. So as a result, we think renewables flattish to slightly positive. I think for China, I just want to characterize the issue. I think from a renewables book value standpoint, it stands roughly from a Sing dollars perspective, SGD 1.8 billion to SGD 2 billion, right, of invested capital from an equity standpoint. Now from a receivables, right, the receivables that are exposed, which is largely in our Hyme portfolio that has not really cleared -- that has not been given a green quote in the subsidy audit is around SGD 350 million, right? The total subsidy receivables on our books, really, it's approximately SGD 370 million, but those pending subsidy audit is about SGD 340 million to SGD 350 million. Of course, we have made provisions against them, right? The provisions to date is about SGD 43 million against the gross amount. Now I think in relation to that, we continue to press respective authorities on being able to release those projects sooner rather than later. But I think what we have noticed is that for projects that have cleared the subsidy audit, they are actually paying down their receivables fast. And this is empirical, right? Because in our own portfolio and our own Hyme portfolio, the amount of subsidies receivables collections in 2025 was about 1.7x that of 2024. We see it accelerating, no doubt. In our JV portfolios, we also see the subsidy receivables collections in 2025, roughly double that of the year before. So I think there is a clear effort from the Chinese government to clear the subsidy receivables. And we are certainly hopeful, while we have continued to provision against it, the subsidy receivables that has not yet cleared the audit. Kim Yin Wong: Yes, so immediate 12 months renewables, we won't be seeing a lot of growth, but we're very comfortable because the pipeline is strong, and we have got new markets. Middle East, in addition to India, is actually very active, if I have to use that word, as you would know. And also now in Australia is coming in. So we think -- I'm not too worried about the 2028 target, if that's a follow-on question. So... Alex Tan: Maybe also just to add, what we are seeing, particularly in India, but also in other markets is many competitors have overextended themselves, and there are now assets available, which makes sense for us. We are now in a position to be able to acquire at attractive prices. Add value through refurbishment and operations as we find the opportunities. So that's the other one. These are all the way from relatively small to relatively meaningful opportunities. Operator: Can we have Siew Khee at the back please. Kim Yin Wong: No, no but the lady there. She's staying up for a long, sorry. Operator: Rachel first. Rachael Tan: Hi, this is Rachel from UBS. I'm very sorry Siew Khee for hijacking you. I have 2 questions. The first one is that on SCI's ex-Senoko power plant contracting profile, does this include the new 600-megawatt plant? Because in H1 '25, only 13% of the portfolio had expiry profile of 0 to 5 years, and now it's 21%. So I'm trying to reconcile that. So that's my first question. My second question is what's the principal payment for the DPN versus the interest payment? Chee Mun Cheng: When we say 80% contracted 5 years or more, it's 80% of what -- did it include the 600-megawatt plant. Kim Yin Wong: Yes. Maybe if you bring up the slide, Eugene. Chee Mun Cheng: Okay. So you are referring to the Sembcorp only contracts contracting where 0 to 5 years has gone up to 21%. I think there are a couple of effects there, right? #1, mainly it is due to hype. Basically, we are also contracting a little more in terms of volume, right? Because we have secured more contracts that are of a shorter-term nature as well. So essentially, from a contracted perspective, historically, when you saw that 13%, that was of a contracted capacity of about 960 megawatts or so. But I think we have also increased contract levels at a shorter-term level. It has gone up to about close to 1,200 megawatts already. That's on the Singapore side. Kim Yin Wong: So the base is 1,200 megawatts. Today, our existing portfolio is less than 1,000 megawatts. Chee Mun Cheng: No. So when we showed the guidance earlier on at half year, right, where it was 13%, right? So at that point in time, the contracted capacity, right, for generation was about 960 megawatts, right? So we did say that it's one of our intent to sign more contracts. So even over our Singapore portfolio, we have contracted up to 1,200 megawatts already. And some of these are shorter-term contracts because we do want to increase the contract levels. And hence, you see the 0 to 5 years increase to 21%. So essentially, this 21%, but the total base of this is no longer 960 megawatts. It is now about 1,200 megawatts. So in a way, it has included the 600 megawatts. In a way, it hasn't. You see what's going on because what we're saying is that we want to sell 1,200 megawatts, of which some are long contracts, some are shorter contracts. And what happens is that when the new plant comes in, because it is much more efficient, what we will do is that we back out some of the older ones. So we can't -- I would guide you to not say that, look, when the new plant comes in, then suddenly our revenue -- our megawatts will go up by 600 megawatts and our revenue will go up 600 megawatts. It doesn't work that way, right? It's a portfolio, right? So what Eugene is saying is that, yes, it is in there. So because part of the 10-year contract and the 5-year contract will be served using the new plant, right? No, it is not in there. We didn't add it up in blocks like that. So hopefully, that clarifies it. Kim Yin Wong: Okay. So I think, Mun Cheng, you heard me talk about this because you stumped me a little bit because we don't think in -- because we don't think in terms of, oh, this plant and I contract for this plant, right? We think it is, okay, so our capacity [ 1,200 ] megawatts, potentially going up to [ 1,800 ] megawatts. But today, if we see opportunities to contract or over contract with a forward start, then we will just increase our contract... Chee Mun Cheng: I think maybe the first time we told them is 1,200 megawatts. Kim Yin Wong: So maybe, Eugene, we know to put a footnote on something. Alex Tan: A question on the DPN. Kim Yin Wong: Okay. So for DPN, for the principal and interest payment, I think, Rachel, in general, we don't -- there is no fixed principal payment, right? So essentially, if you look at the mechanism, how it works is that whatever equity cash flows is generated at the plant level, right, it will be a full sweep of the cash, leaving 6.75% of the equity cash flows to the owners, right? So I think in general, that is the basis. So we have not -- there is no fixed principal repayment. But I think what we can look at is over the -- from a principal paydown standpoint, over the last 3 years, we have collected $1 billion, right, of which the principal has ran down from roughly $2 billion at the start of the period to about $1.3 billion currently, right? So which means that on average, the principal paydown is about $300 million a year. So I think going forward, we do expect the SEIL equity cash flows to be similar simply because they are covered by long-term contracts. So that would roughly be the paydown. Interest cost is still around 8.75% to 8.9%... Alex Tan: Sorry, Siew Khee. Lim Siew Khee: Siew Khee from CGSI. I have 2 questions. On gradual increase in the dividend to benchmark against yourself with peers, who are the peer group that you're looking at? Are you looking at yield payout? And given that your earnings base is potentially stable at $1 billion, would you target to increase your yield to about 5%? That's my first question. Second question is, thanks for guiding us on the Spark Spreads. With much more power coming into the market, would you be able to have a guess on what would be the Spark Spreads into 2027? And I remember previously, we were hoping to actually get more long-term contracts or convert some of the short-term contracts from Senoko to long term. How realistic is that? Kim Yin Wong: I think in terms of the dividend benchmarking, Siew Khee, we look at the benchmarking in 2 sets. One is across more broadly STI comps. Of course, then within the STI comps, we look at both payout ratios as well as dividend yield. So excluding REITs, we do notice that average dividend yield is around 5%, right? So our yield is about 4% or so. But I was hesitant to say that we are targeting a yield Siew Khee because my payout ratio is kind of low, right? So we are at a 40-ish percent right now. Though we do note that, #1, the average STI broader comps, the payout ratios are 60% or more, right? And then if we compare to a closer TLC industrial companies, right, you know who they are, just to name a few, includes Keppel, includes ST Engineering, they are payout ratios in the longer term are in excess of 70% or so. So these are some of the guidelines that we are looking at. Now we also benchmark payout ratios as well as the dividend yields to a broader Gencos, right, both Asia Pacific as well as European players. So in those situations, we do see average dividend yields also in close to a 5% range and average payout ratios for those are in the 60% to 70% range as well. So I guess this is to guide you in terms of how we think in terms of the payout. Now I just want to caution a little bit about the yield perspective because at the end of the day, while those are guidelines for ourselves, we are still focusing more on the absolute dividend and sustainable and growing over time. So I guess the key point to note is that where the dividend is going forward, we will have the ability to grow it both from an earnings perspective and also looking at where our payout ratio stand relative to those benchmarks that I mentioned. And in the Singapore gas market -- gas-fired power market, what will be the spreads into 2027? I don't have a crystal ball at the moment, if you got there to contract, you're getting mid-30s, right? So that's you could see that still okay, right? So the part that I described just now that are going into new contracting, we will be contracting in that range. So the 40-some percent in Senoko will be contracting into that range. The 5% from the Sembcorp portfolio will be contracting into that range. What's the outlook for longer-term contracts? Actually, Singapore market is very small, right? So the -- it is quite binary. If you secure the customer like in our case, Micron, Singtel, then suddenly, there will be one big chunk that will come in, right? So there is a group of customers that will be prepared to sign long-term contracts and that group of customers is a finite universe today, even as the new data centers coming in to increase that puddle. So what we're seeing is that, as I mentioned at the beginning of my delivery, we are very well positioned to chase after the -- both the existing ones as well as the newcomers. So what is really specifically to Senoko, you will see -- I'm very confident to say that we will be able to increase Senoko's pie chart to look a lot more longer term than what it is shown today. But I hesitate to tell you exactly how much because it depends on the lumpy big customers that will come in. And if you think about it, and they are indeed lumpy, right? Because when a data center comes along, it's 30 megawatts, 50 megawatts and so on. So it will suddenly shift the profile of that donut over there. Operator: Next question from Sumedh. Sumedh Samant: Sumedh from JPMorgan here. Just have a couple of questions maybe on capital allocation. So do you think currently you have any non-core assets that may be up for disposals, the other businesses, even the U.K. plants. Any thoughts on that? And also, you did mention that actively looking at capital recycling in India. May I ask what's the progress there and any time line you have in mind? And perhaps my second and more housekeeping question. I think in one of the slides, you mentioned that 1/3 of DCs being catered by gas and related segment. Is that your own business? Or are you talking about the broader Singapore market? Kim Yin Wong: The first question was non-core assets for disposal. I was trying to look at Eugene and he was trying to look at me. Now the portfolio in Singapore, I think we manage the entire portfolio for value, okay? I just want to reassure everybody. That's the first thing. And over the last 5 years, we have made several changes to the port -- [indiscernible] you got questions, we can follow-up later. So I think we already reorganized ourselves into the 3 big business segments, right? So gas-related services, renewables as well as IUS, most of the contributors are actually squarely slot into them, right? So in the long run, we do not have -- I don't want to -- the smaller businesses, even if there is a non-core disposal, I wouldn't -- I don't think it will be something that should bother you. So let's put it that way. Now each of the lines of businesses, they are all growing up. And as they grow up, as you rightly pointed out, the India IPO possibility, that itself is actually something that is much more symbolic and then significant to the portfolio, if it happens. So in terms of -- but to us, the India renewal portfolio is a core asset, right? So that's not a non-core. So I wouldn't put that in the category of the first question, right? So maybe the short answer to it having stopped very loudly in front of you, the short answer is no, right? And the second one is in terms of capital recycling, we are thinking about it actually for the rest of the portfolio as well, including China, if the opportunity arises, right? And 5 years ago, I would tell everyone that, look, we're too small in most of the pieces, right? So now India has grown up and China is in a certain state. So when things are ready, we would definitely be managing them for value, right? So I just want to reassure you that in terms of actual timing, I am warned many times to not say that because we have a plan right? And there are typical time lines in India, how quickly you can do certain things. So -- and of course, there's no certainty until the moment the button is pressed, right? There are people who build the book and then decided that this book doesn't look good enough, I don't want to do it, right? So you can -- I don't think we would have the ability to do things much faster than the next guy who is filing. Let's put it that way. So if you apply the usual time line, that's a good way to think about if it happens. So I'm sorry, I'm not answering your question. I'm struggling a little bit, but I have got strict rules tying my hands behind me. So Sumedh, do you have any other... Sumedh Samant: I just had that quick follow-up. I think the data center slide, I think the slide that you mentioned where you have AI opportunities and I think in gas and related segment, you showed that 1/3 of data center -- yes, this one and that first bullet, I just want to understand what it represents. Is it like for Singapore data centers, is it 1/3 of demand being catered to by your own plants? Is that what you're asking? Kim Yin Wong: Sorry, I forgot about that. No, just to be clear, this one is -- we have highlighted that before maybe we were not so clear in this bullet. We are supplying power to 1/3 of the current data center in Singapore, right? So Singapore, 1,400 megawatts of IT capacity. PUE is probably 1.25, 1.3. I think it's 1.3, right? And then so you multiply that, that is the quantity that we are supplying to. So it's very strong, right? And I think it's also instructive to note that the 1/3 of our capacity that we capture for these data center companies, they are of longer-term PPAs, right? So our understanding is that the other 2/3, they are not really covered by long-term PPAs of our... Operator: We'll take questions from the web first. There's a question from Mayank from Morgan Stanley. He's asking about the U.K. impact on earnings and outlook in 2026 as the also the ability to put DC capacity in the U.K. In terms of China, any plans on adding battery investments into China for 2026? And then lastly, if we can share any performance highlights from Alinta in the second half of 2025. Kim Yin Wong: Do you want to take that? Performance highlights from Alinta in the second half of 2025. Chee Mun Cheng: Okay. I think, Mayank, in relation to performance for Alinta, we certainly have not completed yet. But I think we will be in a position to speak more about Alinta once we have completed the acquisition. You will imagine that we can't, okay? We just can't. Now of course, you could draw broader market performance from the listed guys, right? You've got Origin, you've got AGL, may not be directly comparable. You will just have to bear in mind that if there's any earnings volatility as a result of cost of supply, that is not an issue for Alinta. So you can take guidance from where the other 2 guys are how they are doing. But of course, pressured if there's any volatility caused by cost of supply of electricity, we will be a lot more insulated because we are very long. Kim Yin Wong: Yes. And when we talked about the Alinta acquisition, we showed the historical earnings profile, right? Chee Mun Cheng: Yes, that's right. Kim Yin Wong: So 2024, -- we also showed the pro forma. Chee Mun Cheng: Yes. So in 2024 from an underlying earnings standpoint, they are doing about 400-plus megawatts... Kim Yin Wong: 400 plus megawatts, right? So if there is -- they're not going to suddenly go to 600 megawatts, they're also not going to suddenly drop to 300 -- so that's so you can apply 6 months, you overlay with the amount of debt that we're putting on top of it, which we have also disclosed, right? Chee Mun Cheng: Yes. So the level -- we do expect the level of accretion in the second half of 2025 to be similar to what was disclosed. Kim Yin Wong: Yes. But to also point to the fact that because their first half is the winter, so typically, the first half is stronger than the second half, sort of 60% to 70% -- 60% in the first half, 40% in the second half, right? So hopefully, that helps Mayank. Any battery investment in China, even if there is, it will not move the needle, right? But he is being very kind. Thanks, Nikhil. He's being very kind saying that looking [indiscernible], maybe you should win some batteries so you don't waste the power. So thank you for that. U.K. impact on earnings, Mr. Cheng. Chee Mun Cheng: I think as highlighted earlier on, the U.K. gas business, right, in the 2025, we saw a $20 million impact, right, for the U.K. gas business. Now of course, when we look into 2026, there are headwinds and also the possible and also positives. The headwinds, of course, the customer demand continue to be under pressure simply and power prices as well. Simply because the key -- some of the key customers in Wilton, they are petrochemical players, and we all know that the petrochemical sector is under pressure right now. So that is the headwinds that we expect going into 2026. Now of course, we did -- we are excited because the value of powered land, particularly for data centers is important and Wilton is powered land, right? So we do at a very initial stages of engagement, have seen DC players' interest, right, in our U.K. Wilton site. So we hope to be able to see more developments there. But of course, barring positive developments on the DC capacity, we do expect U.K. continue to be under pressure as we go into 2026. Operator: Okay. I'll take another question from the web. This is from Luis, Citi. He's asking about the run rate for the Gas and Related Services segment. So should we look at the second half GRS level to be roughly the 2026 run rate? And will the Alinta expenses be booked in the first half if the transaction closes by end of first half of 2026? Or will it be booked at the year-end? Kim Yin Wong: Okay. So Luis, to answer your question on the first point, I think from the second half 2025 going into FY 2026, I wouldn't say that we could use that level because a couple of things would have to -- you have to bear in mind. #1, into 2026, roughly 3% to 5% of the Singapore portfolio will be up for renewals. So those renewals would be at roughly $30, $35 type of a Spark Spreads. So that will be coming off historical high short-term contracting Spark Spreads of $70 or so, right, $70 to $80. So that's one impact. Second impact is for Senoko. We did highlight that coming into 2026, you have a full year impact of roughly 20% of the portfolio that was renewed in the second half of 2025, right? Also $30, $35 Spark Spreads. And in '26 itself, we would have about 47%, close to 50% of the Senoko portfolio that will be up for renewals. Indications clearly show that our Spark Spreads will be around $30 to $35. So you do have to factor that into your outlook for 2026. Now for the exceptional expense of $208 million, it will be reflected whenever the transaction close, right? So if the transaction closed in the first half, that $208 million, the bulk of it will be booked as exceptional items by half year. If it does -- if it close beyond 30th June, then it will be -- it will show up in the second half. So it's really timing related. Bulk of that is driven by stamp duties. So it's really linked to the timing of the completion of the transaction. Operator: Okay. Question from [indiscernible] Business Times. Unknown Analyst: I'd like to ask a bit more about the data center strategy in terms of supplying energy. For DC-CFA2, there is a requirement. I think it's at least 50% has to be like clean power. So for yourselves, like what sources of clean power do you see yourselves providing in terms of fulfilling this demand from DC-CFA2? And also, I think for other markets in the region where you hope to power data centers, do you see it mainly being gas or more of renewables? Kim Yin Wong: The specific requirements or rather the requirements of the DC-CFA2, my understanding is it is actually quite specific. It will have to be new sources, right? So it is not existing. So my solar panel doesn't count. So we are working with our customers, who are interested to win the DC-CFA 2 to provide them with new sources. That includes green power from biofuel, that includes fuel cells, right? So the array of potential solutions that can qualify for this new green source, we actually have them as part of our toolkit to supply them. The question really is for each one of them, because difference in size, difference in technology, different in their customer base, their appetite type to absorb the cost from some of these new sources is different. You can imagine some of these new sources is at a higher cost than your solar, right? So that's why what I'm trying to say is that we have those solutions, and we are working with each one of them to tailor it for their specific requirements based on the affordability, right? So that's on that. Now the other one I want to say is that for -- generically, like you say, whether it is in the region or even in Singapore, at the end of the day, data centers, they need very stable, reliable power, highly reliable, in fact. They don't want interruption. So the new sources generally, on the one hand, will put cost pressure. On the other hand, very often, it may not be as reliable, right? And certainly, even if you -- they are reasonably reliable, you still need to backup from existing sources, be it from batteries, be it from gas, be it from the grid, right? So this is where Sembcorp believes we are actually very well positioned because we have the entire array. In Singapore, we have got the gas-fired power plants. We have our solar panels. We have the largest battery in the region. And then on top of that, we have got these new sources, biofuel, fuel cells, so on and so forth. So we are able to say that, hey, look, even as you take the new source, we can supplement it and support it and provide insurance and reliability by giving you everything else, right? So that is where we are -- we have that strength. In the region, it is the same, right? So when we go to Batam, this is something that we can offer. And our experience doing this is also giving them confidence, right? If you're getting this from Sembcorp, that's one story. You're getting this from only a solar player, you might actually have to think twice because hey, how good are they even if they offer you batteries, right? But I've got gas, I've got other sources. And I have shown that I am able to keep reliability very, very high [ as a ] portfolio. So that's where even in places like India and not just Indonesia, we are seeing some of these demands coming. And we are -- on the slide that we show here, we are signing up -- actually beginning to sign up some of them, right? So coming back, I also want to make that point, I want to reiterate the point that by the time we see the demand from the AI side, we are seeing the real thing. This is the solid demand. This is not the fluff. So because I'm very worried that people say, oh, this Sembcorp turn around and want to enter into the AI space. Are they going to catch the froth and then get caught up? No, no, no. By the time it comes to us, it is a solid energy side of the demand, not the AI demand. We don't take that risk. We are selling power. We are selling reliable power and we demand and expect that our customer is a reliable pay master. Unknown Analyst: I understand you have import licenses from EME, right, for like Sarawak and also from Vietnam. Would the new sources that you supply to DCs also include like green power that you are importing? Kim Yin Wong: My understanding is that imported green power doesn't count. Unknown Analyst: It doesn't. Kim Yin Wong: And we can confirm that after the meeting. My understanding is that they don't count. So -- but if they count that, we also have that, right? So in fact, last year, we imported some and then that contributed to some of my losses in the previous year. It was a good about $40 million. So yes, the Malaysia one. So I'm glad that it's almost over. So it will not weigh so heavily on to 2026 anymore. Any other queries? Operator: There are no further questions. If not that marks the end of today's briefing. Thank you very much for attending the briefing, everyone. Kim Yin Wong: Right. And again, two things to take away, if I may. In terms of returns, can expect dividend to steadily sustain and grow. And we recognize that we are behind the curve compared to our peer group in terms of payout, in terms of yield. So -- and we -- because of our strong balance sheet, strong cash flow, we are very confident increasing the dividend along that path to cover that gap. That's the first thing. Then in terms of growth, at least for the next few years, we've got new markets that we are venturing into, and we are seeing success. In the case of Australia, there's Alinta, very skilled, very committed to decarbonization and also very energy short, right? And in terms of other greenfield opportunities other than a very hot India market where we have strong establishment, there's also Middle East that is giving us the pipeline. So there is returns, there's growth. 2026, we will have headwinds, but we are very confident selling into '26 and beyond. So thank you very much. Operator: Thank you. Kim Yin Wong: Is there food outside? Operator: There is lunch. Kim Yin Wong: Okay. So sorry to hold you. There's food outside, and please feel free to help us consume it.
Duncan Tatton-Brown: Good morning, everyone, and thank you for joining us today. Before we move into the 2025 results presentation, I'd like to begin by marking an important moment in the evolution of Oxford Nanopore. As previously announced, today, Gordon Sanghera steps down as Chief Executive Officer after more than 2 decades leading the company he co-founded in 2005. Under Gordon's leadership, Oxford Nanopore has grown from a bold scientific idea into a global platform technology company, serving customers in more than 125 countries across research, clinical, biopharma and applied industrial markets. On behalf of the Board, I would like to thank Gordon for his incredible vision, determination and commitment in building the foundations that position the company strongly for its next phase of development. He will remain with the company in an advisory capacity through to early 2027 to support a smooth and orderly transition. Today, also marks the first day of Francis Van Parys as CEO of Oxford Nanopore. Francis joins formally the company this morning. He's spending today in Oxford, meeting the team and therefore, will not be with us today. We look forward to introducing him to many of you in due course once he's had the opportunity to engage more deeply with the business. The Board is pleased to welcome Francis at this important stage of the company's evolution. His experience in scaling innovation-driven life sciences businesses, particularly within regulated and commercial environments will support Oxford Nanopore's continued development. The Board remains focused on maintaining our support for leading-edge science, driving strong growth across our priority end markets through disciplined execution and delivering sustainable profits as the business continues to scale. With that, I will hand over to Gordon and Nick, who will take you through the financial and operational highlights for 2025. Thank you. Gordon Sanghera: Good morning, everybody. It's been a 21-year journey for me. Spring of 2004, I started looking at Hagan Bayley single molecule stochastic sensing. I had to go and check in the dictionary what stochastic meant, but I got the hang of it. The more I looked, the more excited I became that we could potentially deliver a new method of measurement. That doesn't happen very often for chemical and biological single molecules. So we were spun out in 2005 with GBP 0.5 million from IP Group, at that time, Dave Norwood, over a pie and a pint. It was just stunning that somebody would put that much money in -- on an idea, a concept. The company's vision from the outset was to enable the analysis of anything by anyone, anywhere. And I would say that is a work in progress. I think the proudest thing I've seen and the coolest thing I've seen in this technology is NASA taking it up into space, slated to go on the Artemis mission as well, very proud, but also Project NEEMO, which is NASA, going down into the depths of Mariana trench, and finding over 7,500 new species in extreme conditions, which kind of tells us there is life out there somewhere, which is exciting. So our first application area is DNA RNA. We're now extending that to proteomics and you'll hear more from Lakmal at London calling. I will be there as well. But we also have the potential to measure small molecules, chemicals, metabolites, volatile organic compounds as well. So this platform has a lot more to give over the coming years. So I want to show some slides, I guess. That is our vision. You've seen that plenty of times. And as I say, we're just at the beginning of this journey, lots more to come. We launched our DNA products 10 years ago. And our direct RNA product approximately 5 years ago. As Duncan has just said, we are today in over 125 countries. We have over 1,300 employees and we opened our factory because we had a bold ambition from the outset that we would deliver a tech company in the U.K. that would manufacture in the U.K. So our consumables, flow cells and revenues are manufactured in our factory, which we built with an ambitious growth trajectory, which means over the next 3 to 5 years, as we grow, we will be able to meet those demands for our consumables. The key metric on this slide is the fact that in 10 years since we launched our first products, we have 20,000 publications. That is a phenomenal beat rate. And that decade of innovation underpins the unique value proposition and what this single molecule measurement platform delivers. There is no other company in this space, in our competitive space that sequences direct DNA, RNA. This body of work is a foundation for our growth. And since IPO, I'm proud to say we have grown 28% CAGR. And that is a testament to the unique things and a multiomic direct sequencing of DNA, RNA that can only be enabled by Oxford Nanopore. Again, 2025 was a great growth year for us. We grew 24% on a constant currency basis, which is 1% above our top end of our guide, 23%. We have, across all regions, in a tough market where the competitors in the last 3 or 4 years have seen low growth, no growth or negative growth. We delivered 20% growth across all of our regions. 70% of our revenues come from our flow cells and kits, which are manufactured in [ Didcot ]. And we've been financially disciplined this year. We have just over GBP 300 million in cash and cash equivalents, leaving us well poised to build on our ambitious growth trajectory. And as we set out in capital markets a couple of years ago, we would be transitioning from revenues entirely from life science research tools to our applied end markets. In 2025, life science research tools, which accounts for 66% of our revenues today, grew 15%. Again, to reiterate that is outperforming competitors significantly. Our strongest growing applied end market was clinical at 59%. BioPharma, came in at 30%, and applied industrial 27%. Year-on-year, that grew from 30% to 34% and is broadly in line with what we thought we would hit at capital markets a couple of years ago and is a testament to the maturing of the platform for our applied end markets. Why are we growing substantially? It's not a fluke. We didn't get lucky. 20 years ago, we realized that single molecule electronic detection of biological polymers could be transformative. And what we deliver with this platform, and we are the only company in the world who does this, including the other Nanopore people, we read direct DNA, and we can read short hundreds of bases, long tens of thousands to hundred thousand bases to millions of bases ultra-long. No other tech does that. We are not just a long-read company. It's that native DNA that makes us highly differentiated. We do this in real time, live streaming because the sample preps take hours, not days. All other sequencing platforms take days to prep their samples. We do not have to batch, which means we can get rapid insights in point of care in distributed affordable, accessible platforms. It is 1, 2 or all 3 of these attributes that are driving that strong growth, both continuing to, in our life science research tools market for translational and discovery work, which is a foundation then for the applied markets. So I want you to remember that this technology is driving adoption, and we are very early in this journey. And I'll talk a little bit about Francis at the end, but I'm excited to be handing the baton on to him. And I will now pass over to Nick, who will get into details and talk about outlook for 2026. Nicholas Keher: Thank you, Gordon. So good morning, everyone. My name is Nick Keher, I'm the CFO of Oxford Nanopore. Today, I'll be updating on our FY '25 financials, outlook and operational performance. So FY '25 was a year of both delivery and further transformation in a year of volatility. We delivered revenue growth of 24.2% at constant currency, marginally ahead of guidance of 20% to 23% set in March 2025. With over 20% growth in all regions on a constant currency basis and a return to growth across the MinION range as previously guided to also. Reported gross margins finished broadly in line with guidance and in spite of numerous headwinds, some of which that should not repeat, and with a see-through gross margin of closer to 61%. Adjusted OpEx growth of only 1% reflects strong cost control of the period and 2 restructuring events. One in January previously discussed to allow for the reallocation of capital to higher growth opportunities. And another in November that related to a strategic realignment exercise to align the business to these high-priority end markets. As a result, we improved our adjusted EBITDA loss by GBP 31.2 million or 26%, which is a material step forward in our path to profitability. We finished the year with GBP 302.8 million of cash with no debt, demonstrating a material improvement in cash conversion as we made improvements to our business model and focus on working capital. and continue to see minimum cash of at least GBP 100 million as we pass through adjusted EBITDA breakeven in '27 and cash flow breakeven in '28. Turning to gross margins, the year reflects a solid improvement overall and in line with our original guidance of 59%. From a base of 57.5% in FY '24, we delivered underlying improvements of 460 bps, driven by the new CapEx-first pricing model; and two, yield improvements, particularly on the PromethION flow cell. Whilst we saw benefits from improving recycling on the PromethION flow cell, these were largely offset in the year by lower levels of recycling overall at MinION flow cell. From this position, we then saw headwinds of FX of 70 bps, the previously discussed one-off items related to obsolete inventory of 150 bps are not set to be repeated and product and customer mix headwinds of 130 bps. This provided a reported gross margin of 58.6% overall. Within this, we also took the charge related to restructuring in the year, related almost entirely to the ElysION product line of GBP 1.8 million or 80 bps. Absent this, the margin was 59.4%, and absent the one-off items taken in half 1, the margin would have been 60.9%. We think this is the right figure for investors and analysts to look at as we enter FY '26, noting we still have a number of upsides to improve margin further in FY '26 and '27, namely on PromethION flow cell recycling, as we also continue to see further benefits from the change of the pricing model. The strong top-line growth and improvement in gross margin has been matched by discipline on the cost base, which saw an increase of only 1% to adjusted OpEx year-on-year. This meant we delivered a 26% improvement year-on-year to EBITDA, a total of GBP 31.2 million, with GBP 18 million of that coming in the second half, which itself showed a 32% improvement. Stepping back, we have now delivered an adjusted EBITDA improvement each half since the beginning of FY '24, and we believe we have a solid path to achieving breakeven in '27. It is also worth putting this into the context of the top line and gross margin headwinds we have seen from a currency perspective, which have now reduced our adjusted EBITDA figure by GBP 9 million since January '24. We will deliver breakeven through continued above-market revenue growth, consistent with what we've delivered historically and are set to in FY '26, but with continued cost control of the cost base. In particular, we see opportunities to improve efficiencies we scale through IT, logistics and internal working practices with non-headcount related expenditures. Turning to cash. The strong operational execution delivered in the year, coupled with the transformation to our business model completed have transferred -- had translated to improved cash conversion. Our operating loss before restructuring costs came to GBP 79.1 million, largely mirroring our EBITDA performance. Restructuring costs of GBP 13.8 million in the year are split GBP 5.2 million in the first half and GBP 8.6 million in the second half from the strategic realignment exercise in November. Working capital was an inflow of GBP 13.4 million, reflecting a meaningful improvement in inventory management with total inventory levels down GBP 18 million in the period. We continue to see more opportunities for improvements as we look forward on this area. Assets at customers came in at GBP 10.1 million, down GBP 10.5 million from the prior year, thanks to adoption of the new pricing model. The second half increase of GBP 4.6 million relates primarily to devices for the U.K. Biobank contract and a small number of evaluation devices provided to customers. CapEx and capitalized development costs of GBP 45.5 million are split GBP 41.5 million on capitalized development and GBP 4 million on CapEx across the business. This low level of CapEx in '25 reflects -- largely reflects timing of investments and significant projects such as the Spectrum Building are now complete. It is unlikely that this level of -- this low level will be repeated again in '26. Tax income of GBP 18.9 million reflects the receipt of 2 R&D tax credits in the year, again, unlikely to be repeated in FY '25. Finally, other investing and financing inflow of GBP 15.3 million reflects the income from our bond portfolio in the year. As such, our net cash outflow finished the year at GBP 101 million, leaving us with GBP 302.8 million in the bank with reducing losses and improving cash conversion from both focus on working capital and the adoption of the CapEx first approach, we continue to see cash reserves of at least GBP 100 million as we pass through breakeven. Turning now to the commercial strategy. In '25, we completed a strategic review to ensure we maximize the broad opportunities in front of us. This process incorporated a variety of perspectives from the inside -- from both inside and outside the group, ensuring we can prioritize the opportunities that best leverage our differentiated technology to create value for all of our stakeholders. As part of this strategic review, we looked at where we have the clearest right to win and where we can scale with discipline. Across research, clinical, biopharma manufacturing QC and other markets, we identified roughly $13 billion to $14 billion of higher priority segments where our richer data, speed and accessibility provide meaningful competitive advantage over peer technologies. We then categorize segments into higher, medium and lower priority, not based purely on size, but on ease of access, differentiation and scalability. This prioritization is now shaping everything internally. Commercial resource allocation, product road map decisions, capital deployment and organizational focus. The result is a more focused, more disciplined company concentrating investment behind the segments that drive sustainable growth and margin expansion. With that context, let me turn to how we action these insights in '25. In terms of our commercial performance, we delivered GBP 223.9 million of revenue of 24% at constant currency, with growth across all regions and all customer types despite challenging end markets. But the quality of growth is what matters here with clinical up close to 60%, biopharma up 30%, applied industrial 27% and research up 15% despite ongoing NIH pressures. That mix shift towards applied end markets reflects the natural pull of our technology to these sectors, supported by our existing investments to support that growth. With our focus now enhanced on these end market segments as a corporation with our operational structures also aligned to enable a strategy, we expect to see further improvements in our commercial performance over time. In Clinical, we saw broader adoption across rare disease and oncology across strategic collaborations such as Cepheid and BioMerieux. In BioPharma and industrial, we supported QC deployment, plasma sequencing expansion and increased PromethION utilization. We also saw strengthened pricing discipline and contracting structures, improving both margin profile and cash dynamics. Growth is increasingly weighted towards higher priority segments identified in the strategic review, and that gives us confidence in both durability and operational leverage as we move forward. Turning to innovation. Gordon has already covered the technical performance improvements in detail at the JPM in January, including advances in output, accuracy and workflow maturity and these improvements will continue at pace. But the key stories of '25 are of prioritization and alignment. Following the strategic review we did last year, we refined the portfolio to concentrate investment behind platforms that best serve our priority end markets. That meant the discontinuation of sales of P2 Solo from June this year and the focused efforts internally on the P2i, pausing further internal development of the ElysION platform and discontinuing direct commercial efforts on the product. Hard decisions, but once taken. Focusing on the core platform and integrated systems such as the P2i and P24, advancing Q-line product lines more broadly across GridION and PromethION. For GridION, we are set to launch a version 2 of the Q-Line product in 2026 that benefits a broader requirement set from our BioPharma customers, whilst on the Prom, revaluation of the time line leads to an updated launch date for late 2027. To ensure our innovation efforts drive greater returns, we are also improving our ways of working internally, formalizing process improvements to ensure greater success. This simplification reduces operational complexity, improves capital allocated discipline and ensures R&D is directed where returns are strongest. So innovation in 2025 became more focused, more commercially aligned and more scalable. On operational excellence. Operationally, 2025 was about discipline and leverage. We delivered continued improvements to gross margin, reflecting pricing improvements, flow cell efficiency and operational scale. During the year, we completed 2 restructuring events to realign the organization, simplify the portfolio and refocus R&D behind our higher ROI opportunities. Operationally, we also advanced automation, expanded manufacturing capability and initiated ERP and CRM transformation to support scalable growth. The result is a structurally more focused business with improving operational leverage. Looking forward, I would anticipate further additions to the executive team to strengthen our capabilities and to support our continued expansion into these target higher priority end markets. Turning to guidance. For FY '26, we are setting revenue guidance of between 21% and 25% at constant currency. This guidance is materially above what we see as end market growth with peers guiding for largely for low to mid-single-digit growth overall. This growth is being driven by growing interest in demand for Oxford Nanopore Technologies products and their desire to see more and do more against conventional legacy sequencing technologies. The low end of the range is driven by the expectation for a continued subdued research environment in the U.S. and specific market dynamics, particularly in China. Alongside this, we have factored in some risk from the discontinuation of the P2 Solo. As always, we attempt to risk adjust our guidance to both set estimates in a place for the year ahead that derisk external expectations. As we look to the top end, it largely mirrors the opposite of these factors and we note the potential to exceed this guidance, should we succeed in converting more customers to P2i, which we believe is a superior product and delivers better results for customers. Regionally, we see growth being strongest in the Americas, driven by continued expansion into the applied markets. EMEAI has delivered consistent, significant growth. But in FY '26, we note the timing of large research end market contracts rolling off and new contracts ramping up that lead us to expect a more cautious growth rate at this point of the year and hence for growth to be lower than in '25. Similarly, across APAC, we continue to see -- to expect above end market growth, but note the expected headwind from the PRECISE II contract ending and specific factors in China, that means this could be a slower growth rate overall. Against our guidance, it is APAC, which could be the surprise factor to the upside. For FY '26, we would like to see how the year progresses from here. By end market, we continue to see growth strongest across the applied end markets driven by clinical and BioPharma again. This guidance has been taken into account -- has not taken into account any of the potential risks to recent events in the Middle East over the weekend. Our current efforts are to keep our own people safe, and our thoughts are with everyone impacted by the events over the weekend as this risk remains an evolving situation. Our total revenues in the region represent around 3% of group revenues but the region also acts as a central point in the global supply chain. So the full impact from these events are arguably unknown at this time. On gross margins, we are setting guidance of 62% this year, 340 bps above FY '25 reported margins, but 110 bps above the see-through margin talked through earlier. We are confident that there are further benefits to margin from the adoption of the CapEx first pricing model alongside improving recycling rates at the PromethION flow cell that looks set to drive further improvements overall and offsetting expected headwinds in terms of product mix and currency. And adjusted OpEx growth, we have set guidance at 0% to 5%, which reflects the expected benefits of the strategic realignment exercise in November and continued focus on improving efficiencies in the business overall. The range itself also reflects the timing of expected hiring across the business. Over the course of '26 and '27 we see opportunities to improve operational efficiency again and through non-headcount-related activities, particularly across logistics and IT. Turning to my final slide on financial outlook and summary. Noting that we are reiterating our medium-term adjusted EBITDA and cash flow guidance targets at '27 and '28, respectively, but with amended constituent drivers of how we will get there. We expect to see this strong above-market broad-based revenue growth in '26 to continue in '27 and at a broadly similar rate. This growth is below the previously set medium-term CAGR of over 30%, reflect a mix of weaker end market backdrop than guidance was originally set and partly on execution, which we will look to improve going forward. We delivered a 26% improvement in adjusted EBITDA in '25 and we continue to see further operational leverage in '26 and '27 to deliver adjusted EBITDA breakeven in line with our medium-term guidance. Given the improving gross margin profile that has accelerated ahead of initial expectations, alongside the restructuring exercise completed in '27 -- completed in -- sorry, and given the improving gross margin profile that's accelerated ahead of initial expectations alongside the restructuring exercises with further operational efficiencies, we continue to see breakeven EBITDA in '27 as reinforced even with a lower top line growth rate. Lastly, as demonstrated today, we have continued to translate our operational performance into real improvements in cash. Our cash burn was down GBP 50 million in the year. With this profile set to continue in '26 and '27, driven by improved losses, the adoption of the CapEx model and supported further by benefits in working capital to come, we continue to see cash flow breakeven in '28 with a minimum amount of cash of over GBP 100 million. With that, and before passing back to Gordon for final remarks, I also want to provide my own personal thanks to Gordon and congratulations on a truly remarkable achievement in building a great company like Oxford Nanopore. Gordon Sanghera: Thanks, Nick. So last slide now we've got that up. I just wanted to say a few words after 21 years being at this -- at the helm. I've always felt this was a deep tech company. People talk about that a lot. It actually took us 10 years to deliver our first products. We've been in market place 10 years, and we've raised a lot of money and people look at that, and they think the return on the investment is low, but this company will be around in 100 years' time. Already today, T2T genomes are the new gold standard. And you can't get any better than that because it's the whole genome completely mapped. And Craig Venter who is the founder of the original -- driver of the original human genome is out there building that gold standard. So as I reflect on this 20-year journey, it will never work. you'll never make a circuit, you can't stabilize a soap bubble, you can't raise money in London, you can't float in London, you will never be profitable, all these things just made us more determined and this is the right moment to hand over. I've always known this moment will come. This company will be far bigger than any of the individuals. Yet it is each and every individual who in the last 21 years has really believed that we could do something special and different and we have. And it's a really exciting moment. And I'm really excited about Francis' coming in and taking the baton and really helping build this company, taking us to the next level. I would like to thank you all. It's been a blast and the journey, and I'd like to thank the Board, in particular for putting up with me for 5 years. And I'll leave you with this. I'm not retiring. And as David Bowie said on his 50th birthday, I don't know what I'll be doing next, but I can guarantee it will be interesting. Thank you very much. Nicholas Keher: Questions? Zain? Do you want to say your name and company. Zain Ebrahim: Zain Ebrahim, JPMorgan. Firstly, just to extend my congratulations to Gordon as well for your legacy and everything that you built here. First question is on the '26 guidance just in terms of the moving parts you talked about it in terms of the revenue guide somewhat, but just to elaborate further in terms of what gets you to the upper end of the guide versus the lower end of the guide. It sounds like P2i Solo is a key driver in terms of conversion, but also geographically, what gives you confidence in Americas outgrowing or accelerating in growth versus 2025? That will be the first question. The second question is on the adjusted EBITDA path to breakeven. You mentioned operational leverage that you can drive, but just potentially more color on where you see gross margin. Consensus is adjusted EBITDA loss of GBP 14 million for next year. So what do you think we as consensus are underappreciating? Nicholas Keher: So just on the '26 guidance for revenue. So geographically, what gives confidence in the Americas, they've got momentum. And so when we go through our exercise of guidance setting, there's a lot of things that kind of we look at. And in particular, in the non-research markets, when I look at the pipeline coverage, when I look at the sheer number of customers, that those high profile ones in either clinical or biopharma, they're evaluating, but also there in the hopper to take product on. Yes, I think we've got confidence in the Americas market and that we've turned that corner now. It's always been difficult to kind of penetrate the research market in the U.S. for us, and that could be a whole host of reasons why. But the applied markets now has kind of got there quicker. We've talked about the fact that over 50% of the revenue in the Americas is now coming from those applied markets and that looks set to continue. So it's a different type of customer buying the product, they're getting to scale and they're driving the growth. On EMEA, we talked about this in the statement, but if I look at even the 5-year historic CAGR for EMEA, it's been a hell of a performance, and the team have done a great job in terms of like how they've delivered that growth consistently year-on-year. When I look to this year, we have a couple of contracts that are rolling off that we talked about, like NIHR, like GL 2.0. We have the U.K. Biobank contract that's coming in to help to offset it, but that means a proportion of revenue is essentially static for the year. And so there's kind of a piece there that we've just got to kind of factor in. And so it might just be -- we're expecting it to be a lower growth year overall. As always, we try and set guidance prudently as well. And now for APAC, this is probably where there's a bit more of a wildcard factor at play. And we are seeing conversion, particularly in specific markets to clinical that is actually quite encouraging. So adaptive sampling is making material inroads with certain large customers, particularly in Australia. And there is a healthy pipeline of activity that we're going up. But there is just a timing aspect here for how things ramp up. And we've seen that it can take time for these things to kind of get to the scale we want them to. At the same time, we have precise II that's ended and is coming off. So there's -- those non-China markets, we can see these dynamics at play. In China itself, I think there are a few things happening. So first of all, the export control restrictions haven't got easier. And we have a backlog now of potential revenue to go into that market because of the restrictions in place. We also could recognize that there are -- well, there is increased Nanopore competitors in the China market as well. We've evaluated those technology against our own. We believe our technology is superior, and that's demonstrated by the fact that even the price differential being what it is in that market, you still see high underlying demand for our technology overall, but it is something that is kind of -- has grown over the recent years. And then finally, we think we can do better from an execution standpoint. And China is a substantial part of APAC overall. So we're setting guidance cautiously. That's why I talk about it being potentially surprise to the upside. And hopefully, as we progress through the year, as we improve upon that, and we get greater confidence, maybe we can look again. In terms of product level as well because you asked about the P2i -- P2S piece, so we're setting guidance of 21% to 25% growth. We're putting some risk in there that the discontinuation of the P2 Solo should we not see that conversion to the P2i like we believe it will happen. So when we've done this commercial realignment exercise, we've taken the 47 end market segments we're targeting, the high priority segments overall. We then evaluated the customer demands from requirements, table stakes, like for those high priority segments we're looking at. And what we found is that the P2i is a better fit. The P2 Solo is a very good product, but the P2i is a better fit for the customers overall. And we are going to push the P2i stronger and harder than we have done before because we think our customers are going to get a better experience overall as well. So we've taken a tough decision. We're focusing efforts from a commercial market -- and that's the big C of commercial -- sorry sales, marketing, all of the efforts, application development, workflow development, all of that on the P2i or the P24, so that we essentially get a better return overall for the company and drive faster, more profitable growth. Now there is a risk, though, in the interim that this essentially drives a little bit of a weaker performance as we execute on that. And so my job is to make sure that we've kind of factored that into the guidance overall, and that's hopefully what we've done. Now on adjusted EBITDA breakeven, what's the market missing? If I look at consensus as today and it's updating, previously, the market, I believe, had a question over that top line growth rate. And to be clear, when we set medium-term guidance, it was always breakeven adjusted EBITDA in '27, cash flow in '28 and we gave constituent drivers for the market to kind of model how they would get there. And we also said if the top line growth wasn't achieving what we wanted to, we would actually modulate the cost base accordingly. We've done exactly that. And we've got 2 examples of that in the year just gone. And now through those exercises, actually, we don't need to achieve over 30% CAGR to achieve that breakeven in '27. So hopefully, the market comes away from this going actually, with the new guidance that is out today. Actually, sorry, medium-term is reiterated, but with the updated constituent parts, it's actually a more realistic outlook to achieve adjusted EBITDA breakeven in '27. And hopefully, investors and analysts can start to model that in as well. Veronika Dubajova: Veronika Dubajova from Citi. 2 questions for me, please. The first one is actually going back to the EBITDA breakeven pathway, Nick. And if you can maybe talk a little bit about the gross margin picture in particular, sort of on my math, you'd need to hit something that's better than 62% that we talked about previously to get to that breakeven. Maybe just give us some color on how we get there in 2027 and what gives you the increased confidence that it's achievable? And then my second question is kind of bigger picture, both for you, Gordon, and for Nick, now that we've had the sort of strategic realignment, you've bedded it down for a number of months now within the organization following the restructuring. Just kind of talk about what are the bits that you're most excited about? How is the organization handling that change and sort of anything that has gone maybe better or worse than you expected? And then finally, congratulations, Gordon, from me as well. We look forward to hearing more from you in your new advisory role, but amazing accomplishment, and I hope you enjoy a little bit of downtime. Nicholas Keher: Thank you, Veronika. So just on the EBITDA breakeven piece, and focusing specifically on gross margin. So absolutely. What we guided to do today is to a 62% gross margin for FY '26. That's bringing forward the original constituent guidance point of -- greater than 62% in '27. So we're bringing that forward a year. And in the statement, we believe that we'll see continued improvements as going into '27. I think it's fair to assume that, that means for the market to start thinking around 64% for '27 as being an achievable gross margin or perhaps around that level. The reason why we're confident on that is that when we set the original guidance in '24, we did state to the market that -- sorry, we haven't updated the pricing model. The pricing model changes and going CapEx first has clearly had a benefit on the gross margin overall. And so we're updating for that. The piece that's still to deliver a true tailwind, and it will because we're seeing it, is in PromethION flow cell recycling. So in the year just gone, the drop in MinION recycling essentially canceled out the benefit we saw in PromethION. For this year going forward, MinION recycling rate is now at a level actually that will step over that. But with PromethION increasing, it's going to deliver a meaningful improvement to overall gross margins. We've talked about it before, but if the MinION level, if we achieved the levels that we did with the Prom to the Min, then essentially, it could be a 10 percentage improvement -- point improvement on PromethION gross margins overall. We still got some way to go there. So that's how we get there. On the bigger picture piece, would you like to go first, Gordon? Gordon Sanghera: No, go ahead. Nicholas Keher: So the strategic realignment piece and parts of that excite. From myself, my opinion on it, I think prioritization of activities will always lead to better outcomes. And so the team, we've got an incredible capability in the business. And because the technology is so good, there's almost so much we can work on. And I think that's genuinely what I mean I've seen since I've been here is just there is so much opportunity for the technology to go on, 47 end market segments, it could arguably go with all of them. I think actually having this kind of focus prioritized exercise completed and saying, well, we're going to have to put down tools here because we're going to focus there is a good thing for the business. And actually, it's going to drive increased efficiency overall because we can have more people working on those bigger projects that are going to move the dial as well. So that's the part I'm excited about. Clearly, going through change as a business, it's difficult, actually. And so I don't want to -- I think it's been hard, actually. And these things take time to work through. But even since the start of the year, people are starting to kind of find their feet again and kind of realign to what that is. Not everybody is there yet as always, but we're working through it. And, I think, we're going to get there. Gordon Sanghera: I think success can be painful with infinite possibilities, which is what happens when the impossible is made possible. And finite resource, it's a challenge. And the company has quite rightly and is evolving to be much more focused on what are the 5 or 10 big things. We are redesigning the PromethION chip for reuse, which has radical transformative revenue and margin gains rather than, "oh, we can reuse it even though it wasn't designed for reuse." So we are very confident about that trajectory. Adaptive sampling is going to be groundbreaking and changing. This is where the DNA in the first seconds, is red and the sequencer is intelligent enough to decide whether that's a region of interest on target or off target. That means 2 days, $300 to $500 of target enrichment disappears. But in addition, because you are looking at the native DNA, you end up seeing methylation. 2026 will be the year of the methanone, the UK Biobank and the Office of Life Sciences with Nanopore are sequencing 50,000 patient samples. That will deliver the first and most comprehensive 5-base genome. That fifth base is scientifically incredibly important. Now I could go on. The list is endless, but what we've done is targeted 3 to 5 major things, direct RNA with mods, direct DNA with mods, adaptive sampling reuse by design. And all of these major drivers mean that we cannot do all of the things we want to. And that is just a natural transition from being a heavy R company with some D to becoming an appropriate R company but with very much D because of the applied, regulated end markets, which gives us recurring sticky revenues over multiple years and radically change the way people use NGS, these are workflows that only we can enable. All of those are the things that I'm excited about and will drive change and will be important in our growth trajectory. Samuel England: It's Sam England from Berenberg. And first one, just around the 2026 revenue guide. Can you give us a sense for the cadence of growth in margins during 2026? I suppose, in particular, is there anything from a revenue or cost perspective that we should be aware of in terms of phasing this year? And then bigger picture, can you give us an update on your progress in biopharma QC? I suppose, are you seeing more interest from potential clients here at the moment? And is there anything you can say around the scope for large contract wins during 2026? I know it's something you talked about sort of over the course of '25. And then lastly, just to echo everyone else's comments, Congratulations, Gordon, and best of luck for the future. Nicholas Keher: Tom, so on 2026 revenue cadence, margins and costs. So as like previous years, we're expecting revenues to be broadly 45-55 weighted in terms of first half, second half as we've seen consistently. So it's good to get -- make sure everybody gets the numbers in the right place for that. And then on margins, I think there's a few moving parts to this overall. But actually, we might see it broadly consistent half-on-half in terms of gross. So very much 62% level, I think, we're kind of aiming for, for both first half and second half. In terms of cost phasing, we have just had the benefit of the restructuring event in November. So you're going to see some benefit in the first half of that as well. So -- but in terms of adjusted EBITDA loss, it will kind of mirror that revenue performance as well. I'm expecting us to show meaningful year-on-year adjusted EBITDA improvement. And well, if people plug through those numbers that we kind of put our guidance today, the market should work out at circa a negative GBP 45 million to GBP 55 million loss for the year as well as adjusted EBITDA, which is, I think, an improvement -- quite meaningful improvement on the year just gone and good against where consensus is at the moment as well. Sorry, on the second one on biopharma QC, Gordon and I have been extremely frustrated with our inability from a commercial perspective to name companies in the space that are working on the technology, but rest assured, things are happening. So in the mRNA vaccine production space, we have signed a contract in that space. We have another one that we're hoping to sign this year. In the sterility space, we have another one that we've talked about previously and in the statement today, which is a large European biopharma that is using our technology and centrally for several sites that it manages. And over time, it should expand out to those several sites as well. So -- and we have a pipeline of companies that are evaluating the technology as well. So in terms of confidence levels, biopharma QC is an area where, over time, we're going to see greater penetration of and there's a big market opportunity for us to win there. It's extremely frustrating that we can't kind of talk about the companies directly who they are. But I'm sure those eagle-eyed analysts out there will be able to go work it out over time. Gordon? Gordon Sanghera: I think we put out a fee-for-service contract with Eurofins, who they put our contract, doing sequencing in biopharma QC and looking at sterility. In the first 3 weeks, they picked up a customer contamination that saved several millions and that's just an indication of what is going to happen here. They didn't say who it was. But so just -- you can see the glimpses and is frustrating that we've got a great list of partners that we can't talk about. Charles Weston: Charles Weston from RBC. Two questions, please. First of all, on the guide. You mentioned in the release that 2027 revenue expectations for growth would be sort of similar to 2026. You've mentioned a number of 2026 headwinds that are quite specific to 2026 and in 2027, of course, you'll have a higher base of the nonresearch markets, which are growing faster. So why shouldn't we expect an acceleration in growth in 2027? And the second question, just on a couple of product-specific points. First of all, what is the timing of the Q line GridION version 2? You said 2026, but when should we expect that? And the PromethION 2 genome flow cell or chemistry, when should we see that? Nicholas Keher: Perfect. So on the guide, so 2027 could be higher than 2026. So it could be. In terms of what we're guiding to today, we're saying that it's going to be a broadly similar rate to what we see in 2026. And for the market, that's all it needs to achieve adjusted EBITDA breakeven in 2027. So that what we're trying to kind of get here is a prudent set of like market expectations that are out in the market as well. You're not wrong that we may see the -- sorry, with the growth in the applied markets and the weighting that it has, I can't -- do we see there being something wrong that's going to slow this growth down over time? No, not necessarily, but we're here to kind of give '26 guidance and how people can get to '27 breakeven and keep that in place. We'll update on '27 guidance explicitly when we get to 2027. On the timing of the GridION version 2, so the second half of this year. And then on the PromethION 2 genomes per flow cell. So actually, in -- with beta testing with customers, we can already demonstrate this. We're just thinking about how we roll this out from a product perspective effectively to our customers, and that's the key piece there. So because it's not just having a flow cell that can do it, it's actually having all of the constituent parts to make it a full product for companies as well. And we've got to be careful here. I don't want people running away and thinking that all of our business will be able to achieve this because for the PromethION flow cell and that focus in particular, there will be certain customer segments that this is appropriate for. So what's the sample type, what's the read length, what is the customer doing with the product. And that's where this will be used in the first instance, and then we need to do further development work to mean that all customers can benefit from this as well. Do you want to add anything to that, Gordon? Gordon Sanghera: No, I think it's really important that there's this terrible thing going on with all the other competitors in a race to the bottom for whole genomes. This is not what this is about. We have applications in biopharma and clinical and other application, applied market applications -- of applications in there, where that throughput will be competitive with the incumbents, and that's where we will deploy it. Everybody does not need that overcapacity. So this is a really good example of how we are becoming much more mature as a business and thinking about target customers and how we can stratify them appropriately. Somebody else somewhere else wants a much lower throughput, but a much higher accuracy. So it's just starting to really segment the markets, and we're at the beginning of that journey and then targeting the right products in our portfolio to meet that. Charles Weston: Congratulations, Gordon. Best of luck in your new endeavors. Unknown Analyst: And a couple of sort of more specific ones. Just wondering in terms of the MinION recycling decline. Just wondering what was behind that? Nicholas Keher: So nothing untoward, I think is the key piece. So for the MinION essentially, what we've noticed is that with the customers that use the MinION product because there's a lot of MinION devices out there and they are usually a lower-volume customer. And actually getting those flow cells back from the customer is more difficult than it is with the PromethION. So we kind of have the stockpiles kind of ebb and flow essentially in terms of the amount of recycling that we do. It is also about what we are focused on internally in terms of manufacturing as well. So we can turn it up and down. So this is in our control. So we can kind of look to increase or decrease recycling rates as appropriate to ensure other factors as well, not just margin, but yes, there's nothing untoward. And we could increase it again. We can decrease it. It just really depends on where we are. Unknown Analyst: Lovely. And then just as far as inventory is concerned, just wondering about how much more reduction there's a possibility of there? Nicholas Keher: Yes. So it's a big focus from the Board all the way down to essentially manage our inventory levels. I think it's fair to say that we can still work through. So we reported an GBP 80 million number, but there is clearly provisions on that as well. So the gross number is actually higher. And there is an ability to work through this inventory position over the coming years, particularly with a focus on the MinION flow cell range, whilst maintaining the PromethION where it is. And there are varying things that go into this. One is yield improvements. The better our yields go up, the less product that we're going to need, it means we can work through the inventory level. The other one is recycling rate, which actually hurts the inventory level. Because the more you can recycle, the less we chew through on an inventory perspective as well. But as we look forward, there is absolutely scope to further improve and reduce that inventory level by tens of millions over time on a gross level. And as I think we've talked to you before, we've got cash stored up there. We should unlock it. Unknown Analyst: Absolutely. Well done, Gordon. It's a long time since our first IP to IPO investment. Miles Dixon: Miles Dixon from Peel Hunt. Three quick questions, if I can. Firstly, on the restructuring programs. Nick, you already talked about the focus, but forgive me, I don't have the numbers in front of me. It looked like the headcount and the cost was broadly the same in R&D. So does this mean what's really changed? Are we seeing more go towards pre-existing chemistries and products? And is it about less going into proper blue sky research? And relatedly, we saw a really passionate presentation about the proteomics product at the London calling event. What really are you thinking about in terms of the time line to offering from a product like that? And if you can give us a clue on what kind of spend in R&D might go towards something like that, that would be great. And then finally, on the clinical definition. You clearly have seen a 60% increase in sales into clinical, but what really constitutes clinical because a very significant chunk of that revenue might actually be a clinical research application. I just want to get a bit of a better understanding about that. Nicholas Keher: Okay. Probably the third one is easiest if I just take that one first, which is, well, how we define clinical and the customer base that's in there, is anybody that's using the technology to provide a diagnosis to patient. Now clearly, we don't have like complete understanding of what everybody is doing with all of our technology at any one time. We're working on that. And once we get that, I think that will be quite interesting for us to be able to segment our marketing approach as well. So what we have to do is just look at how the customer is paid. So essentially, when we're selling these products to customers that are essentially in the clinical space who make their money from essentially providing diagnosis to patients as well. That's how we have to define it. So there could be a mix at times with like translational work that's in here because there's always going to be a bit of grayness about how they overlap. You're never going to have perfect reporting on this, unfortunately. Gordon Sanghera: Just on that, Nick, because there's diagnosis, but there's also a screening. So just to be very clear, right? The bulk of the revenues come from LDT clear-waved where the physician signs off on the test, not Oxford Nanopore providing a diagnostic tool and workflow. Nicholas Keher: Sorry. Yes, very good just catch from a legal perspective. And then on the first piece for restructuring. So the -- if you look at the R&D headcount, there's a bit of a mix thing going on here as well as Gordon has talked to. So we've made quite significant investments in things like tech transfer and later-stage development opportunities. Also -- but have to -- the average headcount, bear in mind that we made a restructuring at the beginning of the year and reinvested in higher activities and things like late-stage development, quality manufacturing, which some of which sometimes fall in the R&D piece. And then towards the end of the year, in November and the head count reductions that happened there, you still see the average benefit come through. So actually, you will see a reduction in head count in R&D next year from an average perspective, but we are reinvesting. So we are going to -- we're not -- it's very important that you guys and the investors take away as well that we're not stopping innovation. We are absolutely investing in the technology to drive future revenue growth as well. What we're trying to do is just drive that prioritization. So actually, we get better return. And then proteomics? Gordon Sanghera: So proteomics, I mean, we're very excited about the fact that we can map peptides. So true protein sequencing to come. But right now, we have what we call our early open access program request for information, and we've had some really exciting potential applications. So how much of that we can talk about because a lot of them are biopharma customers. But there's a lot of excitement. I mean, all GLP ones are like a bunch of peptides, right? And we can now read them directly at the single molecule level. Nobody else can do that. That's quite transformative. And we're just finding our feet through that early, early open access program where and who can do some interesting things to start to show where the potential market is for this novel method of leucine protein peptides. Nicholas Keher: In terms of just on the cost piece as well. So single-digit millions today. But the thing is with all -- this is a platform technology. And so whilst it might be directly single million pounds essentially on this is because the broader technology is already there to essentially build on the back of. Miles Dixon: I guess what I was asking is are we really thinking about a 2- to 4-year application? Or is it a 5- to 10-year application for those type of offerings on the platform, if you like? Gordon Sanghera: Pure-play protein sequencing is medium term, so 3 to 5 years. But peptide mapping, there are some revenue opportunities sooner rather than later. We just don't know what they are because we're creating a whole new market space and a whole new sensing element. We've just got to work through that. But we're not getting -- we're getting some brilliant lone wolf academic applications, but we're also getting some big corporate interest -- a lot of corporate interest. So it will go faster than I think DNA burn down was, but hard to predict right now. Miles Dixon: And just reiterating like everybody else, congratulations Gordon. Andrew Whitney: It's Andrew Whitney from Investec. If I could just follow up on Miles' question. Just thinking about the philosophy of the business as a whole. I think does the slight tweak to near-term spending, does that mean you are staying focused on nuclear basis for longer before you go off into sort of proteins and metabolites, right? Should we be thinking about you into the midterm as a nuclear-based business more than we were before? Or are the time lines on some of those things unchanged? They're not really dependent on near-term spending, right? They're dependent on market opportunity or whatever it is. So should we be thinking nuclear basis for the foreseeable future and put all of our thinking into that? Or is there something else there? And then my other one was just I think you mentioned some senior recruitment and maybe it's for thinking about when Francis has arrived, but where do you think you need to put people? Gordon Sanghera: I'll answer that one first. As manager this season and not here next season, I'm not about to start telling Francis who he should recruit. That's called Tottenham Hotspur. We can see what a mess that is, right? But in regard to I mentioned volatile organic compounds and small metabolites, we made a decision strategically to do biology or chemistry. We chose biology. So we've done DNA and 5 years later, we did RNA. Now we've got some really great opportunities in peptide mapping. So that's the beginning of proteomics in a very different way to everybody else, which is mostly mass spectrometry, and then protein sequencing will come. So we haven't made a conscious effort to go after chemistry right now. So we're not distracted by or inhibited by not doing chemistry. We are focused on multiomics and biology. And that's very much been the strategic rationale from day 1. Nicholas Keher: Can I just add to that as well on that because it speaks to Miles' question. We are doing a lot of thinking in the space about actually what the right product would be for the protein at the end markets we're going at. So we're getting very focused in terms of even what does the features and benefits of this specifically need to do to win. So essentially, we're really -- because again, there's loads of applications you could take this into. So if the peptide sequencing piece or a whole protein sequencing, so the peptide piece that Gordon just spoken to, we're looking now at the applications, what does it need to do to win, make sure the product can do that, make sure it's ready for launch and get a better launch profile when we actually go for it as well. And it's probably Duncan's best place to answer. Duncan Tatton-Brown: Perhaps as the coach, the departing coach can't comment, maybe I'll say a few words. I mean as a Board, I think it's very clear in this business that the quality of talent, the capabilities, particularly in research and development has been obvious to the Board for some time, a real credit to Gordon and others for building that up. I think real progress over the last couple of years of building out strength in the commercial team, again, my credit to Gordon to bringing real talent into the business. I think the executive team now has a few gaps. So I think Francis has an opportunity to bring in some more talent to grow the business over the next few years. But I think there's a lot of talent in the business, and it's just some gaps at the senior level. So it's quite encouraging, the opportunities ahead. Andrew Whitney: Congratulations, Gordon. Nicholas Keher: We've got a couple of analysts who've dialed in. So I think we've got about another 5 minutes if we could take 1 or 2 of those please, Sergei. Operator: Sure. The first question is from Kyle Mikson from Canaccord. Kyle Mikson: Congratulations, Gordon, and look forward to speaking with -- meeting with Francis soon. So I have 2 questions. I'll lump into 1 here. First is on device revenue in '26. Just curious if you could kind of parse out shipment expectations for the year as you go through this P2S to P2i conversion and other things and also the pricing tailwinds maybe from the CapEx model that I would have thought have rolled off at this point, but maybe that's providing more of a benefit this year as well? And the second question I have is about the clinical end market that grew nearly 60% in '25, You're obviously taking steps to continue your strong execution there, but is that becoming a more competitive space with long-read competitors, short-read competitors doing more in that market that maybe got more challenging to grow at that level going forward? Nicholas Keher: So I'll just take the first one on device revenue in '26 and what we're expecting there. I think you're right that actually, we are going to see continued benefits from the pricing model. It is an important piece to call out that when we changed the pricing model at the beginning of '25, actually in January, if people remember, and it went live in February, we did obviously take our customers a bit off guard here in terms of moving from placing the device for free to essentially charging for the device instead. And that meant that we actually had a bit of a slowdown in device placements during the entire '25 that from the data we're seeing, it looks if it should reverse in '26. So we may -- I think we will see higher overall device revenue growth again in '26 than consumable pull-through. No doubt we'll get that wrong. But in terms of how we look at it today, that's exactly what we should expect. And again, from a pricing tailwind benefit, we're still going to see a bit more on the margin here. There's some real fun stuff in deep accounting that I'll take people off-line on in terms of why that could be and why it will benefit margin, but particularly on the larger devices that we should see improving gross margins overall. On the second piece in clinical end market growth and competition that's kind of coming in there. Clearly, there are new competitors entering the market. I know Gordon will definitely have a view on this as well. But I think it's important to recognize why we are growing even against the legacy conventional technologies that are out there, be them short read or long read. It's the richness of information that you get from Nanopore sequencing, the direct data that you get from looking -- direct DNA, RNA, the methylation, the long read, the structural variations you get all rolled into one that essentially is meaning that we can win today as well as the turnaround time. So those don't change from the evolving landscape that we can see in front of us today. So no reason why we should necessarily slow down. And again, when I look at the Americas growth rate and I look at the customers that are evaluating or underpinning that growth, there are some big names in the clinical space that are looking at this. Gordon Sanghera: Kyle, I think the competitive landscape is a real positive for Oxford Nanopore. The fact that Illumina has finally agreed long reads are important and they've launched a synthetic long-read play. This is the fourth one, I think. So good luck with that. We have native long, ultra-long, super long, short. So we can give you any relength you want on native DNA. The fact that methylation has also come to the fore and they are launching a methylation profiler as well, again, is recognition that, that 20,000 publications and the foundational work that we have laid down on multiomics is important. So from our perspective, bring it on, native, direct, all in one read and one price will outperform the market. So we look forward to that landscape, that competitive landscape and how we are superior as a tech. Operator: Thank you. Unfortunately, that's all the time we have for questions today. With this, I'd like to hand the call back over to Gordon for closing remarks. Gordon Sanghera: I think just thank you, everybody, for your time today and over the last couple of years and see you all in 6 months with Francis and Nick leading the charge. Thank you, everyone.
Operator: Good day, everyone, and welcome to SQM's Earnings Conference Call for the Fourth Quarter and Full Year 2025. [Operator Instructions]. Please note, this conference is being recorded. Now it's my pleasure to turn the call over to Megan Suitor with Investor Relations. Please proceed. Megan Suitor: Good day, and thank you for joining SQM's earnings conference Call for the Fourth Quarter and Full Year of 2025. This call is being recorded and webcast live. Our earnings press release and accompanying results presentation are available on our website where you can also find the link to the webcast. Today's participants include Mr. Ricardo Ramos, Chief Executive Officer; Mr. Gerardo Illanes, Chief Financial Officer; Mr. Carlos Diaz, CEO of Nova Andino Litio; Mr. Pablo Altimiras, CEO of the Iodine and Plant Nutrition division; and Mr. Mark Fones, CEO of the International Lithium Division. Also joining us today are members of the Commercial and Business intelligence teams, Mr. Felipe Smith, Commercial Vice President of Nova Andino Litio; Mr. Pablo Hernandez, Vice President of Strategy and Development of Nova Andino Litio; Mr. Juan Pablo Bellolio, Commercial Vice President of Plant Nutrition and Specialty Products; Mr. Alvaro Araya, CFO of the International Lithium Division; Mr. Andres Fontannaz, Commercial Vice President of the International Lithium Division; and Mr. Max Fial, Head of Studies of the International Lithium Division. Before we begin, please note that statements made during this call regarding our business outlook, future economic performance, anticipated profitability, revenues, expenses and other financial items, along with expected cost synergies and product or service line growth are considered forward-looking statements under U.S. federal securities laws. These statements are not historical facts and are subject to risks and uncertainties that could cause actual results to differ materially. We assume no obligation to update these statements, except as required by law. For a full discussion of forward-looking statements, please refer to our earnings press release and presentation. With that, I will now turn the call over to Chief Executive Officer, Mr. Ricardo Ramos. Ricardo Ramos: Good morning, everyone, and thank you for joining us today. 2025 was an important year for SQM. We finished the year by signing our association agreement with Codelco, creating Nova Andino Litio, which enables long-term lithium production from the Salar de Aacama. At the same time, we delivered solid financial results, strengthened our operational performance across our key businesses and continue advancing our long-term growth strategy. For the full year 2025, we reported revenues of $44.6 billion, slightly higher than the previous year, with net income of $588 million. These results reflect improved market conditions, strong operational execution and the resilience of our diversified portfolio. During the fourth quarter, we saw particularly strong performance in lithium and iodine, 2 of our most strategic businesses. In Lithium, we achieved record quarterly sales volumes across both our Chilean and international operations. At Nova Andino Litio, sales volumes exceed 66,000 metric tons in the fourth quarter, more than 50% higher year-over-year, reflecting the expansion efforts we have implemented over the past several years. On the market side, we began to observe an important shift toward the end of the year. As we mentioned in our previous conference call in November, we saw the inflection point in lithium prices, driven by stronger-than-expected demand from energy storage system, together with some supply disruptions. This contributed to a tighter market environment and improving pricing trends. As a result, our average realized lithium price increased nearly 14% quarter-over-quarter, reaching close to $10 per kilogram in the fourth quarter. Given the demand momentum we have seen in recent months and limited new supply entering the market, we expect the pricing environment in the first quarter to be significantly stronger. Looking ahead, we continue to see strong long-term fundamentals for lithium, driven primarily by electric vehicles and energy storage systems. Operationally, we are currently running at full capacity at Nova Andino Litio while continue to advance expansion plans in the Salar de Atacama. In our International Lithium division, the Mount Holland mine and concentrator performed well and the Kwinana refinery continues progressing through the ramp-up phase. Early this year, we also celebrated the first shipment of lithium hydroxide from the Kwinana refinery in Australia, a milestone that highlights the progress of our international lithium strategy. Moving to iodine. The business delivered a strong contribution, representing approximately 42% of SQM's total gross margin during the year. By the end of 2025, we observed record iodine prices, supported by a tight supply conditions and a strong demand, particularly in the x-ray contrast media market. Looking ahead, we estimate the iodine market could grow by around 3% in 2026, and our sales volumes are expected to remain stable or increase slightly depending on market conditions. We expect to be able to finish our seawater pipeline project in the Tarapaca region, which will provide additional operational flexibility and should allow us to unlock incremental production capacity. In Specialty Plant Nutrition, we saw 3% volume growth during the year, driven by specialty blends and value-added products. For 2026, we expect moderate volume growth of between 2% and 4% within a stable pricing environment. Before concluding, I would also like to highlight our continued progress in sustainability. During 2025, SQM strengthened its ESG performance and received important international recognition, including inclusion in the SP Global Sustainability Yearbook 2026 and strong ratings from Dow Jones Sustainability Index, MSCI and EcoVadis. To conclude, we're entering 2026 with a strong operational momentum, improving lithium market conditions and continued strength in Iodine and Specialty Plant Nutrition. Our teams remain focused on delivering reliable supply to our customers, executing our growth projects and creating long-term value for our shareholders. Thank you for joining us today. I will now turn the call over to the operator for the Q&A session. Operator: [Operator Instructions]. One moment for our first question and it comes from the line of Lucas Ferreira with JPMorgan. Lucas Ferreira: I have 2 questions regarding lithium. The first one is your expectation of sales in 2026 of an increase of 10% from the Chile operations. If you can briefly discuss the product mix from the production side, if the company would be willing to put a bit more focus on sulfate in 2026, eventually as a way to quickly expand production. If you're fully utilizing your plant in China, if you have been able to toll more capacity there. So pretty much what's the outlook for production mix. And if you can share some production numbers for the JV? And the second question is regarding the cost of production in the fourth quarter, which was up significantly from the last quarter. I would assume that has to do with the lease payments given the higher average prices. But just wanted to confirm if there's anything else impacting the cost of production eventually these sulfate operations could a bit more expensive. Anyways, any color on the cost of production side would be appreciated. Felipe Smith: Lucas, this is Felipe Smith. Regarding the first part of your question, the sales volume 2026. We are targeting a strong sales volume in Q1. We hope to surpass the sales volume of Q1 '25 by more than 15%, which would also be a record for the first calendar quarter. As we have consistently done over the years, our strategy remains unchanged, which is to operate at full capacity and expanded in line with anticipated market growth, ensuring we are always prepared to meet our customers' needs. So aligning with that strategy, we feel confident that we will successfully allocate in the market the additional production that we expect to achieve this year, which is close to 260,000 tons. There is an appetite for lithium units in the market, especially in Asia Pacific. I will give you -- Carlos will comment about the product mix. Carlos Diaz Ortiz: Lucas, this is Carlos Diaz, CEO of Nova Andino. With respect to the production, first during the year 2025, our production went according to the schedule, reaching 234,000 LCE. Out of 50 of those were produced in China coming from our lithium sulfate producing in the Salar de Atacama. And for this year, our expectation for production have been increased, and we target to produce close to 260,000 as a lithium carbonate equivalent, increasingly even from both our production in Chile and in China. And it has been the case during the past year in '25, we expect to continue to increase our productivity driven by the efficiency improvement, the use of new technology at the same time, reducing the traction according to our sustainability strategy. And this year, we will continue to have full flexibility in terms of lithium carbonate and lithium hydroxide, both in Chile and China. I understand you're asking for machine. We are now operating at full capacity as well. Mark Fones: Lucas, this is Mark Fones from SQM International Lithium division. In our case, we also expect sales to be increasing in around 10% on an LCE basis. As we have completed the ramp-up of the concentrator, we will continue and expect to be producing at capacity at the concentrator in Mount Holland. So our sales will be heavily directed by our production. And in terms of the mix between spodumene concentrate and lithium hydroxide, they will be heavily leaned and skewed into spodumene concentrate as we continue to ramp up the lithium hydroxide plant in Kwinana. Gerardo Illanes: Lucas, regarding your question about cost, I think there may be a mistake in those numbers because if you look at the total cost per ton of the Lithium and Derivatives division, third quarter versus fourth quarter, it's quite similar. But you would see that the average price of lithium in the fourth quarter was higher. And consequently, within the cost line, we have a higher portion of lease payments to CORFO. Bear in mind that within the cost of goods sold, we have the cost of our Nova Andino Litio division and also the International Lithium division that is becoming more relevant in terms of total volumes within the business line. Lucas Ferreira: That was exactly my question, Gerardo, if there was any effect other than the lease payments in the quarter. It was very clear. Operator: One moment for our next question and it comes from Andres Castanos-Mollor with Berenberg. Andres Castanos-Mollor: Congratulations on the strong results. So your EPS shows an impact from higher minority interest, but we don't see yet a dividend paid to Codelco in the cash flow statement. So 2 questions about this. First, can you provide some guidance on how to calculate the minority interest going forward? And can you please provide also some guidance on when will we start seeing dividend payments to Codelco and how these dividends will relate to the minority interest? Ricardo Ramos: Andres, Ricardo Ramos speaking. The detail of the agreement with Codelco is public and it's a shareholders' agreement, how we calculate the dividend to Codelco every year. But in very simple terms, you have the net income of Nova Andino and from the portion, most of the Nova Andino net income is related to lithium business. And nowadays, [ 33,500 ] metric tons of lithium are allocated to Codelco and the rest allocated to SQM. Using this proportion, we allocate the net income for both companies. That's a simple way to do it. It's just a little bit more complicated, but it's public and you can review in the shareholders' agreement we have both parties. We expect to pay the dividends during April, I think during April, May, but I think April is going to be the month. We are going to release every quarter our best estimates and assumptions of the portion of the dividend to Codelco that is going to be paid at the end of the year. Andres Castanos-Mollor: So a follow-up, if I may. The earnings that we see the minority interest reflects a proportion to the 33.5 kilotons or reflects a proportion of the 50% that Codelco controls? Ricardo Ramos: The minority interest, we put the dividend to Codelco and this dividend is related with the 33,500 metric tons of lithium and the net income allocated to this 33,500 metric tons. Operator: Our next question is from Ben Isaacson with Scotiabank. Ben Isaacson: I have 3 questions, and I'd like to ask them one by one. The first question is on iodine. You sold much more than I think the Street was expecting in Q4, but you're also looking for stable volume in '26, especially given that you have the seawater pipeline coming on. I'm just curious, why did you sell more than expected in Q4, but you're going to be flat on volume in '26, even though you have the pipeline coming on? Pablo Altimiras: Ben, Pablo Altimiras speaking. I would say that the main reason is what we didn't see some capacity from third parties that was expected to come. So that's the reason why finally, we sell more in Q4. Also, we are seeing good signals in terms of the demand. Actually, demand of last year in iodine growth more than expected. According to our numbers, finally, the demand growth 0.6%, where the expectation was to grow almost 0. So that was a good sign. So we have the product to deliver. In the case of this year, we are expecting some capacity. Actually, we are expecting the new projects in Chile are coming. Our first estimation was the first semester. Right now, maybe it will happen in the second semester. So we -- that's the reason why finally, we pretend to sell much more or less the same amount. Having said that, you know that SQM strategy, you are always putting more capacity and our idea with the new project is to have a capacity to respond to the market needs. Ben Isaacson: My second question is on Tianqi. They are -- they have filed that they are now an active seller of, I think, maybe 3 million shares or so and potentially that could grow. Given that you see significantly higher lithium prices, iodine is doing well, potash and the SPN business seems fine. Have you been in discussions to potentially buy back some of those shares and keep them out of the market? And if you haven't, is that something that you would be willing to consider? Ricardo Ramos: We are not under any kind of discussion about this point, first. And second, there's no -- from a legal point of view, you cannot buy back shares in Chile. Ben Isaacson: Okay. That's easy. Let me go to my third question. And we're starting to see sodium-ion batteries really inflect this year and improve on key metrics like energy density, cost, et cetera. I was hoping you could talk about what the risks are to lithium demand growth for both EVs and for energy storage from sodium ion? And how are you managing those risks? Pablo Hernandez: Ben, Pablo Hernandez speaking here. So we have indeed heard a lot of sodium-ion batteries in the market, as you have mentioned. But we still strongly believe that lithium is the best placed item to be used in these batteries in our conversations with the market and understanding of the market. There is -- we see a small potential market space for the sodium-ion batteries, but we feel very strongly that lithium will be a dominant technology for the future. Operator: Our next question comes from Corinne Blanchard with Deutsche Bank. Corinne Blanchard: Could you -- I want to go back on the lithium expectation for the year. So you mentioned a pretty strong 1Q, 15% up year-over-year. Can you talk about the expectation of the cadence 2Q through 4Q? And then maybe if you can share as well what you hear from Chinese customer, like trying to get a sentiment on what people are seeing there on the market. Felipe Smith: Yes, Corinne, Felipe here. Yes. Well, as I said before, 15% for the first quarter compared to the Q1 '25. And we expect an increasing volume quarter-by-quarter, ending up with, hopefully, the largest volume in Q4, okay? As I said also in the previous question, we are planning to sell more or less in line with the increase in production. But if we have opportunities to sell a bit more, of course, we will try to take them. Just for your information, we have today about more than 80% of our volume is already contracted. So we are leaving some space for spot sales, trying to maximize our opportunities and margins. And your question about the Chinese customers. Well, as I said also, there is a strong appetite for lithium units, especially in Asia Pacific, and China is not an exception. On the contrary, we have been getting a lot of inquiries for trying to increase our volumes, but we want to have a very diversified customer portfolio. So we manage that carefully. Corinne Blanchard: And maybe another question. So can you talk about like the pricing expectation? You mentioned having about 80% under contract. So I'm assuming that's looking at the current pricing or like what we have seen in the last 3 months. Can you just remind us how you look at it for the contract? And then just overall, what's your pricing view for the year for the market? Felipe Smith: Yes. This is the best question, of course, which nobody can answer, but I will try. After reaching the lowest point over the last 4 years in the second quarter of 2025, our average sales price reached around $10 in Q4 '25, aligned with market indices, which is good news. Our realized prices remain, as always, mainly linked to those price indices. Consequently, our sales price in Q1, I can say now that will be substantially higher than Q4 2025. That is one very good news. And however, if you ask me to go further beyond that, it's more difficult. I can only say that prices will remain volatile this year. It is very difficult to predict what will happen in the other quarters. But what I can say without my boss being upset with me, is that prices should be closer to current price levels than the levels we saw last year. I hope this is good for you, Corinne. Operator: Our next question comes from the line of Marcio Farid with Goldman Sachs. Marcio Farid Filho: Follow-up on my side. Looking at your presentation, you have Chile capacity increasing to 240,000 tons by 2028 and the earlier presentation pointed to 2026. So just trying to understand what led to that change? And it seems like that you guys are privileging China over Chile capacity. I'm not sure it's because of CapEx per ton is more efficient. And just trying to understand how should we think about production growth and the mix between Chile and China in the next couple of years would be great. And secondly, on the iodine side, you just mentioned 3% expectations in terms of demand growth, lot pricing. Obviously, profitability has been quite strong for the last few years. And it's always surprising to see that the supply response has been relatively slow. And you suggested that seems like growth that was expected in the later part of last year has failed to materialize as well. So just trying to understand your level of conviction on the iodine market that we can continue to see this level of profitability and if there is any risk in terms of supply response to the elevated prices. Carlos Diaz Ortiz: Marcio, Carlos Diaz speaking. Regarding your question of lithium expansion, the 240,000 expansion of our chemical plant Antofagasta been delayed into 2028 as a consequence of optimization and efficiency project we have been developing in Salar de Atacama, allowing us to increase the lithium sulfate production. But it's important to mention that the total production we have forecast hasn't been affected. And actually, our total production expected for this year is increasing compared to the previous announcement. So finally, it's an optimization of the CapEx and going to produce more every year. Pablo Altimiras: Pablo Atimiras speaking. Regarding to your question about iodine, the perspective that we have for this market is quite positive. As we already said, our expectation for this year is that the demand will grow 3%, which is a big jump compared to the growth that we saw last year. And also in the long term, our view about the demand also is positive. That's the reason why we have been investing material resources in expansion. Remember that some years ago, we opened Pampa Blanca. Right now, we are opening Maria Elena. And also, we are close to finish our project of the seawater pipeline in order to be able to continue to grow and to have more capacity and flexibility. Our strategy is to be there to deliver the iodine that the market needs. And actually, with the new investment, we intend to produce more than 15,000 metric tons this year. And also after the water -- seawater pipeline project, we pretend to reach a capacity that will surpass the 17,000 metric tons of per year. Operator: One moment for our next question. And it comes from the line of Cesar Perez Novoa with BTG Pactual. Cesar Perez-Novoa: The first one, could you please provide an update on the ramp-up trajectory of the Kwinana refinery? And if you could provide a volume forecast for Mt Holland throughout 2026. Additionally, if you could detail the current status of the engineering studies and regulatory permits for the proposed expansion of the mine and concentrator. If this expansion would be able to proceed, what capital expenditure range would we be looking at? And my second question relates to your exploration activity within Australia and other international jurisdictions. If you could provide an update on that, that would be extremely helpful. Mark Fones: Thank you, Cesar, for your questions. I will try to go one by one over them. This is Mark Fones. So regarding your question on the expansion of the mine and concentrator, remember that the final investment decision that we're supposed to take this year refers only to the mine and concentrator. We expect that to be brought to the Board's respective Boards, so both Wesfarmers and SQM by mid this year. And its output is still subject, of course, as you well mentioned, to the environmental approvals and the engineering studies. Both have progressed well. So we expect ahead of the decision to have a relevant milestone on the approvals, which is progressing well. And the engineering studies has also been progressing well. As you all know and as was usual on our previous investment decision, we take our capital investment decisions with above 30% advance in engineering. We expect to have that advanced by mid this year. And relevantly in the concentrator, we expect to have around 50% engineering progress. So that has been moving well. And regarding your question on CapEx, on the expansion, we haven't yet defined a number on investment CapEx, but I can tell you that we have allocated within our 2025 and 2027 CapEx projection, we have allocated around $200 million for the expansion on the concentrator for Mt. Holland in 2027. Your next question was on Kwinana refinery and having production outputs and projections. I can tell you, first, on the mine and concentrator, as I explained briefly before, we are already producing at capacity. We expect to have such capacity production within 2026. That should be a range for SQMs 50% of between 170,000 and 180,000 tonnes of sodium concentrate, 6%. That's our portion along this year. The more tough and difficult question has to do with the projection and guidance on production on Kwinana. As you well known, we've been under ramp-up lately. It's difficult to come up with precise numbers in such scenario. However, I can tell you that the ramp-up has been affected by intermittent other issues as has been briefed by our partners, Wesfarmers before. But it has already been tackled with the studies and engineering development. So we expect to have that solution by mid this year, completed solution. It's important to note there that our emissions have been within approved limits anyway. So because of this, we are now expecting ramp-up to move into 2027. Therefore, as I mentioned before, that volumes of sales will be heavily leaned into spodumene concentrate also this 2026, which provides us the flexibility of selling profitable spodumene concentrate in the meantime. Regarding your exploration question, we are focused today in 3 main areas. So Australia, Namibia and Canada. So let me go probably a little bit over each one of those briefly. In Australia, we have 4 earning agreements or partners, if you may. Those 4 early exploration agreements are distributed across Western Australia and the Northern Territories. Each one of those are in different early stages, if you may. A couple of them are on the surface exploration and a couple of them are already undergoing drilling programs. And we expect to have progress and developments during this year, 2026. The 2 drilling programs, if you're interested, are planned at Mount Roberts and at the Northern Territories areas where pegmatites are already been identified. Regarding our exploration activities outside Australia, still early days in Namibia. We are conducting our Stage 1 drilling program with our partner, Andrada Mining there. And in addition to have confirmed some very good grades at surface, we have also confirmed several bodies of pegmatite, in this case, spodumene at depth. But it's still to be seen how well spread, how big they are. So it's still early days, and we expect to have a second stage of exploration during this year as well. And finally, regarding Canada, as you well know, we established SQM Canada for exploration purposes last year, and we are currently exploring our own [ land ] in Canada as we speak. Operator: Our last question comes from Juraj Domic with LarrainVial. Juraj Domic: So in the press release, you mentioned some certain supply disruptions in the lithium market. And just to confirm if this is related to the news we've been hearing in Zimbabwe or if you have seen disruptions in other countries or areas? And my second question is regarding the permit process for Salar Futuro. If you have any timing or schedule when we can have any news from that? Pablo Hernandez: Juraj, on the disruptions on the lithium market, I believe what you're asking is related to when we talked about the supply, and that was mainly related to some lepidolite producers in the second half of last year who had some government restrictions in China that actually ended up in some of them stopping their production. Carlos Diaz Ortiz: Carlos speaking again. With respect to the Salar Futuro project, we continue working on that, and we expect to apply the environmental approval in the middle of this year. Operator: Thank you so much. And this concludes today's conference call and Q&A session. Thank you all for participating. You may now disconnect.
Eamonn Hughes: Good morning, everyone. I'm Eamonn Hughes, Investor Relations Officer, and you're all very welcome to Bank of Ireland's 2025 Results and Strategy Update. Myles will shortly take you through an overview of our business and how it performed over the last cycle. Mark will then go through the key points from our 2025 financial results. And then we'll turn to our strategy update covering our plans for the next 3 years to 2028. We'll then wrap up with the investment case for the group and open to the floor for your questions. Over to you, Myles. Myles O'Grady: Good morning, everyone, for those with us in person in London and those on the call. You're very welcome to our 2025 results and strategy update. I'd like to start by giving you an overview of the unique shape and deep reach of Bank of Ireland's franchise. Put simply, we have an unrivaled position in Ireland with complementary international businesses. And what you see on the first slide is that unrivaled position across Mortgages, Everyday Banking, Corporate & Commercial Lending and Wealth and Insurance. Our position is underpinned by 4 long-established respected brands, Bank of Ireland, Davy, New Ireland and Bank of Ireland U.K. This embeds the group into every community in Ireland, its economy and indeed its society. This is key to our growth over the coming years, complemented by supportive businesses outside of Ireland. Being embedded in Ireland means being embedded in one of Europe's fastest-growing economies. This is a highly attractive market driving balance sheet growth. Ireland's average annual GDP growth is forecast to be 3% out to 2028 and as demographics are also highly supportive. These include a population expected to increase by 17% by 2040. A structural growth story in wealth management, sustained credit formation. And at this point, private sector credit grew 6% last year and Ireland's national development plan. This plan aims to drive Ireland forward with a EUR 275 billion public investment in infrastructure, unlocking economic and balance sheet growth. We're also mindful of the risks presented by the geopolitical uncertainty. Ireland is navigating these risks well with a resilient and growing economy. Healthy public finances can help to shield against volatility and Bank of Ireland's strong balance sheet is well positioned to manage potential future challenges, underpinning a bright future for the group. Bank of Ireland's unrivaled position in Ireland and the strength of the Irish economy come together on Slide 8. This combination is driving outstanding business performance. Over the past 3 years, new to bank customers increased by 18%. We have significantly improved customer satisfaction. And this has been supported the balance sheet momentum you see here. Our Irish loan and deposit book grew 6% in 2025, while wealth assets under management increased by 9% to an all-time high. Capital generation was 270 basis points last year, bringing the total over the cycle to 920 points. That's EUR 5 billion of capital generation. On Slide 9, we recap on the returns profile since 2022. In early '23, we committed to a range of financial targets, which have been delivered. That's ROTE, cost income ratio, a progressive dividend and returning surplus capital. This performance has supported strong distributions, totaling EUR 3.6 billion over the last cycle, equivalent to 37% of our starting market capitalization. And for 2025, this includes EUR 1.2 billion of distributions, which equates to 100% total payout of earnings, comprising a progressive dividend per share of EUR 0.70 and the EUR 530 million approved share buyback we are announcing today. We enter 2026 and our new cycle to '28 with real momentum and strong capital generation. And I'll share more on this with you shortly. For now, I'll pass over to Mark, who will take you through last year's financial performance. Mark Spain: Thanks, Myles, and good morning, everyone. We've had a strong financial performance in 2025. Slide 12 sets out the key highlights, including continued momentum in Irish loans and deposits, both up 6%, growing fee income led by our Wealth and Insurance franchise, ongoing cost discipline and robust asset quality. All of these contributed to capital generation of 270 basis points and support total shareholder distributions of EUR 1.2 billion. Subject to shareholder approval, the ordinary dividend will be EUR 0.70 per share, up 11% compared to last year, reflecting our confidence in the bank's prospects. We've had a good NII performance in 2025 with balance sheet growth, bond purchases and our structural hedging helping to counter the impact of lower interest rates and planned deleveraging. We expect NII to grow from 2025 levels to around EUR 3.4 billion in 2026, above our expectation of the high 3.3s. The key dynamics here are business momentum and hedging, playing remaining interest rate and deleveraging impacts, including our recently announced intention to run down our U.S. acquisition finance book. We expect stronger growth in 2027, where we are upgrading our prior guidance of the mid 3.5s with NII of greater than EUR 3.6 billion now expected. As part of our strategy update, we have published new guidance for 2028 today with NII of greater than EUR 3.85 billion expected with the potential for further upside beyond. The supportive Irish macro backdrop that Myles spoke to earlier and the breadth of our franchise both contributed to the strong growth in Irish loans in 2025. Our Irish Mortgage business had another excellent year with a greater than 40% share of new lending for the third year running, while retaining our commercial and risk disciplines. International corporate contracted as planned due to the portfolios and runoff and FX was a headwind in 2025. In 2026, we expect to see net lending growth of around 4%, once again led by our Irish books. We saw good growth in customer balances in 2025. This was led by our Irish Everyday Banking propositions, where flow to term dynamics reduced as expected. Retail U.K. balances were higher with a good performance by our Northern Ireland business. For 2026, our expectation is around 3% growth in deposits, led by continued strong growth in Irish Everyday Banking. Slide 16 provides more detail on our structural hedge, which is one of the key drivers of our NII trajectory into 2028 and beyond. Rollovers and additions meant the average yield in the hedge rose 16 basis points to 1.89% in 2025 with an exit yield of 1.98%. And there's more to come this year. Helped by our modest growth in our hedge volumes and the rollover dynamic, we see fixed leg income increasing by 10% in 2026. The group's total fee income increased by 7% last year. Wealth and Insurance, which now accounts for nearly half of total fee income, had a really good performance with fee income up 12%, reflecting the benefits of our strategic execution over the past 3 years. For 2026, we expect to see around 4% growth in fee income, driven by Wealth and Insurance. Operating expenses rose 3% last year, meeting our guidance. Staff and other costs were higher. This reflects a number of factors, including wage inflation in the competitive Irish labor market and ongoing investment in digital capabilities and customer experience. Efficiencies from our restructuring and investment activity were equivalent to around 2% of the cost base. And we'll see more of this over our new strategic horizon. On Slide 18, I'd also note the noncore charge of EUR 430 million. Majority of this relates to U.K. Motor Finance. EUR 153 million of restructuring costs supported the delivery of our efficiency program. One presentational change to call out here is that from 2026 onwards, restructuring costs will be included above the line. We expect to see total costs of around EUR 2.2 billion in 2026. This is comprised of 2 parts. Firstly, underlying operating expense growth of around 2%, reflecting inflation and investment, including targeted higher investment to support strategic delivery, offset by efficiencies. And secondly, restructuring costs that are expected to be in line with the 2025 outturn. Looking further out, we expect total costs to be stable at around EUR 2.2 billion over the strategic cycle. Moving now to Slide 19. The impairment charge in 2025 was EUR 193 million or 23 basis points cost of risk, better than we had anticipated following a strong final quarter. Within that, net loan loss experience and portfolio activity was EUR 65 million, with net writebacks in H2, reflecting the team's execution on the ground. Macroeconomic and model updates account for the balance of the charge with a geopolitical PMA of EUR 40 million, providing protection against potential volatility. The NPE ratio finished 2025 at 2.2%, down 40 basis points in June, reflecting the H2 progress. Looking ahead, we expect the cost of risk to be in the low to mid-20 basis points. Group is a very capital-generative business model. Organic capital generation was 270 basis points last year. Around 1/4 of this was consumed by investment in lending and CRT amortization. IRB model scalers consumed a further 40 basis points with an objective to at least partially mitigate these over time. We've today announced distributions totaling 225 basis points in respect of 2025 performance. Our reported CET1 ratio was 15.1% after EUR 1.2 billion of distributions with 100% total payout ratio, which compares to 80% last year. For 2026, we expect net organic capital generation of around 250 basis points. We've updated our CET1 guidance for the new strategic cycle to around 14.5%, which we believe is an appropriate level to both protect the bank and support the ambitious growth plans we are setting out today. Our objective is to operate at this new CET1 guidance. Slide 21 recaps the building blocks of our 2026 financial guidance that produce around 12.5% statutory ROTE expectation for 2026. On this slide, I would note the changes to the presentation of a number of our key metrics. Having taken on board market feedback and reflecting on peer approaches, from 2026 onwards, we will simplify our reporting by including restructuring costs within our operating expenses and within our cost income ratio and presenting ROTE on a statutory basis. To conclude, as we start 2026, we have real momentum across our franchises, which sets us up very well as we start our new strategic cycle. I'll pass you over to Myles now, who will take us through our new strategy. Myles O'Grady: Thanks, Mark. The strategy we are setting out today is centered on 3 priorities. The first is continued business model momentum in Ireland, driving growth. And earlier, I spoke to the very strong balance sheet growth over the 3-year period to 2025. That growth story continues. We expect lending growth of 4% per year, deposit growth of 3% and AUM growth of 10% and in turn, creating more value from a highly attractive Irish economy. The second is allocating capital to optimize returns. We're allocating more capital to the island of Ireland while capturing the most attractive opportunities in our corporate and U.K. franchises. And the third, investing for the future, improving resilience, customer experience and efficiency. This ambition underpins the financial targets we are setting out today. We see income growing at an annual growth rate of more than 4%. This top line momentum, supported by our investments and cost discipline is transforming operating leverage. This is reflected in our cost income ratio expected to fall to mid-40s by 2028 with an ambition to go beyond. Combined, this sees our return on tangible equity, that's a clean statutory ROTE increasing by more than 500 basis points to greater than 16% by 2028. As set out on Slide 25, the group has a strong portfolio with complementary capabilities across our businesses. These interlinkages between our Retail, Wealth and Insurance and Corporate & Commercial teams offer significant potential. Examples include 2.2 million retail Ireland personal customers, of whom more than 150,000 are affluent, and this offers an important opportunity to Davy Wealth, connecting our corporate customers with New Ireland corporate pension solutions and leveraging our Davy Capital Markets business to offer more complex solutions for our corporate customers. We have the opportunity to serve more than 4 million customers at every step and stage of their financial lives. Our Everyday Banking franchise in Ireland, a core value driver for the group, has very attractive market positions. From a position of strength, we have a growing deposit franchise with EUR 87 billion of customer balances equivalent to around 1/3 of total Irish private sector deposits. And we expect continued growth in our deposit and current account franchise. Our ambition here is threefold: one, to strengthen customer loyalty through improving experience and to protect customers from the ever-increasing surge of fraud; two, to grow our customer and deposit base, supported by product innovation, for example, our Smart Start account for youth customers and our coming to Ireland product for people are returning to Ireland; and three, to drive more efficiency through technology. Delivering our strategy allows Bank of Ireland to command a leading share of new business, to deepen customer relationships and to drive further cross-sell. We are Ireland's #1 Mortgage provider, and our strategic objective is to retain that position. In the last cycle, we captured a growing share of Ireland's growing Mortgage market. Rising housing output underpinned by Ireland's strong demographics represents a clear structural growth opportunity for mortgages, supporting an expected 5% average annual book growth. Over the next cycle, we will maintain our right to win in this market while continuing to maintain pricing discipline. And we continue to enhance our capability, making it easier and faster for customers to secure a Mortgage approval. Our overall ambition is to be the unrivaled leader in Irish home buying. We are Ireland's leading wealth provider. Our Davy and New Ireland insurance businesses have more than 650,000 customers. Total AUM was a record EUR 60 billion at the end of last year. This has grown by more than 50% since we completed the acquisition of Davy in 2022. And supported by favorable dynamics across all segments, high net worth, affluent and corporate pensions, we expect AUM to grow to more than EUR 75 billion by 2028 with an objective to hit EUR 100 billion by 2030. And I expect this business to be the largest source of capital-light fee income growth out to '28 and beyond. This is supported by the strong Irish macroeconomic fundamentals, investment in our digital platforms and further cross-sell into our retail customer base. We have successfully repositioned our retail U.K. business in recent years. Our reshaped loan book and improved funding base are delivering attractive sustainable returns. Our U.K. subsidiary reported an underlying ROTE of 16% last year, continuing the trend of strong returns from this business. And throughout the new cycle, we expect growth through selective lending and mortgage products and strengthening propositions and capabilities in Northern Ireland, complemented by our specialist lending propositions in Great Britain. Slide 30 covers our Corporate & Commercial Banking division. With a very strong market position, including an SME lending share of more than 50%, we are well placed to benefit from increased housebuilding and infrastructure investment in Ireland. We're also deepening our relationships with our corporate customers, growing lending and fee income, leveraging our broader business model, including treasury services and Davy Capital markets. This underpins our strategic objective to retain our leadership position in Ireland. To deliver those business line performances I've just spoken to requires ongoing digital investment. In 2025, we delivered important enhancements. This includes the rollout of a new SME lending platform, SEPA instant payments and a wide range of customer service improvements in our contact centers. We also progressed our new mobile app and Zippay instant payments, both due for launch in the coming months. Over the new strategic horizon, we are making a conscious decision to invest more than previously planned to protect and grow our core Irish franchise and capitalize on our unique position in wealth. Priority areas of investment include operation resilience, including cyber protection, a new commercial digital platform and as referenced earlier, a scaled wealth platform and automated credit decisioning for mortgages. And in -- a new U.K. savings platform to support long-term funding needs. These investments offer a better customer experience and allow the group to deepen and grow our customer base. Earlier, I said the group was embedded physically and online in every community in Ireland. The combined power of this presence is a winning formula for our customers and a source of value creation for the group. We're also embracing AI. My focus is on creating tangible value and setting out an ambition that truly captures the positive and profoundly disruptive benefits of AI. We see emerging tangible value from our deployments to date. Contact center call transfers have reduced by more than 40% as AI connects with the help they need better and faster. AI is also protecting our customers, assessing over 1 billion card transactions last year to help prevent fraud. And we are targeting increased efficiency, reinventing our approach to KYC and customer onboarding. These are just some examples. We see real potential for AI to fundamentally improve a range of areas. These include customer sales and servicing, middle and back-office functions and changes to our technology delivery. Now bringing this together, this strategy builds on our strong momentum, delivering business and revenue growth, combined with a stable operating cost base, which creates significant operating leverage. We expect to see considerable top line growth in the coming years, and I referenced earlier income growing on average by more than 4% per year. And over that period, a continued focus on cost discipline and efficiency. As I said earlier, we are targeting a mid-40s cost to income ratio by 2028 with an ambition to go beyond. And that equates to a circa 6% operating efficiency improvement over the next 3 years. To meet our efficiency objectives, we've identified EUR 250 million of cost reduction. And there are 3 main elements to this. Firstly, our operating model, where we have redesigned and we are simplifying our organization and footprint. Two, redesigning our customer journeys and internal processes. I referenced KYC earlier; and three, rigorously ensuring our third-party providers create maximum value for Bank of Ireland. And related to this, we have radically reduced the number of third parties we work with, focusing on a much deeper, more strategic relationship with a smaller number. And Mark will provide more detail on this objective later. Slide 25 sets out how our strategy will continue to drive significant shareholder value. At its core is a more than 500 basis point increase in statutory ROTE to greater than 16% by 2028. And that equates to compound earnings per share growth in the mid- to high teens. All of which underpins continued attractive distributions to our shareholders. And we are achieving this by driving growth in Ireland from a structurally advanced economy, the strength of our balance sheet, making the best use of our capital, investing for the future in support of customers and shareholders, maintaining a very sharp focus on efficiency and competing hard, always with a focus on price discipline and risk management. Mark will now take you through our financial targets. Mark Spain: Thanks, Myles. Slide 38 sets out the macro context that underpins the balance sheet growth we expect to see over the new strategy. We expect to see CAGRs of around 3% for deposits, around 4% for loans and around 10% for AUM. For deposits and lending, we've been pragmatic in embedding some of a growing market going to new players, an assumption which sees continued growth momentum for Bank of Ireland's balance sheet. This balance sheet growth and structural hedge dynamics will help total income grow at a CAGR of more than 4%, rising to greater than EUR 4.75 billion in 2028. NII is expected to increase from around EUR 3.4 billion this year to more than EUR 3.85 billion in 2028, with the growth rate accelerating as we move through the cycle. Given the strong balance sheet drivers and the multiyear benefits from our structural hedge, which I'll come back to shortly, I see the potential for NII to reach EUR 4 billion after 2028. We expect fee income to grow by around 4% a year over the plan with W&I growing at a faster pace. The structural hedge is an important part of our revenue outlook. We see it providing a gross tailwind of around EUR 0.5 billion over the next 3 years as the yield moves towards the 2.5% level. Hedge volumes will grow over the coming years as customer balances evolve. While other hedging, for example, on our fixed rate mortgages also need to be factored into our NII, the key message here is that the structural hedge is a material positive driver, which should mechanically flow into our NII as hedges roll over. We are guiding for total costs to be stable at around EUR 2.2 billion over the strategic horizon with a CAGR of around 1% from 2025 levels. The key moving parts are inflation and investment with investments higher than prior plans to support our strategic delivery, offset by material efficiencies, driven by investment in our restructuring activity and lower restructuring costs over the period. As part of this, given that around half of our costs are staff related, we expect staff numbers to fall by around 3% each year, largely from natural attrition. As Myles said earlier, operating leverage is a key outcome of our strategic plan with our cost income ratio improving by around 6% from 52% last year to the mid-40s in 2028 and with an ambition to go further beyond that. Slide 42 provides details on our 3 areas of efficiency focus, each of which contribute broadly 1/3 to meeting our total efficiency target of around EUR 250 million that Myles spoke to. Key initiatives include completing our organization redesign, the exit of nonstrategic business lines, material consolidation of third-party suppliers, optimization of KYC and onboarding journeys and transforming our U.K. operations. Slide 43 summarizes the key drivers in our statutory ROTE building to greater than 16% by 2028 from a starting position of 12.8% last year, excluding the Motor Finance impact. Franchise growth predominantly reflects the power of our brilliant Irish Retail business and Wealth franchises. As I noted earlier, the structural hedge benefits are realized as hedges roll over at rates close to 2.5%. And while our TNAV increases, the growth is lower than RWA growth due to DTA utilization over the next couple of years. The momentum in our franchises gives us confidence that ROTE can increase further in 2029 and beyond. We expect organic capital generation to build to more than 270 basis points by 2028, averaging around 260 basis points over the cycle. Of this, around 1/4 is required to support business and lending growth. We also guide to a progressive ordinary dividend per share supported by a payout ratio of around 50%. This will leave us with significant amounts of surplus capital, which will be returned to shareholders unless there are more compelling strategic opportunities. Our objective is to operate at a 14.5% CET1 guidance, subject to customary approvals. Slide 45 recaps on our key financial targets with growth, operating leverage and returns at the heart of our updated strategy. Two items I'd mention here are: firstly, we see net capital generation of around EUR 3.7 billion over the plan, equivalent to around 1/4 of our end 2025 market cap and our expectation for mid- to high teens CAGR in earnings per share growth through this new cycle. I'd note that the EPS guidance does not make allowance for buybacks. Thank you. I'll now pass it back to Myles. Myles O'Grady: Thanks, Mark. Bringing our presentation to a close, let me recap. Today, we're setting out a strategy to create significant shareholder value by driving growth in Ireland, optimizing capital for maximum benefit and investing for the future. The strategy stands on the back of Bank of Ireland's unrivaled embedded position in one of Europe's best-performing economies and is underpinned by our proven track record of strategic delivery, which has built the foundation, enabled the momentum that drives us forward to 2030. Thank you very much for your interest in Bank of Ireland. We'll now open the floor to questions. And Eamonn, over to you. Thanks. Eamonn Hughes: Okay. As Myles said, we're now open to the floor for questions from analysts, actually first taken in the room before moving to those who have joined us online. And actually, for those of you in the room, you'll note that there's actually a microphone, I think, in the front -- just in front of you there. So please raise your hand and we'll take them in turn. So actually, just Andy we will take you first, if that's okay. Unknown Analyst: Well. Yes. Just one for me really. The increase in the CET1 target to 14.5%, I thought there was probably more of a chance that you might reduce that at some point rather than increasing it. So what feedback have you had from your -- maybe your debt holders that I can't imagine that they were unhappy with anything, but what was it that made you increase that number because it probably looked like there was room to reduce that rather than increase. Myles O'Grady: Yes. Thanks, Andy, for that. So as we embark on a new strategic cycle, our updated capital guidance to 14.5% allows the group to protect and safely grow our business. So it supports strong shareholder distributions, balance sheet growth and indeed business model investment. And at this capital level, we see growth coming through in the strong ROTE momentum. So we are with an updated clean ROTE of more than 16% by 2028, underpinned by average capital generation of 260 basis points. So this is the very nice balance between growing our balance sheet safely with a strong capital position and generating very strong capital returns. And of course, we can link that to distributions, the communication of a EUR 1.2 billion distribution for '25, that's distributing 100% of profits. It's a progressive DPS of 11%. It's an increase in payout from 80% last year to 100% this year. So it's in that context we thought about our capital position out over the next 3 years. Thanks, Andy. Eamonn Hughes: Dermot, next? [Audio Gap] Myles O'Grady: Yes. Thanks, Dermot, for that. And the question in the heart, the competition question, I mean, firstly, the -- I called out 3 really important components to our strategy today. So driving growth in Ireland, optimizing capital allocation and investing. And really, that growth in Ireland is the big story here. And so we expect the lending book to grow by, on average 4%, the deposit book by 3% and our wealth assets on average by 10%. Of course, driving top line growth of 4% on income, translating with op lev into ROTE improvement of 500 basis points. So with that as a backdrop, I mean, from a competitive perspective, for sure, Ireland is an attractive market. You heard me say it earlier, but it's also a competitive financial services market across a range of products. There's about 20 market players, including traditional and FinTech providers. And growing our Irish business, part of that strategy, again, very encouraged by the great momentum coming out of the last cycle, growing lending and deposits by 6%, AUM by 9%. So we enter '26 from a position of strength, a very strong franchise. Competition is picking up a little bit for sure. We compete on 3 pillars. One is a footprint that offers a deep business relationship and customer service. Two is an ever-increasing digital capability. I referenced earlier a new mobile app and faster peer-to-peer payments coming out soon. And the third pillar, of course, is always going to be to offer value to our customers while maintaining pricing and risk discipline. And from a guidance perspective, Dermot, I think we've been pragmatic in embedding some of a growing market going to new players. I think that's a reasonable assumption, an assumption with the Bank of Ireland balance sheet and franchise grow. And on the capital point, so certainly, in setting out an updated capital target of 14.5%, I mean 2 observations. One is in moving to a statutory ROTE with a target of greater than 16% is a sign of our conviction to operate in line with this new guidance, meaning if we hold excess capital and clearly, statutory ROTE would be reduced. And on a relative point, looking forward, we expect to operate at 14.5% each year. And given the need to hold about 25% of cap gen for loan growth, 100% payout would not be a constraint looking forward. I think that's it. Thank you. Thanks, Dermot. Eamonn Hughes: We move to Sanjena next. Actually, just if you can press the button on the mic, I think it will help in terms of getting picked up the question. Sanjena Dadawala: Sanjena Dadawala from UBS. I'm trying to better understand the net capital generation number of EUR 3.7 billion, which, as I understand, is the capital available for distributions after growth. So while the P&L to '28 is in line to ahead of consensus, the net cap gen projection is below what consensus currently has in terms of total distributions of EUR 4.2 billion or so. Potentially half of the cap can be explained by higher RWAs, but if you could help reconcile the rest. And then secondly, on fee income. So the growth number of 4% per annum, while still good, is lower than the usual 5% that we've talked about in the past. Are there any specific factors weighing on this? Myles O'Grady: Super. Sanjena, thank you for that. I'll ask Mark to take some of those. So just maybe to frame the capital gen question. So that EUR 3.7 billion underpinned by average capital generation of 260 basis points per year. That's really important to make that point because that momentum continues and again, of course, in support of a ROTE that is growing. And Mark, on some of the moving parts... Mark Spain: Yes, on the -- yes, Sanjena. Yes, on the net cap gen, so maybe a couple of things there. So one, we need about 25% of organic cap to invest in growing the business. So that's certainly one factor. A second factor you might just think about is our DTAs, actually, that benefit we have in '26 and '27. We actually use our DTAs by the middle of 2028. So those are probably 2 things just to bear in mind as you think about that. And on the fee income, the fee income about 4% over the cycle, maybe 2 things I'd call out there. So one is, we had a really, really strong performance in 2025, really pleased with that. We do call out in the detail in the report some modest one-off benefits in our Life business. So I think when you adjust for that. And then the second thing is in our Retail Ireland business, we expect a change in interchange arrangements from the beginning of 2027, which costs about EUR 15 million a year. So [ we've allowed ] for that in the 4% as well. Myles O'Grady: And maybe just as a final point, I spoke earlier about the ability for our Wealth business to really supercharge our fee income. And against the backdrop of AUM growth of 10%, that fee income component that's coming from Wealth is a hugely important part of our capital-light income model growth. Thanks, Sanjena. Sanjena Dadawala: Sorry, can I just follow up on the first one? What -- you mentioned TNAV growing less than RWAs, but would you be happy to put some numbers to that? Mark Spain: Yes, for sure. So with loan growth around 4%, as we say, and Ireland growing faster within that, Sanjena. Then if you think about RWA growth as a second leg on that, a little bit less because of the mix factors, for example, Irish mortgages, U.K. mortgages will carry lower risk weights than corporate. And then TNAV because of the benefit of the DTA in particular, growing at about 1% to 2% a year over the cycle. Eamonn Hughes: I think Guy just had his hand up first, sorry. We move to next. Guy Stebbings: It's Guy Stebbings at BNP Paribas. The first question was on net interest income. Thanks for all the exhaustive guidance today. Beyond '26, just 2 particular points I want to focus on. On the structural hedge, there's some sort of useful color, but maybe just be a bit more specific in terms of maturing yields beyond '26, so where you expect the yield for the total hedge to go to? And then on competitive dynamics, I think you talked a little bit about maybe some share giveaways perhaps. But in terms of any impact on product spreads captured in the guidance, that would be helpful. And then back on capital again. I guess I'm trying to understand, is the 14.5% the number because that's what's practical given the strong starting point, the strong capital generation and what you can realistically distribute or is that the number because that's the right number you think the business should run to even well beyond 2028? Myles O'Grady: Yes. Thanks for that. And Mark, I'll pass it to you on the NII-related questions. On capital, again, it's just that point that we start into a new strategic cycle. And hopefully, you've got a very strong sense that this is a growth story for Bank of Ireland out over the next 3 years. So we want to make sure we grow our balance sheet, grow our business really safely and make sure we've got the right capital to ensure that we can reward shareholders, that we can grow our balance sheet, that we can invest in our business model as well. It's in that context. And again, I'd make the point that linking a 14.5% capital that we can run the business at combined with a target statutory ROTE of 16%, I think is a good balance to think about how we think about our conviction around that level of ROTE performance. And Mark? Mark Spain: Yes. On the NII, I mean, maybe just to stand back for a second, I mean, this is a real story of continuing real momentum here in our NII trajectory. I think we were out with you a year ago. We gave a positive outlook on our NII trajectory to 2027. We've upgraded that outlook several times since, and we're upgrading again today. So again, specifically, we're upgrading 2026 around EUR 3.4 billion, previously high 3.3s, 2027, now greater than EUR 3.6 billion, previously mid 3.5s. And then the new guidance today of greater than EUR 3.85 billion and the key drivers before that balance sheet growth largely in Ireland and the benefit of the structural hedge. And I did note in the presentation that I see the potential for the business to reach EUR 4 billion, but after 2028. And specifically then on the structural hedge maturing yields, actually, we've got some details in the slide materials. But in 2027, 1.16%; and in 2028, 1.06%. So again, when you think about the reinvestment yield, that is quite a delta between the reinvestments and the maturity. Eamonn Hughes: Okay. [ Perlie, ] I think we go to you next. [ Perlie ] can just press the button actually. Unknown Analyst: I am sorry about that. On NII, yes, you've mentioned that you've upgraded guidance a few times. And if I look at the building blocks to '26, based on today's rates and what happened in Q4 implied, I think one could make the case that even EUR 3.4 billion looks like there's some conservatism embedded in that. So what are you -- what are some of the areas that could drive it higher or lower? Competition you've mentioned? And what about deposit migration to term? It looks like it's a little bit slower than expected. So just what are you assuming over there? And then on the cost side, you've mentioned 3% reduction in headcount. Is that in relation to the EUR 250 million AI efficiency saves that you identified? Myles O'Grady: Yes. Thanks, [ Perlie, ] and good to see you this morning. So I'll ask Mark to take the dynamics on interest income and certainly any potential for upside. On the cost piece, maybe if I anchor my response to the question in terms of what we're doing with operating leverage, really important. So in the context of top line growth of income of 4%, but also creating significant operating leverage from efficiencies. I've spoken about a mid-40s CIR, cost income ratio by FY '28. That's a 6 percentage point improvement versus FY '25. And certainly, when we get to that upper end of the mid-40s, we want to do more and do better. The EUR 250 million cost savings that are built into that overall outlook for that mid-40s CIR, I mean, there are 3 components that we called out. Much of the work has been done to get those benefits. So it's the operating model we have deployed. It is our -- going after our customer journeys and our internal processes and also making our third parties work really hard. Within the EUR 250 million, I would say, of those savings in the region, of about 20% are coming from AI. And that's important because when we go beyond 2028 and our objective to create more leverage and take our CIR lower again, AI will play a bigger role in supporting that further improvement in operating leverage. Mark Spain: Yes. So just on the NII, maybe a way to think about this is just year-on-year, and we can look at this in different ways. But if I think about year-on-year, 3 moving parts relative to 2025. So firstly, rates and FX are lower relative to 2025, and ECB rate 25 bps lower on the year. BOE also lower as well. So about EUR 110 million of a headwind there. The deleveraging portfolios, and I think probably -- the market probably hasn't fully taken into account the impact of our U.S. acquisition finance announcement of about EUR 70 million impact over 3 years, about EUR 30 million of that this year. So together, they're almost EUR 200 million of a headwind. But against that, we've got the balance sheet growth, the structural hedge and the full year impact of the bond purchases we've conducted and they're more than offsetting that, that gets us to the circa EUR 3.4 billion. So happy to get into that in more detail, but those are the big moving parts. Eamonn Hughes: Okay. I'll move down to Sheel, you're next. Sheel Shah: Sheel Shah at JPMorgan. I've got 2 questions, please. Firstly, on the capital, again, I'm struggling to understand the point around protecting the bank. You've got RWAs that are growing. You've got a capital base that is also growing, but the capital ratio has now increased on the back of that in terms of the target. Are you holding anything back from maybe M&A or further growth opportunities beyond the organic that you're seeing across the plan? And then secondly, on costs, could I ask around the investments that you're making and the timing of these investments and the timings of the efficiencies? You mentioned that the bulk of the investments have already been made around the org design. Could I just press you as to the shape of these costs? I appreciate the total cost base is looking flattish, but more around the cost investments and the efficiencies. Myles O'Grady: Very happy to, Sheel. Let me take the capital and M&A-related question and Mark, the profile of those cost savings. So Sheel, I mean, this morning, we're presenting an organic strategy for Bank of Ireland out to '28. So everything we've set out today is organic growth in the context of our lending book growth, the deposit book growth and of course, our wealth business as well. So nothing included in today's material for M&A. And of course, we do have the benefit of 2 transformative acquisitions in recent years, Davy, Wealth and of course, the KBC back book as well. And my experience is that M&A can be opportunistic. And certainly, if any opportunities present themselves. I spoke about the importance on driving growth in Ireland. So that will generally be my focus in that regard. We'll always think about an acquisition in the context that it must be aligned to our strategy, hence the Irish story. Two, that we can integrate it to ensure we generate synergies and further that it generates strong attractive returns. So it's not an explicit linkage, but I think we can say that we are keeping a very strong capital position to grow our business and also, of course, be ready to avail of any opportunities should they present themselves. Mark Spain: So EUR 250 million target over the cycle, maybe just give a bit more color on it somewhere between around 12% and 14% of our addressable cost base. That's offsetting inflation and also the material investments we're making and the 3 buckets we spoke about op model, third-party and AI-enabled process excellence. If I think about the phasing of that EUR 250 million, somewhere around 40 -- 40/20 over the 3 years. There are clear initiatives in place, and I'll just come back to those in a second. But just to give you a sense of momentum on that, actually in our disclosures for 2025, you can see we've got EUR 38 million of efficiencies. That's mostly H2 weighted. So about sort of run rate of somewhere between 2% and 3% in the second half of last year. We need to get above about 4% in our cost base. So we're building towards that. And as you note, actually, the members of our exec team are actually all in the room this morning. So I know they'll be really excited afterwards to tell you about what they're working on. But just to give you an example to bring it to life, and we mentioned about material consolidation on our third-party providers. So one of the things we would have worked on last year and would have been incorporated in the restructuring cost of last year was on our change providers, okay, reducing the number of providers there significantly down to around 5. So all the hard work, thinking the RFP process, et cetera, all run during the back part of last year. And now that's actually coming to life. We're getting the benefits in this year. So it's just one example, but there are many examples. Benjamin Toms: Toms from RBC. The first on competition. Can you just give us some color about what kind of competition changes you've got baked into the plan? Have you been relatively conservative the Irish banks have been relatively conservative historically? And does it make any difference do you think that one of your peers potentially might get purchased over the next 6 months to competition in Ireland? And then secondly, on net interest margin, could you just help us a little bit with the shape potentially of net interest margin for this year to kind of give us an idea of the exit rate? Myles O'Grady: Super. Thank you. And on competition, and I won't -- as you expect, I won't comment on the particular transaction in the Irish market. But I think it is interesting in the context of somebody willing to come into the market. From my perspective, maybe on the harder end of it, I referenced earlier on the guidance point, I think we've been pragmatic. We simply say that this is -- the Irish market is going to continue to grow. The loan book is going to grow. The system loans will grow. For example, mortgages as a structural positive fact. I referenced earlier; private sector credit grew 6% last year. Business sentiment is quite strong. I expect that to grow as well. System deposits are also going to grow. And certainly, demographically, wealth assets will also grow, and we're particularly well positioned to get the benefit of that. But we have been pragmatic in assuming that a growing market, some of that will go to an alternative provider, but very focused on ensuring that we continue to compete. I spoke earlier to competing based on our physical footprint plus our ever-increasing digital capabilities. I regard that as a winning formula, and we enter this period of maybe a slightly increasing competition but a very, very strong position. Mark Spain: Yes. Just on the net interest margin. So last year, 2.68%, broadly flat half-on-half, and we expect the net interest margin going forward to track our NII guidance. Aman Rakkar: It's Aman Rakkar from Barclays. I had a follow-up question on capital. And yes, I'll start with that one. So a follow-up question on capital. So you're talking about the 100% payout ratio. Why -- you're talking about not being constrained going forward, but it appears to have been a constraint today. I think you've kind of -- your distribution outturn for the year is coming below market expectations, right? We're all expecting a payout ratio above 100%. So why did you not pay out above 100%, you clearly got the capital to do it. And I guess I'm asking that question in the context of what it feels like pretty negative signaling here around capital, right, in terms of you've increased your target CET1 ratio and you've kind of come in below market expectations for distribution. So can you tell us exactly what's gone on in terms of this print and what it means going forward? And my second question was around AI actually. So it's a clear market concern in the last couple of weeks, the highly disruptive potential impact of AI on actually the revenue streams of banks. And I look at yourself and Irish banks, you've got some of the richest product margins in Europe. Interested in kind of your reflections. I know it's an unfair question given this is kind of an emerging theme in real time. But just given your vantage point, interested in whether you share that view and actually to what extent you see yourself well defended. Myles O'Grady: Super. Thanks, Aman. Let me take both of those. On the capital question, I understand the question. And -- I mean, just to reiterate, I mean today, we're announcing a EUR 1.2 billion distribution. And I call that again because it's 100% of profits, and that's an increase of a payout from 80% last year to 100% this year. So that consistent objective of returning surplus capital back to shareholders through a combination of a progressive DPS that's up 11% on the year, but also surplus capital. And it's always going to be a point-in-time decision. And maybe to anchor it back over the past 3 years, we've returned EUR 3.5 billion to shareholders, representing 37% of our opening market cap in 2023. And again, as a measure of our commitment, of course, to hold capital to invest appropriately in our business, but also to reward shareholders as well is an absolute priority for us. It always has been, and it will continue to be so as well. And on the go-forward piece, again, I would just point to the very strong capital gen momentum that we see. So on average, 260 basis points of capital being generated on average for the next 3 years that's capturing momentum. It's capturing growth, its capturing operating leverage, all of which translates into that ROTE target of greater than 16% and that EPS growth of mid- to high teens. So that's how I think about it. And certainly, that priority on returning capital is unchanged. And I do think there is a dynamic that's worth calling out maybe to the harder part of your question. If I think about looking forward, we expect to operate at 14.5% each year. And I know I'm repeating myself a little bit here, but given the 25% investment in loan growth, that 100% payout would not be a constraint going forward. On AI, I think you're right, Aman. I've spoken to it as a positive disruptor, and that's what it is. But any disruption, of course, comes at risks and not unique to Bank of Ireland, and not unique to banks actually, I mean, for all sectors. I mean some of those risks are sector dislocation, potential employment risks into the longer term and maybe also deflationary pressure as well. Now they're very much into the long term. I don't think they're a clear and present risk. So it's important that we absolutely harness the benefits of AI, but also we've got a keen eye on the risks. And again, if I link that to -- it's a broader response to the question, but I think it's relevant. If I think about Ireland and its position, it's very strong economic growth expected over the next 3 years. That's been driven by very strong sector performance in the domestic economy. The multinational sector where we export, that's holding up well. Employment is up. And really importantly, I think to the heart of your question is that the Irish government's commitment to its national development plan, EUR 275 billion out over the next 10 years, that's going to drive and maintain economic growth in Ireland for some time. I think we can take that as a positive and of course, as we appropriately manage those risks. Eamonn Hughes: At the back here. Unknown Analyst: [indiscernible]. Just coming back on capital again. You buffered your minimum requirements now over 300 basis points. Should we think about that 14.5%, should we link it to your minimum requirements, you run with a 300-bps buffer? If SOFR comes down, it should mechanically come down. And then you just talked about the national development plan. I mean your loan growth targets don't seem that ambitious given what's coming through there. And I guess if growth were to surprise on the upside on loan growth, what gives? Is it the payout ratio? Or should we expect that 14.5% to come down? And then just maybe on NII, Mark, you said going to maybe EUR 4 billion after 2028. Is that 2029 or 2030? And what's driving that? Is it rates staying at 2.25? Is it loan growth? Is it hedge? Is it a mix of everything? Myles O'Grady: Thanks for that. Let me take the first question, and then I'll pass to Mark. Actually, in setting our target to be at 14.5% for a CET1 ratio, we'll always check in as to where we stand against the rest of the market. And when I look across Eurozone banks, that's about 40 banks in total. The average buffer above MDA is, as you say, is about 300 basis points. So we're pretty much comfortably in the pack on that. And certainly, any mechanical change in regulatory requirements, I think, would have an impact on overall requirements as well. I think you can take that as a reasonable assumption. And on the loan book growth, we've got an incredibly strong Irish franchise. We've seen that in the last 3 years. Loan book growth last year, deposit book growth of 6%. We have factored in very strong growth into the future. For example, the mortgage book to grow at 5% per year. That's growing faster than the Irish economy. And certainly, if the economy performs stronger, if some of that 10-year national development plan happens sooner, then we're very much well placed. We've got the balance sheet capability to support that growth. And that growth, I don't believe would come at a cost to getting the balance right with distributions as well. Mark Spain: And just to add on that last point, obviously, we've got EUR 1.7 billion of deleveraging portfolio as well. So that's going to come through a lot of that 2026, a little bit less of a drag, '27, '28. In terms of the NII beyond 2028, obviously given guidance and the targets more into 2028, not going beyond. But my view is I don't think you have to wait for too long. And if I think about the drivers on that, really, you were talking about a pretty stable rate environment at that point. There's still some benefit from the hedge at that point to 2029, but it's really back to the balance sheet growth of those -- that deposit and loan growth, particularly in Ireland. Eamonn Hughes: Okay. There doesn't appear to be any further questions in the room. We can come back to -- sorry. Mic. Jordan Bartlam: It's Jordan Bartlam from Mediobanca. On the loan growth point, I was just gonna ask, it hasn't really been mentioned, but about 10% plus consumer lending growth this year. I wonder what was driving that. Obviously, that's a lot higher margin than on the mortgage or the corporate side. So it's quite an important driver if you continue at that sort of run rate. Yes, that'd be super helpful, a bit of color on that and where you see that piece going in the future. Myles O'Grady: Thanks, Jordan. I mean, the consumer book is a relatively small component of the overall Bank of Ireland balance sheet. But what is encouraging about it, that growth in the book, I see that as a measure of, importantly, of consumer confidence and willing to borrow. That's important because consumer confidence is the starting point for businesses having confidence to invest in their business. Yes, of course, we will support that consumer book. The encouraging element of it is that I referenced earlier private sector credit in Ireland up 6% last year. When I look at our business on the ground, we've seen very strong performance in manufacturing, in engineering, retail, holding up really well. In fact, that book is growing, supported, I think, by consumer confidence, which again, gives us confidence to the growth story for Ireland. Eamonn Hughes: A few hands went up there. Send a mic. Mike Evison: Mike Evison from Autonomous. Just 2 questions, please. So on the fees, thanks for giving more details there. You're obviously guiding for some very strong AUM growth and about EUR 0.1 billion contribution to the income growth through '28. Would just be interesting to understand where you think that growth is coming from? Is it competitive market share? Is it just general new growth? And in that context, how you think about any lost NII on that growth? So obviously, deposits generate strong profits in Ireland. And are you assuming in your cross-sell any movement from the deposit book across the AUM book? And then the second question on the cost guidance. I'm just trying to put together some of the numbers. You've obviously given the mid-40s cost/income ratio target for '28 and then said a lower than -- you're aiming or would expect to do a lower than 45% by FY '30. Should we be implying from that, that the mid-40s in FY '28 is higher mid-40s? Or should we be looking mid-40s there? Myles O'Grady: Okay. Thanks, Mike, for that. Let me take those questions. So I mean, on the fee income, the -- I referenced earlier that our wealth business is a hugely important part of where we expect to grow capital-light fee income. It's been an incredibly strong success story, 2 amazing brands with Davy and New Ireland, Davy in particular, looking after high net worth customers and of course, New Ireland, a life and protection business supporting pensions. So we want those 2 businesses to continue to do what they do so well. But also growing from that, there are areas that we know there are opportunities, in particular, the affluent market. So I referenced earlier, we've got about 2.2 million retail Ireland customers, 2.5 million retail customers if we include Northern Ireland, where Davy is present as well. Within that, it's about 150,000 affluent customers. So we want to target that. And much of our -- I referenced earlier, we're spending a bit more on our investment profile. Part of that investment spend is in digital and CRM capabilities within the wealth business. So that's an area that we want to step into. And that will not only generate short- to medium-term benefits, but also today's affluent customers, many tomorrow down the line become high net worth customers. That's a good thing to go after as well. The other area that we are focused on is in pension. So many private workers in Ireland don't have a pension. So using the new Ireland brand to support corporate pension growth is another area and certainly getting all our different businesses interlink together for those cross-sales. And then stepping back from it a little bit, the demographic piece is really important as well. So we called out a 7% expected growth -- household wealth growth out to 2030. That's a huge part of the story as well. Did I get was there a second question? Or did I answer both? On the cost piece, sorry. Yes, sorry, yes. So again, the uplift piece around getting to mid-40s, I'd say it's about a -- think about the delta, it's a 6% improvement in leverage in part from a top line revenue growth of 4% and keeping our costs a CAGR of about 1% or less than 1%, we call it stable cost mark. Within that, we have EUR 250 million of cost savings. So I'd say it's probably just you can take 6 off the current position. But I think at the heart of your question is that we don't stop in '28. There's real momentum here to go beyond that, and we will push hard for that. Eamonn Hughes: Okay. Sorry, Aman back to you. Aman Rakkar: Let me ask another question. Yes, it's just about the revenue mix. So I think you're around 81% net interest income this year. And I think in terms of your forward-looking guidance, you're effectively indicating increasing shift towards net interest income from here. Is that just a reality of the banking system that you operate in the position that you operate in, the opportunity set that's in front of you? And are you inclined to do anything about that? Do you want to try and address that revenue mix at some point? Can you? Myles O'Grady: Yes. I mean so it's an interesting question because if you know the back story to Irish banks, typically, the fee income has been a smaller component of the total revenue. Now we have the fantastic opportunity to grow our net interest income, which Mark has spoken to. And of course, we want to do that. So that's a good story. But also, of course, we want to increase our wealth fees or fee income. I mean our wealth business accounted for just under 50% of our total fee income, and that's going to grow more. And of course it's not happening, but had net interest income remained static, then fee income would've become a greater component. But it's great from a diversified income perspective, both are growing. Certainly I would say, again, I referenced earlier today is an organic story, but certainly if there's anything, any opportunities that were to present themselves that would offer an ability to positively shift that mix, you know, we'd certainly have a look at that. Mark Spain: I might just comment on it as well because I think, if you think about one of the pieces we outlined in today, which is actually getting behind our wealth position, we've got fantastic positions, getting behind it more, investing a little bit more there. Talked about the impact in the near term and costs. Actually, we see benefits in 2028, but we see benefits, even more benefits into 2029 and 2030. We're making that conscious decision to invest now, recognizing that the medium-term opportunity here is really, really attractive. So I think we'll see further benefits beyond 2028. Eamonn Hughes: We just might give some people online an opportunity now, we can come back to the room. [Operator Instructions] So it looks like our first is from Borja Ramirez from Citi. Borja, you may unmute yourself, turn your video on and ask your question. Borja, if you can hear us. Okay. We'll move on to the next question. We can come back. If Rob Noble is there from Deutsche. Robert Noble: Just on the capital generation point. So I don't understand how 25% of the capital gets consumed by RWA or growth, right? So you're saying 4% loan growth and RWAs grow less than that because of the mix. So if we call it 3%, I don't understand how you'll get anywhere near 25% of the capital being consumed. So is there something in there that I'm missing or doing wrong? I guess linked to that is you'll do 12.5% ROTE, your numbers, 12.5% ROTE this year, generate 250 bps of capital. How come 16% in '28 is only 270 bps. It seems that it should be materially higher than that even if you take off the DTA partially dropping off. And then last one is on the U.K. So there's a lot of spread pressure in the U.K. So what spreads are you writing on mortgages at the moment? And what ROE do you see the U.K. within the mix of the group? And are you still happy with that business adds value overall. Myles O'Grady: Rob, thank you for that. I'll respond to the broader question on our U.K. business and then ask Mark to take some of your detail on capital and the spreads as well. I mean we're very pleased with our U.K. business, Rob. We're -- this is a business we've worked very hard in recent years. I called it out in my script earlier to get that business performing well. It's a combination, I think, of a full service offering in Northern Ireland. That's particularly important because that offers efficient funding to support what I would describe broadly as specialized lending in Great Britain. That's working. So that specialized lending supported by efficient funding, also an efficient operating model. We've taken cost out of that business as well. I mean that's resulted in for last year, if you use our U.K. plc business as a proxy, it's a return on equity of 16%, and that trend has continued. So earlier, I spoke about 3 components to our strategy: driving growth in Ireland, optimizing capital allocation; and three, investing for the future. The U.K. business sits comfortably in that second bucket where we are optimizing our capital allocation, and I'm very comfortable with that business and how we have repositioned it in recent years. Mark? Mark Spain: Yes. On the RWA point, Rob. So again, we're guiding this morning loan growth of around 4% over the cycle, RWA is around 3% I think the other factors probably you need to think about are op-risk RWA. And obviously, given our outlook, we'll have a higher op-risk RWA based on earnings and also CRT movements, which can move in individual periods as well. So when you bring all that together around 25%, we think is appropriate guidance at this point. Obviously, in individual periods, we could do better than that, but I think about 25% overall. On the start ROTE and the organic cap generation, so yes, there's a DTA point. I think the guidance maybe though is greater than 270 bps. So just to note the greater than. And also, obviously, we'll think about the average higher risk weights as our balance sheet grows as well in terms of the denominator. Eamonn Hughes: Okay. Our next question comes from Denis in Goodbody. Denis McGoldrick: Just two, please, if I may. So one is the statement this morning referred to a 40-bps impact from IRB model scalers. Just if you could give us a little bit more detail on that, please, and what areas of the loan book is referring to? And then secondly, maybe just more broadly on the Irish loan growth guidance and the national development plan that you mentioned, Myles, I guess, how do you think about development finance lending in that context? Is it an area you expect to move into more? And is it considered within the guidance? Or are there any constraints which might stop you from leaning in a bit more into that space? Myles O'Grady: Yes. Thank you very much, Denis. I mean the strategy to grow our Irish business within the lending piece of that, absolutely, there are 2 very, very large significant structural opportunities and one we know very well, which is in relation to housing and the supply of homes. Our mortgage book has performed very well. It grew 9% last year as a book, expected to grow further out over the next 3 years. But of course, in support of that infrastructural lending is hugely important to us, and we are an active player in that market. There are different components to it. For example, on the housebuilding side, we hit a target last year to support the development of 25,000 homes. That's really important because we typically support the building of affordable and efficient homes. and that's the right thing to do from a societal perspective but also plays in very nicely to our mortgage business. And beyond that, the infrastructure spend, that EUR 275 billion by 2035, about EUR 105 billion, I think, over the next 5 years or thereabouts. So we're very well poised to support that. And so that spend is going to focus on roads, infrastructure, energy. And I should say we've built up capability in that regard and that team over the last 18 months. And so we're well positioned to support that growing part of the market as well. And on IRB, Mark? Mark Spain: Yes, so that relates to scalers applied pending the approval of certain IRB models, about EUR 2.7 billion of RWA, 40 basis points CET1 net of some capital buffers that we held, primarily U.K. mortgages, expect to at least partially recoup that over time. That is not built into our guidance. So that's actually upside. Eamonn Hughes: We're going to see if we can get Borja in Citi. Borja Ramirez Segura: So I would like to ask 2 questions, please. Firstly, the capital generation target of over EUR 3.75 billion, it seems conservative in my view. So I did a back of the envelope estimate, and I get to like EUR 600 million of higher net profit cumulative over the 3 years. If I use the P&L targets compared to the capital generation. So I think in my view, there's maybe EUR 600 million of upside cumulatively. And then linked to this, I think that -- I mean, there's also upside to your distribution compared to consensus. So I think if we assume like a payout of around 100%, there's still around, I think, 10% upside to consensus distributions for the next 3 years. And I think that's interesting because you -- with your EPS target growth, which does not include the share buybacks, you're already going to be towards the better -- the higher end of the European banks in terms of EPS growth. So I think that's very, very interesting. And then my second question would be on cost of risk. I understand that you are deleveraging in those portfolios that have a higher cost of risk like US Direct Finance, CIB and U.K. corporate book. And also, I guess you -- macro is very supportive with the stimulus. So I understand there's maybe also some potential to surprise positively in the cost of risk in the medium term. That would be my second question. Myles O'Grady: Thanks, Borja, and good that we were able to patch you in. I'll ask Mark to take those questions. I mean, other than to offer an overarching comment, which is that to the extent that there is an ability to outperform any of the targets that we set out today. We'll always push ourselves hard to outperform. And certainly, if we do, that offers opportunities to reward shareholders more to invest in our business model indeed to grow our business. Mark, over to you. Mark Spain: Yes. So maybe a couple of thoughts on the capital generation question or observation, I would say. So one is, I agree, we're upgrading our guidance today over the cycle, particularly for 2028 from the emerging consensus, I can see for 2028. I think we're upgrading by 3% or 4% relative to that. And then if I think about the cap gen specifically, so we do have higher net profit, you're right, over the period. You also have to think about other moving parts in getting from profit to cap gen. So for example, the changes in the expected loss allowance would be one that would be within that as well. And as I mentioned earlier, about 25% of that strong organic capital generation we need to invest in growing our business. So we factored all of that in. We factored in the delta between the 15.1% and the 14.5% and arriving at the EUR 3.7 billion. But as Myles said, absolutely, if we can outperform that, we will absolutely do it. And we think we've, I think, made realistic assumptions overall, but we'll obviously look to outperform those. And then the cost of risk, actually a really good performance in the second half of last year. So our NPE ratio down to 2.2%. That's the lowest level over the last 15 years. So we're in really good shape. That reflects a lot of hard work, I'd say, on the ground in the second half of the year, particularly strong last quarter to the year. So we're really pleased with that. And if I think about the low to mid-20s guidance for 2026 then, and I think it's a similar level beyond, actually, by the way. I think that's an appropriate level. One of the things we've done actually looking back over the last sort of 5 or 6 years is testing the cost of risk over that cycle. And you're right, we have made decisions during that time in terms of strategic reallocation of capital, most recently on U.S. Life. That does support a lower cost of risk. But I'd say that at this point, low to mid-20s is an appropriate level. Eamonn Hughes: Okay, Borja was the last online. So we'll just come back to analysts in the room. Fatima? Fatima Ghaznavi: So your forward-looking guidance that you have for 2028 NII was a lot better than what people were expecting. And a big part of that is you growing the size of your structural hedge. And for that, you assume a swap rate of 2.5%. Is there any risk of the long end of the yield curve coming down? What would the risk be on that NII guidance? I think swap rates today are 10 basis points lower than what you'd guided to. Would that maybe incentivize you to change your hedging behavior so perhaps ramp up a bit more slowly or think about increasing your duration at all? Myles O'Grady: Mark, do you want to take that one. Mark Spain: Yes, absolutely. Fatima, You're right. I mean the structural hedge is a key part of our revenue outlook. And if I think about we've given the details in the presentation, a lot of the benefit is locked in, certainly for 2026, more than 90%, more than 70% next year. While I think the other piece that came up in the question earlier is you think about the maturing yields. So the maturing yields here are closer to 1% over the period. So yes, of course, there's an impact, and you can think about EUR 9 billion a year rolling off. So you can sort of do the math in terms of if there's any delta in terms of the reinvestment rate, but we think getting to 2.5% even on today's curves, is absolutely reasonable and realistic. Eamonn Hughes: Any more questions from analysts in the room. We've one at the back on the phone. Unknown Analyst: It looks like the Irish government are going to introduce sort of tax-free investment wrappers like there are in the U.K. with the ISA type structure. I was just wondering if you've embedded anything in your targets in actual years for that. Myles O'Grady: The backdrop of that, of course, is, if I understand the question correctly, it's a European initiative on savings and investment union, which is about empowering customers with better tools for wealth growth and retirement. And so I would say that it's entirely aligned with Bank of Ireland's strategic objective to grow our wealth business. As Ireland's National Champion Bank, our job is to offer choice, whether that's a simple deposit account, whether that's a passive wealth account or whether it's a more discretionary approach to it. And certainly, I will be very supportive of the introduction of the ISA type product that would be a progressive step, and we'll be very happy to support that. And in many ways, the products that we're developing are, in essence, that for affluent and mass affluent market. So it's aligned with our strategy, and we would support it. Eamonn Hughes: Okay. Any more questions in the room? Okay. Okay, folks. Look, thanks, everybody, for your participation this morning. For those of you here with us in the room, you're welcome to stay for refreshments and to meet the members of the group executive who are here in the front rows. We look forward to also meeting as many of you as possible on our road show. And if you have any follow-up questions, obviously, please reach out to us in Investor Relations as well. So thanks again. Have a great day. Myles O'Grady: It's a busy day in the market, guys, and thank you for being here today. Mark Spain: Thank you so much.
Operator: Good afternoon, everyone. Welcome to today's WhiteHorse Finance Fourth Quarter 2025 Earnings Call. [Operator Instructions] Please note this call is being recorded. And it is now my pleasure to turn the meeting over to Mr. Rob Munnings of Rose & Company. Please go ahead, sir. Rob Munnings: Thank you, Bo, and thank you, everyone, for joining us today to discuss WhiteHorse Finance's Fourth Quarter 2025 Earnings Results. Before we begin, I would like to remind everyone that certain statements made during this call, which are not based on historical facts, including any statements relating to financial guidance, may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Because these forward-looking statements involve known and unknown risks and uncertainties, these are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements. WhiteHorse Finance assumes no obligation or responsibility to update any forward-looking statements. Today's speakers may refer to material from the WhiteHorse Finance Fourth Quarter 2025 earnings presentation, which was posted to our website this morning. With that, allow me to introduce WhiteHorse Finance's CEO, Stuart Aronson. Stuart, you may begin. Stuart Aronson: Thank you, Rob. Good afternoon, everyone, and thank you for joining us today. As you're aware, we issued our earnings this morning before the market opened. I hope you've had a chance to review the results for the period ending December 31, 2025, which can also beyond on our website. On today's call, I'll begin by addressing our fourth quarter results and current market conditions, then Joyson Thomas, our Chief Financial Officer, will discuss our performance in greater detail, after which we will open the floor for questions. Our results for the fourth quarter of 2025 reflected improved earnings and NAV performance relative to the prior quarter. Q4 GAAP net investment income and core NII was $6.6 million or $0.287 per share compared with Q3 GAAP and core NII of $6.1 million or $0.263 per share. NAV per share at the end of Q4 was $11.68 compared to $11.41 at the end of Q3, an increase of approximately 2.4%. The increase in NAV resulted from share repurchases that were accretive to NAV by approximately $0.184 per share as well as net realized and unrealized gains of approximately $0.77 per share while also reflecting distributions paid during the quarter of $0.25 per share in base dividends and $0.035 per share in special dividends. We will continue our distribution policy framework that was previously discussed where the company intends to distribute a quarterly base distribution of $0.25 as well as make potential supplemental distributions above the base level in the future pursuant to this distribution policy. For the first quarter of 2026, the company declared a $0.01 per share supplemental distribution in addition to our base $0.25 dividend. To the extent our nonaccrual and other troubled situations in our portfolio result in recoveries or if current market conditions improve and/or base rates increase and any of these factors lead to additional earnings, we will be prepared to share those incremental earnings with investors in the form of supplemental or special distributions. Turning to shareholder value. We recognize that our shares have traded at a persistent discount to NAV, and we've been focused on taking concrete steps to improve earnings power and narrow that gap over time. Over the last several quarters, we have prioritized actions that directly support sustainable net investment income and long-term value. First, we completed a term debt securitization through our CLO vehicle, which included $164 million of AAA-rated notes priced at 3-month SOFR plus 170 basis points. This transaction improves the stability and cost profile of a meaningful portion of our secured leverage. Second, our adviser voluntarily agreed to reduce the incentive fee on net investment income from 20% to 17.5% for the most recently completed fiscal quarter and the first quarter of 2026, providing near-term support for distributable earnings. In Q4, this voluntary reduction reduced incentive fees by approximately $200,000 and provided additional support for our quarterly distributions. The adviser may extend this voluntary reduction. However, the duration and extent of any future reductions are uncertain and will be subject to ongoing discussions with the Board. Finally, during Q4, the company repurchased approximately 1 million shares for an aggregate cost of approximately $7.4 million, which was accretive to NAV by approximately $0.184 per share. Given the continued gap in price to book, our Board has approved an incremental authorization to our share repurchase program of approximately $7.5 million, bringing the total authorization to $22.5 million with approximately $15 million still available under the authorization. This expanded program positions us to continue repurchasing shares opportunistically at prices below NAV when conditions warrant. Looking ahead, in addition to executing on portfolio repositioning and disciplined origination and building on the actions we've already taken, we and the Board will continue to evaluate and pursue other potential avenues to enhance shareholder value. Turning to our portfolio activity. We had gross capital deployments of $77.1 million in Q4, which was partially offset by repayments and sales of $49.6 million, resulting in net deployments of $27.5 million before the effects of transferring assets into the STRS JV. Gross capital deployments consisted of 7 new originations totaling $64 million, and the remaining amounts were deployed to fund 9 add-ons to existing investments. In addition, there were $1.2 million in net repayments on revolver commitments during the quarter. Our new originations in Q4 included a mix of sponsor and nonsponsor deals at an average underwriting leverage of approximately 4.3x EBITDA. All of our Q4 deals were first lien loans. Pricing reflected competitive market conditions, and our focus remained on structure and credit quality. Total repayments and sales were driven by completer partial realizations in 4 portfolio companies, Brooklyn Bedding, Bridgepoint Healthcare, ELM One Call Locators and Contemporary Services Corporation. In the case of Brooklyn Bedding and ELM or in the case is of Brooklyn Bedding and ELM, we lead new financings that took out the old financings. At the end of Q4, 99.7% of our debt portfolio is first lien, senior secured and our portfolio continued to reflect a balanced mix of sponsor and nonsponsor investments. The weighted average effective yield on our income-producing debt investments decreased to 11% at the end of Q4 compared to 11.6% at the end of Q3, mainly due to lower spreads and lower base rates. The weighted average effective yield on our overall portfolio also decreased to 9.1% at the end of Q4 compared to approximately 9.5% at the end of Q3. During the quarter, the BDC transferred 2 new deals in 2 existing investments to the STRS JV totaling $19.2 million. At the end of Q4, the STRS JV portfolio had an aggregate fair value of $323.6 million and an average effective yield of 9.9%. We continue to successfully utilize the STRS JV and believe WhiteHorse Finance's equity investment in the JV continues to provide attractive returns to our shareholders. After net deployments and JV transfer activity as well as net realized and unrealized gains recognized during the quarter, total investments increased from the prior quarter by $10.2 million to $578.6 million. This compares to our portfolio's fair value of $568.4 million at the end of Q3. During the quarter, we recognized $11.3 million in net realized losses and approximately $13.1 million in net unrealized gains for an aggregate total of $1.9 million in net realized and unrealized gains in Q4. The net realized and unrealized gains of $1.9 million or $0.077 per share were primarily driven by a $1.1 million unrealized gain in Sklar Holdings, also known as Starco, a $0.7 million unrealized gain on motivational fulfillment and other net markups across the portfolio. These items were partially offset by a $0.7 million unrealized loss in Lumen LATAM. In addition, we recognized realized losses of $11.6 million, primarily driven by an $11.2 million from the Aspect Software investment restructuring and exit and $0.5 million from the partial sale of Therm-O-Disc. Importantly, these investments were already marked down in prior periods and reflected in our fair value. So the Q4 realizations largely converted previously recognized unrealized losses into realized losses, which accordingly also resulted in a corresponding net unrealized gain of $11.6 million in the quarter. With the Aspect Software realization, those debt investments were removed from nonaccrual status. Our small remaining exposure in Therm-O-Disc was placed on nonaccrual status as of quarter end, with the remaining investment already sold and exited in Q1 of 2026. Excluding the STRS JV, nonaccrual investments represented 2.4% of the total debt portfolio at fair value. The remaining issuers on nonaccrual at quarter end were Honors Holdings, New Cycle Solutions, Playmonster and Therm-O-Disc. As always, we continue to actively manage underperforming credits, leveraging our dedicated restructuring resources and the broader capabilities of H.I.G. Subsequent to quarter end, we've had some credit-specific updates worth noting. We have seen negative developments at Honors Holdings, where New Year sign-ups were below budget. And based on the current information we have, we would expect a markdown in the first quarter of 2026. In addition, Outward Hound is being sold at a price that is below our fourth quarter marks based on weak performance in Q4. The gap between the Q4 mark and the anticipated recovery is approximately $3 million. On Lumen LATAM, we received updated financial information during this quarter, and we exited a portion of that position at current market values, which were below the mark in Q4. Partially offsetting these items, we've seen positive developments in certain credits, including Telestream, Starco and Playmonster. Aside from the credits on nonaccrual, our portfolio continues to perform well. I would also note that we have modest exposure to Internet or software companies. The BDC software exposure across 6 portfolio names represents 10% of the portfolio at cost and 9% at fair value. Market conditions remain competitive with capital availability continuing to exceed new deal supply. In the mid-market, we're generally seeing sponsor-backed deals pricing in the SOFR plus 4.50% to 5.25% range and then the lower mid-market and the SOFR 4.50% to 5.50% range with terms varying by credit quality and structure. We have been avoiding certain large cap opportunities where we believe the market has been overheated, both in documentation and pricing. We are also highly focused on minimizing exposure to liability management executions and new investments. For investors less familiar with the term, liability management execution or LME risk refers to the risk that a borrower can move assets away from the existing lenders and pledge them to new lenders, effectively subordinating the original senior debt. We are working to ensure that structures and documentation provided adequate protections for all the deals we do against this risk. Looking forward, we're seeing somewhat better deal volume than this time last year. The sentiment we hear from bankers and private equity sponsors is for an increase in M&A volumes in 2026, supported by lower interest rates, abundant capital and increased pressure on sponsors from LPs to drive realizations. At the same time, the market continues to recognize the possibility of volatility from political and geopolitical developments, which could disrupt M&A activity. In the nonsponsor, conditions remain stable and less competitive than the sponsor market. Average leverage is approximately 4x to 4.5x and pricing continues to be generally at SOFR plus 600 or above with our nonsponsor portfolio performing as well as or better than the sponsor portfolio. We continue to focus significant resources on the nonsponsored market where there are better risk returns in many cases and much less competition than what we are seeing in the on-the-run sponsor market. We currently have 21 originators covering 12 regional markets. Given the market conditions, these originators are heavily focused on sourcing off-the-run sponsor deals and nonsponsor deals as we look for value in a market where there is limited deal flow and a lot of aggressiveness. Subsequent to quarter end, the BDC has closed on 2 new deals and 7 add-on investments totaling $20 million and had 1 sale on Therm-O-Disc totaling $1.1 million. Following the net deployment activity to date in Q4, the capital reserve for share buybacks to BDC's remaining capacity is very limited. At the end of the fourth quarter, the STRS JV's remaining capacity was approximately $55 million and pro forma for recently mandated deals to be eventually transferred and anticipated repayments, the JV's capacity is approximately $35 million currently. Additionally, we continue to expect a normal level of repayment activity over time. For 2026, our current estimate is that approximately 30% of the portfolio could repay over the course of the year, consistent with the typical 3- to 3.5-year average life for loans although actual repayment timing will be driven by M&A, refinancing activity and company-specific outcomes. Our pipeline remains lower than normal for this time of year. We currently have 5 new mandates and are working on 1 add-on to existing deal. Our 5 mandates are all sponsored deals. While there can be no assurance that any of these deals will close, all of these credits could fit into the BDC or our JV should we elect to transact and if there's room for more assets. All the sponsor mandates have pricing of 4.50% to 5.50% over SOFR. With that, I'll turn the call over to Joyson for additional performance details and a review of our portfolio composition. Joyson? Joyson Thomas: Thanks, Stuart, and thanks, everyone, for joining today's call. During the quarter, we recorded GAAP net investment income and core NII of $6.6 million or $0.287 per share. This compares with Q3 GAAP NII and in core NII of $6.1 million or $0.263 per share as well as our previously declared fourth quarter base distribution of $0.25 per share. Q4 fee income was approximately $0.8 million, primarily due to higher prepayment fee activity relative to the prior quarter. For the quarter, we reported a net increase in net assets resulting from operations of $8.4 million. Our risk ratings during the quarter showed that approximately 85.9% of our portfolio positions either carried a 1 or 2 rating, an increase from the 81.8% reported in the prior quarter. Upgrades during the quarter included investments in Telestream and Max solutions. Downgrades during the quarter included moving our positions in Outward Hound from a 4 to a 5 rating as well as Therm-O-Disc from a 3 to a 5 rating, given those investments anticipated exit values in Q1. As a reminder, a 1 rating indicates that a company has seen its risk of loss reduced relative to initial expectations and a 2 rating indicates the company is performing according to such as initial expectations. Regarding the JV specifically, we continue to utilize the platform as a complement to the BDC. As Stuart mentioned earlier, we transferred 2 new deals in 2 existing investments during the fourth quarter to the STRS JV totaling $19.2 million. As of December 31, 2025, the JV's portfolio held positions in 43 portfolio companies with an aggregate fair value of $323.6 million compared to an aggregate fair value of $341.5 million as of September 30, 2025. Leverage for the JV at the end of Q4 was approximately 1.07x compared with 1.24x at the end of the prior quarter. The investment in the JV continues to be accretive from our BDC's earnings, generating a low teens return on equity. During Q4, income recognized from our JV investment aggregated to approximately $3.8 million compared to approximately $3.6 million reported in Q3. As we have noted in prior calls, the yield on our investment in the JV may fluctuate period-over-period as a result of a number of factors, including the timing and amount of additional capital investments, changes in asset yields in the underlying portfolio, and the overall credit performance of the JV's investment portfolio. Turning to our balance sheet now. We had cash resources of approximately $29.7 million at the end of Q4, including $22.7 million in restricted cash. As of December 31, 2025, the company's asset coverage ratio for borrowed amounts, as defined by the 1940 Act was 179.1%, which was above the minimum asset coverage ratio of 150%. Our Q4 net effective debt-to-equity ratio after adjusting for cash on hand was approximately 1.15x compared with 1.07x in the prior quarter. In regards to our share repurchase program, as Stuart noted earlier, our Board approved a $7.5 million increase to the existing authorization, bringing the total share repurchase program to $22.5 million, with approximately $15 million of that still to be used. I'd like to also highlight that in addition to the company's share repurchase activity, certain company insiders and other individuals and H.I.G. affiliate employees also purchased shares in the open market during the prior quarter, including 87,000 shares by certain officers and directors of WhiteHorse Finance as disclosed on Form 4 filings. This demonstrates their view of WhiteHorse Finance's valuation. Before I conclude and open up the call to questions, I'd like to discuss our recent distributions and corresponding distribution policy. This morning, we announced that our Board declared a first quarter base distribution of $0.25 per share. Consistent with our existing distribution framework, the Board also evaluated and declared a supplemental $0.01 per share distribution in addition to the regular quarterly distribution. The distributions will be payable on April 6, 2026, and to stockholders of record as of March 12, 2026. As a reminder, the framework the Board will use to determine supplemental distribution, if any, will be calculated as the lesser of: one, 50% of the quarter's earnings that is in excess of the quarterly base distribution; and two, an amount that resulted no more than a $0.15 per share decline in NAV per share over the current quarter and preceding quarter. Earnings for the purpose of measuring the excess over the quarter's base distribution is net investment income. The NAV decline measurement is inclusive of the supplemental distribution calculated and to be clear, is measured over the 2 most recently completed quarters. We believe this formulaic supplemental distribution framework allows us to maximize distributions to our shareholders while preserving the stability of our NAV, a factor that we do believe to be an important driver of shareholder economics over time. In assessing distributions, we also consider our taxable income relative to amounts that we have distributed during the year when setting our overall dividend. Our current estimate of undistributed taxable income, sometimes referred to as our spillover as of the end of Q4 2025 is approximately $27.6 million, and pro forma for our distribution already made in January 2026 is approximately $21.6 million. We continue to believe that having a healthy level of spillover income is beneficial to the long-term stability of our base dividend. We will continue to monitor our undistributed earnings and balance these levels against prudent capital management considerations. As I said previously, we will continue to evaluate our quarterly distribution, both in near and medium term based on the core earnings power of our portfolio in addition to other relevant factors that may award consideration. With that, I'll now turn the call back over to the operator for your questions. Operator? Operator: [Operator Instructions] And we'll go first today to Rick Shane with JPMorgan. Richard Shane: Look, solid order. Stock is still trading 40-plus percent discount to NAV. You have announced an increase to the repurchase. I am curious, and this is not going to be a shock given all the questions that I've asked over and over again on earnings calls. How are you balancing the opportunity in terms of what's out there for new deployment versus the attractiveness of your stock? And also, as we think about that, can you just give us a sense of how you're going to be managing leverage as well? Stuart Aronson: Yes. Thanks for the questions, Rick. And the simple answer is at the current trading levels or really anything close to the current trading levels, we think our stock represents a very attractive purchase, which is why the Board originally authorized the $15 million buyback and why insiders, including myself, have been buying shares at or near current levels. Given how far the shares have traded down and given the success of the buyback in the last quarter, the Board authorized an increased amount for buybacks. We have very limited availability of capital for new on-balance sheet transactions. The JV generates a higher return. And so we are still doing some JV transactions. But as long as the shares are continuing to trade at this type of discount, one of the best things we can do with our capital is to buy the shares. And then also that it wasn't in your question, but I'll highlight, we and the Board are viscerally aware of the significance of the discount and are looking at options that we can try to avail ourselves of to improve the earnings of the BDC and/or improve value to shareholders. Richard Shane: I appreciate that. And again, I mean, look, I think the challenge ultimately is, I think you would suggest that of your investment options behind the stock at this discount for yourselves might be the most attractive. But in general, we've seen BDCs struggle with that approach. Is the expectation if we see net runoff in the portfolio that, that capital will largely be redeployed into repurchases at this point? Is that how we should be thinking about things? Or how will you balance that? Stuart Aronson: The Board is going to continue to evaluate the trading price vis-a-vis the NAV and make decisions with the management to try to optimize performance for the shareholders. That is why even though we had enough capital to continue the buyback into the next quarter, the board wanted to send a message to shareholders by increasing the capital by another $7.5 million. And each quarter, the Board will look at the trading level and the market to determine what it thinks the best use of capital would be. But at the moment, as opposed to putting assets on the balance sheet, we are primarily focused on repurchasing shares at currently, as you said, a 40% or more discount to NAV, which is very accretive to both NAV and also accretive to NII. Operator: We'll go next now to Christopher Nolan with Ladenburg Thalmann. Christopher Nolan: Following up on the previous question. What measure does the board use to compare the performance of WhiteHorse BDC to its peers? Stuart Aronson: We look at a whole series of metrics. Joyson, I may pass it to you to highlight what those metrics are. But we look at return on the share price. We look at costs that the BDC incurs versus others, and we look at our trading level vis-a-vis the discount to NAV compared to other BDCs. Joyson, did I miss any there that are important? Joyson Thomas: No, I think I would just add also just that the dividend yield relative to NAV, obviously, based on our own analysis on what the core earnings power of the portfolio is. Christopher Nolan: Okay. Do you guys feel that your exposure to the JV senior loan funds effectively takes a first lien investment on the scheduled investments, puts it into the JV and suddenly, you are in a subordinated position because you're holding equity in the JV. Is that a correct analysis? Stuart Aronson: We put leverage on the JV, and we are subordinated to that leverage. That is correct. Christopher Nolan: Okay. So you're in a subordinated position taking higher -- you're getting a mid-teens return. Do you think in the current environment, which is sensitive to the asset quality of private credit that part of the discount in your share price could be the fact that the market is looking at these SLF positions and saying they're second lien and they're given the appropriate haircut? Stuart Aronson: We haven't heard that from any of our covering analysts nor have we heard that directly from its shareholders. The JV portfolio is remarkably clean in terms of performance. And while we do have leverage on the JV and leverage on the BDC, that leverage is against a pool of first lien assets and modest leverage against first lien assets is, frankly, a very common thing in the direct lending market and the BDC market. And if we heard from shareholders or covering analysts that the STRS JV was a reason or a key reason for the share discount, we would certainly take that information in, communicate it to the Board and make decisions based on that. But again, so far, I've gotten no feedback that would indicate that, that would account to the discount to NAV of the trading level. Christopher Nolan: Got it. Okay. Well, your stock is trading roughly almost a 16% dividend yield on the stock price. On the new NAV, it's roughly trading a 9% yield, which is okay. But your stock price is 50%, 60% of book. I mean, there has to be a real big issue. And the only thing that's left there is most likely the portfolio. I'm just putting it out there. I mean, anyhow... Stuart Aronson: Chris, I would tell you that we strive to be transparent and realistic in our marks. That is why, historically, you've seen some assets that mark down and continue to mark down but other assets that get marked down and then get marked up, which include names like Telestream, [ Chase ], and I mentioned this quarter, we're seeing positive news also on Playmonster. Too early yet to know whether there will be a markup. But we agree that the discount to the NAV is extreme. And we are trying to take action to improve shareholder value, starting with the share buyback and also with the refinancing of the leverage at a cheaper rate. And we are talking to advisers about anything else we can do that would improve value for shareholders. Christopher Nolan: No argument on the marks. And I think what you guys are doing in terms of repurchases is definitely awesome. And I hope you continue the waiver and the repurchases. I think it's a great use of capital. My point is, this is an elephant in the room, and it's effectively a second lien position. At a time when financial services companies are -- or the sector is under scrutiny, BDCs in my humble opinion, tend to be valued more on a discounted value of their NAV, which leads to haircuts in terms of the type of assets in the book. So that's just my two cents. Operator: [Operator Instructions] We'll go next now to Heli Sheth with Raymond James. Heli Sheth: You mentioned an active M&A market, but also a lower than normal pipeline currently. Any further insight into what we should expect in terms of timing or pacing of both repayments and originations for the year? Are there any catalysts down the line that might drive more activity? Stuart Aronson: Yes. Just to be clear, we have had noticeably better activity and volume in Q1 of this year so far than we had in Q1 of last year. But as we sit here now in early March, the pipeline that we have looking forward, March into April is not as strong as it was at this time last year. Now you'll also remember or I'll remind folks that at this time last year, there was a fair amount of optimism in terms of M&A activity coming back. And then the tariff issues arose, which threw a real monkey wrench into a lot of people's plans on the M&A side. There is, once again, optimism from the bankers we are speaking to and from private equity shops we're speaking to regarding likely activity, M&A activity in 2026 for the reasons that I highlighted in my call, including lower interest rates and abundant capital with pricing on that capital being at or near all-time lows. But as we've seen just in the past couple of days, things can certainly happen on the geopolitical side that were not forecast and can have an impact on M&A activity. So we currently are projecting based on what we see, improved M&A activity for the year. We think that, that could lead to slightly better pricing in the marketplace. But that slightly better pricing is likely to be offset by rate cuts, whether it's 1 or 2, which I think is the current conventional wisdom or whether it's 3 or 4 driven by leadership of the Fed likely changing in May. Heli Sheth: Got it. I appreciate the detail. And in that pipeline, is there any sort of shift in the kinds of deals that you're seeing maybe in terms of sponsor, nonsponsor incumbent versus new borrowers or LTVs, anything along those lines? Stuart Aronson: We're seeing fewer deals that are straight repricings because the lower pricing has now been in the marketplace for about 1.5 years to 2 years. So we are seeing more new M&A deals. In terms of sponsor nonsponsor, we finished the year with a couple of non-sponsor deals in Q4. But the nonsponsor pipeline has been lighter than normal here in the first quarter of 2026. We do think that the nonsponsor market in general is more appealing than the sponsor market right now, largely because in the sponsor market, there are over 200 active direct lenders. But in the nonsponsor market, at least in the mid-market and lower mid-market, we see fewer than 10 shops who actively originate nonsponsor mid-market and lower mid-market deals. So it's a much less competitive market and as evidenced by the nonsponsor deals that we did in Q4, we are getting still pricing of 600, 650 or even 700 on nonsponsor deals at modest leverage and modest loan to value. Operator: [Operator Instructions] And gentlemen, it appears we have no further questions this afternoon. So that will bring us to the conclusion of today's conference call. Ladies and gentlemen, I'd like to thank you all so much for joining the WhiteHorse Finance Fourth Quarter 2025 Earnings Call. Again, thanks so much for joining us, and we wish you all a great day. Goodbye. Stuart Aronson: Thank you.
Operator: Good day, and welcome to the California Resources Corporation Fourth Quarter 2025 Conference Call. [Operator Instructions] Please note that this event is being recorded. I would now like to turn the conference over to Daniel Juck, Vice President of Investor Relations. Please go ahead. Daniel Juck: Good morning, and welcome to California Resources Corporation's fourth quarter and year-end 2025 conference call. Following prepared comments, members of our leadership team will be available to take your questions. By now, I hope you had a chance to review our earnings release and supplemental slides. We have also provided information reconciling non-GAAP financial measures to comparable GAAP measures on our website and in our earnings release. Today, we'll be making forward-looking statements based on current expectations. Actual results may differ due to factors described in our earnings release and SEC filings. As a reminder, please limit your questions to one primary and one follow-up as this allows us to get to more of your questions. I'll now turn the call over to Francisco. Francisco Leon: Thank you, Daniel, and good morning, everyone. I'll begin with our 2025 results, then highlight what different CRC today. Including our unique position in California's energy and decarbonization landscape and how that translates into long-term value creation. I'll then turn it over to Clio for the financials and 2026 guidance. Let me start with the big picture. In 2025, we grew production for the third consecutive year, delivered record financial performance and return record capital to shareholders. Even as commodity prices declined 14% year-over-year. Our guidance shows further annual production growth in 2026. Our high-quality, low-decline conventional assets generate stable cash flow, supporting annual capital returns, while maintaining balance sheet strength. Since 2021, we have returned nearly $1.6 billion to shareholders, underscoring our commitment to long-term value creation. Our capital priorities remain clear: invest in high-return opportunities, preserve financial strength and return excess cash to shareholders. We will continue to take a measured and disciplined approach to shareholder returns, maintain the flexibility to invest through the commodity cycles. As we enter 2026, CRC stronger and more resilient with a differentiated asset base and improved access to the full depth of our reserves, positioning us to grow cash flow per share. Three factors define CRC today. First, our conventional reservoir base is a core strength. These assets are characterized by low natural declines, strong recovery factors and very predictable performance. That allows us to sustain production with less capital and lower risk than shale-focused peers. Our expanded 2P disclosure of nearly 1.2 billion Boe, highlights the depth and longevity of our inventory, supporting 20-plus years of development at current production levels. Our assets are large scale, low decline, multi-stack sandstone reservoirs. Conventional systems where production is sustained through reservoir injection management and long-duration recovery, requiring low capital intensity without the need for the continuous high-intensity reinvestment. Notably, we see a similar recovery potential in our Belridge field compared to Elk Hills. But at an early stage of development, reinforcing the strong industrial logic behind the Aera merger. While many peers are looking to new basins and international opportunities to extend reserve life. Our deep inventory provides confidence in the long-term durability of our production and cash flows right here in California. Second, regulatory progress has been meaningful. The resumption of new drill permitting and the steady flow of approvals through the system represent a step change from where we've been in recent years. We appreciate the efforts of state and local regulators to move this process forward. This progress positions us to stabilize production while supporting the state's objectives for energy affordability. We now have the majority of the permits required to execute our 2026 capital program, which materially expands our flexibility to plan, sequence and high-grade capital across the portfolio. Importantly, it also allows us to adjust activity levels methodically as market conditions and returns dictate. We have returned to drilling new wells in 2026 and see ample potential across our long runway assets. Third, our integrated strategy continues to differentiate CRC. We're investing in high-return oil and gas developments, while advancing our carbon management and power platforms in a capital-efficient and return-driven manner. Carbon TerraVault has moved from concept to execution. Construction is complete on California's first commercial scale CCS project at Elk Hills, and we're now in the commissioning and testing phase. We have successfully captured CO2 from our gas processing plant and are awaiting final EPA approval to commence injection. We believe each step in the process materially derisked the platform. from engineering and construction to capture performance to regulatory clearance and positions us to transition into full operations. Importantly, the proximity of our permitted CO2 storage reservoirs to existing infrastructure across the street, provides a structural advantage as demands grow for reliable, low-carbon power solutions. We continue to advance discussions related to our power platform with multiple high-quality counterparties. The demand signal is evident, but these are large complex transactions in a market that is still maturing. As it evolves, commercial structures are improving, and our options continue to expand. We have strong conviction in the value of our integrated power to CCS offering. We're not focused on speed. We're focused on getting the fundamentals right and securing the right agreement at the right time, one that appropriately aligns risk and returns and delivers durable long-term cash flow. As the market matures, we believe our differentiated position only strengthens. So what does this all mean for CRC as we look ahead for the long-term? What defines us is durability of inventory and returns. We're investing in 2026 from a position of strength. With 2027 marking the point where we returned to a steady-state level of activity to sustain production. On a hedge basis, our corporate maintenance breakeven sits in the mid-50s WTI, providing resilience in the range-bound oil macro. This reflects the full enterprise, including upstream operations, Carbon TerraVault, power, base dividend interest, corporate needs and hedges. For context, our upstream-only maintenance breakeven is in the low to mid-50s WTI among the more competitive levels across pure-play E&P tiers. This outlook is grounded in asset quality, inventory depth and structural cost discipline, not aggressive capital assumptions or optimistic pricing. Together, our reservoir base improved regulatory visibility and integrated strategy support resilient long-term value across cycles. With that, I'll turn it over to Clio to walk through our financial results and 2026 guidance. Clio? Clio Crespy: Thank you, Francisco, and good morning. The fourth quarter capped a record year for CRC. We delivered on our financial and operational targets, while further strengthening the durability of our business. In the fourth quarter, we generated adjusted EBITDAX of $251 million and free cash flow of $115 million, including 14 days of contribution from Berry. Net production averaged 137,000 barrels of oil equivalent per day with oil realizations at 97% of Brent before hedges. For the full year, we generated nearly $1.25 billion of adjusted EBITDAX and $543 million of free cash flow, the highest level since 2021. Results were driven by strong base performance, structural cost reductions, realized synergies and higher-than-average resource adequacy payments from our power assets. Net production increased 25% year-over-year to 138,000 barrels of oil equivalent per day, reflecting consistent capital execution and value accretive transactions. Fourth quarter capital spending totaled $120 million within guidance, bringing full year capital deployment to $322 million. Capital allocation remained returns-focused throughout the year. In a permitting constrained environment, we directed investments towards our highest drilling opportunities and returned excess free cash flow to shareholders. The dividend continues to anchor our returns framework, and we have grown it meaningfully since 2021. In 2025, we returned approximately 94% of free cash flow to shareholders through dividends and share repurchases. Given the permitting constraints last year, repurchasing shares represented an attractive use of capital and enhance per share cash flow. The Board recently approved a $430 million increase to our share repurchase authorization and extended the program through 2027, bringing remaining capacity to approximately $600 million. As we enter 2026, we began receiving new well permits, as a result, a greater share of our capital will be directed toward high-return reinvestment opportunities that support sustainable production and cash flow growth. This framework reinvesting at attractive returns, while maintaining a strong balance sheet and a durable dividend remains central to our capital allocation philosophy. Turning to the balance sheet. We exited the year at 1x leverage with total liquidity of $1.4 billion. During the year, we completed a refinancing transaction associated with the Berry merger. Redeemed our 2026 senior notes, expanded lender commitments and received improved outlooks from the rating agencies. Collectively, these actions enhance financial flexibility and reduce our cost of capital. Looking ahead to 2026, our guidance reflects a measured capital deployment ramp-up and resilient cash flow generation. At $65 Brent, we expect to generate approximately $1 billion of adjusted EBITDAX supported by lower costs and ongoing synergy capture. These efficiencies position us to sustain strong margins, despite lower commodity price assumptions and a softer resource adequacy market. We expect capital spending at roughly $450 million. Drilling, completions and workover capital is projected at the $280 million to $300 million range, supporting a 4 rig program. Our development plan is grounded in decades of production history and consistent performance, and we retain flexibility to adjust activity levels as the year progresses. Net production is expected to increase 12% year-over-year to 155,000 barrels of oil equivalent per day at midpoint of our guide, with oil representing roughly 81% of volumes. 2/3 of our expected oil production is hedged at $65 Brent, providing meaningful cash flow protection. We enter 2026 with a stronger balance sheet and expanded inventory of high-return projects and improved visibility into sustainable production and cash flow growth. With that, I'll turn it back to Francisco for closing comments. Francisco Leon: Thanks, Clio. As we look to 2026 and beyond, our priorities are clear. We're focused on responsibly developing our deep, high-quality resource base, lowering cost, maintaining our balance sheet and effectively allocating capital. We will continue to advance platforms that will shape CRC's future. Carbon TerraVault and our power strategy are moving from concept to execution and are expected to contribute to a more durable, diversified cash flow profile over time. CRC plays an important role in California's energy future. Our locally produced oil and gas, combined with scalable carbon management and power solutions, position us to help meet the state's affordability needs, while advancing emission reduction goals. As California's demand for secure, lower carbon energy evolves, we see our integrated model as part of this solution. Operator, we're now ready for questions. Operator: [Operator Instructions] The first question comes from Scott Hanold with RBC Capital Markets. Scott Hanold: I was hoping if you could provide some added context on your 2P inventory update and maybe talk to see how that -- talk to that relative to how you see permitting -- the permitting environment moving forward? And also speak to the duration of that inventory to hold your production flat. Francisco Leon: Scott, thanks for the question. Really appreciate you leading with this question. Important that we convey in the potential of the business. And I have a few things to say. So we have a great foundation. That's well known. Conventional assets with low declines, repeatable inventory. We actually have really good rock that actually flows. It's an asset base that's been built to outperform through any cycle. But really 3 things to highlight. The -- in terms of the runway, the inventory, as I said in my remarks, we have permits in hand to execute 2026. We're building line of sight into 2027. So now that permitting is back to normal cadence, that allows us to put the focus on the resource. And we grew our 1P reserves, 350% reserve replacement ratio on the back of the permits coming in, stronger-than-expected base decline and the Berry acquisition. And if you look at the value of the 1P reserves alone, that's about $9 billion at SEC prices. But what really stands out is the running room beyond that. We said we have 23 years of inventory of 2P basis -- on a 2P basis in our disclosure. We operate about 4 of the largest oil fields in the U.S. You can add 3 more, so 7 have each well in place that exceeds 3 billion barrels of oil in place. And these are fields that have been producing for decades and have many, many decades ahead. Recovery factors of 40% plus on waterfloods, 75% plus on steamfloods. And that just tells you some of that gives you a sense of how much resource remains to be captured. But on top of the resource, we also have very low subsurface risk that makes capital allocation very predictable. We have a lot of well control across all of our acreage. A lot of our production is about 2,000 feet deep, so very shallow. We have a lot of data that helps us derisk every dollar that we deploy. A lot of the activity that we have on new wells is infill drilling. So low geological risk. And as technology continues to help us improve our lower base decline, we have a very repeatable capital-efficient program that we can execute with confidence. Finally, I would like to highlight, it's truly an opportunity set with stacked optionality and returns. We have thousands of feet of stacked pay across multiple producing horizons, 2 million acres of minerals, 89% on average working interest, which means really strong netbacks. As I highlighted in my remarks, Belridge is probably the best example. We look at Belridge in terms of development as we saw Elk Hills about 20 years ago. So extremely long runway, low risk. And one of the highlights of Belridge is it's less than a 5% royalty burden. So amazing netbacks and really excited about the setup that we have for the company going forward. I think you had a second question? Scott Hanold: Yes, yes, absolutely. I appreciate the context. And as you -- and just staying on kind of a similar theme, if you step back and think about 2026 program, it looks like 4Q flattens. I'm just wondering, is that a good forward rate to utilize for that building the maintenance of '27? And also maybe a little bit about the capital efficiency. That appears to have improved as well. So any color there? And I don't know if it's the type of wells you're drilling or what other factors might have helped the capital efficiency. Francisco Leon: Yes. We're extremely proud of the work the team has done to improve the capital efficiency. We've seen tremendous progress year-over-year and continue to work on it. So I'll turn it to Clio to highlight -- to give some of the highlights around efficiency and the well mix. Clio Crespy: Thanks, Francisco. Scott, yes, so on our '26 program, it's really designed to materially reduce our corporate decline to roughly 2%. So as you alluded, it really equates to 0.5% glide path quarter-over-quarter. That's effectively flat production throughout the year, while generating substantial free cash flow. And so we're operating 4 rigs. We're deploying $280 million to $300 million of D&C and workover capital to support that production on a materially larger asset base. The program is intentionally weighted towards lower risk development. It's really focused on PUD inventory. And we've got roughly 2/3 of our activity on sidetracks and 1/3 on new wells. That's all supplemented by a very robust workover program. And the sequencing here is deliberate, more sidetracks and workovers in the first half, and then we transition into new wells as permit inventory builds here throughout the year. So a couple of points. We're reinvesting less than 50% of cash flow. We're maintaining our leverage around 1x. You're really seeing a disciplined capital allocation at work here. And you were asking, Scott, around our capital efficiency. We will think about it through 2 lenses. So on project level returns, but also on corporate capital intensity. If I start with our project level returns, our '26 program, it's highly competitive on a stand-alone basis at $9 per Boe of development cost. The program generates just shy of 4x multiple on invested capital. It generates mid-40% returns at $65 Brent and roughly a 3-year payout. The portfolio is also oil weighted. It's 90% oil weighted, which supports strong cash margins here and durable economics across the cycle. So those metrics reflect the quality of our inventory that Francisco was highlighting and also the structural improvements that we've captured over the past several years. If you take a step back and look at the corporate level, the impact of the Berry integration here is clear. What's most notable is that we're delivering this very low decline on a materially larger portfolio without increasing our structural capital intensity. We absorbed here roughly 25,000 Boe per day of incremental production with Berry, while managing to hold the combined business at 2% decline with no increase in our capital and no increase in our rig count versus our early November guide, and that was built in a much smaller footprint without Berry. So that's a meaningful demonstration of our improved capital efficiency and our integration synergies. We're generating the strong marginal returns on our new capital, and we're also lowering the capital required to sustain the broader base. And that combination really supports our durable free cash flow generation. Operator: The next question comes from Betty Jiang with Barclays. . Wei Jiang: Congrats on a very strong finish to 2025. Shifting gears a bit to the other growth opportunities in the portfolio, maybe starting with the CCS business. Can you speak to the remaining approval process needed to start injection at the cryogenic gas project? And maybe more broadly, as the CCS, the carbon capture business is finally moving into execution, what are the key milestones you are targeting this year from a business development or permitting perspective? Francisco Leon: Betty, thanks for the compliments. And yes, in terms of our CCS business, really good progress, and we are near the finish line to deliver a fully integrated end-to-end capture to storage solution. Construction is complete, commissioning and final approvals are underway. We have successfully captured our first CO2 from the plant to running it to the amine system. And we're working closely with the EPA through the final operational readiness and compliance steps. We're excited. This first injection is really a big derisking of the CCS business model and really brings a lot of confidence to the business that we're building. As we wait for market adoption, and there's many moving parts to it, but it's coming quickly, being able to have decarbonized molecules and electrons in California is what we think wins the day. We have a state requirement under cap and invest to 2045 to decarbonize. So we're bringing a market solution that may be very different from whatever else is happening in the rest of the country. We continue to see progress from our team in terms of permits. We just filed CTV [indiscernible] with the EPA. That's another 27 million tons of capacity. It's adjacent to CTV I. So it's bringing the hub concept into that Elk Hills area to accommodate higher growth, which we expect. 2026 will also be a year where we see a lot of the permits in the queue that we filed 2, 3 years ago starting to come in the form of draft permits coming forward. So overall, really good progress, really exciting proof point to be able to decarbonize our gas processing plant, but there's a lot more to go and excited to share the news as it comes, but 2026 is a big year for us. Wei Jiang: Great. Sounds great. And my follow-up is on the power to CCS opportunity. On Slide 11, Francisco, you alluded to the hub concept of you have multiple power plants that's sitting all on top of a growing carbon storage. The -- can you just expand on what are you seeing in the market on that front? What do we need to see from the market in terms of demand or other maturations to crystallize this opportunity for CRC? Francisco Leon: Yes, Betty, it's clear now that the industry that's going to lead the efforts to decarbonize is the electricity sector, the utility sector. And in California, in particular, that's going to be a requirement in order to be able to build data centers, in order to be able to source incremental demand, we see it as being -- having to be decarbonized. Now we missed out in California from the first wave of data center growth, which is more focused around training. Pretty obvious, we have high power prices here in California, so not the best place to site training data centers. But we're really excited about the second wave that's coming through inference and edge compute, where you really have to be close to the user. So if you look at the map, Elk Hills power plant, CTV I, CTV VII now are right at that intersection of 2 of the most attractive use cases for content, for virtual gaming. So whether that's -- it's Los Angeles, Las Vegas, these are where we see this very high demand center. So it's a very compelling outlook as we look out into the next few years. So the things that we've done to date, which some of them we highlighted, some of them are new is, first, we wanted to have this power now concept that allows a customer data center more than likely to be able to look at scale. And the scale comes initially from our Elk Hills power plant, but also from the partnership that we made with power plants around our site. We've highlighted La Paloma, we've highlighted Sunrise, overall, 2 gigawatts of portfolio that ultimately you can scale the data center to. A more recent update is we've been advancing the -- what we call the Land Now concept, which is permitted and powered land. We're working closely with a leading data center developer. We're in early stages of design and permitting together. We think this is going to be the most compelling and exciting site in California to build a data center. So making good progress along those lines. And as you have line of sight to permits, as you have line of sight into a data center build-out, the hyperscalers we're picking up more and more interest on people that want to establish a foothold into the California market. The injection of CTV I is also an important milestone by being able to take CCS from a concept to a clean hourly matched energy offering in the PPA negotiation really becomes a differentiator with the rest of the state that's solely relying on renewables and batteries. So putting all these things together, so power at scale, site design and permitting and a CCS derisked opportunity is what we ultimately think will be the best path to create durable contracted cash flows and ultimately a good way to unlock shareholder value. So we're making really good progress. Operator: The next question comes from Zach Parham with JPMorgan. Zachary Parham: First, just wanted to ask on cost reductions and your confidence in the Berry synergy capture. In the slide deck, you've got an interesting slide that shows incremental cost reductions going out to the 2027, 2028 time frame. Can you just give us a little bit more color on what's driving those continued cost reductions? Francisco Leon: Thanks, Zach. Really appreciate the question. So we're applying the same integration playbook to Berry as we did with Aera. We're simplifying. We're standardizing and integrating the business. As we've announced, we have -- we're targeting about $80 million to $90 million of synergies. We were able to close the Berry merger earlier than expected. So we're right now in full execution mode. The areas of focus are around field efficiencies, overhead redundancies, leverage on supply chain, but we also now have the ability to optimize well services through our C&J company. So that on top of the refinancing that we did last year, these are all very controllable, high confidence levers that we're going to be able to pull. Ultimately, we still feel good about that $80 million to $90 million. But what's been really impressive to watch as you step back and that's the point of the slide is that we're on a glide path to about $0.5 billion of cumulative structural savings between our 2 deals. So I'm going to let Clio go through some of the details, but the track record of this team, our operations team, in particular, has been outstanding in terms of achieving those synergies and getting to a lower cost structure for the future. But Clio, do you want to take it away? Clio Crespy: Thanks, Francisco. Zach, yes, so our synergy and our cost reduction journey, if you look at that graph that we shared with you all, since 2023, we've delivered $300 million of structural cost reductions, and those are primarily driven by the Aera integration. That was around $235 million, and we achieved those ahead of schedule. What's most important is that those savings are durable. They came from our field level operating improvements from the infrastructure rationalization exercise, our workforce consolidation, of course, the centralized procurement as well as our system integration. So these are really permanent changes to how we operate. They're not service cost deflation or temporary timing benefits here. It's also worth noting that these savings were realized during a period of permitting constraints and industry cost inflation. So we've already been tested here. We've tested those in a challenging operating environment, which reinforces the durability point. Scale matters in our business. We're now operating at a scale where procurement, infrastructure and field operations, those can be optimized in ways that were not available to us historically. And that industrial scale advantage it's really now embedded in our cost structure. So as a result of all these actions we took, our current run rate total operating expenses, those are $550 million lower than the pro forma premerger baseline. And that's not incremental optimization. That really is a structural reset of our cost base. And Francisco mentioned the path. We're on that path. We're targeting $450 million of cumulative savings by year-end '28. And I'll add that that's a meaningful portion for CRC. That's getting close to 10% of our market cap in 5 years. So we are really well on our way to execute that target of $0.5 billion. And if you look at it, that's 80% already executed or action. So excited to see the new and improved CRC. Zachary Parham: For my follow-up, I wanted to ask on how you're thinking about capital allocation over the longer term. You mentioned getting back to a steady state in 2027. But how do you think about maintenance versus potential production growth and balancing those versus free cash flow generation? Francisco Leon: Yes, Zach. So we're certainly dealing with a lot of volatility in the commodity prices, and we want to have a disciplined outlook to growth. That's whether the markets are running hard or pulling back. We're really building this company that works well throughout the cycle, right? It's a commodity business. You'll have those ups and downs, but we -- predictable returns, predictable cash flows is what we're after. So we're really trying to stay very flexible. And the way we're thinking about the year, we've been running 4 rigs since the beginning of the year. we're thinking about what incremental activity would be that ultimately gets us to from about a 2% year of -- entry to exit decline to more of a flat steady state, and that's going to require more activity. So we've been thinking about that incremental FIB rig. Certainly, there's a lot of things to think about what's happening in the geopolitics today, but we have a lot of flexibility to increase activity. And that comes not only from the running room that we talked about, the inventory, the projects are there. We also control 100% of all of our fields we operate, all of them and we have all the services and rigs that we need for the year. So it's really a matter of timing and when can we get delivered those high returns for the investor. We invest to make high returns, not invest to keep production flat, right? So if we see high returns, it's the opportunity to lean in. Maybe I'll let Clio talk about more of the go-forward plan in 2027 and beyond. Clio Crespy: Yes. Thanks, Francisco. So when we look at beyond '26, we've outlined what a maintenance framework would look like. That's holding production flat at the '26 exit rate, and that would require 7 rigs and about $485 million of D&C and workover capital. So that's approximately 20% less capital than legacy CRC needed to sustain a similar production level and a real meaningful improvement there. And at that activity level, our oil and gas breakeven is about $58 Brent, or $54 WTI. If you look at it on a fully burdened corporate basis, so that includes power, carbon management, corporate costs and the dividend, that corporate breakeven is roughly $60 Brent. And that's an important point. A $60 Brent breakeven reflects a structurally more resilient business, one that can sustain flat production, fund the dividend and preserve balance sheet strength. And of course, above that level, we generate incremental free cash flow. One thing I'd like to add as well is operating within a maintenance framework, that doesn't mean static economics. We continue to see opportunities to structurally lower our breakeven over time through the Berry integration, through incremental capital efficiency gains and also through portfolio high grading. So as those improvements take hold, the capital required to hold that production flat should decline. And our objective really remains straightforward. It's durable cash flow, resilient margin and our sustainable returns through the cycle here. So we're excited about the breakeven progress. Operator: The next question comes from Kalei Akamine with Bank of America. Kaleinoheaokealaula Akamine: My first question is on gas. So just kind of looking at the screen, very low natural gas in California is trending below hub. Wondering if low natural gas is a net benefit at the operating level, noting that you guys sell and consume natural gas. And as you prosecute this year's drilling program, wondering if there's going to be a gas production benefit that could emerge when that could help begin insulating operating costs, especially at the acquired assets? Francisco Leon: Kalei, thanks for the question. So as a reminder, California is -- we think about it as an energy island, very regional market. You see sometimes the movements of gas price in California that are in the same direction as Henry Hub, but they're not really very well correlated. So ultimately, what you have to look at is the specific California dynamics. First of all, we bring, we import a lot of our gas, a lot of it from Texas and the Rockies. So we're literally at the end of the pipe or price takers as a state. So then you look at what are the underground conditions and what's local demand, what's the storage, what's the capacity on the gas pipes moving gas West. And right now, those storage levels, in particular, are very -- are elevated. They're high. The weather, there hasn't -- there's been kind of tempered weather for the last few weeks. So the build-out of hydro and battery continue to add and that puts pressure on natural gas. So that's why you're seeing a dip in those realizations. But as a reminder, it's pretty obvious in days like today, but you have asymmetric risk. When demand exceeds the seasonal norms or where the infrastructure gets stretched or fails, California gas prices can spike dramatically, and that volatility tends to favor the producer. So we've taken obviously a lot of steps in terms of our hedging strategy to protect our gross margins. But the setup where oil prices are increasing and gas prices are decreasing is favorable. That oil to -- gas-to-oil ratio ultimately means higher margins for our business, and we protect the consumption of that gas through hedging. So right now, the focus is more on oil, but we will be looking at gas opportunities in the year. Part of our mix of projects this year has natural gas projects because this asymmetry in the market means that we need to be very well positioned when conditions shift, and we believe they will be shifting in the near term. Kaleinoheaokealaula Akamine: Got it. I appreciate that. My very quick follow-up is on Elk Hills power. That business receives a benefit from the state's resource adequacy program. Can you simply quantify the benefit for '26? Francisco Leon: Yes. Resource adequacy, the capacity programs in the state, very highly, highly regulated from the procurement of power. So as the state started making their capacity requirements for 2026, they came in well below expectations. So pricing pullback. I think we've been signaling this since last November, where we can see where the contracts were heading. We really had a period where we -- we had really big spikes and now we're seeing much more of a normalized level as historical -- much more historical in a lot of ways. So what we're seeing for this year is a $25 million to $50 million annually RA under current conditions. We're looking to, as we discussed, layer in contract the revenue to the PPA. But we're well set up, right. Ultimately, there's a lot of things that could happen in a market like California. There could be plant retirements, demand that is beyond expectations, which is likely the case. You can have some reserve margin adjustment. We don't underwrite those scenarios in our base case, but they're real optionality over time. It's going to be really interesting to watch. California grid is now very heavy on solar and wind that just have never been tested under stress conditions. If those resources underperform during extreme heat or there's a failure somewhere in the system, the value of reliable dispatchable capacity could shift quickly. So we're well positioned for the RA market if that were to happen. Operator: The next question comes from Josh Silverstein with UBS. Joshua Silverstein: I wanted to ask on the Uinta Basin. Now that you have it in-house, how are you thinking about the asset? Is it viewed as noncore or something you want to develop? And then maybe just a little bit more details on it, higher or lower cost relative to the California operations and what inventory depth looks like? Francisco Leon: Thanks, Josh. So yes, [ Ute ] came through our acquisition and merger with Berry, oil-weighted, a lot of stacked reservoir as well. We like the position. It's 100,000 contiguous net acreage. The Berry drilled 4 horizontals in the Uteland Butte that are all tracking around type curve, which gives us conviction around the repeatability and technical merit of the asset. We also see some promising benches, the Castle Peak and the Wasatch to name 2 incremental areas of interest. So it's a nice asset. We see it strategically as a high-quality option. Right now, we're focusing on optimization, well designed ways where as we take control of the assets where we can improve the capital efficiency. Ultimately, though, it will have to -- in order for us to scale it, it has to compete with full cycle returns across the broader portfolio and against the California assets. And that's a really high bar. As we mentioned, we see about 4x money on invested capital for California. So Uinta will have to compete for capital in that way. So we'll continue to evaluate it. We've only been operating it for a couple of months and whether that's scaling it through development or partnership, or other value-creating pads, we don't know yet, but we're keeping all options on the table. And ultimately, it's going to be returns and value creation that will guide the decision. Joshua Silverstein: Got it. And then I also wanted to ask just on the Huntington Beach asset. Any update there in terms of how you guys are thinking about kind of optimizing the value of that? Francisco Leon: Yes, 90 acres of Beach run property in one of the most expensive ZIP codes in California. So it's an asset that we continue to advance. It's exciting to own this asset in the portfolio, and we're executing our plan. A lot of the plugging and abandonment well it's been happening as we continue to produce, it's a cash flow positive asset. So we are effectively paying the P&A with that production. We have made good progress in terms of working with the City of Huntington Beach, advancing the entitlements. We expect formal review in late 2026. And then that will be followed by approximately 2 years of review by the Coastal Commission. Once the entitlement is approved by the City and Coastal Commission, then we have -- we will do the site redevelopment and remediation. We expect to have about 80 wells, active wells remaining to plug at that stage. And we will look to -- ultimately, we're looking to optimize value. And we see, if you look at comparables and the scarcity of land and high-quality development areas in the state, we see the -- some of the comparables going higher. So we like where we sit, and we will go through the process, obviously, look for ways to accelerate the process to the extent that we can. But we'll monetize it when we see the value, right? And right now, the value as we abandon and entitle shifts to the developer, we would like more of the value to accrue to our shareholders. So we're working diligently and putting things forward, but we see a lot of significant value creation opportunity in a few years related to this asset base. Operator: I understand there is time for one last questioner. We have Nate Pendleton with Texas Capital. Nathaniel Pendleton: Congrats on the strong quarter. Referencing Slide 10 and the potential storage of up to 1 billion tons of CO2 with the 350 submitted for CTV VII and more in the works. How do you think about the time line to develop the additional projects to reach that 1 billion ton marker? And then should we think about that total number representing total potential or just what the team has derisked at this point? Francisco Leon: Nate, thanks for the question. Yes, our CTV business continues to be a really bright spot in terms of the way the state is progressing through their net 0 targets. And we're seeing not only we talked a lot about today about the data center opportunity and how that part of the business can unlock CTV. The one area we didn't highlight today is through what we call what is called the RCPPP, which is the reliable and clean procurement of the state. There's advanced discussions happening and a lot of advocacy trying to add carbon capture into the mix for procurement. So whether it's data centers or the state making it a requirement, we think CCS will be the solution for the state, and that will bring the market forward. So it's going to be important to watch both progress this year. We have 2 very, very large markets, one behind the meter, one in front of the meter that we're going to tap. And if that were all to come into fruition, we would -- that would fill up every single reservoir that we have. So we continue to work on incremental capacity and bringing those permits forward. And that's been a core strength of our team is to advance those permits better than anyone else can in the state. So we're well situated for those market updates and for that market to unfold, and we think this is the year where it all comes together. Operator: This concludes -- just a moment. This concludes our question-and-answer session. I would like to turn the conference back over to Francisco Leon for any closing remarks. Francisco Leon: Thank you so much for joining us today. We really look forward to connecting with many of you in the coming weeks. Thanks, and have a great day. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Good morning, and welcome to the Gelion plc investor presentation. [Operator Instructions] The company may not be in a position to answer every question received during the meeting itself. However, the company can review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, we'd like to submit the following poll. I'd now like to hand you over to John Wood, CEO. Good morning, sir. John Wood: Good morning. Look, it's very -- to be able to take this opportunity to give you this update at this very important and exciting time for Gelion, your company. First of all, I would draw attention to our disclaimer here, our lawyers say hello. And look, companies are about people. That's where I wanted to start here. It's a little snapshot of some of the people only part of my leadership team here. But on my roadshows and my updates with Gelion, of course, today, we have our CFO, Amit Gupta with me, who is doing an absolutely outstanding job. Amit, thank you for your work. Also on the roadshows along the way, a lot of you have met Louis Adriaenssens and our CTO; Adrien Amigues, who's our President of Gelion in U.K. and Europe has been out to meet shareholders with me. And over on the far right corner, introducing Mr. Tracy Sizemore, who's our Senior Vice President of Global Partnerships. Now there's some little flags up in the top right corner. You'll notice that Tracy is saying hello from the U.S.A. We'll talk about that a little bit later on in the presentation. We're blessed with an extraordinary panel of technology advisers. Our very own founder, Professor Thomas Maschmeyer, regard as one of the top 15 chemists on the planet. The remarkable Professor Markus Antonietti, the Director of the Max Planck Institute of Colloids and Interfaces and Germany's most cited chemist and most cited material scientist. And most recently, Professor [indiscernible] to be able to invite Professor Rachid Yazami to join our advisory as well, famous across the battery industry, one of the pioneers of lithium-ion technology when Professor Rachid Yazami did his seminal work on the methods for intercalation of lithium into graphite. Again, we'll see where that fits into your company in perspective as we advance through this presentation. Okay. Who are we? And what are we doing? Look, Gelion, this sulfur battery company is targeting the cathodes market, which is projected to be $150 billion in 2032. And we're following a pathway followed in a way that we're going after that. This is a very big price, very important. We want to move quickly to establish leadership. So the way we're doing that is we're working very hard on global collaborations. Now there's a couple of our corporate collaborations, you can see at the top there with TDK and QinetiQ. We also are working very hard on technology collaborations. And so three that we're highlighting here is our partnership with The University of Sydney, Thomas Maschmeyer and work with Oxford in the U.K., and of course, the multiyear collaboration with the Max Planck Institute of Colloids and Interfaces. Underneath that, you can see government collaborations. A big callout for ARENA, absolutely in our corner. Thank you very much for the recent extension. The Advanced Propulsion Centre in the U.K. and The Faraday Institution, both of who have been supporters of this campaign. We are really very grateful to our government partners, our academic partners and our commercial partners. And of course, the other thing we're doing is we're building a strong patent network as we go. So we're building a strong core of technology. A little strategy update for you, a little talk about the market opportunity. Your company has three operating divisions. We are Gelion, the sulfur battery company. That is our primary business is where a lot of the excitement is about what we're doing right now. We also have an integrated solutions division and a recycling vision. Everybody in your company are hit their straps working really hard on performance. I'm going to start with our sulfur business. We have an ambitious goal. We want to establish sulfur cathode material, our sulfur cathode material as an alternative to the incumbent LFP and NMC technologies. That is a huge and important market opportunity. So that you can put it in perspective today, the market for cathode materials is about $44 billion. It's growing to $132 billion by 2032. And it is serviced principally by two chemistries, that's LFP and NMC. Your company, Gelion, is working to provide an alternative to those chemistries, and that's a sulfur cathode material. How are we doing that? Well, you can see on this picture, the picture on the left is actually our material. We call that Nano-Encapsulated Sulfur, NES. So, LFP, NMC NES. So that material and the way that we are approaching the introduction of that material globally is towards it becoming a drop in. So what you'll see in the picture in the middle, that actually is a sheet of cathode material, which is using our NES sulfur cathode powder. On the right, you see a sheet that looks somewhat like it, but that sheet on the right is either NMC or LFP. So you can see what the company is trying to do is to change one thing and to minimize variation in the production process. And basically, we're replacing expensive toxic critical minerals with simple sulfur. Now how do we go about doing that? Sulfur has always had the enormous potential to be an important battery chemistry in the cathode. And that is because it is the lightest material -- sorry, a very light material means that we can make very highly energy dense batteries, lots of energy for weight. And it had a few obstacles or a few things that were holding it back. Foremost amongst that was what's called polysulfide shuttle. And the Nano-Encapsulated Sulfur that we use eliminates polysulfide shuttle. Also, sulfur being held back by power characteristics. We support very high power. It's very low cost. We're supporting and testing against a very wide temperature range. The material intrinsically has low expansion and contraction characteristics. Now that's very important when you start to consider the cell types that you make from the material. It's important in liquid electrolyte cells but very, very important in solid electrolyte cells. And one thing very important about this technology is that it also retains a very high sulfur percentage. So it's actually the sulfur that's doing the energy storage. And so by maintaining that high sulfur percentage, that means that as well as having high power, wide temperature range, low cost, we've got very high energy density. I want to touch for a little bit just on the two other business units. So, firstly, our Integration division. Very proud of what the team is doing there. You can see on the right, the first of their systems that they've commissioned that was the group energy project operating very, very soundly. We've got a road show on that site is being shown in March 2026 as part of a major conference down in Australia. The team has built a substantial pipeline, which is between the identifying project and the proposal stage, but it is a long cycle -- a long sales cycle business. So we're not projecting revenue from this business in 2026. Instead, what we're working towards is maturing our pipeline and building that out in 2027. The Recycling group, and a call out to young Jacob and team who are building a battery, battery minerals. These guys are knocking it out of the park at the moment, doing an excellent job. What do we do with this? This is technology that we acquired from Johnson Matthey when we acquired the OXIS sulfur portfolio. So this team has established their U.K. testing facility in London. They've validated their technology at benchtop scale, and they're now scaling it to large volumes and validating the unit economics. This is an independent business building inside of Gelion and creating value in its own right. They have done a great job of coming up with their techno-commercial proposition. Basically, when you recycle lithium batteries, you end up with a black mass, this material called black mass, which is all of the materials that are in the battery also sort of mixed up. Now that's a hazardous material. There are shipping regulations coming in around what you can do with that material. What this team does is to extract from the material, the lithium. And by extracting the lithium, they also extract the fluorine at the same time. They result in an outcome that is more valuable to the shredder who's producing the black mass and they produce a material an alloy that is safe to ship. So, solid business model being developed by our team here and great work on the technology, watches space around what is happening with battery minerals. Okay. Status update for our businesses. We committed we would deliver our cathode active materials to our partners to commence the pouch cell manufacturing. And indeed, we have done that. Our Nano-Encapsulated, CAM, cathode active material is being supplied to TDK. And our Gen 3 has gone to QinetiQ, and that's being put into pouch cell prototypes at the moment. We expanded our advisory panel by adding Professor Yazami. We have said that we'll be expanding into the U.S. and there are very active discussions progressing there and in multiple global -- with multiple global partners around a range of applications and geographies right now. We said that we'd advance our innovation solutions pipeline and progress being made on that pipeline continuously, strengthen our balance sheet. Thank you very much to all the investors that joined us and those were existing investors that contributed into our round in November 2025, which strengthened our balance sheet and brought on some large institutional funds to join our journey. We are delivering on our technological commitments as well. So we said that we commenced our pouch cell prototyping with partners. Indeed, TDK has successfully manufactured the initial Nano-Encapsulated Sulfur pouch cells and the results are in line with our expectations. The Gen 3, first Gen 3 power cells be manufactured by QinetiQ and now we're transferring the capability to support the Nano-Encapsulated Sulfur between our Australian team and our U.K. team so that they can support QinetiQ to prototype using our Nano-Encapsulated Sulfur. We said we'd scale up our CAM in 2026. Thank you very much, ARENA, coming back and supporting us again. So we've extended the ARENA project budget from GBP 4.8 million up to GBP 5.3 million. Of course, that's shared funding and focused and extended our project scope to support what we're doing with our sulfur CAM fabrication. ARENA's support also has allowed us to bring online our ACPC and that will be leading to our ability to produce and prepare specification sheets for the material. We said that we would achieve our target aerial capacity, and we've achieved that milestone as well. So we're very pleased that our crew has managed to scale our materials from the original 1.5Q all the way to 4Q, 4Q being the critical milestone for -- that's the size or the density that we'll be using for our commercial high energy density sulfur cathodes. Continuing to file patents, including around the Nano-Encapsulated Sulfur. And we said that we'd validate the recycling technology at benchmark benchtop scale, and that has been achieved. So delivering on our commercial commitments and on our technological commitments. I'd like to pass to Amit now, who will update on the financial results. Amit Gupta: Thank you, John. Apologies, everyone. I'm having technical issues, so I have to switch off my camera so I can be heard properly. [indiscernible] On this slide, let me start with where we are today [indiscernible]. I think the underlying message on this slide is all the core [indiscernible] are improving and continue to improve over the last few periods. You will [indiscernible] total income increased slightly modestly from GBP 0.4 million to GBP 0.5 million. This is [indiscernible] higher grant income from the ARMD4 program by APC in the U.K. and the ARENA grant [indiscernible] continue to decrease over the period. So in [indiscernible] our adjusted EBITDA loss was GBP 2.9 million, which has now decreased to GBP 2.4 million. This is a reflection of us trying our best to access non-dilutive grant as much as possible and continue to reduce our operating cost. [indiscernible] For grant [indiscernible] I emphasize how important grant income is. They're just not a means of getting nondilutive capital. They are approval, a stamp of approval [indiscernible] U.K. governments. When [indiscernible] these a lot of diligence that goes into it. And if you're successful, you get these grant income. So this is a technical stamp of approval from the Australian and the U.K. government saying what we are doing. There is a lot of confidence from [indiscernible] that we are on the right track. It also allows us to work with quality partners like... [Technical Difficulty] John Wood: See, we have a problem with Amit's connection there. So, as you can see, continued strong stewardship of our financials. We're improving on pretty well every metric of operation of our business, even while we are scaling our business. In 2026, half 2, we will be starting to do a little bit more investment. So, in the 2025 period and then indeed the three years of my stewardship of the company as CEO, we have progressively controlled our expenses and continually delivered more from the company. We will be accelerating, just a little bit in some key areas and we're highlighting that on the screen here for you now. We are increasing our equipment CapEx a little in the period. There's a GBP 0.9 million of equipment that we're bringing in this equipment allows us to start to scale the production of our materials, and we need to be able to do that in order to get the materials out to all the customers or the collaboration partners and customers that we're starting to support. Good news is that 0.5 million of that comes from Gelion and GBP 0.4 million is being covered through our grant programs. In terms of our U.K. team, we are expanding our capabilities in the U.K. really grateful to Faraday and the APC up in the U.K. It's our intent to strengthen everything that we're doing in the U.K. and in Australia at the moment. And as we're doing that, what we're doing is also strengthening our presence into the U.S. So you'll hear a lot in the next period from us about what is happening in each one of those territories. I'm doing a lot of travel with our team at the moment. We are working very intensively, particularly in the U.K., in Australia, in Japan and in the U.S. All right. What I'd like to do now is to give you a view of what it is that we've done, why we've done it and where we are going next. So looking at our technology and collaboration progress. What are we doing? Shamelessly, we are aiming to secure leadership globally in sulfur technology at the very time that it is most important. We are catalyzing sulfur, both as a specialist battery cathode material and as a general battery cathode material. We're doing that by a capital-light model, and we have been very successful in implementing that as a capital-light model by way of collaborations across the entire supply chain. We're working very hard on genuine product market fit and reducing our time to market. So you saw us very active in that in 2025. You saw the cell technology and manufacturing arrangements we put in place with TDK and with QinetiQ. You saw us put in place the technology arrangements with Max Plank Institute, with Oxford. And previous to that, you saw us do the acquisitions of the Johnson Matthey, OXIS Technology and the OXLiD entity. This is a company that is moving quickly and effectively. So, 2025, big effort on technology and cell leadership. That gave us product parts. So we have one material and that material we are taking on four distinct product paths. The first of those is where we take our Gelion cathode active material, our NES, and we combine it with lithium metal and liquid electrolytes that's the cell down on the bottom left. We then also are developing it with solid state. You know about the relationship that we have in the U.K. with Oxford around solid-state material and also the great support that we have had from APC and with our collaboration up in Nottingham around solid state. In the middle, we have the graphitic CAM based -- the graphitic anode-based cell. Now this is an important -- this is an area of particular importance for us because as we develop this, this is where we become fully dropping. Why Professor Yazami? Professor Yazami's work is right there. He is a master of the art of intercalation into -- of lithium into a graphitic anode. On the right, what you have is a room temperature sodium sulfur cell. So, this cell is sodium, carbon and sulfur. Looking across the four of them, all four cell targets come from material. The two on the right include supplementary processes, which is called methylation, lithiation or sodiation. But our work in 2025 was about technology and getting to these product targets. So each one of these cells, we are prototyping in our laboratories even as we prepare to scale our materials. So let's look at where we go from here. 2026. 2026 is about make and market. And again, in addressing that, the way we are approaching it is through collaboration. So we're investing in leadership in the middle here in this sulfur technology cell manufacture area. But now my focus on collaboration activity and on customer activity is in the process development and the application stage. This is up the top here and down the bottom. How do you make and scale the material? How do you -- who uses the material? How do they apply it? What are the applications that they apply to? If you look at that application line, you'll see that we're aiming for electric vehicles. We're aiming for defense, we're aiming for transportation in all forms. We're aiming over on the right for BESS, in battery energy storage as well. Process engineering, and this is what you are seeing. One material, the core material, the Nano-Encapsulated Sulfur, we're working to put in place process engineering collaborations for the general material. That general material then flows all the way down to the lithium metal anode products on the left. And then you can see the lithiation. Again, here, we're looking at collaboration, again to put us on a fast path into the lithium-ion battery drop-in approach. Over on the right, the sodiation and the room temperature sodium sulfur. We're still doing some laboratory work at the process engineering level. So we'll do that work before we start to put in place process collaboration. So this is a company committed to leadership and committed to maximizing collaboration as we go. Collaborations at the application level. So, at the application level, this is where we're working with the people who use the batteries to make the equipment that uses the batteries. And I'm highlighting three areas that we're focused on at the moment. First one over here is drones and robotics. So, obviously, if you've got a very light battery technology, drones and robotics are an important area. If you're looking at the middle, that's now electric vehicles. And over on the right, what I'm highlighting here is that we're starting to work beyond the cell because we have to work on the pack and the product applications as well. So Gelion is out there at the moment working with -- working on collaborations across process equipment and process engineering and on these applications as well. We're very busy on it. And combining the two things that I've told you, the areas that we're working in, we're working in Australia, the U.K., U.S.A. and Japan. And we are currently, of course, working across collaborations and sulfur technology, cell development and manufacture, process development and applications. Now for all of you who have been existing investors tracking Gelion as we've come along, you know that up in the last few years, we've been moving very quickly. We've been effective in executing our collaborations and moving forward. This is a very exciting time for Gelion. I've got a wonderful team. We have that team fully deployed, working really hard, and I have never been as busy working with that team across these collaborations to get this in place, a company that is determined to deliver leadership. So we're focused on structures that leverage our competitors -- sorry, our competitors, our partners' strength to out with our competitors and using what is being done today rather than reinventing the wheel and prioritizing our applications around those where we bring the greatest value. So, what are some of the upcoming catalysts for you to look at? Well, we'll be advancing our commercial readiness. The focus at TDK, I cannot say enough about the quality of the people that we work with there. That is an extraordinary, extraordinary company. So our team is working closely with their team in Nagano to advance all of our work delivering progress together. Thank you to the QinetiQ team and all the work that's going on in the U.K. towards being able to produce our products up here in the U.K. We're going to derisk through the preparation of our commercial pouch cells. So that development is going on at the moment. Our team working with QinetiQ and TDK and others towards real-world testing with our partners on the pouch cell technology. We're going to expand our strategic partnerships. So we've got very good progress, new collaboration agreements that we're working on with potential partners in the U.S., Europe and Asia. And we're continuing to focus on our capital discipline so we're keeping everything tight. I did mention we're going to do a little bit more investment in the areas of highest returns, and we set out what we're going to be spending on there and how much we're going to be spending. This is in the highest areas of return for us, U.S. expansion and commercialization pathways. And we're going to maximize nondilutive government funding. We consider the governments who are backing us as our partners, and we steward everything that they give us as carefully as we steward all of the investors' funds that we are entrusted with. So the most exciting time for Gelion and a huge call out to my team and my Board who are supporting us with quality every day. I'd like to proceed to questions now. Operator: That's great. Thanks very much for your presentation. [Operator Instructions] Just while the company take few moments to review those questions submitted today, I'd like to remind you that recording of this presentation along with a copy of the slides and the published Q&A can be accessed via your investor dashboard. Operator: As you can see, we have received a number of questions throughout today's presentation. Can I please ask you to read out the questions and give responses where appropriate to do so, and I'll pick up from you at the end. John Wood: Okay. Thank you very much. Look, the first question here, I'll try to get -- try to get through all the questions, so I'll try to do that today. As TDK moves towards qualification, which durability metric are you most focused on derisking in aging tests? That is a great question. Batteries are like a Rubik's Cube, you must have every aspect of the technology right. So energy density, of course, we're working on maintaining energy density and so always working on getting the sulfur percentage up. We're working on power, great support from Max Plank Institute on working on power, particularly getting our voltage histories down, getting our impedance lower. We're working on wide temperature range. So making sure that these cells are suitable to be used in the extreme conditions that we anticipate they will be using. We're working on, of course, ensuring safety, which is almost in everything that we do. At what stage of commercialization would a dual or U.S. listing make strategic sense for Gelion, if at all? That's a really interesting question. Look, we're working hard to get presence in the U.S. at the moment. So U.S. is an important market. It's also a place where there's a lot of dynamism in battery tech at the moment. In terms of the U.S. listing, look, we're pretty happy with our AIM listing. People keep saying things like we'd be on a higher multiple -- might be on a higher multiple if we're on the U.S. and things like that. Our focus at the moment is on delivering leadership in what we're doing, delivering the major collaborations. I think that as we do that, if this difference in valuation exists between the U.S. and availability of capital in the U.K. is there. I think that it's just going to correct itself because I think a good company is recognized where it is. There might come a time when it's right for us to look at the U.S. but I sort of have a really treasure the investors we got in the U.K. and all the support that we're getting. So I'd like to make the company successful and see where we go there. What is the status of your solid-state separator? And do you think you will be able to integrate it into your semi solid-state battery anytime soon? We are working really hard on that at the moment. So the status is the team up at Nottingham that join Europe team are working with the solid-state separator. We are what is called densifying it at the moment. So densifying it means that that's a technique to resist dendrites and things like that. It's an area that is good and strong. And then yes, we'll integrate it. We're looking both at semi solid state, and we're looking at solid state as well. Do you anticipate having enough time to be able to develop and demonstrate a lithium sulfur battery with good performance characteristics in time for the Cenex Expo this September? We are working towards that. So that is our goal. We retain that goal. We've progressed -- we've made cells with Gen 3. The material has been shifted from Australia into the U.K. So, the U.K. is working to progress that, and then they'll take that material to QinetiQ. So that's our goal, and we're still working to that target today. Is the Ionblox JDA still active? And if so, can you report back on progress and potential commercial partnerships? So Ionblox hit a wall. And that was an unfortunate thing with -- they had a customer, a large customer that hit its own wall, and that put a lot of pressure on Ionblox. Now the work that we were doing with Ionblox is still active. Now this is an area, I have to be a little careful -- I'm sorry, I try to answer every question as completely as I can. It's an area I've got to be a little careful because it is an area that we are very active on and developing at the moment. And I don't want to signal too much about what's happening there. So, yes, all that work is current, albeit it won't be via Ionblox because of the challenges that happened with Ionblox. I like that NES has been trademarked. Can you expand more marketing on the technology and how it can be featured in industry publications? Hell, yes. Absolutely. NES was trademark for a reason. We want to see NES up alongside LFP and NMC. And call out to Jeneane, our marketing person who's backed us by getting this presentation together and doing so much other stuff, doing a wonderful job and starting to get more presence for the company. So we will be working at that goal. Can you outline exactly what areas of development Dr. Yazami will be advising on? Well, Dr. Yazami, he's amazing. I love our conversations and the opportunity I have to talk with him. There are two areas of particular expertise at Dr. Yazami. First of those is the methods of intercalation of lithium into graphitic anode. So earlier in the presentation, I talked about one of our goals being utilization of our sulfur cathode material with graphitic anodes, whether that's a full graphitic anode or it's an anode, graphitic anode that also has silicon. He's a master in that area. Another area that Dr. Yazami is a master in is battery management. So he's held for many years leadership in the area of fast charge, fast chargers stay ahead of lithium-ion cells. So he brings those skills. Singing out a little -- something I'll say about Professor Maschmeyer about Professor Markus Antonietti and Dr. Yazami, none of them are too proud to get their hands dirty and actually work directly with our team. They all get in and dig in. And from the early reactions with Professor Yazami, I would call out just how effective he was working with our team members inside of Gelion. What yield are you getting from your product line? So, in producing our material, we have our inputs. They go into our reactor and we make the Nano-Encapsulated Sulfur. That's our prototype process at the moment. That process is effective, albeit there are areas that we want to improve in yield where we utilize -- where we'll be utilizing more of the components to make the finished product. And indeed, that's one of the areas that we will be working on in collaboration with best practice process engineering companies. So, I think, the answer that you're probably looking for there is that our process is practical and that with appropriate process engineering, I think we'll be, at the end of the day, getting very high yield from the materials being put in to the end product coming up. How similar are the developments in lithium sulfide to Gelion's lithium sulfur? And is this a good sign? Is there any change or development in the overall plan outlined in the last fundraise document that you can cover? Or is it simply on track? At the moment, we are simply on track. So we just following the plan that we told people we would be following, and we're delivering on that plan. Now there's sort of two questions in this one. The first part of the question was how similar developments in lithium sulfide and Gelion's lithium sulfur. Lithium sulfide is a solid-state electrolyte material. And in fact, the materials that we are using in our solid-state work are sulfide materials. So, I guess, I would answer the question by saying it's good time. In John's comments about the half results, he mentioned Gelion has the potential to achieve Tier 1 status. Yes. Can you explain what this means and maybe give an example of a Tier 1 company? There are a number of leaders in our battery industry. I guess if you want me to just call a quick -- one that comes to mind quickly would be Amprius in the U.S., which is a company that does silicon anode-based technologies, but there's a number of Tier 1 companies. Tier 1 companies are companies that are respected as a leader in what they do. They typically have a very high valuation and they're regarded as Tier 1s because they're working in an area where people can see that, that area that they have leadership is going to intersect the industry and be something that makes cars work better than other cars or makes drones fly further than other drones. So it's always the end use that's important. And then those companies manage to position themselves as the renowned tech leader in that technology. So when I say that we have the potential to achieve Tier 1 status, you can see, I hope from the presentation we gave today that we are aggressively going after leadership in sulfur cathode technology. That's what my team live and breathe every day. The inspiration that I get as a CEO of this company is just going either to the Australian team or the U.K. team and getting them to do their presentations on what they've achieved in the last week or two weeks or month. It's all about being leaders in sulfur technology and having that technology meet the requirements of the market and beating our competitors. So when we achieve that leadership, that's when you -- a Tier 1 when you have that leadership and you have made the linkage to the applications and the application providers are starting to collaborate with you -- sorry, the application companies, the car companies and the training companies are starting to work with you. So look for development from July in that space. Can you tell me anything about the calendar life of the sulfur battery? Great question. Okay. I told you that we have we master polysulfide shuttle. Polysulfide shuttle is the thing that would normally affect shelf life or degradation. In terms of calendar life, we do need to do calendar life testing on the cathode, but we're quite confident about the calendar life of the cathode. In the presentation, I showed you the four different types of batteries. Each one of those batteries has a different sort of anode. So you've got lithium metal anodes, you've got graphitic anodes and you've got liquid electrolytes, you've got solid electrolytes and you've got the room temperature sodium sulfur. So, the whole battery, the calendar life is a function of the whole battery, the anode, the electrolyte and our cathode. The good news is that we believe that our sulfur cathode will be -- I can't give you absolutes, but I believe that the sulfur cathode will not be the limiting factor in the life of the cell. When do you expect revenue from your recycling business? The recycling business is currently moving from lab scale with a goal to go up to pilot scale. As they go from pilot scale -- as they go up to pilot scale and above, then they would be getting revenue. I'd rather not be specific about that, but watch is based on battery minerals, the group is doing particularly well. What competitors do you have in your selected business areas? Are they a threat to the success of Gelion? We're a battery company. We're a battery technology company that is high risk, high reward, straight up. And we have competitors. There are other sulfur battery companies out there. There are companies that are trying to eat our lunch with alternative technologies. We are bloody good. We are a good company. I have a great team. We have an enormous -- we have a great technology and a great opportunity. So, all I can say is that, yes, there are competitors, but I'd rather be with team Gelion in the market, looking across everything that I know in the market today. What capacity will a standard 40-foot sea container have and how many cycles is it designed for? So, I said there are four battery types, lithium metal anode graphitic anode liquid electrolyte, solar electrolyte and room temperature sodium sulfur. Really on this one, you're looking forward to probably the graphitic or the room temperature sodium sulfur. It's a very difficult question for me to answer quantitatively because there are several different answers to it. Some of our cells are designed for short cycle life where we're doing extremely light cells for particular purposes. Others of our cells are designed for long cycle life. I think I need to keep that question there for a little bit further down the track but our cathode material can be applied to the full range of applications from the light cells for drones through automotive through into battery energy storage. And that is the questions, I believe, that I have for today. Operator: That's great. Thank you for covering all the questions you have from investors. And of course, the company can review all questions submitted today, and we'll publish those responses on the Investor Meet Company platform. Just before redirecting investors to provide you their feedback, which I know is particularly important to the company, John, can I please just ask you for a few closing comments? John Wood: Sure. Look, thank you all for listening. It's been a long presentation. It's about positioning. It's about execution, it's about team. And I hope that through the course of this presentation, you've got a feeling for the openness of the company. We do these periodically. We're always prepared to come back, answer the questions, refer to everything we've done before. For me personally, this is the most exciting time for July, and this is where the rubber hits the road for the business. And I'm really grateful to everybody out there that is supporting me and our team to get after this exciting opportunity. So, thank you. Operator: That's great. Thanks for updating investors today. Can I please ask investors not to close the session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This may take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of Gelion plc, we'd like to thank you for attending today's presentation, and good morning to you all.
Paul Meade: Good morning, everybody. I would like just to highlight today that we have on Page 2, a forward-looking statement that highlights some certain risks and uncertainties that impacts our business. These risks and uncertainties are relevant to today's discussions, especially in relating to forward-looking statements. I would now hand over to Urs Jordi for the presentation. Urs Jordi: Thank you, Paul. Good morning all. Welcome to our Full Year 2025 Results Call this Monday. We will start on Page 4 of the presentation. As you can see, a revenue of EUR 2.223 billion being achieved in the year 2025. And with this, an organic growth of 1.5%, supported by volume and by price. An EBITDA of EUR 306.9 million we have in our books and with this a free cash flow of EUR 120 million. Based on this, on this solid performance and the strong cash flow, we decided to repurchase the remaining hybrid bond, the outstanding Swiss franc bond on the amount of CHF 144.3 million by end of April this year. On the next page then, you can see that we did complete our customer negotiations, year-end '25, beginning '26. We maintain a strong share of innovation, 19% of revenue. New capacity is ramping up in Switzerland, as you know, a new line for gipfelis and pastry. The first investment goes operational soon as we are speaking now and in the next 2, 3 weeks. And investment in Portugal, the burger bun factory is confirmed and the planning, execution starts. There's a new investment planned in Poland. Planning is continuing. And as you know from our last calls, business cost optimization is accelerating. On the next page then about the organization of the company, the Board, the management, the dual mandate, the Chairman and the interim role will end at AGM 2027. The Board will propose for then -- for this AGM 2027, a new Chairman. I will remain CEO of the company and Board member of the company. A Board refreshment is as well proposed for this year's AGM 2026. We proposed Heike Sengstschmid to join the Board. Helene Weber-Dubi decided not going for the next round after being more than 5 years with us. We did as well decide to relocate the head office from Schlieren to Zug. This is subject to the AGM approval from April. The guidance then for the coming year on the next page. We confirm to deliver our midterm plan as disclosed, we will achieve a low to mid-single-digit organic growth. We will continue with our EBITDA and EBIT improvement activities. We will remain on a strong cash flow generation for the business and the Board will publish a capital return policy 2026. This is a remarkable point, first time in ARYZTA's existence since many years, the company is in the situation to debate and to propose a capital return plan for shareholders. On next page, then you can see the midterm targets. You know then about EBITDA margin, EBIT margin, 15% or more, 9% or more. CapEx amounts to 3.5% to 4.5% of revenue as we had in the past. Total net debt leverage from 1.5 to 2x is a target level we will achieve. All of this supported by a strong cash generation and improvement on ROIC and on earnings per share. We would go now to the financial review and I would ask Martin to guide us through, please. Martin Huber: Thank you, Urs. Good morning. We are pleased to share with you the details of the resilient results we achieved in 2025. ARYZTA has delivered on the updated guidance after the executive leadership change in October 2025. We achieved revenues of EUR 2,223.3 billion, corresponding to an organic growth of 1.5% with contribution from both volume mix and pricing. Our EBITDA of EUR 306.9 million is above the guidance. The corresponding margin of 13.8% demonstrates our ability to deliver robust results despite the context. Free cash flow of EUR 120 million, representing a cash conversion of almost 40% of EBITDA confirms the cash generation strength of ARYZTA's business model. Despite lower operating results, the disciplined management of our invested capital protected ROIC. The 12.1% is well above the group's weighted average cost of capital, delivering value creation for the shareholders. Next slide. In a challenging consumer end market environment, ARYZTA delivered an organic growth of 1.5%, supported by volume mix growth of 0.5% and a resilient pricing of 1%. Foodservice and QSR contributed with solid growth levels, while retail was flat. Important to highlight that pricing was strongly supported by our foodservice business, while QSR was a key contributor to volume growth. Retail delivered a contrasting picture with some businesses delivering substantial volume mix growth compensating others. Innovation with a revenue share of 19% was organic growth accretive. Next slide. Europe achieved an organic growth of 1.3% with positive volume mix and pricing. Contribution to pricing was stable across the year. The growth in Europe was broad-based with good contribution from Ireland, France, Germany and Poland as well as our European bun cluster. Good performance in foodservice driven by pricing and, to a lesser extent, volume as well as solid volume progress in QSR. Retail had a generally more challenging performance in both pricing and volume. Innovation share of revenue reached 19%, underscoring our category leadership. While EBITDA margin of 12.9% was below last year and further decreased compared to H1 2025, we have been able to significantly recover profitability in the last quarter. The reset triggered by the leadership change supported this acceleration of margin recovery in the last quarter with the several cost optimization initiatives we have put in place. Next slide. Rest of World delivered strong results with an organic growth of 2.9% and a EBITDA margin improvement of 110 basis points to 20.9%. Key contributors to this achievement are a mid-single-digit organic growth in QSR with important contribution from volume and mix. The continued QSR recovery also resulted in improved profitability. The other segments of Rest of World achieved largely flat organic growth, however, added with important margin progression to the results of the region. We expect the QSR to further progress. The new factory in Perth will be commissioned at the end of the first quarter this year and will support this trend. Next slide. We delivered an EBITDA of EUR 306.9 million, which was above the October guidance. The resulting margin of 13.8% is 80 basis points behind previous year but largely stable versus our H1 result. Input cost inflation, particularly related to labor cost as well as some commodities like butter, protein and chocolate have impacted gross margin by 290 basis points. FX and other elements had a negative impact of 50 basis points. This was partially offset by pricing as well as procurement and Simplex cost optimizations, which have benefited gross margin by about 190 basis points. The increasing share on revenue of margin-accretive innovation has also helped to mitigate the effect -- the negative effect the input costs have. Distribution costs and SG&A have contributed 60 basis points to the result through disciplined cost management, efficiency gains from the shared service center and procurement savings on the newly onboarded indirect categories. We have delivered these robust EBITDA levels and have continued investing in our strategic efficiency initiatives to ensure our business model and setup is future fit. Next slide. During the Capital Market Day last year, we committed as part of our 2025 to '28 midterm plan to deliver EUR 20 million to EUR 30 million net savings. Operations, procurement and structure cost improvement will contribute EUR 40 million to EUR 60 million savings, of which we will use EUR 20 million to EUR 30 million to invest in improved digital maturity and AI. Over the last couple of months, we have further evolved and refined our savings and IT investment road map and incorporated them under the umbrella of the ARYZTA Continuous Excellence program. The focus will be on operations as well as commercial. We will drive efficiency in manufacturing through initiatives such as center lining, waste management and changeover cleaning optimization as well as accelerating the rollout of bakery best practices to our factories. In logistics, our focus is on driving the efficiencies of our distribution platforms and our direct store delivery setups. In sales and marketing, we have launched a set of measures to accelerate customer and channel contribution. The excellence program is complemented with transversal initiatives, addressing the structural costs by aligning our organizational models, implementing a standardized integrated business planning process and further extending the reach of our above-market procurement organization. The investments into our digitalization road map will evolve the IT and OT capability of the group and will ensure that the benefits of the excellence program are sustainable. On the next slide, I'll share a couple of early examples of this acceleration of our excellence program, which we have intensified over the last quarter of the year. In operations, we have run a manufacturing optimization pilot project in our Swiss bakery in Dagmersellen and identified material cost reduction potential. The realization of these saving potentials has already started. We will roll out this program further. Germany will be the next manufacturing hub, which we target. Through the alignment of our organizational model, we have identified across the group circa EUR 10 million of gross annual structural cost reduction through the alignment to our predefined organizational models. The implementation of these actions has started and will show its full effect in 2027 as we will have some one-off restructuring costs in 2026. Our business service center now drives major process redesign and technology rollouts across 60% of our revenue, enhancing controls, efficiencies and scalabilities and with that, positions ARYZTA for sustained profitable growth. In terms of our digitization road map, we continue strengthening our digital core by unifying the ERP and business application landscape, tighter data governance and deeper end-to-end system integration. This is reducing manual work, moving supply chain or improving supply chain visibility and enabling faster AI-supported insights. Next slide. ARYZTA delivered EUR 120 million in free cash flow. Continued strong focus on working capital management, disciplined management of CapEx, which only increased by about EUR 4 million versus previous year and the reduction of total financing costs supported by the hybrid buyback program and increased efficiency in cash management were the key drivers of this result. Next slide. Our continuous focus on working capital management allowed us to further reduce trade net working capital as a percentage of revenue to 0.2% compared to the 0.7% at the end of 2024. Management of inventory was one of the contributors to the positive evolution as well as continued disciplined collection management. Next slide. We made good progress in strengthening our balance sheet. The solid cash flow supported by the hybrid buyback program and the further improved working capital efficiency allowed us to reduce the leverage to 2.6x. We are fully on track to deliver the targeted levels of our current midterm plan. In addition, our core equity is progressing as planned and represents already 21.1% of the total balance sheet assets. As announced today, we will repurchase the last remaining hybrid on its next interest payment date at the end of April and repay the outstanding principal of CHF 144.3 million. With this, we will successfully conclude our hybrid buyback program and further progress towards a normalized financing structure. Next slide. Our disciplined and consistent management of financing has delivered strong results. Total financing costs, including hybrid dividends and lease interest amounts to EUR 41.6 million. This is over EUR 4 million better than the lower end of the guidance range for 2025. The hybrid buyback strategy contributed almost EUR 23 million to the reduction of the financing cost and was only partially compensated by higher bank financing interest. Our interest exposure hedging strategy has paid off. Currently, around 37% of our total exposure is covered. For 2026, we expect that our total financing costs remain stable at EUR 40 million to EUR 43 million. Next slide. Return on invested capital is at robust levels with 12.1%. The lower operating profit is impacting the 2025 results. Our invested capital remained, however, stable compared to previous year. Disciplined management of CapEx and working capital have contributed to this. The 2025 result of 12.1% is well ahead the group's weighted average cost of capital of 8%, creating value for our shareholders. The earnings per share increased by 5.7% to EUR 4.25. The positive contribution from our disciplined financing strategy more than outweighed the impact from lower operating results. The tax charge, as you can see on the slide, was largely stable. Concluding now, we have delivered a robust set of figures in a complex and volatile context. The measures we have taken in Q4 to reposition the company and correct the course towards the midterm planned flight path are delivering results. We have refocused the commercial organization and expect to deliver an organic growth in the low to mid-single-digit range. Our negotiations with customer are mostly concluded and pricing is expected to be largely flat for the year. We are focusing the organization on operating profit and expect to return the EBIT margin towards the flight path of our 2028 targets. Certainly, our cost discipline measures structured within the excellence program will support this. We expect to sustain strong free cash flow generation for the current year. And end of April '26, we will repay the remaining principal of the last outstanding hybrid bond and further normalize our financing structure. And last but not least, we have validated our SBTi targets and are making good progress in our ESG journey. Thank you and I hand back to Urs. Urs Jordi: Thank you, Martin, for these financial results. We would go now to the Q&A session. Operator: [Operator Instructions] The first question comes from the line of Jorn Iffert from UBS. Joern Iffert: It would be 3 quick ones, please. And the first one is on the incremental cost saving program you've announced. Can you give us a little more granularity what to expect net on the EBITDA bridge? And also what's the extent full-time employees to be reduced? Is it going down 1% or 2% or even a little bit more? Just a little bit more clarity here. Second question, if you allow me, why was retail only flat more or less on revenue growth? Isn't there a trend that smaller artisan bakers are disappearing and people going more towards retail? So would this imply that underlying consumption of bakery is not really great in the current environment? And the third question is, please, do you expect a back-end loaded year? Or is H1 already showing us some progress on organic sales and also margins? Urs Jordi: Thank you, Jorn. I will start with the cost saving and the retail business then and would then hand over to Martin about the H1 and H2 balancing. This -- the cost saving programs, this Agility to Win and the excellence program, the short to midterm program are in work in progress and in the rollout. So there will be significant savings in the entire supply chain. The numbers for this, we are elaborating. There is already a part of the savings in the budget. We will know and see what the total number is but there is a component as well on the FTEs and you will understand that we will not communicate these numbers. This is always a bit difficult as well. So we are in process to finish this program in Switzerland. The next approach we will take in Germany. This is work in preparation and will start within the next 2 to 3 weeks. So this is the status. We will again see a significant saving in this numbers. We will not communicate this. You will see this in our results. Retail for the last 12 months was okay. It was a bit up and down but the consumption in retail is solid. The bake-off part in retail is a growing and outgrowing part. There is a bit an impact on promotion or on shifts in the portfolio. But basically, retail remains strong. There is, as you know, a pricing initiative from retail, which is good and bad. The good thing for us is that we are efficient and being able to address this. So we clearly count as well for this year for a solid and slightly growing retail volume. On the other hand side, this is the other side of the coin, quick serve restaurant and foodservice did good in the last 12 months. So this is the nice balancing of our business model. We are in quick serve restaurant, retail and foodservice. So if somewhere is a low-ish trend visible, we can offset this with the other 2 channels we are in. Martin, H1 and H2? Martin Huber: As we have guided for the full year, maybe let me start with the Q4 reset that we have done. So we have taken there clear and strong actions. We have refocused the commercial organization that I have mentioned. We have accelerated the savings and cost optimization programs, structured that, as I presented, under the excellence program and are making good progress. So I would really focus that we are guiding for the full year, low to mid-single-digit organic growth. We are, with all these measures that we have taken, returning towards the flight path of the midterm plan and progress on margins. In terms of cash flow, we have some cash expenses at the beginning of this year for the conclusion of the factory in Perth and the installation of an important cooling system in one of our factories in Europe. And this is impacting our cash flow. So the cash flow as it was in '25 will also be in '26, more H2 driven and probably be at similar levels in H1 as we had last year. Joern Iffert: If you allow me one quick follow-up to the first question. Can you just give us an indication what are the restructuring costs you will book in EBITDA in 2026? Martin Huber: Look, what I -- I think I leave it as I mentioned it in the call, we have -- we expect to get annualized savings of these measures of about EUR 10 million. The full impact of this is being impacting positively our results in 2027 as we will incur restructuring expenses in the course of 2026. Overall, we have said that the total contribution from these programs that are now, let's say, under the umbrella of excellence will be EUR 20 million to EUR 30 million net savings over the period of the midterm plan. Operator: [Operator Instructions] The next question comes from the line of Jon Cox from Kepler Cheuvreux. Jon Cox: Congratulations on the free cash flow and the recurring EPS. Just on the free cash flow, you've obviously brought down that trade working capital down to a pretty low level. Can you keep going there? What I'm trying to get to is where the free cash flow could come in this year? Is there a chance actually comes down from what we had in 2025 if you get -- maybe you've already exhausted where you can go on that trade working capital. That's the first question but it's sort of linked as well to this whole capital allocation. And I think I'm not alone. I think some of us were hoping you would come out with a capital allocation policy today given that the balance sheet has now pretty much normalized and obviously, the last -- the final bit will be the hybrid. You talk about this 1.5 to 2x. You've talked about an equity ratio, which is not in the slide. So I guess that's up for a discussion. But I'm wondering why you can't, at this stage, even commit to a dividend in 2027. Is it because you really want to get down below this 2x level before you start paying a dividend? So that's sort of like a free cash flow capital allocation question. The second question is just on top line. And I'm just wondering, do you think there's anything structural going on in the market? We're hearing a lot about bakery being under pressure in North America with the potential to shift to higher protein diets, GLP-1s, all of this type of stuff. Given the reset, given what you're seeing in retail sales of bakery at the moment, I wonder if there's any thoughts on that. I know you're quite passionate about bread and what it can give you in terms of calories and it's very efficient, et cetera. And then just a couple of nuts and bolts questions. Just on the effective tax rate for this year, again, you look lower in 2025 than some of us expecting. Where you think the effective tax rate will be? And then also, did you mention that there will be a restructuring charge because I know normally, you guys are very good and including that in your EBITDA? Or are you now talking about a change in policy there you'll actually start to split that restructuring charge out? Urs Jordi: Thank you, Jon. I would answer the trend at the market first, giving Martin time to prepare the answers. So you remember Atkins diet, what was it 25 years ago. And then the next one and the next one, same time, the carbohydrate consumption remains stable. In our part of the world, somewhere between 70 and 75 kilogram a year. In Asia, it's even ramping up. At the beginning of our business, this was not even measured. And today, in the markets we are, this consumption is somewhere around 20, 25 kilogram. So there might be impacts and appearances affecting the consumption maybe for a certain period of time or in regions or whatever it is. Overall, we are absolutely convinced that we are in a very good business in a very efficient and effective calorie. The cost of living crisis, let me say it like this, is a good helper for carbohydrate calorie. And the way I did mention at the beginning, we are in -- we have a good channel mix with quick serve restaurants, food service and retail. So we do not see any significant change in the trend. Martin? Martin Huber: On the free cash flow, you have seen there, we have improved our free cash flow, thanks to the support of working capital management, which we have consistently worked on over the last couple of years. When we compare H1 versus H2, we have been able to reduce our cash conversion cycle by almost 10 days. A big part of that is coming from inventory management. And to your question, are we able to sustain continuous improvement? I'm not -- I'm clear we have reached competitive levels. That doesn't mean we cannot further improve. I've mentioned under the excellence program, we have a transversal initiative, which is the implementation of a standardized integrated business planning process. We expect from this improved process quality, a further improvement on our overall inventory management. So the steps are getting a bit tougher but I do expect further improvement of our overall working capital and hence, contribution to our free cash flow. For the -- for 2026, I would expect continued strong cash flow generation and I would not expect a change of the deliveries that we have been able to bring forward. When it comes to capital allocation, I think we have been very clear that we will come forward with a communication of a capital allocation strategy, which the Board will issue in the course of this year. We have a clear pathway to that. The first step is the hybrid buyback that we just announced and we will execute at the end of April. We have also indicated that we will further improve our balance sheet structure. We'll be working on -- or continuously working on cash generation, which will help us to do so. At the same time, we will diligently work on improving our credit ratings. That's the next step, which allows us to further diversify our balance sheet structure. And we have given a target of around 30% core equity ratio. We are already, as I indicated in the call, at 21.1%. We have increased this from 15.6% in '24 and we have almost doubled it if I compare to 2023. So we expect this to progress and at the end of '26 to be closer to the 30% than to the 25%. So in that sense, I think we have the pathway set up and you can expect in the course of this year, a communication on this capital allocation and the distribution of capital to the shareholders, be it through dividend or be it through share buybacks. The Board will issue that communication. In terms of the effective tax rate that you have asked, we are about at the same level as we have been last year. And on the long run, we indicated that we will be in the mid-20s when all, let's say, the losses that we have in the different jurisdictions are consumed. That is the tax rate that you can expect over the long run. Currently, our effective tax rate for the year is at around 20%. The last question, the nuts and bolt question you had in terms of the restructuring. We -- as we have communicated, we will absorb these costs within our profit levels. Therefore, we will certainly disclose what the costs are but it will be within the communicated results. So we're not going to an underlying or a core profitability. You can expect that we continue to result -- the results as they are. Jon Cox: That's right. That's very welcome. So just to push a little bit on free cash flow. So you think there will be progress in free cash flow again this year? And then just -- sorry but back to this core equity ratio, you're saying it will be towards 30%, you think, in 2026. Would you still pay a dividend if your equity ratio is not at 30%? Martin Huber: So in terms of the free cash flow, I think you can expect largely similar levels as we had this year. In terms of the core equity ratio, when you look at how we have progressed over the years, '23, '24 and '25, it is an improvement every year by around 5 to 6 percentage points. So that's why I'm saying, at the end of -- and this is almost like clockwork style. So you look at this and it's step-by-step core equity has increased by 5% to 6% year after year. So you can expect that at the end of this year, we will be closer to 30% than to 25%. In that sense, the Board will come forward in the course of this year on how our capital allocation policy will look like. Operator: There are no more questions in the queue. Now I will hand back over to Urs Jordi for the closing remarks. Please go ahead, sir. Urs Jordi: Thank you for joining the call this morning. We will have the opportunity to talk today or tomorrow. I wish you a good day. Thank you. Goodbye.
Philipp Schindera: Good morning, and welcome, ladies and gentlemen, colleagues. Welcome here in Bonn to our conference on Deutsche Telekom's financial statements. We get together once a year personally, too. And I'm pleased that we have the ladies and gentlemen of the press here personally. And I would also like to welcome all the staff who are following the conference on live stream. Great to have you. So we have some interesting things to tell you about today, and that's why we have more speakers than usual. I'd like to introduce the speakers for today -- for today and tomorrow. On my right-hand side, Christian Illek, CFO at DTIG; then Tim Hottges, CEO; Rodrigo Diehl, also on the Board of Management of Deutsche Telekom in charge of the German business, Dominique Leroy, she's in charge of the Europe segment; and Ferri Abolhassan, who's in charge of T-Systems. So Tim, I'd say with that, you have the floor. Timotheus Höttges: Thank you, Philipp. EUR 1. That's the dividend we are proposing for every share, more than ever before in the history of Deutsche Telekom, and that alone shows that 2025 was a very successful year for us. We delivered. And with that, a very good morning from my side. Someone recently said about me, this guy is Deutsche Telekom. But I choose to disagree quite clearly, we are Deutsche Telekom. Our results are a team effort. 197,000 employees have made that possible, and that's why more colleagues are sitting here beside me today. So I'm really glad that we have the various Board members here from Telekom Deutschland, Europe and T-Systems at today's conference. Srini is still in the U.S., and they recently had their Capital Markets Day there. And I am very pleased to say that the Supervisory Board yesterday renewed the contracts of Birgit Bohle, Ferri Abolhassan and the contract of Thorsten Langheim. These contracts have been extended. And this gives us a great deal of stability. We now have an experienced team, and we have new members on Board, that gives us continuity, and that's what we need, first and foremost, in these difficult times. However, Deutsche Telekom is far more than just its Board of Management. We are a huge global team. And I would like to take this opportunity to thank all colleagues for once again achieving a record result despite the complex challenges we were facing in the past year. Like I said, 2025 was a challenge. We had to cover immense costs of energy for taxes, wages, fringe benefits. Competition in our industry is extremely intense. We dealt with Spectrum and for the first time, satellites, too. And of course, we also had to deal with sabotage attacks and power outages in the past year. And on top of that, there were exchange rate effects. In 2025, the U.S. dollar lost more than 5% of its value compared to the previous year of 4%, and that's EUR 0.05. And in 2026, the difference has reached almost EUR 0.10. But despite that exchange rate effect, despite the weak dollar, we've managed to grow across all segments, and we are growing everywhere. The strategy is working well. We are carried by the momentum of our flywheel and the numbers add up. All important financial KPIs have improved year-on-year, compared to the prior year quarter to the third quarter and to the prior year, improvements everywhere. So when you look at momentum, the fourth quarter was stronger than the third quarter. And by the way, the fourth quarter was also stronger than the fourth quarter of the prior year. So in the fourth quarter, the positive trend for Deutsche Telekom even accelerated. Net revenue on an organic basis is up 4.2% to EUR 119.1 billion. Service revenues up 3.8% to EUR 99.4 billion. Adjusted EBITDA is up 4.7% to EUR 44.2 billion, and we increased our guidance for this 3x in the course of last year and now exceeded even that. Free cash flow, up 2% to EUR 19.5 billion. And I don't think I even have to mention that we've also been able to invest a lot of money, which is also part of our flywheel strategy. So you can see Deutsche Telekom continues to be reliable, especially now where it counts the most. What does that mean? For me, it means, first and foremost, reliable networks. We continue to extend our network leadership. In 2025, we built 2.5 million new fiber optic lines in Germany alone. By the way, that's more than all of our competitors combined. And we offer extremely reliable service. 25,000 customers in Berlin, just to give you one example, received unlimited data from us. And in this way, they were able to stay in touch despite the sabotaging of the power grid and in most areas, the network was restored in record time. We bear responsibility, especially when it comes to such outstanding events. And that also means reliable investments in artificial intelligence, data centers, cybersecurity and resilience. Across the group as a whole, we invested almost EUR 17 billion in just 1 year, 2025, of which EUR 5.9 billion were invested in Germany alone. I don't know if there's any other company investing on that scale, maybe Deutsche Bahn, but we are doing that for the 12th year in a row, more than every competitor and more than in the previous year. We launched over 500 AI and data projects and our customers benefit from that. For instance, from our Frag Magenta chatbot, which chatted to customers some 7 million times in 2025, and it was able to independently resolve 56% of all inquiries. We also launched a voice bot in June for everyone who prefers to speak rather than type. And AI benefits the German industrial sector, too. Our AI factory in Munich delivers the necessary computing capacities. And so that is already available and very effective. With sovereign operation and sovereign data and we 100% comply with European standards. That's all guaranteed. In Germany, we often talk about sovereignty, and we claim that we need to be sovereign. And I can't think of any project that would help us more to reach that sovereignty. And we are now climate neutral in Scopes 1 and 2, meaning we are at net zero. Later on, maybe we can give you more details on that. At any rate, we have made sure that we are only using or that all our energy requirements are covered using renewables. All operators of critical infrastructure carry an inherent responsibility for stability, for protection for all aspects, and that's why we are expanding in the area of resilience and defense as well. And I'm not just talking about the resilience of our own infrastructure. We also want to invest in companies that will protect critical infrastructure in the future, such as the drone manufacturer Quantum Systems. We are now in the third round of funding as an investor. And we're also committing additional capital to fund through DT Capital Partners focused on defense and resilience and the minimum target volume is EUR 500 million. This is European capital for European resilience. It's about ensuring the ability of our country and our continent to defend ourselves if need be. Moving on to the outlook, and we remain optimistic regarding 2026. Let me be clear here that what I'm going to say now is not just a wish list. This is a work program. We want our adjusted EBITDA to grow by 6% to EUR 47.4 billion. That would be a 6% growth, like I said, all forecasts, by the way, are based on constant exchange rates, and we have applied the U.S. dollar exchange rate from the prior year of USD 1. 13 to the euro. We want our free cash flow to grow by 3% to EUR 19.8 billion. Why don't we say EUR 20 billion. And our adjusted earnings per share is to increase by around 10% to EUR 2.20. And we presented our targets for 2027 at the Capital Markets Day in 2024. And back then, these targets looked very ambitious, but I can tell you they are achievable. These are tough times for a lot of companies in this country. A lot of companies do not have reason to be as optimistic. So that is quite remarkable. And like I said, we presented our targets for '27 at Capital Markets Day in 2024, and we are fully on track in terms of earnings, in terms of free cash flow and earnings per share. We've achieved what we set out to do, and we are on our way to meeting our targets for 2027. Ladies and gentlemen, we can be satisfied even though sometimes it doesn't feel that way because a lot of the things, the factors that influence our success are factors that we don't have an influence on, like geopolitical tensions. Fewer and fewer players abide by the rules that were taken for granted for decades, then ever-changing regulations, especially in the European environment. 270 national regulators determine what happens in our business. Brussels sees a need for further action. And with the Digital Networks Act, it is just creating more bureaucracy, again, not less. Continuity alone, however, will not be enough to be successful in the future. It will also very much depend on how we are working together. And there are a lot of crises, a lot of challenging framework conditions, and we need to tackle them together with our staff. And that's why we have decided to enhance our corporate culture further. We recently had a big annual kickoff meeting where we launched a new program called T-Style. T-Style stands for three things. First of all, we want to improve our performance. We also want to improve cooperation inside our group or across our group, and we want to cut back on red tape in our company. And ladies and gentlemen, Deutsche Telekom is not stuck in a traffic jam. Sometimes we are the traffic jam ourselves. And that's why we need to take action to make things easier in order to be able to be faster so that our staff can also work more effectively. So T-Style stands for excellence, for creativity instead of rigidity, for cooperation instead of silos, for courage instead of fear and for confidence and optimism instead of gloom. And we have every reason to be optimistic across the group and in the segment. And that's why we are now going to look at the segments. And I would like to hand you over to Rodrigo Diehl. Rodrigo Diehl: Thank you, Tim, and a warm welcome from my side as well. I will start with an overview of how we've executed against our strategic targets before I dive deeper into the financials. I will then round up things with an overview of my strategic priorities for 2026. Overall, we've made good progress along our strategic targets. 2025 was an important year for our fiber build-out. We now reach 12.6 million homes passed and added twice as many fiber customers as in 2023. So in 2025, we had twice as many customers on our fiber network as in 2023. We achieved substantial efficiencies in our fiber build, and we are going to reinvest some money in the fiber network. And we reconfigured our fiber strategy, more on this later. When it comes to a digital and AI-driven transformation, and Tim already made a few comments about that, we see some very encouraging early successes also in Germany. Let me give you a few examples. Our customer chatbot, which Tim already mentioned, is now fully LLM-based and achieves a 55% solution rate and people achieve around 70, just to give you an idea. 3.4 million contacts or problems are solved by chat or voice bots. We have reached 40% zero-touch automatic call identification, and we rolled out AI-based automatic call documentation for our service staff. And more than 2,000 employees are now using this capability. And we are still the undisputed market leader. We won all the service center shop and mobile network tests. And it's not just about tests. It's about the work done by thousands of employees every day. In this way, we can win these tests in the first place. Our customer bonus program, Magenta Moments has now been established in the market with 5 million active users. Our first-time resolution rate reached 77%. That's an all-time high, a record. And this too, obviously helps us improve customer satisfaction further. Complaints. And this is a number that I check every day. Complaints were down by 50% in the last 2 years alone, a 50% decrease. And last but not least, our brand recognition and our brand values are at an all-time high as well. Let me go to the next page. And let's take a look at our financials. I am pleased to say today that after a weaker third quarter, our headline financials are back on track. Organic revenues were up a strong 2.8% in the fourth quarter. Two factors contributed to this in roughly equal parts. First, service revenue growth, both in fixed and in mobile. Total service revenues grew 15% year-on-year; and second, strong revenues with our fiber joint ventures. In Germany, we have over 50 partnerships -- partners that we are building the fiber network with. Year-on-year growth in EBITDA at 2.5% was back at a normal run rate after an unusually weak third quarter. And now let's take a look at revenues on the next page. As mentioned, both fixed and mobile service revenues improved sequentially this quarter. Headlines last year were generally impacted by weaker-than-expected broadband and B2B fixed line revenues. In mobile, the 2.5% year-on-year service growth is a continuation of our ongoing strong performance that we've seen consistently throughout the years. And on the next page, we are taking a deep dive into mobile communications. And there, you can see the consistent strength in our subscriber growth. We had a lot of net adds. As you can see here, we were above the level of Q4 2024. And our propositions continue to resonate well with customers, both business and residential. And our network leadership remains undisputed, and we're extending it with our ongoing network modernization program. We've successfully addressed growing data demand with well-designed unlimited propositions that we recently updated. And growth at Congstar has also been a big help. And therefore, I am still optimistic, and we remain comfortable with our capital markets guidance of 2% to 2.5% mobile service revenue growth in the period from 2023 to '27, having delivered growth at the top end of this range in the first 2 years. And that's why, yes, we should actually come out in the range we defined at Capital Markets Day. Moving to the fixed line. We are pleased that our broadband net adds stabilized last quarter. We even won 2,000 net customers last year, 2,000 net adds. This stabilization is the result of multiple measures, including a steady acceleration in fiber connections. Before I give you more details on fiber, however, let's take a look at our progress in the TV segment. We added over 100,000 new TV customers in 2025, and this comes after a little over 300,000 in 2024. Back then the ancillary cost privilege became obsolete and 2024 was the year when we had the rights for the European Championship, which gave us a lot of tailwind. And now talking about fiber. This quarter, we added 164,000 fiber customers, our best ever quarter and much better than the figures we saw in the Q4 of 2024. And our fiber penetration was up 11% year-on-year at 16.4% and we'll continue to speed things up. We're stepping on it. The entire German organization focuses on increasing the number of customers using fiber. Fiber will continue to be our area of focus as I will demonstrate on the next couple of pages. So as mentioned, in 2025, we increased our fiber footprint by 2.5 million. As promised, we remain well on track for our stated 2027 target of around 17.5 million homes passed. But what's even more important is that the number of fiber customers increased by almost 600,000. Let me repeat that 600,000 German households were connected to the fiber network in 2025, a line from us. And therefore, we are on track towards our target run rate of 1 million in 2027. And we will continue to step up our fiber investments funded by improving efficiencies, budget reallocations and federal tax relief. This amounts to a total of EUR 800 million more for the years '26 to '28, which is a clear commitment to the fiber rollout as we continue to invest more than any other company in Germany, hence, living up to our responsibility. And as communicated in the third quarter, and we've come a long way now in terms of implementation, we are now increasing our focus on single-family homes and less densely populated areas. As for multifamily homes, we will increase our focus on connections, buildings prepared and the full build-out for more homes connected. meaning we're not just going to the basement, but we are basically connecting the entire home so that customers in the future will no longer have to wait 3 months for a fiber line to be connected, but just a couple of minutes. And we are also improving our sales approach, and the first results are very encouraging. We're scaling that, and it looks very good. Now let's take a look at the fixed line revenues. While our broadband net adds improved last quarter, our access revenue trends remain impacted by last year's volume losses. Retail broadband revenue growth slowed to 1.6% in the last quarter. This was driven by the volume losses, while the ARPU momentum remained positive, especially in the B2C sector. B2C ARPA was up 3% to 4% year-on-year. Overall, we remain committed to our capital markets CAGR guidance of 3% to 4%, even though this looks challenging from today's perspective. Wholesale revenues improved sequentially. Here, ARPA momentum continues to offset ongoing volume losses. Overall, over the '23 to '27 guidance period, we expect to deliver the stable wholesale access revenues that we promised at Capital Markets Day. So what are our priorities for 2026? Let me talk about that before I give you an outlook. We are industry -- the industry leader when it comes to the fiber build-out. And the priority is to keep accelerating our fiber customer growth towards our 1 million target in 2027. 1 million German households will be connected to our fiber network by 2027. And this will help us both on the volume and on the value side. Another key focus is to take our digital and AI-driven transformation to the next level. And personally, I am convinced that potential for efficiencies is even bigger than we thought to date. So we are modernizing our network, and we are constantly extending our mobile network leadership through our network modernization program, and we are translating this through our best network campaign into even stronger brand leadership. Another priority is to evolve our Magenta app into a central operating system for customer interactions along the lines of what you're seeing from T-Mobile U.S. So copied with pride from our colleagues in the U.S. As part of this, we aim for 70% of the extensions of mobile contracts and additional SIMs to be done through the app. In B2B, we want to stand apart from others with secure networks and market-leading cloud and AI propositions. We're doing that with Ferri from Systems. German business customers can work with us as a strong and German sovereign company that takes responsibility and will guide them through digitalization in a determined fashion. So now let me talk about the outlook. On the service revenue side, we're currently below our ambitious Capital Markets Day target. While mobile is tracking in line, weaker fixed service revenues are weighing. The weaker-than-expected fixed service revenues result from 2025 broadband customer losses and a weaker-than-expected B2B performance. This year, we're expecting overall similar total service revenue growth as in the prior year. On the EBITDA side, we expect a better trend in '26 and a return to a more normal year-on-year increase. So we are still committed to the goals we communicated at Capital Markets Day. EBITDA CAGR, 2.5% to 3%. But given the weaker growth in '26, we now expect to be at the low end of this range. With that, after this overview of the situation in Germany, I would like to hand over to Dominique. We've worked together for the past 5 years. Over to you, Dominique. Dominique Leroy: Yes. Thank you, Rodrigo. Good morning from my part. Moving on to our European segment. I'm happy to confirm that we continued our success story once again in 2025. Let me share a few highlights along our main strategic pillars, growth, transformation and scale and our efforts to win the hearts of our customers. First of all, growth. We achieved strong service revenue growth of 3.9% in 2025, which was driven both by B2C and B2B. This success is based on our network leadership, further progress with fixed mobile convergence and strong B2B growth with ICT services. We've added 1.1 million fiber homes in 2025. bringing our FTTH number to 11.3 million homes with an average utilization rate of 36%, while our 5G coverage reached 92% by the end of 2025. Looking at transformation to scale, we're proud of our 73% app penetration and growing chat share. Our transformation towards more digital sales and service is progressing well. And we're driving AI for network automation, energy savings and improved customer experience. We've made good progress with scaling platforms with the build-out of centers of excellence in the B2B area and our common network operating model across the NatCos. Turning to the last category, winning the hearts of our customers. We're top rated in trim customer satisfaction in almost all our markets, both in B2C and B2B. 9 million of our customers have signed up to Magenta Moments and about 45% are actively using it every month. Next to our strong customer focus, we're also very proud to have very high employee satisfaction across our NatCos. And all these successes translate into a strong financial performance. In Q4, we delivered another excellent quarter. It was the 32nd consecutive quarter of organic EBITDA growth. Organic Q4 revenue growth was 3.5%. Service revenues grew 4.6%, helped by strong B2B IT service revenue growth in Greece. This brought full year service revenue growth to 3.9%. Our growth was strong both in B2C and B2B, and it remains underpinned by continued strong growth in customer numbers. EBITDA AL growth slightly dipped in the last quarter, but remained strong at 3.8% year-on-year. And we ended the year with a strong 5.4% organic EBITDA AL growth. So this slight sequential slowdown reflects the phaseout of previous price increases and the phasing of various one-timers. Our European commercial performance, going to the next chart, remains consistently strong. and it accelerated in all relevant product categories last quarter. All the NatCos are contributing to this trend with Poland doing particularly well. To carry on our success story in 2026, there are several priorities that I would like to highlight. We shall maintain our strong pace in building the best network. We will add more than 1 million fiber homes in 2026 while keeping utilization high. And we will push to reach 95% 5G coverage. To continue our growth in our core business, we will double down on delivering the best home experience to our customers and further enhance this with new smart features surrounding home control and security. At the same time, we will accelerate growth in new business areas beyond core. We will leverage Magenta moments in B2C by launching new propositions like gifting, travel and dining. This will reinforce customer engagement towards the tea brand. And we will double down on monetizing AI and digital sovereignty in B2B. We will push for even more transactions in our digital channels, aiming for more than 30% e-sales share and up to 50% of all mobile prolongations and tariff changes on digital. We will step up adoption of AI and sales and service, including in call centers and shops through AI-assisted transactions. We will further leverage AI to offer more hyper-personalized and contextualized experiences and products. And we will furthermore continue to simplify and retire our legacy systems to attain more efficiency gains. All of this will not only translate into better experience for our customers, but also help us further reduce our IDC to service revenue ratio. Going forward, we will build towards a next-gen customer experience, which is centered around the Magenta app. We will further drive customer engagement with Magenta moments and aim to reach 10 million registered members already by year-end 2026. And we will continue to focus on improving our customer experience across all domains. Next to our customer focus, we will keep on investing into our employees. Our goal is to push towards becoming top 5 employer in telco and ICT because we want to attract the best talent in the market with focus on future skills like AI. So all of these actions will contribute to our securing our #1 position in TRIM. We're very well on track for our stated CMD Capital Markets Day targets, both with service revenue and EBITDA AL where our growth in the first 2 years were each well ahead of our CMD targets. In 2026, we expect further growth in service revenues and an increase in EBITDA to EUR 4.8 billion. We also expect underlying EBIT AL growth north of the 3% range. That's close to what we delivered in 2025 and adjusted for the tailwind from the end of the Hungarian telco tax. So with that, I would now hand over the floor to Ferri, who will walk you through the story for T-Systems. Ferri Abolhassan: Thank you, Dominique, and good morning. You are a role model for me. For 32 quarters, you've continued to improve performance that is outstanding. And this is something that we are working to achieve at T-Systems as well. And yes, we will use you as a role model for that. I think T-Systems is no longer Deutsche Telekom's trouble [indiscernible]. We certainly achieved the turnaround. And 2025 was a good year for the second time, and we'll try to keep that up. We don't want to be a burden for the group. Instead, we want to help bolster it. And for that, we need to earn our money and prove our value in the market. Revenue grew by 3%, which is in line with the promises made at Capital Markets Day, just like all the other KPIs. But we don't just want to increase revenue, but also profitability more so than revenue so that in the end, our cash flow is also good. We will likely never be the #1 pillar for the big tanker, which is Deutsche Telekom. But then if we make the most of our staff and their skills, then we can be a big support for Deutsche Telekom. Look at our order entry here at the bottom right, that was outstanding in 2025. We had an outstanding December and the full year was outstanding as well. And the order intake always gives an idea of a company's reach. We are in the project business after all. And that's why order entry -- the order entry we see here is not just good, but it also gives us an indication that we have had a good start to the new year. There's one number that is not shown here. So let me just mention it. We have a TRIM of 93 points, which is an all-time high. And I'm just saying that because Rodrigo and Dominique also said that we want to turn our customers into fans. that set the stage. And if we don't manage to do that, we won't be able to generate revenues. That's why we are very happy with our TRIM value, that's very good, but it's not the end of the story either. Every individual customer accounts and there's still some work to do here. In 2026, we'll continue to have stable financial operations, which is also in line with the promises made at Capital Markets Day. And this will at the end of the day, give us new opportunities as well for Deutsche Telekom, and that has always been the vision of Tim Hottges as well. When it comes to the important topics in the field of digitalization, T-Systems can make a major contribution based on the skills of our staff and for our customers, and we can prove it every day. There are basically 3 fields that I'm talking about. That's AI; secondly, cloud and sovereignty and thirdly, key industries. Let's talk about AI for a moment. At T-Systems alone, we have around 1,500 experts who only work in this field for our customers, and they are gaining a lot of experience that Dominique and Rodrigo will also be able to use both for internal and external AI products. And we have almost 500 AI and data projects, including our new AI factory in Munich and so open to others. I'll get back to that later on. At the end of the day, we also want to make a contribution to telecom's business in key industries. That certainly includes public and health and defense, which is another mission of ours and has been for quite some time. So we're not just beginning to work on that. We've been working on it for a while. And here, you can see the numbers for '26 that should give us the possibility to scale. In '26, we want to grow revenue by 50% year-on-year. T-Systems should have a share of EUR 200 million here. And at Capital Markets Day, we mentioned the EUR 1 billion target, and we are well on track to achieve it. And we are the market leader in the field of private cloud in Europe, but also leading when it comes to sovereignty in Europe. And we want to increase our T Cloud public revenues by 20% to over EUR 200 million. That is an important step, not just for T-Systems, it will also play a major role for the group. And we are doing that together. Rodrigo and myself, we are working together. We have a joint cloud group that we can use to launch new products on the market. And we realized early on that the automotive sector is also important for us. Over the past few years, we've taken relevant steps. And we ask ourselves how can we make the most of our experience here. Automotive will always be an important market for us, a market that we feel very loyal to. And of course, we want to grow, and we are trying to prepare ourselves for things to come, which is why we are now focusing more on public and health and defense, for instance, drones. So now we have a right to play. We stand apart from others. And that's why in '26, we aim for more than EUR 100 million of revenues, especially in these fields, public health and defense. And for that, we also need to focus on offshore and nearshore projects. We have an offshore team of almost 12,000 people in India by now. which doesn't only boost T-Systems profitability. We also do it for T-Mobile U.S. We also do it for Rodrigo. So we are the ones who support this field for Deutsche Telekom. So it's offshore, nearshore. And there's also a transformation towards AI. I call it a production machine. We set that up in India, and it helps us to use AI at an early stage so that we can use labor arbitrage, not just in the context of nearshore and offshore, but also in general. 10% to 20% is our goal here for this year. So we are doing things that make us stand apart from others that help us as T-Systems to grow, but that also support the group as a whole. So now let me show you my last slide. And this is an example of how Deutsche Telekom can support the notion of Made for Germany. What does Germany need to catch up in AI linking up to the big foundation models out there. That's the talk of the town. And I am proud to say that T-Systems as part of Deutsche Telekom has made it clear that we are tackling these things. In Munich, for the first time, we are using state-of-the-art technology for a complete AI stack. You can see some numbers here from Munich on the left-hand side within less than 6 months from the idea to implementation, we are starting with a set with the latest NVIDIA chips. We need a green data center that doesn't need a lot of energy with an energy efficiency factor of less than 1.2. But it's not just about selling hardware to the market. We are talking about an open, secure and sovereign AI stack. And this AI stack from connectivity right through to the data center layer, the platform and the connection together with partners such as SAP and Siemens is addressing customers to tackle things such as digital twins, optimizing products, digital twins, product maintenance, et cetera. So in this way, we are addressing the industry. Industry, SMEs, small- and medium-sized enterprises are the backbone of Germany's economy. And we're not just offering LLMs. But the question is how can a production company, how can an SME make sure security standards. It is run by our staff in Germany. And there's just one non-German element, and that's American hardware. There's no way around that. But it is -- other than that, it is sovereign from end to end. It is open to others and it can be used by our customers and industry and all -- are we limited to Munich as a location as such. But rather than just debating how we can make Germany fit for data centers and AI, we just want to get down to business now. And we can see that there is a high demand already I think it was the 4th of February when this new factory was opened and the level of utilization is already very high. So there's a great deal of demand, and we wanted to test how it is received in the market. And with that, over to Christian. Christian Illek: Yes. Thanks,. I'll keep things short to and give you an overview of the group. But first, turning to the U.S. and then I'll finally look at the financial metrics over the last year and some of the financial ratios. Reported service revenue based on U.S. GAAP increased by 10.5% to USD 18.7 billion and that includes U.S. Cellular for a full quarter for the first time. Postpaid service revenue increased by 13.9%. There were several effects here. First of all, higher customer numbers, but also increased profitability. And adjusted core EBITDA also based on U.S. GAAP grew 6.8% to USD 8.4 billion. Customer growth in the U.S. was very strong in the fourth quarter, as you heard, 2.4 million postpaid customers. Although the churn rate rose slightly to 1.02%, that's incidentally a development that can be observed across the industry in the United States, and you can get the other key figures from the charts. Turning to the development with the group's financials. Here are the figures. And we're looking back on a very successful 2025. I'll try to analyze this for. We had a negative effect through the U.S. dollar, and that led to a lower profit, but we were helped by the U.S. dollar's drop in CapEx and also M&A activities also played a role, especially in the U.S. and especially U.S. Cellular, but also there were 4 additional M&A activities in 2025, the acquisition of several companies and a 50% share in 2 companies, [indiscernible] said, one metric was negative. That was an adjusted net profit. That was because in 2024, there were a reversal of impairment losses that took place the year before joint ventures with GD Towers and GlasfaserPlus. These result reversals of impairment losses increased reported net profit in 2024 and hence, also the basis for comparison for 2025. And this brings me to the development of free cash flow, adjusted net profit and net debt over the last year. Free cash flow, as I said, increased by 2% year-on-year. This was essentially driven by operative activities and EBITDA was EUR 1.12 billion, but the weaker dollar also had a reducing effect of around EUR 1.4 billion. If we hadn't had this, it would have been EUR 1.4 billion higher. And we had an increased CapEx greater than expected, around EUR 642 million in the United States was the increase in CapEx, around EUR 88 million in the Germany segment. Looking at adjusted net profit, that grew 3.7%, and that was lower than our ambition for 2026 if you look at '26, but we had the effect of the U.S. dollar and a weaker financial results. This came because of increased interest expenses in the U.S. and also in our stakes in other companies, and that explains the dip here. Net debt here, just a few words on this. As you heard, the weaker dollar helped us here with this minus EUR 6.7 billion. This is ex leasing of EUR 1.2 billion. But what's important is the right-hand side of this chart, where we have been able to reduce our net debt to EUR 6.2 billion. This is just a brief overview of the financial metrics, and I'll be glad to go into any detail if you want. With that, I would give the floor back to Tim. Timotheus Höttges: Thank you very much for your patience. Now that's been an awful lot of information, but it was a very busy year, too, right? That became quite clear. Okay. So now let's continue with the Q&A. We're looking forward to your questions. Please raise your hand. Starting with Mr. Stefan Scher from the Handelsblatt. And make sure you turn on the mic so that people can also hear you in the video conference. Unknown Analyst: Stefan Scher from Handelsblatt. I have two questions, Mr. Hottges. First of all, data center business is your -- something like your pet subject. And you want to make sure that Deutsche Telekom can expand its business beyond the network business. What direction are you headed? Telecom Italia has made a lot of headway here. What could be the role of that for Deutsche Telekom's business overall going forward? And secondly, last year, this conference, I asked you about the US and what's happening there and what's happening in the U.S. is in line with your values here. Back then you said that your values at Deutsche Telekom still apply but then now i understand you are helping to build the new premises on the White House. And how does that fit in with what you said before? Timotheus Höttges: Well, the data center business is something that we have for quite some time. And we are running the data center to generate more business. So it's not about square meters and megawatt. It's about business and customers. With DTCP, our sister organization, sister company, we now have an opportunity to have good market partners in the data center field that gives us a lot of leverage, and we made the most of this room for maneuver in Munich. And yes, I think that demand amongst our customers will continue to grow here. Let me add to this. We have data centers across the group. We have Green Scales and Mine Cubes and own data center at Biere and Magdeburg. Then we set up this new data center in Munich. Of course we will continue to deal with the data center business and the question will be at some stage whether we can consolidate it into one business at some time but the final decision has not been made yet. I would like to mention the giga factory here. I think that german industry collaborates very well in this field. With the Schwarz Group, in particular, we have developed alot of common ground. We need GPO capacities for Germany at a completely new level compared to where we are today. But let me also tell you, Brussels made a lot of big promises at the Summit meeting with Macron. They said that they would invest EUR 6 billion in data centers in Europe, but we haven't heard a lot about that since. It is becoming increasingly difficult for the German government to combine their capacities in such a way that they can guarantee a minimum level of utilization for these data centers. And there is no real demand -- or sorry, no real reaction to the negative energy prices in this country or the too high energy prices. And yes, then we expected a tender from Brussels before long. And now apparently, this has been put off to May. So I would hope that things are sped up here and that politicians take action. Germany Deutsche Telekom doesn't need a gigafactory. Germany does. Let me highlight that. And if politicians do not provide a framework for that, then we will not invest in this kind of project, which is why, yes, the policymakers really need to provide relevant incentives. And then you asked about values and the ballroom next to the White House, which is currently being built. Yesterday, we had our Pulse survey for Telecom. It's a global survey, and it's relevant to us everywhere, and we've improved our results here once again. So our employees are feeling fine with Deutsche Telekom and its values. Needless to say, there's also a certain level of polarization within a company as big as Deutsche Telekom as anywhere else. That's normal for a democratic entity. So I look at this as a whole, and I am proud that there's this feeling of belonging in our corporation and that we have this culture that unites us all. And that is the reason why we've now set up the T-Style. Tomorrow, I'll have a big town hall meeting to also present the substance behind that T-Style program. There are legal and political rules in every country. We are not just holding up ethical standards for the sake of it. We comply with legal requirements in every country, obviously. And right now, in none of the countries where we are active, we are facing any restrictions of our values in terms of diversity, performance orientation and our corporate culture as a whole. We don't see any limits there. And you mentioned the funding of the ballroom. The Americans will be celebrating the 250th anniversary of the constitution. It's a big celebration. And if something like that were to be celebrated in Germany, Deutsche Telekom would sponsor it as long as it's in line with our brand and our products. In the U.S., it is a common thing that companies sponsor such events. And the benefit is that taxpayers don't have to pay for it. That is basically the responsibility of companies. But we are not supporting the building of the ballroom. We are supporting the inauguration ceremony. And that's part of good citizens in the U.S., and we will continue doing things like that in the future. It's just like I said, it's good corporate citizens. And that's nothing that would call our values into question at all. I'm not looking at that critically. Question from the WDR public broadcaster. Unknown Attendee: You just held up the EUR 1 coin for the photographers, nice. I suppose that [indiscernible] trade union will also react to that. Can you comment on the imminent wage talks? There will be collective bargaining. To what extent do you want to make sure that employees will be able to share the success of Deutsche Telekom right now? Timotheus Höttges: Yesterday, we spent the whole day discussing things with the employee representatives. I think so far, Deutsche Telekom has been very good at finding common ground with the employee representatives, sharing interests. And when it comes to the transformation of this company, we've always been able to shape it and manage it in a good way. Then again, I always -- I would always like to see more momentum, a more dynamic development in Germany as a whole, and we need to become more agile. Other countries are more agile than us. So we have to make sure that when it comes to productivity and our economic performance, we're good. That is the best way of guaranteeing that we can keep jobs and safeguard jobs at Deutsche Telekom. If that's not possible, then Deutsche Telekom will have to shift jobs to other countries. That would be the logical consequence. And that has already happened. That's the wage arbitrage, be it in the field of software development or software products. So yes, Germany needs to become more competitive, and it has already become competitive in some fields. There was once a discussion about outsourcing all our call centers. We said back then that external call centers would be -- were far more effective. But then together with the employee representatives, we developed a concept for making the call centers more effective, also very much driven by Ferri Abolhassan. Today, almost all of these call centers are still part of our company. It's almost exclusively telecom employees, and they are doing a great job, and that's precisely the right way, improving competitiveness, maintaining competitive together jointly, both nationally and internationally. And that's why I am hoping that we will have a fair collective bargaining progress with demands that are not over the top. And we offer continuity at Deutsche Telekom also in terms of our strategy and in terms of our cooperation with the employee representatives. And that's precisely what has made us strong in the past. Unknown Attendee: I'm from DPR. You have a 60.4% pickup rate on FTTH right now. There's room for improvement, though. How do you think this will continue to develop? You're at 20% right now and the consumer agencies record the complaints and it's increased considerably, and this relates to the fact that it's being delivered a lot later than pledged. And the second major block of complaints relate to advertising. And I asked about what company was involved there with the consumers' agency and Deutsche Telekom was named among others. So has this -- have you heard about this criticism and the number of people that are making use of this. This Is not developing the way it should. And my second question relates to the TV business. Growth rates here are kind of moderate, let's say, going back to the football World Cup. Back then, you thought that the elimination of the ancillary cost privilege would help a lot. I'd just like to hear a rough estimate of why the TV business hasn't picked up like you hoped? And hasn't become this really major growth story that you were hoping for back then. Philipp Schindera: Well, I can tackle that question. Regarding fiber, in the third quarter, we mentioned that our focus and objective is to connect people to the fiber network and to increase the utilization of it. That also costs money, and we've modified our strategy accordingly. We're focusing more on rural areas. We're seeing that with single-family homes where the utilization rate was 30% or a little over that. We want to move more to rural regions where there's more family houses there. And there is a bottleneck out there. It's difficult -- this is a difficulty in urban areas with multifamily apartments, apartment buildings. There, it's only 10%, slightly above 10%. And there are structural issues, too. Sometimes it's just not possible in these multifamily apartment houses to connect every family. So we want to make full build-out the objective. And when we're not allowed to do that, then we have to look at scaling. Q4 was our best quarter ever with -- we have the objective of 1 million in 2027. That would help us attain this utilization target. And you mentioned the past development. Yes. And we've made some excellent progress though. And this is since COVID because during COVID, fiber was a great business. A lot of customers wanted it then. That was a push back there. But now we have to approach customers. And the question is, how can we strengthen our distribution channels to approach customers. And 2 channels have -- that we're really trying to scale upscale right now, and that's bearing fruit. One of them is we call that consultants from the shops. These are advisers from the shops, and there will be 250 staff by the end of this year who will be going from the shops to approach customers and even visiting them. And we have relations with them. We know the streets, the roads. We know their neighborhoods, and we'll use this knowledge to -- we'll leverage it to go to the customers. And the second channel is we're building a lot of fiber every day out there, we have about 20,000 staff members, building, building, building, and many of them also enter into the buildings, the houses of customers every day, day in, day in, day out, 6,700 of them. And they can provide a pitch and develop leads to customers as well. The customers can then call a service center and get a fiber connection. We have 4,000 leads a week through this channel with a conversion rate of almost 50%. So that makes me very optimistic that we'll achieve this target of 1 million in 2027. And I can tell you all 60,000 of our employees in Germany are really focused on utilization of the fiber network. And that drives us. And that's our contribution to digitalization of Germany. And that's what motivates us when we come to work in the morning. And that's why we are optimistic that we'll achieve this. And the second part of your question, I think it has to do with the marketing model for fiber in Germany and how it works, how it functions. There's no premarketing. First contracts are concluded and then the building takes place. And sometimes it takes quite a long time and only then do customers get the fiber connection. And of course, sometimes it can take 6, 12 or even 18 months. The lag between the moment where the customer signs an agreement and really gets the connection. Of course, that's too long. And a lot of times, that causes some irritation among customers. But I can assure you, I look at these complaints relating to fiber week in and week out, and they are really decreasing significantly because we're learning. We're on a learning curve with our processes, with our journeys, and that's why these complaints are declining continuously and will continue to. With regard to TV, I'm actually quite satisfied with the development of our TV business. In contrast to broadband, where we're the incumbent in the TV business, we're the attacker. And we were the underdog really. And now we have 5 million customers on our TV platform right now, 5 million as the attacker in this market. And our ambition is to really boost this figure a lot. And we have a historical opportunity with the World Cup, and we bought the rights to the World Cup. And we'll have -- we'll be broadcasting 44 matches exclusively on Magenta TV. So we have really high ambitions for TV. And I wouldn't measure our success just in the number of subscriptions we have, but rather broadband subscriptions together with TV and the bundle that we're selling in a package. We were the most successful TV provider this year, if you look at the growth figures in the market among all the competitors, we grew the most. And I'm pretty optimistic that, yes, there is room for improvement. We have 15 million broadband customers and 5 million TV customers. So you see what potential there is. Just something to add on the business approaching customers at home. We've really worked hard on this and to really improve our professionalism here. And I can send you some additional -- I can send you a link where we address this topic. I think that's the best approach, this doorstep selling to fiberglass rollout in Germany. But yes, we're the leading provider when it comes to ethical standards here, too. Yes, the complaint ratio here is less than 1 in 1,000 in this area. I always say, hey, that's too many. And I look at this every week, but this also shows how much we're -- how hard we're working on quality. Then let's go to Ms [indiscernible] and then we'll look at the chat. Unknown Analyst: I would like to go back to human resources. Mr. [indiscernible] said, if the underlying conditions aren't right, then we have to offshore, but we heard that we have 12,000 offshore workers and an efficiency boost through that of 10%. That sounds like you have some concrete plans to increase the number of offshore workers. What are your plans there? And then I'd like to ask about the AI gigafactory again, a question. How great do you think the possibility will be to get another one in Germany? And this cooperation with the Schwarz Group with getting -- is there indications that we could persuade them to get another gigafactory in Germany? What are the plans in this regard? Timotheus Höttges: Let me start with the second part. We have a good partnership with the Schwarz Group. We're not planning anything on top of that. We are building 2 data centers in Europe. In Lebanon, the Schwarz Group is also building a data center. But for now, we're just focusing on the first one or two steps, not a third one. Yes, I think there is room for expanding the cooperation, and that's not an issue in the German industry. That's fine. Then the second question, what's the likelihood? I can't tell you that's an economic decision that we will take once we know what terms the tender comes with. Now I think it's interesting to look at the GPU prices that are defined, then the question is whether the EU and the German government will be able to ensure a 35% level of utilization using their own data centers. That is another relevant question. And the third question is, will there be any subsidies to offset the differences in energy prices? I mean, our prices here are 25% higher than those of the French, for instance, and they may be different elsewhere again. So these are the questions. And once these questions have been answered, then yes, maybe we can continue from there. But so far, these questions have not been answered. Yes, that was completely to the point. Then the staff transformation in Germany, that was the second question. You see in Germany, this staff transformation has been going on for quite some time. And Germany only accounts for 17% of Deutsche Telekom's business today. We are a global corporation. And needless to say, we are using or we are leveraging the benefits that come with that. And let's not talk about offshore here. These are real telecom colleagues. And when I go there, then they are sitting there with their telecom gear and they are fully committed, just as committed as our colleagues here at Lychen and Bonn. So these are telecom staff, and I just wanted to get that straight, not just some offshore staff. Secondly, our staff in other locations also have other skills that we leverage. So here's the thing about Germany. Everybody in this company has a certain entrepreneurial responsibility for this company, and it's been like that for a long time. Everybody is responsible for ensuring cash flow and profitability. And I'm proud of the turnaround that Ferri has brought about at T-Systems. We see a positive cash flow there. We can see that EBITDA is growing at the double-digit range, and that business has now become self-sustained as well. But for that, you need to make the right investments. You need to focus on the right things. You need to take the right decisions. And it also means that our staff is passionate of our business and is working effectively. And that's not possible -- if that's not possible in a particular location because staff are too expensive or not adequately committed, then you need to counteract that. So it's not against Germany, it's with Germany. I want to keep as many jobs as possible in this country, but it also needs to be affordable. And that's not just the responsibility of the employer, but it is also the responsibility of the works councils that are responsible for the various locations. And ultimately, we have to be careful. When we hear that everybody says, we call upon the employers to find some common ground. It's not just our responsibility. We need to find common ground with the employee representatives. It's their responsibility as well. Next question? Unknown Analyst: Just a quick follow-up question. You mentioned the 270 regulators in Europe that are quite skeptical about AI gigafactories. But my -- what's your gut feeling about Europe? You've talked a lot about Germany. But how do you expect the telecommunications industry in Europe to develop from here? Do you think that something can actually change? And if so, how and why? Timotheus Höttges: I'll start in German and then I'll switch to English. Yes, we are very disappointed with regulation in Europe. And the only good thing is the extension of Spectrum. That's the only positive trend that we are seeing here. But anything else that we are seeing is not good for the telecommunication sector. The rules haven't become any less complex. And the hyperscalers are not paying anything for using our networks. That hasn't happened. And we always said that we don't want to have ex-anti, but ex-post regulation. And now we see the new networks, the fiber networks, which are rolled out and ex-anti-regulation is not so important anymore. We need to have a free market, you see that makes it possible for all the players to compete against each other. And if you are -- if somebody is not adequately or not enough competitive, then you can still do something on an ex-post basis. But that's not how it's handled. So we are very disappointed, and we'll continue to fight for better regulation of our sector. It's an important sector. A lot of investments are made in this sector. This sector enables digitalization in all the countries. And it's really important that we are getting support from European lawmakers here also to counteract the trends that we see in the U.S. and China. Philipp Schindera: I love your accent. I would just add a couple of things to that. First of all, in Europe, right now, we're seeing more and more red tape, more requirements. You have to just look at it very soberly and that's a fact. And yes, and that's being planned in the recent paper that was mentioned. And in this paper, we didn't find any answers to what [indiscernible] and [indiscernible] called for. The single market and the independence of Europe, especially in international competition with China and America, that would be so important. And there's no -- this isn't tackled in any ambitious way. And in this report, and I'm on the fifth commission now. This is the fifth commissioner actually that I've worked together with. And you always have the good and the bad. And the bad is quite clear. There's more regulations. This whole web of regulations isn't decreasing and there's fewer exemptions, but then they also say they want to extend Spectrum over a period of 50 years. And I can tell you right now, that's not going to happen. Because in the paper, it says that, but that's only so that the telecommunications industry is provided a little bit of hope, let's say. But the actual markets will never go along with that. And that's to put it mildly to put it bluntly, they don't take it seriously. And this lack of ambition in this paper and in Brussels that they approach telecommunications with is fatiguing. It's just wearing me out. And against this background, we're doing what we always do. We're carrying on. We're not trying to change things that we can't change. That's a great quote. By the way, write it down. We are concentrating on what we can do given the existing conditions aside from politics and things like that. We can invest. We can invest in fiber in the U.S. where it's profitable. We can invest in a gigabyte factory in Munich. We can push forward fiber build-out in Germany. We're not going to take off the blinders. We are focusing on these topics, but this industry could do a heck of a lot better and citizens in Europe could do a lot better too if there are more with more ambition in the telecommunications and digitalization market. You know this whole litigation with Meta. There's no initiative from Brussels in this regard. We'll stop. Good. And now I'm looking at the chat. And the first one on the list is Mr. Hassan from Reuters. Mr. Hassan Can you hear us? Then I would ask you to ask your question. Unknown Attendee: Yes, i can hear you. I have a question for Mr. Abolhassan. You talked about the growing demand for the AI factory. And I would like to know what is the capacity utilization right now? And how much of that is from public institutions, either government institutions or research institutes. Philipp Schindera: Well, I'm not going to disclose all the figures here, but we are about 40% to 50% utilization here, and that's in line with our ambition. And because it's only been open a few months, [indiscernible] factory. And regarding Sophie, you might have heard about this because that was publicly announced. We have a cooperation with the Nova Institute. This is the first European foundation model, and that addresses consumers and the public. And that is an open, secure sovereign factory for industry, but also for the public sector. And now that's where I would stop. There's still room. That's right. There's still room. And it would be not -- it wouldn't be so good if we opened a shop and everything was sold out in just a couple of months. Yes, just a brief addition. Unknown Attendee: Ms. Hassan Yes, thank you. The dollar this year has really impacted the business this year. And I was wondering if you're planning on hedging against the dollar because you're talking about adjusted targets, financial targets? And my second question relates to the Germany business, the mobile communications market. If I see correctly, you're not expecting net adds for your market here. And I assume that your cooperation with Congstar and your other partners, fraenk will help you forward going forward this year. But how about with prices, special offers? And how do you want to react to the situation right now going forward? Timotheus Höttges: I can tackle that first. Start with the second question, maybe take the second one first. Well, regarding the mobile communications market, your question on that, we Christian, correct me if I'm wrong, but we report just like we always did if we have a dividend in Germany. And if we look at customer growth figures, the good news is that we're growing our customer base in all three areas. So we're like a plane that has three jet engines in it and pushing us higher and higher. We have the B2B area where we've gained customers in the private customer business, we've grown. And also, we've gained customers with Congstar with that brand and the fraenk brand. So the segmentation we have is really paying off. And did you want to comment on Europe? Philipp Schindera: Yes. I think in Europe, mobile communications is really important. 2/3 of our sales are from mobile. So that's part of our DNA here. And growth in the mobile area has been considerable. And you see that in T-Mobile and the Magenta markets, too. In Germany, you have a second brand. But in all the other countries, it's just the T brand. In all the markets, we're growing. Our market share is growing. And in Germany, we have the highest share of market revenue. We have a market share of almost 50%. We're growing in mobile in almost all areas. We're concentrating on the first brand because it's so strong, the T brand right now, nothing against fraenk and Congstar. We won prizes for these. So the focus on marketing of the first brand is paying off because it's so strong right now. And that's our recipe for success globally right now is a very strong mobile. Yes, we're only hedging in the financial area, right? And with M&A transactions, we look at this possibility. In the acquisition of Sprint, we do normal operative hedging. Everything else is just much too expensive actually. And in our annual report, you'll see some figures on that. And if you look at the currency rates, you'll see why we work with organic comparisons so the years can be compared with each other, just like -- so financial analysts can look at our business. But we don't do any operative hedging as you'll notice from the figures. Then the next on my list is Mr. Klein from Spegel. Are you still there? I see you on the monitor, and we can hear you Your question, please? Unknown Analyst: I have questions on AI and broadband. Magenta AI is a big project. Can you tell us how it is used? And when do you expect to make any money with it? And about broadband, according to media reports, you've started to increase the monthly rates of old contracts. How many customers are affected by that? And are you expecting this to also have an influence on the number of fiber customers? Because maybe fiber will then also become more attractive. And yesterday, there was news that the Federal Network Agency said that they want to cut back on regulation of Deutsche Telekom in 4 big cities. Can you also comment on that? Timotheus Höttges: Well, maybe, Ferri -- no, let me start by answering the question on -- yes, yesterday. Now I think we can see that the broadband market in Germany is working well as I've been able to see for myself as the Head of the German business here over the past year. So the so-called , [indiscernible] the basic agreement is a step in the right direction. But then 4 cities are not enough. We will profoundly analyze the proposal by the Federal Network Agency and then issue a statement on it at any rate is a step in the right direction. About broadband and rate adjustments. First, we're not doing that for all customers. We mainly focus on older calling plans. So we are talking calling plans dating back to the time before the Ukraine war and even before the COVID pandemic. And when you look at the past few years, you can see that the telecommunications industry in Germany did not increase prices in line with inflation. And when you look at all the things that have happened in the telecom industry in all countries, then you will find that, yes, prices in England, in Switzerland and the Netherlands everywhere were adjusted in line with inflation. But it's not just about calling plans. And you know that all fiber players are facing the challenge that their investments in the fiber rollout need to amortize at some stage, and that also applies to us. So much for broadband, now AI. We believe that we are in a position to help people actually use AI. And we have -- we are bold enough to test things. We've proven that on the basis of several offerings. We have incorporated AI into our systems. The colleagues from the U.S. also told us about something about AI in the networks recently. So things are in full swing here. And we are testing things. And I can see that the use cases are becoming more specific from year-to-year. And the use cases are moving closer and closer to our core, which is our network. And I am optimistic that in the future, Deutsche Telekom will have a right to play in the AI sector as well. Yes, let me add to this. We have a large portfolio of AI projects and products, both in consumer and B2B. Our internal goal is clear when it comes to increasing efficiency, but you also asked when will we be able to make money with it? Well, at the last Capital Markets Day, we did come up with a clear-cut number, and that was EUR 700 million for Germany, Europe and T-Systems for all 3 segments. And that's what I also wanted to say in my presentation. We are actually ahead of the budget here. And that's -- so EUR 700 million, that's committed. And this comprises AI products and projects in the external market that are highly profitable for us. There's a great deal of demand, and we know that we can do this. I am exchanging messages with Mr. [indiscernible]. So now we can hear him. Maybe you could speak up a little. It sounds as if you're speaking through a towel. Unknown Analyst: That's not what I'm doing. The Federal Network Agency invited you to give out frequencies to a fourth network operator. Do you think that we will see 4 network operators in future? Or will there just remain 3 in place? Timotheus Höttges: Well, the Federal Network Agency, I'll put it this way. In 2025, we negotiated with 1 on 1. And now the Federal Network Agency made a proposal. The proposal is that now national roaming should be used, including a compensation of the network operators to the tune of EUR 2 million per year. That's the proposal. We believe that this is a step in the right direction. And now we have a couple of weeks' time to come up with a reaction, and we will, yes, make the most of that time. Let me add to this. We can't really comment on this as we would like to because 1 and 1 would then probably take legal action. They don't want to see this discussed in public, which is why we have the best network in Germany, but 1&1 are trying to prevent us from telling our customers that our network is the best. So I would like to expressly thank 1&1 for making this such a big deal in public because in this way, we've been able to put across the message quite clearly to our customers. I think my blog was read by around 500,000 people on this topic. So -- but 1&1 are highly sensitive about that. And that is quite reassuring for me, you see. As far as spectrum is concerned I think that companies offering the highest bandwidth and the fastest speeds are in the best position. And that's what we are doing. Last year, we increased capacities for our customers once again. And I don't think you should strip such companies of Spectrum. Quite the contrary. And that's why our position, I think, is quite clear. We will do whatever we can to avoid giving up any Spectrum. It would be disastrous if the company offering the best network was to be punished, which would also mean that Spectrum would have to be passed on to others, which is unused. I mean, what has become of the 5G Spectrum? Take a look at it. This is my plea to the journalists here. My position is clear. We sold 400 megahertz. And of the 400 megahertz, around 200 megahertz remain completely unused as of today. That is not fair, is it? That's not the right thing as far as network coverage for the citizens is concerned. I think policymakers need to do more to ensure a proper network coverage for the citizens. Thank you. This brings us to the end of our conference. Let me just point out one thing. AI was mentioned several times today, and it will be mentioned even more often at the Mobile World Congress on Monday in Barcelona. We will have the Magenta keynote at 1:30 p.m. So you can either go to hall 3 in Barcelona yourselves or you might want to use our live stream in order to hear about the latest from us. Some first reports already came out this week, and there will be more. We are doing more in the field of AI. And there's a range of interesting things that Aura will be presenting in Barcelona. And I would also like to mention that on the 1st of April, Deutsche Telekom shareholders' meeting will be held. I hope to see you again at one of these events. Thanks for joining us here today. We wish you all a pleasant day, and we're saying hello from Bonn.
Philipp Schindera: Good morning, and welcome, ladies and gentlemen, colleagues. Welcome here in Bonn to our conference on Deutsche Telekom's financial statements. We get together once a year personally, too. And I'm pleased that we have the ladies and gentlemen of the press here personally. And I would also like to welcome all the staff who are following the conference on live stream. Great to have you. So we have some interesting things to tell you about today, and that's why we have more speakers than usual. I'd like to introduce the speakers for today -- for today and tomorrow. On my right-hand side, Christian Illek, CFO at DTIG; then Tim Hottges, CEO; Rodrigo Diehl, also on the Board of Management of Deutsche Telekom in charge of the German business, Dominique Leroy, she's in charge of the Europe segment; and Ferri Abolhassan, who's in charge of T-Systems. So Tim, I'd say with that, you have the floor. Timotheus Höttges: Thank you, Philipp. EUR 1. That's the dividend we are proposing for every share, more than ever before in the history of Deutsche Telekom, and that alone shows that 2025 was a very successful year for us. We delivered. And with that, a very good morning from my side. Someone recently said about me, this guy is Deutsche Telekom. But I choose to disagree quite clearly, we are Deutsche Telekom. Our results are a team effort. 197,000 employees have made that possible, and that's why more colleagues are sitting here beside me today. So I'm really glad that we have the various Board members here from Telekom Deutschland, Europe and T-Systems at today's conference. Srini is still in the U.S., and they recently had their Capital Markets Day there. And I am very pleased to say that the Supervisory Board yesterday renewed the contracts of Birgit Bohle, Ferri Abolhassan and the contract of Thorsten Langheim. These contracts have been extended. And this gives us a great deal of stability. We now have an experienced team, and we have new members on Board, that gives us continuity, and that's what we need, first and foremost, in these difficult times. However, Deutsche Telekom is far more than just its Board of Management. We are a huge global team. And I would like to take this opportunity to thank all colleagues for once again achieving a record result despite the complex challenges we were facing in the past year. Like I said, 2025 was a challenge. We had to cover immense costs of energy for taxes, wages, fringe benefits. Competition in our industry is extremely intense. We dealt with Spectrum and for the first time, satellites, too. And of course, we also had to deal with sabotage attacks and power outages in the past year. And on top of that, there were exchange rate effects. In 2025, the U.S. dollar lost more than 5% of its value compared to the previous year of 4%, and that's EUR 0.05. And in 2026, the difference has reached almost EUR 0.10. But despite that exchange rate effect, despite the weak dollar, we've managed to grow across all segments, and we are growing everywhere. The strategy is working well. We are carried by the momentum of our flywheel and the numbers add up. All important financial KPIs have improved year-on-year, compared to the prior year quarter to the third quarter and to the prior year, improvements everywhere. So when you look at momentum, the fourth quarter was stronger than the third quarter. And by the way, the fourth quarter was also stronger than the fourth quarter of the prior year. So in the fourth quarter, the positive trend for Deutsche Telekom even accelerated. Net revenue on an organic basis is up 4.2% to EUR 119.1 billion. Service revenues up 3.8% to EUR 99.4 billion. Adjusted EBITDA is up 4.7% to EUR 44.2 billion, and we increased our guidance for this 3x in the course of last year and now exceeded even that. Free cash flow, up 2% to EUR 19.5 billion. And I don't think I even have to mention that we've also been able to invest a lot of money, which is also part of our flywheel strategy. So you can see Deutsche Telekom continues to be reliable, especially now where it counts the most. What does that mean? For me, it means, first and foremost, reliable networks. We continue to extend our network leadership. In 2025, we built 2.5 million new fiber optic lines in Germany alone. By the way, that's more than all of our competitors combined. And we offer extremely reliable service. 25,000 customers in Berlin, just to give you one example, received unlimited data from us. And in this way, they were able to stay in touch despite the sabotaging of the power grid and in most areas, the network was restored in record time. We bear responsibility, especially when it comes to such outstanding events. And that also means reliable investments in artificial intelligence, data centers, cybersecurity and resilience. Across the group as a whole, we invested almost EUR 17 billion in just 1 year, 2025, of which EUR 5.9 billion were invested in Germany alone. I don't know if there's any other company investing on that scale, maybe Deutsche Bahn, but we are doing that for the 12th year in a row, more than every competitor and more than in the previous year. We launched over 500 AI and data projects and our customers benefit from that. For instance, from our Frag Magenta chatbot, which chatted to customers some 7 million times in 2025, and it was able to independently resolve 56% of all inquiries. We also launched a voice bot in June for everyone who prefers to speak rather than type. And AI benefits the German industrial sector, too. Our AI factory in Munich delivers the necessary computing capacities. And so that is already available and very effective. With sovereign operation and sovereign data and we 100% comply with European standards. That's all guaranteed. In Germany, we often talk about sovereignty, and we claim that we need to be sovereign. And I can't think of any project that would help us more to reach that sovereignty. And we are now climate neutral in Scopes 1 and 2, meaning we are at net zero. Later on, maybe we can give you more details on that. At any rate, we have made sure that we are only using or that all our energy requirements are covered using renewables. All operators of critical infrastructure carry an inherent responsibility for stability, for protection for all aspects, and that's why we are expanding in the area of resilience and defense as well. And I'm not just talking about the resilience of our own infrastructure. We also want to invest in companies that will protect critical infrastructure in the future, such as the drone manufacturer Quantum Systems. We are now in the third round of funding as an investor. And we're also committing additional capital to fund through DT Capital Partners focused on defense and resilience and the minimum target volume is EUR 500 million. This is European capital for European resilience. It's about ensuring the ability of our country and our continent to defend ourselves if need be. Moving on to the outlook, and we remain optimistic regarding 2026. Let me be clear here that what I'm going to say now is not just a wish list. This is a work program. We want our adjusted EBITDA to grow by 6% to EUR 47.4 billion. That would be a 6% growth, like I said, all forecasts, by the way, are based on constant exchange rates, and we have applied the U.S. dollar exchange rate from the prior year of USD 1. 13 to the euro. We want our free cash flow to grow by 3% to EUR 19.8 billion. Why don't we say EUR 20 billion. And our adjusted earnings per share is to increase by around 10% to EUR 2.20. And we presented our targets for 2027 at the Capital Markets Day in 2024. And back then, these targets looked very ambitious, but I can tell you they are achievable. These are tough times for a lot of companies in this country. A lot of companies do not have reason to be as optimistic. So that is quite remarkable. And like I said, we presented our targets for '27 at Capital Markets Day in 2024, and we are fully on track in terms of earnings, in terms of free cash flow and earnings per share. We've achieved what we set out to do, and we are on our way to meeting our targets for 2027. Ladies and gentlemen, we can be satisfied even though sometimes it doesn't feel that way because a lot of the things, the factors that influence our success are factors that we don't have an influence on, like geopolitical tensions. Fewer and fewer players abide by the rules that were taken for granted for decades, then ever-changing regulations, especially in the European environment. 270 national regulators determine what happens in our business. Brussels sees a need for further action. And with the Digital Networks Act, it is just creating more bureaucracy, again, not less. Continuity alone, however, will not be enough to be successful in the future. It will also very much depend on how we are working together. And there are a lot of crises, a lot of challenging framework conditions, and we need to tackle them together with our staff. And that's why we have decided to enhance our corporate culture further. We recently had a big annual kickoff meeting where we launched a new program called T-Style. T-Style stands for three things. First of all, we want to improve our performance. We also want to improve cooperation inside our group or across our group, and we want to cut back on red tape in our company. And ladies and gentlemen, Deutsche Telekom is not stuck in a traffic jam. Sometimes we are the traffic jam ourselves. And that's why we need to take action to make things easier in order to be able to be faster so that our staff can also work more effectively. So T-Style stands for excellence, for creativity instead of rigidity, for cooperation instead of silos, for courage instead of fear and for confidence and optimism instead of gloom. And we have every reason to be optimistic across the group and in the segment. And that's why we are now going to look at the segments. And I would like to hand you over to Rodrigo Diehl. Rodrigo Diehl: Thank you, Tim, and a warm welcome from my side as well. I will start with an overview of how we've executed against our strategic targets before I dive deeper into the financials. I will then round up things with an overview of my strategic priorities for 2026. Overall, we've made good progress along our strategic targets. 2025 was an important year for our fiber build-out. We now reach 12.6 million homes passed and added twice as many fiber customers as in 2023. So in 2025, we had twice as many customers on our fiber network as in 2023. We achieved substantial efficiencies in our fiber build, and we are going to reinvest some money in the fiber network. And we reconfigured our fiber strategy, more on this later. When it comes to a digital and AI-driven transformation, and Tim already made a few comments about that, we see some very encouraging early successes also in Germany. Let me give you a few examples. Our customer chatbot, which Tim already mentioned, is now fully LLM-based and achieves a 55% solution rate and people achieve around 70, just to give you an idea. 3.4 million contacts or problems are solved by chat or voice bots. We have reached 40% zero-touch automatic call identification, and we rolled out AI-based automatic call documentation for our service staff. And more than 2,000 employees are now using this capability. And we are still the undisputed market leader. We won all the service center shop and mobile network tests. And it's not just about tests. It's about the work done by thousands of employees every day. In this way, we can win these tests in the first place. Our customer bonus program, Magenta Moments has now been established in the market with 5 million active users. Our first-time resolution rate reached 77%. That's an all-time high, a record. And this too, obviously helps us improve customer satisfaction further. Complaints. And this is a number that I check every day. Complaints were down by 50% in the last 2 years alone, a 50% decrease. And last but not least, our brand recognition and our brand values are at an all-time high as well. Let me go to the next page. And let's take a look at our financials. I am pleased to say today that after a weaker third quarter, our headline financials are back on track. Organic revenues were up a strong 2.8% in the fourth quarter. Two factors contributed to this in roughly equal parts. First, service revenue growth, both in fixed and in mobile. Total service revenues grew 15% year-on-year; and second, strong revenues with our fiber joint ventures. In Germany, we have over 50 partnerships -- partners that we are building the fiber network with. Year-on-year growth in EBITDA at 2.5% was back at a normal run rate after an unusually weak third quarter. And now let's take a look at revenues on the next page. As mentioned, both fixed and mobile service revenues improved sequentially this quarter. Headlines last year were generally impacted by weaker-than-expected broadband and B2B fixed line revenues. In mobile, the 2.5% year-on-year service growth is a continuation of our ongoing strong performance that we've seen consistently throughout the years. And on the next page, we are taking a deep dive into mobile communications. And there, you can see the consistent strength in our subscriber growth. We had a lot of net adds. As you can see here, we were above the level of Q4 2024. And our propositions continue to resonate well with customers, both business and residential. And our network leadership remains undisputed, and we're extending it with our ongoing network modernization program. We've successfully addressed growing data demand with well-designed unlimited propositions that we recently updated. And growth at Congstar has also been a big help. And therefore, I am still optimistic, and we remain comfortable with our capital markets guidance of 2% to 2.5% mobile service revenue growth in the period from 2023 to '27, having delivered growth at the top end of this range in the first 2 years. And that's why, yes, we should actually come out in the range we defined at Capital Markets Day. Moving to the fixed line. We are pleased that our broadband net adds stabilized last quarter. We even won 2,000 net customers last year, 2,000 net adds. This stabilization is the result of multiple measures, including a steady acceleration in fiber connections. Before I give you more details on fiber, however, let's take a look at our progress in the TV segment. We added over 100,000 new TV customers in 2025, and this comes after a little over 300,000 in 2024. Back then the ancillary cost privilege became obsolete and 2024 was the year when we had the rights for the European Championship, which gave us a lot of tailwind. And now talking about fiber. This quarter, we added 164,000 fiber customers, our best ever quarter and much better than the figures we saw in the Q4 of 2024. And our fiber penetration was up 11% year-on-year at 16.4% and we'll continue to speed things up. We're stepping on it. The entire German organization focuses on increasing the number of customers using fiber. Fiber will continue to be our area of focus as I will demonstrate on the next couple of pages. So as mentioned, in 2025, we increased our fiber footprint by 2.5 million. As promised, we remain well on track for our stated 2027 target of around 17.5 million homes passed. But what's even more important is that the number of fiber customers increased by almost 600,000. Let me repeat that 600,000 German households were connected to the fiber network in 2025, a line from us. And therefore, we are on track towards our target run rate of 1 million in 2027. And we will continue to step up our fiber investments funded by improving efficiencies, budget reallocations and federal tax relief. This amounts to a total of EUR 800 million more for the years '26 to '28, which is a clear commitment to the fiber rollout as we continue to invest more than any other company in Germany, hence, living up to our responsibility. And as communicated in the third quarter, and we've come a long way now in terms of implementation, we are now increasing our focus on single-family homes and less densely populated areas. As for multifamily homes, we will increase our focus on connections, buildings prepared and the full build-out for more homes connected. meaning we're not just going to the basement, but we are basically connecting the entire home so that customers in the future will no longer have to wait 3 months for a fiber line to be connected, but just a couple of minutes. And we are also improving our sales approach, and the first results are very encouraging. We're scaling that, and it looks very good. Now let's take a look at the fixed line revenues. While our broadband net adds improved last quarter, our access revenue trends remain impacted by last year's volume losses. Retail broadband revenue growth slowed to 1.6% in the last quarter. This was driven by the volume losses, while the ARPU momentum remained positive, especially in the B2C sector. B2C ARPA was up 3% to 4% year-on-year. Overall, we remain committed to our capital markets CAGR guidance of 3% to 4%, even though this looks challenging from today's perspective. Wholesale revenues improved sequentially. Here, ARPA momentum continues to offset ongoing volume losses. Overall, over the '23 to '27 guidance period, we expect to deliver the stable wholesale access revenues that we promised at Capital Markets Day. So what are our priorities for 2026? Let me talk about that before I give you an outlook. We are industry -- the industry leader when it comes to the fiber build-out. And the priority is to keep accelerating our fiber customer growth towards our 1 million target in 2027. 1 million German households will be connected to our fiber network by 2027. And this will help us both on the volume and on the value side. Another key focus is to take our digital and AI-driven transformation to the next level. And personally, I am convinced that potential for efficiencies is even bigger than we thought to date. So we are modernizing our network, and we are constantly extending our mobile network leadership through our network modernization program, and we are translating this through our best network campaign into even stronger brand leadership. Another priority is to evolve our Magenta app into a central operating system for customer interactions along the lines of what you're seeing from T-Mobile U.S. So copied with pride from our colleagues in the U.S. As part of this, we aim for 70% of the extensions of mobile contracts and additional SIMs to be done through the app. In B2B, we want to stand apart from others with secure networks and market-leading cloud and AI propositions. We're doing that with Ferri from Systems. German business customers can work with us as a strong and German sovereign company that takes responsibility and will guide them through digitalization in a determined fashion. So now let me talk about the outlook. On the service revenue side, we're currently below our ambitious Capital Markets Day target. While mobile is tracking in line, weaker fixed service revenues are weighing. The weaker-than-expected fixed service revenues result from 2025 broadband customer losses and a weaker-than-expected B2B performance. This year, we're expecting overall similar total service revenue growth as in the prior year. On the EBITDA side, we expect a better trend in '26 and a return to a more normal year-on-year increase. So we are still committed to the goals we communicated at Capital Markets Day. EBITDA CAGR, 2.5% to 3%. But given the weaker growth in '26, we now expect to be at the low end of this range. With that, after this overview of the situation in Germany, I would like to hand over to Dominique. We've worked together for the past 5 years. Over to you, Dominique. Dominique Leroy: Yes. Thank you, Rodrigo. Good morning from my part. Moving on to our European segment. I'm happy to confirm that we continued our success story once again in 2025. Let me share a few highlights along our main strategic pillars, growth, transformation and scale and our efforts to win the hearts of our customers. First of all, growth. We achieved strong service revenue growth of 3.9% in 2025, which was driven both by B2C and B2B. This success is based on our network leadership, further progress with fixed mobile convergence and strong B2B growth with ICT services. We've added 1.1 million fiber homes in 2025. bringing our FTTH number to 11.3 million homes with an average utilization rate of 36%, while our 5G coverage reached 92% by the end of 2025. Looking at transformation to scale, we're proud of our 73% app penetration and growing chat share. Our transformation towards more digital sales and service is progressing well. And we're driving AI for network automation, energy savings and improved customer experience. We've made good progress with scaling platforms with the build-out of centers of excellence in the B2B area and our common network operating model across the NatCos. Turning to the last category, winning the hearts of our customers. We're top rated in trim customer satisfaction in almost all our markets, both in B2C and B2B. 9 million of our customers have signed up to Magenta Moments and about 45% are actively using it every month. Next to our strong customer focus, we're also very proud to have very high employee satisfaction across our NatCos. And all these successes translate into a strong financial performance. In Q4, we delivered another excellent quarter. It was the 32nd consecutive quarter of organic EBITDA growth. Organic Q4 revenue growth was 3.5%. Service revenues grew 4.6%, helped by strong B2B IT service revenue growth in Greece. This brought full year service revenue growth to 3.9%. Our growth was strong both in B2C and B2B, and it remains underpinned by continued strong growth in customer numbers. EBITDA AL growth slightly dipped in the last quarter, but remained strong at 3.8% year-on-year. And we ended the year with a strong 5.4% organic EBITDA AL growth. So this slight sequential slowdown reflects the phaseout of previous price increases and the phasing of various one-timers. Our European commercial performance, going to the next chart, remains consistently strong. and it accelerated in all relevant product categories last quarter. All the NatCos are contributing to this trend with Poland doing particularly well. To carry on our success story in 2026, there are several priorities that I would like to highlight. We shall maintain our strong pace in building the best network. We will add more than 1 million fiber homes in 2026 while keeping utilization high. And we will push to reach 95% 5G coverage. To continue our growth in our core business, we will double down on delivering the best home experience to our customers and further enhance this with new smart features surrounding home control and security. At the same time, we will accelerate growth in new business areas beyond core. We will leverage Magenta moments in B2C by launching new propositions like gifting, travel and dining. This will reinforce customer engagement towards the tea brand. And we will double down on monetizing AI and digital sovereignty in B2B. We will push for even more transactions in our digital channels, aiming for more than 30% e-sales share and up to 50% of all mobile prolongations and tariff changes on digital. We will step up adoption of AI and sales and service, including in call centers and shops through AI-assisted transactions. We will further leverage AI to offer more hyper-personalized and contextualized experiences and products. And we will furthermore continue to simplify and retire our legacy systems to attain more efficiency gains. All of this will not only translate into better experience for our customers, but also help us further reduce our IDC to service revenue ratio. Going forward, we will build towards a next-gen customer experience, which is centered around the Magenta app. We will further drive customer engagement with Magenta moments and aim to reach 10 million registered members already by year-end 2026. And we will continue to focus on improving our customer experience across all domains. Next to our customer focus, we will keep on investing into our employees. Our goal is to push towards becoming top 5 employer in telco and ICT because we want to attract the best talent in the market with focus on future skills like AI. So all of these actions will contribute to our securing our #1 position in TRIM. We're very well on track for our stated CMD Capital Markets Day targets, both with service revenue and EBITDA AL where our growth in the first 2 years were each well ahead of our CMD targets. In 2026, we expect further growth in service revenues and an increase in EBITDA to EUR 4.8 billion. We also expect underlying EBIT AL growth north of the 3% range. That's close to what we delivered in 2025 and adjusted for the tailwind from the end of the Hungarian telco tax. So with that, I would now hand over the floor to Ferri, who will walk you through the story for T-Systems. Ferri Abolhassan: Thank you, Dominique, and good morning. You are a role model for me. For 32 quarters, you've continued to improve performance that is outstanding. And this is something that we are working to achieve at T-Systems as well. And yes, we will use you as a role model for that. I think T-Systems is no longer Deutsche Telekom's trouble [indiscernible]. We certainly achieved the turnaround. And 2025 was a good year for the second time, and we'll try to keep that up. We don't want to be a burden for the group. Instead, we want to help bolster it. And for that, we need to earn our money and prove our value in the market. Revenue grew by 3%, which is in line with the promises made at Capital Markets Day, just like all the other KPIs. But we don't just want to increase revenue, but also profitability more so than revenue so that in the end, our cash flow is also good. We will likely never be the #1 pillar for the big tanker, which is Deutsche Telekom. But then if we make the most of our staff and their skills, then we can be a big support for Deutsche Telekom. Look at our order entry here at the bottom right, that was outstanding in 2025. We had an outstanding December and the full year was outstanding as well. And the order intake always gives an idea of a company's reach. We are in the project business after all. And that's why order entry -- the order entry we see here is not just good, but it also gives us an indication that we have had a good start to the new year. There's one number that is not shown here. So let me just mention it. We have a TRIM of 93 points, which is an all-time high. And I'm just saying that because Rodrigo and Dominique also said that we want to turn our customers into fans. that set the stage. And if we don't manage to do that, we won't be able to generate revenues. That's why we are very happy with our TRIM value, that's very good, but it's not the end of the story either. Every individual customer accounts and there's still some work to do here. In 2026, we'll continue to have stable financial operations, which is also in line with the promises made at Capital Markets Day. And this will at the end of the day, give us new opportunities as well for Deutsche Telekom, and that has always been the vision of Tim Hottges as well. When it comes to the important topics in the field of digitalization, T-Systems can make a major contribution based on the skills of our staff and for our customers, and we can prove it every day. There are basically 3 fields that I'm talking about. That's AI; secondly, cloud and sovereignty and thirdly, key industries. Let's talk about AI for a moment. At T-Systems alone, we have around 1,500 experts who only work in this field for our customers, and they are gaining a lot of experience that Dominique and Rodrigo will also be able to use both for internal and external AI products. And we have almost 500 AI and data projects, including our new AI factory in Munich and so open to others. I'll get back to that later on. At the end of the day, we also want to make a contribution to telecom's business in key industries. That certainly includes public and health and defense, which is another mission of ours and has been for quite some time. So we're not just beginning to work on that. We've been working on it for a while. And here, you can see the numbers for '26 that should give us the possibility to scale. In '26, we want to grow revenue by 50% year-on-year. T-Systems should have a share of EUR 200 million here. And at Capital Markets Day, we mentioned the EUR 1 billion target, and we are well on track to achieve it. And we are the market leader in the field of private cloud in Europe, but also leading when it comes to sovereignty in Europe. And we want to increase our T Cloud public revenues by 20% to over EUR 200 million. That is an important step, not just for T-Systems, it will also play a major role for the group. And we are doing that together. Rodrigo and myself, we are working together. We have a joint cloud group that we can use to launch new products on the market. And we realized early on that the automotive sector is also important for us. Over the past few years, we've taken relevant steps. And we ask ourselves how can we make the most of our experience here. Automotive will always be an important market for us, a market that we feel very loyal to. And of course, we want to grow, and we are trying to prepare ourselves for things to come, which is why we are now focusing more on public and health and defense, for instance, drones. So now we have a right to play. We stand apart from others. And that's why in '26, we aim for more than EUR 100 million of revenues, especially in these fields, public health and defense. And for that, we also need to focus on offshore and nearshore projects. We have an offshore team of almost 12,000 people in India by now. which doesn't only boost T-Systems profitability. We also do it for T-Mobile U.S. We also do it for Rodrigo. So we are the ones who support this field for Deutsche Telekom. So it's offshore, nearshore. And there's also a transformation towards AI. I call it a production machine. We set that up in India, and it helps us to use AI at an early stage so that we can use labor arbitrage, not just in the context of nearshore and offshore, but also in general. 10% to 20% is our goal here for this year. So we are doing things that make us stand apart from others that help us as T-Systems to grow, but that also support the group as a whole. So now let me show you my last slide. And this is an example of how Deutsche Telekom can support the notion of Made for Germany. What does Germany need to catch up in AI linking up to the big foundation models out there. That's the talk of the town. And I am proud to say that T-Systems as part of Deutsche Telekom has made it clear that we are tackling these things. In Munich, for the first time, we are using state-of-the-art technology for a complete AI stack. You can see some numbers here from Munich on the left-hand side within less than 6 months from the idea to implementation, we are starting with a set with the latest NVIDIA chips. We need a green data center that doesn't need a lot of energy with an energy efficiency factor of less than 1.2. But it's not just about selling hardware to the market. We are talking about an open, secure and sovereign AI stack. And this AI stack from connectivity right through to the data center layer, the platform and the connection together with partners such as SAP and Siemens is addressing customers to tackle things such as digital twins, optimizing products, digital twins, product maintenance, et cetera. So in this way, we are addressing the industry. Industry, SMEs, small- and medium-sized enterprises are the backbone of Germany's economy. And we're not just offering LLMs. But the question is how can a production company, how can an SME make sure security standards. It is run by our staff in Germany. And there's just one non-German element, and that's American hardware. There's no way around that. But it is -- other than that, it is sovereign from end to end. It is open to others and it can be used by our customers and industry and all -- are we limited to Munich as a location as such. But rather than just debating how we can make Germany fit for data centers and AI, we just want to get down to business now. And we can see that there is a high demand already I think it was the 4th of February when this new factory was opened and the level of utilization is already very high. So there's a great deal of demand, and we wanted to test how it is received in the market. And with that, over to Christian. Christian Illek: Yes. Thanks,. I'll keep things short to and give you an overview of the group. But first, turning to the U.S. and then I'll finally look at the financial metrics over the last year and some of the financial ratios. Reported service revenue based on U.S. GAAP increased by 10.5% to USD 18.7 billion and that includes U.S. Cellular for a full quarter for the first time. Postpaid service revenue increased by 13.9%. There were several effects here. First of all, higher customer numbers, but also increased profitability. And adjusted core EBITDA also based on U.S. GAAP grew 6.8% to USD 8.4 billion. Customer growth in the U.S. was very strong in the fourth quarter, as you heard, 2.4 million postpaid customers. Although the churn rate rose slightly to 1.02%, that's incidentally a development that can be observed across the industry in the United States, and you can get the other key figures from the charts. Turning to the development with the group's financials. Here are the figures. And we're looking back on a very successful 2025. I'll try to analyze this for. We had a negative effect through the U.S. dollar, and that led to a lower profit, but we were helped by the U.S. dollar's drop in CapEx and also M&A activities also played a role, especially in the U.S. and especially U.S. Cellular, but also there were 4 additional M&A activities in 2025, the acquisition of several companies and a 50% share in 2 companies, [indiscernible] said, one metric was negative. That was an adjusted net profit. That was because in 2024, there were a reversal of impairment losses that took place the year before joint ventures with GD Towers and GlasfaserPlus. These result reversals of impairment losses increased reported net profit in 2024 and hence, also the basis for comparison for 2025. And this brings me to the development of free cash flow, adjusted net profit and net debt over the last year. Free cash flow, as I said, increased by 2% year-on-year. This was essentially driven by operative activities and EBITDA was EUR 1.12 billion, but the weaker dollar also had a reducing effect of around EUR 1.4 billion. If we hadn't had this, it would have been EUR 1.4 billion higher. And we had an increased CapEx greater than expected, around EUR 642 million in the United States was the increase in CapEx, around EUR 88 million in the Germany segment. Looking at adjusted net profit, that grew 3.7%, and that was lower than our ambition for 2026 if you look at '26, but we had the effect of the U.S. dollar and a weaker financial results. This came because of increased interest expenses in the U.S. and also in our stakes in other companies, and that explains the dip here. Net debt here, just a few words on this. As you heard, the weaker dollar helped us here with this minus EUR 6.7 billion. This is ex leasing of EUR 1.2 billion. But what's important is the right-hand side of this chart, where we have been able to reduce our net debt to EUR 6.2 billion. This is just a brief overview of the financial metrics, and I'll be glad to go into any detail if you want. With that, I would give the floor back to Tim. Timotheus Höttges: Thank you very much for your patience. Now that's been an awful lot of information, but it was a very busy year, too, right? That became quite clear. Okay. So now let's continue with the Q&A. We're looking forward to your questions. Please raise your hand. Starting with Mr. Stefan Scher from the Handelsblatt. And make sure you turn on the mic so that people can also hear you in the video conference. Unknown Analyst: Stefan Scher from Handelsblatt. I have two questions, Mr. Hottges. First of all, data center business is your -- something like your pet subject. And you want to make sure that Deutsche Telekom can expand its business beyond the network business. What direction are you headed? Telecom Italia has made a lot of headway here. What could be the role of that for Deutsche Telekom's business overall going forward? And secondly, last year, this conference, I asked you about the US and what's happening there and what's happening in the U.S. is in line with your values here. Back then you said that your values at Deutsche Telekom still apply but then now i understand you are helping to build the new premises on the White House. And how does that fit in with what you said before? Timotheus Höttges: Well, the data center business is something that we have for quite some time. And we are running the data center to generate more business. So it's not about square meters and megawatt. It's about business and customers. With DTCP, our sister organization, sister company, we now have an opportunity to have good market partners in the data center field that gives us a lot of leverage, and we made the most of this room for maneuver in Munich. And yes, I think that demand amongst our customers will continue to grow here. Let me add to this. We have data centers across the group. We have Green Scales and Mine Cubes and own data center at Biere and Magdeburg. Then we set up this new data center in Munich. Of course we will continue to deal with the data center business and the question will be at some stage whether we can consolidate it into one business at some time but the final decision has not been made yet. I would like to mention the giga factory here. I think that german industry collaborates very well in this field. With the Schwarz Group, in particular, we have developed alot of common ground. We need GPO capacities for Germany at a completely new level compared to where we are today. But let me also tell you, Brussels made a lot of big promises at the Summit meeting with Macron. They said that they would invest EUR 6 billion in data centers in Europe, but we haven't heard a lot about that since. It is becoming increasingly difficult for the German government to combine their capacities in such a way that they can guarantee a minimum level of utilization for these data centers. And there is no real demand -- or sorry, no real reaction to the negative energy prices in this country or the too high energy prices. And yes, then we expected a tender from Brussels before long. And now apparently, this has been put off to May. So I would hope that things are sped up here and that politicians take action. Germany Deutsche Telekom doesn't need a gigafactory. Germany does. Let me highlight that. And if politicians do not provide a framework for that, then we will not invest in this kind of project, which is why, yes, the policymakers really need to provide relevant incentives. And then you asked about values and the ballroom next to the White House, which is currently being built. Yesterday, we had our Pulse survey for Telecom. It's a global survey, and it's relevant to us everywhere, and we've improved our results here once again. So our employees are feeling fine with Deutsche Telekom and its values. Needless to say, there's also a certain level of polarization within a company as big as Deutsche Telekom as anywhere else. That's normal for a democratic entity. So I look at this as a whole, and I am proud that there's this feeling of belonging in our corporation and that we have this culture that unites us all. And that is the reason why we've now set up the T-Style. Tomorrow, I'll have a big town hall meeting to also present the substance behind that T-Style program. There are legal and political rules in every country. We are not just holding up ethical standards for the sake of it. We comply with legal requirements in every country, obviously. And right now, in none of the countries where we are active, we are facing any restrictions of our values in terms of diversity, performance orientation and our corporate culture as a whole. We don't see any limits there. And you mentioned the funding of the ballroom. The Americans will be celebrating the 250th anniversary of the constitution. It's a big celebration. And if something like that were to be celebrated in Germany, Deutsche Telekom would sponsor it as long as it's in line with our brand and our products. In the U.S., it is a common thing that companies sponsor such events. And the benefit is that taxpayers don't have to pay for it. That is basically the responsibility of companies. But we are not supporting the building of the ballroom. We are supporting the inauguration ceremony. And that's part of good citizens in the U.S., and we will continue doing things like that in the future. It's just like I said, it's good corporate citizens. And that's nothing that would call our values into question at all. I'm not looking at that critically. Question from the WDR public broadcaster. Unknown Attendee: You just held up the EUR 1 coin for the photographers, nice. I suppose that [indiscernible] trade union will also react to that. Can you comment on the imminent wage talks? There will be collective bargaining. To what extent do you want to make sure that employees will be able to share the success of Deutsche Telekom right now? Timotheus Höttges: Yesterday, we spent the whole day discussing things with the employee representatives. I think so far, Deutsche Telekom has been very good at finding common ground with the employee representatives, sharing interests. And when it comes to the transformation of this company, we've always been able to shape it and manage it in a good way. Then again, I always -- I would always like to see more momentum, a more dynamic development in Germany as a whole, and we need to become more agile. Other countries are more agile than us. So we have to make sure that when it comes to productivity and our economic performance, we're good. That is the best way of guaranteeing that we can keep jobs and safeguard jobs at Deutsche Telekom. If that's not possible, then Deutsche Telekom will have to shift jobs to other countries. That would be the logical consequence. And that has already happened. That's the wage arbitrage, be it in the field of software development or software products. So yes, Germany needs to become more competitive, and it has already become competitive in some fields. There was once a discussion about outsourcing all our call centers. We said back then that external call centers would be -- were far more effective. But then together with the employee representatives, we developed a concept for making the call centers more effective, also very much driven by Ferri Abolhassan. Today, almost all of these call centers are still part of our company. It's almost exclusively telecom employees, and they are doing a great job, and that's precisely the right way, improving competitiveness, maintaining competitive together jointly, both nationally and internationally. And that's why I am hoping that we will have a fair collective bargaining progress with demands that are not over the top. And we offer continuity at Deutsche Telekom also in terms of our strategy and in terms of our cooperation with the employee representatives. And that's precisely what has made us strong in the past. Unknown Attendee: I'm from DPR. You have a 60.4% pickup rate on FTTH right now. There's room for improvement, though. How do you think this will continue to develop? You're at 20% right now and the consumer agencies record the complaints and it's increased considerably, and this relates to the fact that it's being delivered a lot later than pledged. And the second major block of complaints relate to advertising. And I asked about what company was involved there with the consumers' agency and Deutsche Telekom was named among others. So has this -- have you heard about this criticism and the number of people that are making use of this. This Is not developing the way it should. And my second question relates to the TV business. Growth rates here are kind of moderate, let's say, going back to the football World Cup. Back then, you thought that the elimination of the ancillary cost privilege would help a lot. I'd just like to hear a rough estimate of why the TV business hasn't picked up like you hoped? And hasn't become this really major growth story that you were hoping for back then. Philipp Schindera: Well, I can tackle that question. Regarding fiber, in the third quarter, we mentioned that our focus and objective is to connect people to the fiber network and to increase the utilization of it. That also costs money, and we've modified our strategy accordingly. We're focusing more on rural areas. We're seeing that with single-family homes where the utilization rate was 30% or a little over that. We want to move more to rural regions where there's more family houses there. And there is a bottleneck out there. It's difficult -- this is a difficulty in urban areas with multifamily apartments, apartment buildings. There, it's only 10%, slightly above 10%. And there are structural issues, too. Sometimes it's just not possible in these multifamily apartment houses to connect every family. So we want to make full build-out the objective. And when we're not allowed to do that, then we have to look at scaling. Q4 was our best quarter ever with -- we have the objective of 1 million in 2027. That would help us attain this utilization target. And you mentioned the past development. Yes. And we've made some excellent progress though. And this is since COVID because during COVID, fiber was a great business. A lot of customers wanted it then. That was a push back there. But now we have to approach customers. And the question is, how can we strengthen our distribution channels to approach customers. And 2 channels have -- that we're really trying to scale upscale right now, and that's bearing fruit. One of them is we call that consultants from the shops. These are advisers from the shops, and there will be 250 staff by the end of this year who will be going from the shops to approach customers and even visiting them. And we have relations with them. We know the streets, the roads. We know their neighborhoods, and we'll use this knowledge to -- we'll leverage it to go to the customers. And the second channel is we're building a lot of fiber every day out there, we have about 20,000 staff members, building, building, building, and many of them also enter into the buildings, the houses of customers every day, day in, day in, day out, 6,700 of them. And they can provide a pitch and develop leads to customers as well. The customers can then call a service center and get a fiber connection. We have 4,000 leads a week through this channel with a conversion rate of almost 50%. So that makes me very optimistic that we'll achieve this target of 1 million in 2027. And I can tell you all 60,000 of our employees in Germany are really focused on utilization of the fiber network. And that drives us. And that's our contribution to digitalization of Germany. And that's what motivates us when we come to work in the morning. And that's why we are optimistic that we'll achieve this. And the second part of your question, I think it has to do with the marketing model for fiber in Germany and how it works, how it functions. There's no premarketing. First contracts are concluded and then the building takes place. And sometimes it takes quite a long time and only then do customers get the fiber connection. And of course, sometimes it can take 6, 12 or even 18 months. The lag between the moment where the customer signs an agreement and really gets the connection. Of course, that's too long. And a lot of times, that causes some irritation among customers. But I can assure you, I look at these complaints relating to fiber week in and week out, and they are really decreasing significantly because we're learning. We're on a learning curve with our processes, with our journeys, and that's why these complaints are declining continuously and will continue to. With regard to TV, I'm actually quite satisfied with the development of our TV business. In contrast to broadband, where we're the incumbent in the TV business, we're the attacker. And we were the underdog really. And now we have 5 million customers on our TV platform right now, 5 million as the attacker in this market. And our ambition is to really boost this figure a lot. And we have a historical opportunity with the World Cup, and we bought the rights to the World Cup. And we'll have -- we'll be broadcasting 44 matches exclusively on Magenta TV. So we have really high ambitions for TV. And I wouldn't measure our success just in the number of subscriptions we have, but rather broadband subscriptions together with TV and the bundle that we're selling in a package. We were the most successful TV provider this year, if you look at the growth figures in the market among all the competitors, we grew the most. And I'm pretty optimistic that, yes, there is room for improvement. We have 15 million broadband customers and 5 million TV customers. So you see what potential there is. Just something to add on the business approaching customers at home. We've really worked hard on this and to really improve our professionalism here. And I can send you some additional -- I can send you a link where we address this topic. I think that's the best approach, this doorstep selling to fiberglass rollout in Germany. But yes, we're the leading provider when it comes to ethical standards here, too. Yes, the complaint ratio here is less than 1 in 1,000 in this area. I always say, hey, that's too many. And I look at this every week, but this also shows how much we're -- how hard we're working on quality. Then let's go to Ms [indiscernible] and then we'll look at the chat. Unknown Analyst: I would like to go back to human resources. Mr. [indiscernible] said, if the underlying conditions aren't right, then we have to offshore, but we heard that we have 12,000 offshore workers and an efficiency boost through that of 10%. That sounds like you have some concrete plans to increase the number of offshore workers. What are your plans there? And then I'd like to ask about the AI gigafactory again, a question. How great do you think the possibility will be to get another one in Germany? And this cooperation with the Schwarz Group with getting -- is there indications that we could persuade them to get another gigafactory in Germany? What are the plans in this regard? Timotheus Höttges: Let me start with the second part. We have a good partnership with the Schwarz Group. We're not planning anything on top of that. We are building 2 data centers in Europe. In Lebanon, the Schwarz Group is also building a data center. But for now, we're just focusing on the first one or two steps, not a third one. Yes, I think there is room for expanding the cooperation, and that's not an issue in the German industry. That's fine. Then the second question, what's the likelihood? I can't tell you that's an economic decision that we will take once we know what terms the tender comes with. Now I think it's interesting to look at the GPU prices that are defined, then the question is whether the EU and the German government will be able to ensure a 35% level of utilization using their own data centers. That is another relevant question. And the third question is, will there be any subsidies to offset the differences in energy prices? I mean, our prices here are 25% higher than those of the French, for instance, and they may be different elsewhere again. So these are the questions. And once these questions have been answered, then yes, maybe we can continue from there. But so far, these questions have not been answered. Yes, that was completely to the point. Then the staff transformation in Germany, that was the second question. You see in Germany, this staff transformation has been going on for quite some time. And Germany only accounts for 17% of Deutsche Telekom's business today. We are a global corporation. And needless to say, we are using or we are leveraging the benefits that come with that. And let's not talk about offshore here. These are real telecom colleagues. And when I go there, then they are sitting there with their telecom gear and they are fully committed, just as committed as our colleagues here at Lychen and Bonn. So these are telecom staff, and I just wanted to get that straight, not just some offshore staff. Secondly, our staff in other locations also have other skills that we leverage. So here's the thing about Germany. Everybody in this company has a certain entrepreneurial responsibility for this company, and it's been like that for a long time. Everybody is responsible for ensuring cash flow and profitability. And I'm proud of the turnaround that Ferri has brought about at T-Systems. We see a positive cash flow there. We can see that EBITDA is growing at the double-digit range, and that business has now become self-sustained as well. But for that, you need to make the right investments. You need to focus on the right things. You need to take the right decisions. And it also means that our staff is passionate of our business and is working effectively. And that's not possible -- if that's not possible in a particular location because staff are too expensive or not adequately committed, then you need to counteract that. So it's not against Germany, it's with Germany. I want to keep as many jobs as possible in this country, but it also needs to be affordable. And that's not just the responsibility of the employer, but it is also the responsibility of the works councils that are responsible for the various locations. And ultimately, we have to be careful. When we hear that everybody says, we call upon the employers to find some common ground. It's not just our responsibility. We need to find common ground with the employee representatives. It's their responsibility as well. Next question? Unknown Analyst: Just a quick follow-up question. You mentioned the 270 regulators in Europe that are quite skeptical about AI gigafactories. But my -- what's your gut feeling about Europe? You've talked a lot about Germany. But how do you expect the telecommunications industry in Europe to develop from here? Do you think that something can actually change? And if so, how and why? Timotheus Höttges: I'll start in German and then I'll switch to English. Yes, we are very disappointed with regulation in Europe. And the only good thing is the extension of Spectrum. That's the only positive trend that we are seeing here. But anything else that we are seeing is not good for the telecommunication sector. The rules haven't become any less complex. And the hyperscalers are not paying anything for using our networks. That hasn't happened. And we always said that we don't want to have ex-anti, but ex-post regulation. And now we see the new networks, the fiber networks, which are rolled out and ex-anti-regulation is not so important anymore. We need to have a free market, you see that makes it possible for all the players to compete against each other. And if you are -- if somebody is not adequately or not enough competitive, then you can still do something on an ex-post basis. But that's not how it's handled. So we are very disappointed, and we'll continue to fight for better regulation of our sector. It's an important sector. A lot of investments are made in this sector. This sector enables digitalization in all the countries. And it's really important that we are getting support from European lawmakers here also to counteract the trends that we see in the U.S. and China. Philipp Schindera: I love your accent. I would just add a couple of things to that. First of all, in Europe, right now, we're seeing more and more red tape, more requirements. You have to just look at it very soberly and that's a fact. And yes, and that's being planned in the recent paper that was mentioned. And in this paper, we didn't find any answers to what [indiscernible] and [indiscernible] called for. The single market and the independence of Europe, especially in international competition with China and America, that would be so important. And there's no -- this isn't tackled in any ambitious way. And in this report, and I'm on the fifth commission now. This is the fifth commissioner actually that I've worked together with. And you always have the good and the bad. And the bad is quite clear. There's more regulations. This whole web of regulations isn't decreasing and there's fewer exemptions, but then they also say they want to extend Spectrum over a period of 50 years. And I can tell you right now, that's not going to happen. Because in the paper, it says that, but that's only so that the telecommunications industry is provided a little bit of hope, let's say. But the actual markets will never go along with that. And that's to put it mildly to put it bluntly, they don't take it seriously. And this lack of ambition in this paper and in Brussels that they approach telecommunications with is fatiguing. It's just wearing me out. And against this background, we're doing what we always do. We're carrying on. We're not trying to change things that we can't change. That's a great quote. By the way, write it down. We are concentrating on what we can do given the existing conditions aside from politics and things like that. We can invest. We can invest in fiber in the U.S. where it's profitable. We can invest in a gigabyte factory in Munich. We can push forward fiber build-out in Germany. We're not going to take off the blinders. We are focusing on these topics, but this industry could do a heck of a lot better and citizens in Europe could do a lot better too if there are more with more ambition in the telecommunications and digitalization market. You know this whole litigation with Meta. There's no initiative from Brussels in this regard. We'll stop. Good. And now I'm looking at the chat. And the first one on the list is Mr. Hassan from Reuters. Mr. Hassan Can you hear us? Then I would ask you to ask your question. Unknown Attendee: Yes, i can hear you. I have a question for Mr. Abolhassan. You talked about the growing demand for the AI factory. And I would like to know what is the capacity utilization right now? And how much of that is from public institutions, either government institutions or research institutes. Philipp Schindera: Well, I'm not going to disclose all the figures here, but we are about 40% to 50% utilization here, and that's in line with our ambition. And because it's only been open a few months, [indiscernible] factory. And regarding Sophie, you might have heard about this because that was publicly announced. We have a cooperation with the Nova Institute. This is the first European foundation model, and that addresses consumers and the public. And that is an open, secure sovereign factory for industry, but also for the public sector. And now that's where I would stop. There's still room. That's right. There's still room. And it would be not -- it wouldn't be so good if we opened a shop and everything was sold out in just a couple of months. Yes, just a brief addition. Unknown Attendee: Ms. Hassan Yes, thank you. The dollar this year has really impacted the business this year. And I was wondering if you're planning on hedging against the dollar because you're talking about adjusted targets, financial targets? And my second question relates to the Germany business, the mobile communications market. If I see correctly, you're not expecting net adds for your market here. And I assume that your cooperation with Congstar and your other partners, fraenk will help you forward going forward this year. But how about with prices, special offers? And how do you want to react to the situation right now going forward? Timotheus Höttges: I can tackle that first. Start with the second question, maybe take the second one first. Well, regarding the mobile communications market, your question on that, we Christian, correct me if I'm wrong, but we report just like we always did if we have a dividend in Germany. And if we look at customer growth figures, the good news is that we're growing our customer base in all three areas. So we're like a plane that has three jet engines in it and pushing us higher and higher. We have the B2B area where we've gained customers in the private customer business, we've grown. And also, we've gained customers with Congstar with that brand and the fraenk brand. So the segmentation we have is really paying off. And did you want to comment on Europe? Philipp Schindera: Yes. I think in Europe, mobile communications is really important. 2/3 of our sales are from mobile. So that's part of our DNA here. And growth in the mobile area has been considerable. And you see that in T-Mobile and the Magenta markets, too. In Germany, you have a second brand. But in all the other countries, it's just the T brand. In all the markets, we're growing. Our market share is growing. And in Germany, we have the highest share of market revenue. We have a market share of almost 50%. We're growing in mobile in almost all areas. We're concentrating on the first brand because it's so strong, the T brand right now, nothing against fraenk and Congstar. We won prizes for these. So the focus on marketing of the first brand is paying off because it's so strong right now. And that's our recipe for success globally right now is a very strong mobile. Yes, we're only hedging in the financial area, right? And with M&A transactions, we look at this possibility. In the acquisition of Sprint, we do normal operative hedging. Everything else is just much too expensive actually. And in our annual report, you'll see some figures on that. And if you look at the currency rates, you'll see why we work with organic comparisons so the years can be compared with each other, just like -- so financial analysts can look at our business. But we don't do any operative hedging as you'll notice from the figures. Then the next on my list is Mr. Klein from Spegel. Are you still there? I see you on the monitor, and we can hear you Your question, please? Unknown Analyst: I have questions on AI and broadband. Magenta AI is a big project. Can you tell us how it is used? And when do you expect to make any money with it? And about broadband, according to media reports, you've started to increase the monthly rates of old contracts. How many customers are affected by that? And are you expecting this to also have an influence on the number of fiber customers? Because maybe fiber will then also become more attractive. And yesterday, there was news that the Federal Network Agency said that they want to cut back on regulation of Deutsche Telekom in 4 big cities. Can you also comment on that? Timotheus Höttges: Well, maybe, Ferri -- no, let me start by answering the question on -- yes, yesterday. Now I think we can see that the broadband market in Germany is working well as I've been able to see for myself as the Head of the German business here over the past year. So the so-called , [indiscernible] the basic agreement is a step in the right direction. But then 4 cities are not enough. We will profoundly analyze the proposal by the Federal Network Agency and then issue a statement on it at any rate is a step in the right direction. About broadband and rate adjustments. First, we're not doing that for all customers. We mainly focus on older calling plans. So we are talking calling plans dating back to the time before the Ukraine war and even before the COVID pandemic. And when you look at the past few years, you can see that the telecommunications industry in Germany did not increase prices in line with inflation. And when you look at all the things that have happened in the telecom industry in all countries, then you will find that, yes, prices in England, in Switzerland and the Netherlands everywhere were adjusted in line with inflation. But it's not just about calling plans. And you know that all fiber players are facing the challenge that their investments in the fiber rollout need to amortize at some stage, and that also applies to us. So much for broadband, now AI. We believe that we are in a position to help people actually use AI. And we have -- we are bold enough to test things. We've proven that on the basis of several offerings. We have incorporated AI into our systems. The colleagues from the U.S. also told us about something about AI in the networks recently. So things are in full swing here. And we are testing things. And I can see that the use cases are becoming more specific from year-to-year. And the use cases are moving closer and closer to our core, which is our network. And I am optimistic that in the future, Deutsche Telekom will have a right to play in the AI sector as well. Yes, let me add to this. We have a large portfolio of AI projects and products, both in consumer and B2B. Our internal goal is clear when it comes to increasing efficiency, but you also asked when will we be able to make money with it? Well, at the last Capital Markets Day, we did come up with a clear-cut number, and that was EUR 700 million for Germany, Europe and T-Systems for all 3 segments. And that's what I also wanted to say in my presentation. We are actually ahead of the budget here. And that's -- so EUR 700 million, that's committed. And this comprises AI products and projects in the external market that are highly profitable for us. There's a great deal of demand, and we know that we can do this. I am exchanging messages with Mr. [indiscernible]. So now we can hear him. Maybe you could speak up a little. It sounds as if you're speaking through a towel. Unknown Analyst: That's not what I'm doing. The Federal Network Agency invited you to give out frequencies to a fourth network operator. Do you think that we will see 4 network operators in future? Or will there just remain 3 in place? Timotheus Höttges: Well, the Federal Network Agency, I'll put it this way. In 2025, we negotiated with 1 on 1. And now the Federal Network Agency made a proposal. The proposal is that now national roaming should be used, including a compensation of the network operators to the tune of EUR 2 million per year. That's the proposal. We believe that this is a step in the right direction. And now we have a couple of weeks' time to come up with a reaction, and we will, yes, make the most of that time. Let me add to this. We can't really comment on this as we would like to because 1 and 1 would then probably take legal action. They don't want to see this discussed in public, which is why we have the best network in Germany, but 1&1 are trying to prevent us from telling our customers that our network is the best. So I would like to expressly thank 1&1 for making this such a big deal in public because in this way, we've been able to put across the message quite clearly to our customers. I think my blog was read by around 500,000 people on this topic. So -- but 1&1 are highly sensitive about that. And that is quite reassuring for me, you see. As far as spectrum is concerned I think that companies offering the highest bandwidth and the fastest speeds are in the best position. And that's what we are doing. Last year, we increased capacities for our customers once again. And I don't think you should strip such companies of Spectrum. Quite the contrary. And that's why our position, I think, is quite clear. We will do whatever we can to avoid giving up any Spectrum. It would be disastrous if the company offering the best network was to be punished, which would also mean that Spectrum would have to be passed on to others, which is unused. I mean, what has become of the 5G Spectrum? Take a look at it. This is my plea to the journalists here. My position is clear. We sold 400 megahertz. And of the 400 megahertz, around 200 megahertz remain completely unused as of today. That is not fair, is it? That's not the right thing as far as network coverage for the citizens is concerned. I think policymakers need to do more to ensure a proper network coverage for the citizens. Thank you. This brings us to the end of our conference. Let me just point out one thing. AI was mentioned several times today, and it will be mentioned even more often at the Mobile World Congress on Monday in Barcelona. We will have the Magenta keynote at 1:30 p.m. So you can either go to hall 3 in Barcelona yourselves or you might want to use our live stream in order to hear about the latest from us. Some first reports already came out this week, and there will be more. We are doing more in the field of AI. And there's a range of interesting things that Aura will be presenting in Barcelona. And I would also like to mention that on the 1st of April, Deutsche Telekom shareholders' meeting will be held. I hope to see you again at one of these events. Thanks for joining us here today. We wish you all a pleasant day, and we're saying hello from Bonn.